Exhibit 2.1
ARRANGEMENT AGREEMENT AND PLAN OF ARRANGEMENT
ARRANGEMENT AGREEMENT
THIS AGREEMENT made as of March 8, 2002.
B E T W E E N:
TRIZEC XXXX CORPORATION, a corporation governed by the Business
Corporations Act (Ontario) (hereinafter, "TrizecHahn"),
and
TRIZEC CANADA INC., a corporation governed by the Canada Business
Corporations Act (hereinafter, "Trizec Canada"),
and
4007069 CANADA INC., a corporation governed by the Canada Business
Corporations Act (hereinafter, "Trizec Subco"),
and
TRIZEC PROPERTIES, INC., a corporation governed by the Delaware General
Corporation Law (hereinafter, "Trizec Properties").
WHEREAS TrizecHahn intends to propose to its shareholders a statutory plan
of arrangement under section 182 of the OBCA on the terms of the Plan of
Arrangement annexed as Appendix I hereto;
AND WHEREAS Trizec Properties is an indirect subsidiary of TrizecHahn and
has agreed to participate in the Arrangement on the terms and conditions set
forth herein;
AND WHEREAS each of Trizec Canada and Trizec Subco will participate in the
Arrangement on the terms and conditions set forth herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the
premises and the covenants and agreements herein contained and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged by each of the Parties to the others, the Parties covenant and
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless something in the subject matter or context is
inconsistent therewith:
"1987 SOP" means the TrizecHahn Amended and Restated 1987 Stock Option
Plan;
1
"Agreement" means this arrangement agreement including the Appendices
hereto and all amendments made hereto;
"Arrangement" means the proposed arrangement under the provisions of
section 182 of the OBCA, on and subject to the terms and conditions set
forth in the Plan of Arrangement and any amendments thereto made in
accordance with Section 6.1 hereof;
"Business Day" means a day, other than a Saturday or Sunday, on which the
TSE is open for trading;
"Canadian Resident" means a partnership or a person who is a resident of
Canada for the purposes of the Tax Act and who has so certified in the
Share Election Form, but does not include (i) a partnership that is not a
"Canadian partnership" as defined in the Tax Act or (ii) a trust unless the
trust is a resident of Canada for purposes of the Tax Act and the interests
in such trust of beneficiaries who are Canadian Residents have an aggregate
value equal to or greater than 95% of the value of the interests of all
beneficiaries in the trust;
"Circular" means the Management Information Circular of TrizecHahn relating
to the Arrangement;
"Claim" means any act, omission or state of facts, or any demand, action,
suit, proceeding, claim, assessment, judgment, settlement or other
compromise relating thereto, which may give rise to a right of
indemnification under Article 5 hereof;
"Court" means the Superior Court of Justice of Ontario;
"Direct Claim" means any Claim by an Indemnified Party against an
Indemnifier;
"Director" means the person appointed as the Director under the OBCA;
"Dissent Rights" means the right of a TrizecHahn SVS Shareholder to dissent
in respect of the Arrangement pursuant to the procedures set forth in
section 185 of the OBCA as modified by section 3.1 of the Plan of
Arrangement;
"Dissenting Shareholder" means a TrizecHahn SVS Shareholder who exercises
such holder's Dissent Rights;
"Effective Date" means the effective date of the Arrangement, being the
date shown on the certificate of arrangement to be issued by the Director
under the OBCA giving effect to the Arrangement;
"Effective Time" means the earliest moment on the Effective Date;
"Encumbrance" means a mortgage, charge, pledge, lien, hypothec, security
interest, encumbrance, adverse claim or right of a third party to acquire
or restrict the use of property;
"Equivalent Amount" on any given date in one currency (the "first
currency") of any amount denominated in another currency (the "second
currency") means the amount of the first currency which could be purchased
with such amount of the second currency at the rate of exchange quoted by
Royal Bank of Canada (or successor thereto) at 11:00 a.m. (Toronto time) on
such date for the purchase of the first currency with the second currency;
"Exchange Certificate" means a certificate delivered to a holder of a share
of Trizec Properties Common Stock who is not, or has not certified that it
is, a Qualifying U.S. Person evidencing the ownership of a share of Trizec
Properties Common Stock by such person, subject to the terms and conditions
set out in the Exchange Certificate Agreement;
2
"Exchange Certificate Agreement" means the custody agreement to be entered
into between Trizec Properties and a custodian and all owners and
beneficial owners, from time to time, of Exchange Certificates;
"Final Order" means the final order of the Court approving the Arrangement;
"Indemnified Party" has the meaning set out in Section 5.1 hereof;
"Indemnifier" has the meaning set out in Section 5.1 hereof;
"Indemnity Payment" means the amount of any Loss required to be paid by an
Indemnifier pursuant to Section 5.1 hereof;
"Interim Order" means the interim order of the Court to be sought in
connection with the Arrangement;
"Loss" means any and all loss, liability, damage, cost, expense, charge,
fine, penalty or assessment arising from and pertaining to this Agreement,
including Taxes, the reasonable out-of-pocket costs and expenses of any
action, suit, proceeding, demand, assessment, judgment, settlement or
compromise relating thereto, fines and penalties and reasonable legal fees
(on a solicitor and its own client basis) and expenses incurred in
connection therewith, excluding loss of profits and consequential damages;
"Maximum Aggregate Holdings" means Trizec Canada Constrained Shares which
represent an aggregate of that percentage of the total number of issued and
outstanding Trizec Canada Constrained Shares, including (for greater
certainty) the number of Trizec Canada Constrained Shares which would be
issued if all Trizec Canada Options were exercised at such time, which is
equal to (i) 45%, less (ii) the Option Ownership Percentage, provided that
for the purposes of this definition the Trizec Canada MVS and Trizec Canada
SVS shall be considered to be shares of a single class and series;
"Meeting" means the meeting of TrizecHahn Shareholders called for April 23,
2002, and any adjournments or postponements thereof, to be held for the
purpose of considering, and if considered advisable, approving the
Arrangement;
"Notice Period" has the meaning set out in Section 5.2(a) hereof;
"NYSE" means the New York Stock Exchange;
"OBCA" means the Business Corporations Act (Ontario), as amended;
"Option Ownership Percentage" means, at any time, the greater of (i) zero
and (ii) the fraction, expressed as a percentage of which the numerator is
equal to the sum of the number of Trizec Canada Options owned by Canadian
Residents minus the number of Trizec Canada Options owned by non-Canadian
Residents and the denominator is equal to the number of issued and
outstanding Trizec Canada Constrained Shares, including (for greater
certainty) the number of Trizec Canada Constrained Shares which would be
issued if all Trizec Canada Options were exercised at such time;
"Party" means a party to this Agreement;
"Plan of Arrangement" means the plan of arrangement set out as Appendix I
hereto as the same may be amended or varied from time to time in accordance
with the terms hereof;
"Prime Rate" means the floating rate of interest established from time to
time by the Royal Bank of Canada (the "Bank") (and reported to the Bank of
Canada) as the reference rate of interest the Bank will use to determine
rates of interest payable by its borrowers on Canadian dollar commercial
loans made by the Bank to such borrowers in Canada and designated by the
Bank as its "prime rate";
3
"Qualifying U.S. Person" has the meaning ascribed thereto in the Plan of
Arrangement;
"Share Election Form" means the letter of transmittal and share election
form to accompany the Circular pursuant to which, inter alia, a TrizecHahn
Shareholder makes elections with respect to its TrizecHahn SVS and
TrizecHahn MVS and represents certain other matters;
"Tax Act" means the Income Tax Act (Canada), as amended;
"Tax Gross Up" means, with respect to any particular Indemnity Payment,
such additional amount as is necessary to place the Indemnified Party in
the same after tax position as it would have been in had such Indemnity
Payment been received tax free. The Tax Gross Up amount shall be calculated
by using, in the case of Canadian taxes, the combined effective federal and
provincial income tax rate or, in the case of U.S. taxes, the combined
effective federal, state and local income tax rate, applicable to the
Indemnified Party and, except as provided in Section 5.8 hereof, without
regard to any losses, credits, refunds or deductions that the Indemnified
Party may have which could affect the amount of tax payable on any such
Indemnity Payment;
"Taxes" includes all applicable present and future income taxes, capital
taxes, stamp taxes, charges to tax, withholdings, sales, and use taxes,
value added taxes and goods and services taxes and all penalties, interest
and other payments on or in respect thereof;
"Third Party Claim" means any Claim asserted against an Indemnified Party
that is paid or payable to or claimed by any person who is not a Party;
"Trizec Canada Constrained Shares" means the Trizec Canada Shares and any
other shares of Trizec Canada carrying voting rights under all
circumstances or by reason of an event that has occurred and is continuing
and includes a security that is currently convertible into such share and a
currently exercisable option to or right to acquire such share or such
convertible security;
"Trizec Canada MVS" means the multiple voting shares in the capital of
Trizec Canada;
"Trizec Canada Option" means an option to purchase Trizec Canada SVS
governed by the Trizec Canada SOP and issued in replacement of a TrizecHahn
Option pursuant to section 2.2(b) of the Plan of Arrangement;
"Trizec Canada Shares" means, collectively, the Trizec Canada SVS and
Trizec Canada MVS;
"Trizec Canada SOP" means the stock option plan adopted by Trizec Canada in
accordance with Section 3.3(c) hereof;
"Trizec Canada SVS" means the subordinate voting shares in the capital of
Trizec Canada;
"Trizec Hungary" means Emerald Blue Kft, a company governed by the laws of
Hungary that is an indirect wholly-owned subsidiary of TrizecHahn;
"Trizec Properties Class C Stock" means the Class C convertible preferred
stock of Trizec Properties;
"Trizec Properties Class F Stock" means the Class F convertible stock of
Trizec Properties;
"Trizec Properties Common Stock" means the common stock of Trizec
Properties;
"Trizec Properties Option" means an option to purchase Trizec Properties
Common Stock governed by the Trizec Properties SOP and issued in
replacement of a TrizecHahn Option pursuant to section 2.2(b) of the Plan
of Arrangement;
4
"Trizec Properties Series B Stock" means the Series B convertible preferred
stock of Trizec Properties;
"Trizec Properties SOP" means the stock option plan adopted by Trizec
Properties in accordance with Section 3.5(b) hereof;
"Trizec Properties Special Stock" means the special voting stock of Trizec
Properties;
"Trizec Properties Warrant" means a warrant to purchase a share of Trizec
Properties Common Stock issued in replacement of, or in connection with the
replacement of, a TrizecHahn Option pursuant to section 2.2(b) of the Plan
of Arrangement;
"TrizecHahn MVS" means the multiple voting shares in the capital of
TrizecHahn;
"TrizecHahn Option" means an option to purchase TrizecHahn SVS granted by
TrizecHahn pursuant to the 1987 SOP and outstanding immediately prior to
the Effective Time;
"TrizecHahn Shareholders" means the holders of TrizecHahn SVS and
TrizecHahn MVS;
"TrizecHahn SVS" means the subordinate voting shares in the capital of
TrizecHahn;
"TrizecHahn SVS Shareholder" means a holder of TrizecHahn SVS; and
"TSE" means the Toronto Stock Exchange.
1.2 Appendices
The following appendix is attached to this Agreement and forms part hereof:
Appendix I - Plan of Arrangement.
1.3 Construction
In this Agreement, unless otherwise expressly stated or the context
otherwise requires:
(a) references to "herein", "hereby", "hereunder", "hereof" and similar
expressions are references to this Agreement and not to any particular
Article, Section or Appendix;
(b) references to an "Article", "Section" or "Appendix" are references to
an article, section or appendix of or to this Agreement;
(c) words importing the singular shall include the plural and vice versa,
words importing gender shall include the masculine, feminine and
neuter genders, and references to a "person" or "persons" shall
include individuals, corporations, partnerships, associations, bodies
politic and other entities, all as may be applicable in the context;
(d) the use of headings is for convenience of reference only and shall not
affect the construction or interpretation hereof;
(e) the word "including", when following any general term or statement, is
not to be construed as limiting the general term or statement to the
specific items or matters set forth or to similar items or matters,
but as referring to all other items or matters that could reasonably
fall within the broadest possible scope of the general term or
statement; and
5
(f) a reference to a statute or code includes every regulation made
pursuant thereto, all amendments to the statute or code or to any such
regulation in force from time to time, and any statute, code or
regulation which supplements or supersedes such statute, code or
regulation.
1.4 Currency
All references to currency herein are to lawful money of Canada unless
otherwise specified.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Mutual Representations and Warranties
Each Party represents and warrants to and in favour of each other Party
that:
(a) it is duly incorporated, continued or amalgamated and is validly
existing under the laws of its governing jurisdiction and has the
corporate power and authority to enter into this Agreement and,
subject to obtaining the requisite approvals contemplated hereby, to
perform its obligations hereunder;
(b) the execution and delivery of this Agreement by it and the completion
by it of the transactions contemplated herein and in the Plan of
Arrangement do not and will not:
(i) result in the breach of, or violate any term or provision of, its
articles or by-laws;
(ii) except as contemplated by Section 3.2(h) hereof, conflict with,
result in the breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required
by, any agreement, instrument, licence, permit or authority to
which it is a party or by which it is bound and which is material
to it, or to which any material property of such Party is
subject, or result in the creation of any Encumbrance upon any of
its material assets under any such agreement or instrument, or
give to others any material interest or right, including rights
of purchase, termination, cancellation or acceleration, under any
such agreement, instrument, licence, permit or authority; or
(iii) violate any provision of law or administrative regulation or any
judicial or administrative award, judgment, order or decree
applicable and known to it, the breach of which would have a
material adverse effect on it;
(c) there are no actions, suits, proceedings or investigations commenced,
contemplated or threatened against or affecting it, at law or in
equity, before or by a governmental department, commission, board,
bureau, court, agency, arbitrator or instrumentality, domestic or
foreign, of any kind nor are there any existing facts or conditions
which may reasonably be expected to form a proper basis for any
actions, suits, proceedings or investigations, which, in any case,
would prevent or hinder the consummation of the transactions
contemplated by this Agreement;
(d) no dissolution, winding up, bankruptcy, liquidation or similar
proceeding has been commenced or is pending or proposed in respect of
it; and
(e) the execution and delivery of this Agreement and the completion of the
transactions contemplated herein and in the Plan of Arrangement have
been duly approved by its board of directors (and its shareholder, in
the case of Trizec Subco) and this Agreement constitutes a valid and
binding obligation of such Party enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and to
general
6
principles of equity and limitations upon the enforcement of
indemnification for fines or penalties imposed by law.
2.2 Representations and Warranties of TrizecHahn
TrizecHahn represents and warrants to and in favour of each other Party
that:
(a) the authorized capital of TrizecHahn consists of 7,522,283 TrizecHahn
MVS, an unlimited number of TrizecHahn SVS, and an unlimited number of
preferred shares, issuable in series. As of February 28, 2002, the
issued and outstanding share capital of TrizecHahn consisted of
7,522,283 TrizecHahn MVS, 142,021,665 TrizecHahn SVS and no preferred
shares; and
(b) no person holds any securities convertible into any unissued shares of
TrizecHahn or has any agreement, warrant, option or any other right
capable of becoming an agreement, warrant or option for the purchase
or other acquisition of any unissued shares of TrizecHahn, other than
the holders of TrizecHahn Options. As at February 28, 2002 there were
17,322,350 TrizecHahn Options outstanding.
2.3 Representations and Warranties of Trizec Canada
Trizec Canada represents and warrants to and in favour of each other Party
that:
(a) the authorized capital of Trizec Canada consists of an unlimited
number of Trizec Canada SVS and 7,522,283 Trizec Canada MVS, of which
no shares are issued or outstanding;
(b) no person holds any securities convertible into any unissued shares of
Trizec Canada or has any agreement, warrant, option or any other right
capable of becoming an agreement, warrant or option for the purchase
or other acquisition of any unissued shares of Trizec Canada other
than as contemplated by this Agreement;
(c) Trizec Canada is the legal and beneficial owner of all of the issued
and outstanding shares of Trizec Subco, held free and clear of all
Encumbrances; and
(d) Trizec Canada has no assets other than cash and the issued and
outstanding shares of Trizec Subco held by it, has no liabilities
other than those incurred in connection with the Arrangement and has
carried on no business other than in connection with the Arrangement.
2.4 Representations and Warranties of Trizec Subco
Trizec Subco represents and warrants to and in favour of each other Party
that:
(a) the authorized capital of Trizec Subco consists of an unlimited number
of common shares of which 1 common share is issued and outstanding and
registered in the name of Trizec Canada; and
(b) Trizec Subco has $1.00 of assets, has no liabilities and has carried
on no business other than in connection with the Arrangement.
2.5 Representations and Warranties of Trizec Properties
Trizec Properties represents and warrants to and in favour of each other
Party that:
(a) the authorized capital of Trizec Properties consists of 500,000,000
shares of Trizec Properties Common Stock, 100 shares of Trizec
Properties Special Stock, 100,000 shares of Trizec Properties Class F
Stock, 1,100,000 shares of Trizec Properties Series B Stock and
750,000 shares of Trizec Properties Class C Stock. As of February 28,
2002, the issued and outstanding capital
7
stock of Trizec Properties consisted of 38,220,000 shares of Trizec
Properties Common Stock; 100 shares of Trizec Properties Special
Stock; 100,000 shares of Trizec Properties Class F Stock; 1,100,000
shares of Trizec Properties Series B Stock; and 376,504 shares of
Trizec Properties Class C Stock; and
(b) no person, other than TrizecHahn and Trizec Hungary holds any
securities convertible into any unissued shares of Trizec Properties
stock or has any agreement, warrant, option or any other right capable
of becoming an agreement, warrant or option for the purchase or other
acquisition of any unissued shares of Trizec Properties stock, other
than (i) 4 shares of Trizec Properties Class C convertible preferred
shares held by a United States charity and (ii) as contemplated by
this Agreement.
2.6 Survival of Representations and Warranties
The representations and warranties in this Agreement shall survive the
Effective Date.
ARTICLE 3
COVENANTS
3.1 General Covenants
Each of the Parties covenants with the other Parties that it will:
(a) use all commercially reasonable efforts and do all things reasonably
required of it to cause the Arrangement to become effective on or
before May 8, 2002, or such other date as TrizecHahn may determine,
including performing its obligations under the Plan of Arrangement;
(b) do and perform all such acts and things, and execute and deliver all
such agreements, assurances, notices and other documents and
instruments as may reasonably be required to facilitate the carrying
out of the intent and purpose of this Agreement;
(c) co-operate with and assist the other Parties in the preparation and
filing with all applicable securities commissions or similar
securities regulatory authorities in Canada and the United States of
such applications to seek exemptions from the requirements of the
applicable securities laws of jurisdictions in Canada and the United
States as any Party may reasonably determine are necessary or
advisable in connection with the Arrangement;
(d) co-operate with and assist the other Parties, both before and after
the Effective Date, in dealing with transitional matters relating to
or arising from this Agreement or the Arrangement, including effecting
any pre-Arrangement transactions as any Party may reasonably require
from time to time; and
(e) co-operate prior to the Effective Date in making such amendments to
this Agreement (including the Plan of Arrangement) as may be necessary
to implement the Plan of Arrangement or as may be reasonably desired
by any Party to enable it to carry out transactions deemed
advantageous by it.
3.2 Covenants of TrizecHahn
TrizecHahn hereby covenants and agrees with each of the other Parties that
it will:
(a) until the Effective Date, not perform any act or enter into any
transaction which interferes or is inconsistent with the completion of
the Arrangement;
(b) as soon as practicable and subject to receipt of the Interim Order,
convene the Meeting;
8
(c) in a timely and expeditious manner, prepare and file the Circular (and
any amendments or supplements thereto as may be required from time to
time) in all jurisdictions where the same is required to be filed by
it and mail the same in accordance with the Interim Order and
applicable law and solicit proxies to be voted at the Meeting in
favour of the Arrangement;
(d) conduct the Meeting in accordance with the Interim Order, the by-laws
of TrizecHahn, as applicable, and as otherwise required by applicable
law;
(e) cooperate with Trizec Canada to obtain the approval for the listing of
the Trizec Canada SVS on the TSE and cooperate with Trizec Properties
to obtain the approval for the listing of the Trizec Properties Common
Stock and the Exchange Certificates on the NYSE;
(f) prior to the Effective Date, cause Trizec Hungary to dispose to Trizec
Subco the shares in the capital stock of Trizec Properties required in
connection with the Plan of Arrangement;
(g) perform the obligations required to be performed by it under the Plan
of Arrangement and do all such other acts and things as may be
necessary or desirable and are within its power and control in order
to carry out and give effect to the Arrangement, including using all
commercially reasonable efforts to obtain:
(i) the approval of TrizecHahn Shareholders required for the
implementation of the Arrangement;
(ii) the Interim Order and Final Order;
(iii) such other consents, orders, rulings or approvals and assurances
as its counsel may advise are necessary or desirable for the
implementation of the Arrangement, including those referred to in
Section 4.1 hereof; and
(iv) satisfaction of the other conditions precedent referred to in
Sections 4.1 and 4.2 hereof; and
(h) prior to the Effective Date, give notice of redemption of all of its
outstanding 6.0% debentures due September 3, 2002, 7.45% debentures
due June 1, 2004 and 7.95% debentures due June 1, 2007 and cause
TrizecHahn Holdings Ltd. to give notice of redemption of all of its
outstanding 10.875% notes due October 15, 2005 and to redeem such
debentures, and cause TrizecHahn Holdings Ltd. to redeem such notes,
on the first date following such notice on which it is permitted to do
so.
3.3 Covenants of Trizec Canada
Trizec Canada hereby covenants and agrees with each of the other Parties
that it will:
(a) until the Effective Date, not carry on business except as otherwise
contemplated by this Agreement;
(b) until the Effective Date, not perform any act or enter into any
transaction which interferes or is inconsistent with the completion of
the Arrangement;
(c) prior to the Effective Date, adopt and maintain a stock option plan,
on terms satisfactory to TrizecHahn, to govern the Trizec Canada
Options to be issued pursuant to the Arrangement;
(d) prior to the Effective Date, use all commercially reasonable efforts
to obtain approval for the listing of the Trizec Canada SVS on the
TSE; and
9
(e) perform the obligations required to be performed by it under the Plan
of Arrangement and do all such other acts and things as may be
necessary or desirable and are within its power and control in order
to carry out and give effect to the Arrangement, including cooperating
with TrizecHahn to obtain:
(i) the Interim Order and Final Order;
(ii) such other consents, rulings, orders, approvals and assurances as
its counsel may advise are necessary or desirable for the
implementation of the Arrangement, including those referred to in
Section 4.1 hereof; and
(iii) satisfaction of the other conditions precedent referred to in
Sections 4.1 and 4.2 hereof.
3.4 Covenants of Trizec Subco
Trizec Subco hereby covenants and agrees with each of the other Parties
that it will:
(a) until the Effective Date, not carry on business, except as otherwise
contemplated by this Agreement;
(b) until the Effective Date, not perform any act or enter into any
transaction which interferes or is inconsistent with the completion of
the Arrangement;
(c) prior to the Effective Date, acquire from Trizec Hungary the shares in
the capital stock of Trizec Properties required in connection with the
Plan of Arrangement; and
(d) perform the obligations required to be performed by it under the Plan
of Arrangement and do all such other acts and things as may be
necessary or desirable and are within its power and control in order
to carry out and give effect to the Arrangement, including cooperating
with TrizecHahn to obtain:
(i) the Interim Order and the Final Order;
(ii) such other consents, rulings, orders, approvals and assurances as
its counsel may advise are necessary or desirable for the
implementation of the Arrangement, including those referred to in
Section 4.1 hereof; and
(iii) satisfaction of the other conditions precedent referred to in
Sections 4.1 and 4.2 hereof.
3.5 Covenants of Trizec Properties
Trizec Properties hereby covenants and agrees with each of the other
Parties that it will:
(a) until the Effective Date, not perform any act or enter into any
transaction which interferes or is inconsistent with the completion of
the Arrangement;
(b) prior to the Effective Date, maintain a stock option plan to be
effective as of the Effective Date, on terms satisfactory to
TrizecHahn, to govern the Trizec Properties Options to be issued
pursuant to the Arrangement;
(c) prior to the Effective Date, enter into the Exchange Certificate
Agreement to be effective as of the Effective Date, on terms
satisfactory to the Parties;
(d) prior to the Effective Date, use all commercially reasonable efforts
to obtain approval for the listing of Trizec Properties Common Stock
and Exchange Certificates on the NYSE;
10
(e) prior to the Effective Date prepare and file with and use all
commercially reasonable efforts to have declared effective by the U.S.
Securities and Exchange Commission registration statements on Form
S-11 registering:
(i) a primary offering of Trizec Properties Common Stock to be issued
upon the exercise of Trizec Properties Warrants;
(ii) a secondary offering of Trizec Properties Common Stock that may
be sold in connection with the exercise of a pledge in the event
of default under credit facilities obtained by TrizecHahn in
connection with the Arrangement; and
(iii) a secondary offering of Trizec Properties Common Stock that may
be disposed of by Trizec Canada in connection with redemptions of
Trizec Canada Shares;
in form and substance satisfactory to Trizec Canada;
(f) prior to the Effective Date prepare and file with the U.S. Securities
and Exchange Commission a registration statement on Form S-8
registering a primary offering of Trizec Properties Common Stock to be
issued upon the exercise of Trizec Properties Options and registration
statements on Form S-11 registering:
(i) a secondary offering of Trizec Properties Common Stock that may
be sold by Trizec Hungary in connection with any conversion of
Trizec Properties Class F Stock; and
(ii) a secondary offering of Trizec Properties Common Stock that may
be sold by Trizec Canada in connection with the exercise of
dissent rights;
in form and substance satisfactory to Trizec Canada;
(g) take all steps within its power to effect the recapitalization of its
stock so that immediately prior to the Effective Time, it consists of,
among other things, Trizec Properties Class F Stock, Trizec Properties
Class C Stock and a number of shares of Trizec Properties Common Stock
held directly or indirectly by Trizec Canada equal to the then
aggregate number of issued and outstanding TrizecHahn SVS and
TrizecHahn MVS; and
(h) perform the obligations required to be performed by it under the Plan
of Arrangement and do all such other acts and things as may be
necessary or desirable and are within its power and control in order
to carry out and give effect to the Arrangement, including
co-operating with TrizecHahn to obtain:
(i) the Interim Order and the Final Order;
(ii) such other consents, orders, rulings, approvals and assurances as
its counsel may advise are necessary or desirable for the
implementation of the Arrangement, including those referred to in
Section 4.1 hereof; and
(iii) satisfaction of the other conditions precedent referred to in
Sections 4.1 and 4.2 hereof.
3.6 Final Order
Subject to Section 6.2 hereof, if the Interim Order and all security holder
approvals as required in respect of the Arrangement are obtained, TrizecHahn
shall promptly thereafter take the necessary steps to submit the Arrangement to
the Court and apply for the Final Order in such fashion as the Court may direct.
11
3.7 Costs and Expenses
Transaction costs and regulatory fees incurred by the Parties shall be
borne by TrizecHahn.
3.8 Survival of Covenants
The covenants in this Agreement shall survive the Effective Date.
ARTICLE 4
CONDITIONS
4.1 Mutual Conditions Precedent
The respective obligations of the Parties to complete the transactions
contemplated by this Agreement and to file articles of arrangement to give
effect to the Arrangement shall be subject to satisfaction of the following
conditions:
(a) the Arrangement, either without amendment or with amendments approved
by TrizecHahn, shall have been approved at the Meeting in accordance
with the Interim Order;
(b) the Final Order shall have been obtained in form and substance
satisfactory to TrizecHahn;
(c) TrizecHahn shall be satisfied that, after giving effect to the
Arrangement, persons other than Canadian Residents will not hold
Trizec Canada Constrained Shares in excess of the Maximum Aggregate
Holdings;
(d) all pre-Arrangement transactions contemplated in Article 3 hereof
shall have been completed to the satisfaction of TrizecHahn, acting
reasonably;
(e) the registration statements on Form S-11 contemplated by Section
3.5(e) hereof shall have been filed with, and declared effective by,
the U.S. Securities and Exchange Commission;
(f) the registration statements on Form S-8 and Form S-11 contemplated by
Section 3.5(f) hereof shall have been filed with the U.S. Securities
and Exchange Commission;
(g) all material consents, orders, rulings, approvals and assurances,
including regulatory and judicial approvals and orders, required for
the completion of the transactions provided for in this Agreement and
the Plan of Arrangement shall have been obtained or received, all on
terms and conditions satisfactory to TrizecHahn acting reasonably,
from the persons, authorities or bodies having jurisdiction in the
circumstances, including orders, rulings, no action letters and
registrations pursuant to the Securities Act (Ontario) and the
comparable securities legislation of the other provinces and
territories of Canada and of the United States of America and the
states thereof to permit the Trizec Canada SVS, the Trizec Canada MVS,
the shares of Trizec Properties Common Stock and the Exchange
Certificates to be traded without a prospectus and without the
participation of a registered dealer pursuant to the Arrangement or
pursuant to the terms of options or other rights to purchase or
exchange granted or assumed pursuant to the Arrangement and to be
freely tradeable in each such jurisdiction promptly following the
Effective Date;
(h) no action shall have been instituted and be continuing on the
Effective Date for an injunction to restrain, a declaratory judgment
in respect of, or damages on account of or relating to, the
Arrangement and there shall not be in force any order or decree
restraining or enjoining the consummation of the transactions
contemplated by this Agreement or the Plan of Arrangement and no cease
trading or similar order with respect to any securities of any of the
Parties shall have been issued and remain outstanding;
12
(i) no law, regulation or policy shall have been proposed, enacted,
promulgated or applied which interferes or is inconsistent with the
completion of the Arrangement;
(j) in the event that Dissenting Shareholders hold more than 1.0% of the
outstanding TrizecHahn SVS, the board of directors of TrizecHahn shall
have determined to proceed with the Arrangement;
(k) the TSE shall have approved the listing of the Trizec Canada SVS and
the NYSE shall have approved the listing of the Trizec Properties
Common Stock and the Exchange Certificates, subject to compliance with
the normal listing requirements of such exchanges; and
(l) this Agreement shall not have been terminated under Article 6 hereof.
With the exception of the conditions stipulated by Sections 4.1(a), (b), (c),
(k) and (1) hereof, the conditions of this Section 4.1 may be waived in whole or
in part by TrizecHahn.
4.2 Conditions to Obligations of Each Party
The obligation of each Party to complete the transactions contemplated by
this Agreement is further subject to the condition, which may be waived by such
Party without prejudice to its right to rely on any other condition in its
favour, that the covenants of the other Parties to be performed on or before the
Effective Date pursuant to the terms of this Agreement shall have been duly
performed by them and that, except insofar as this Agreement does not prohibit
transactions taking place prior to the Effective Date that would alter facts
represented, the representations and warranties of the other Parties shall be
true and correct in all material respects as at the Effective Date, with the
same effect as if such representations and warranties had been made at, and as
of, such time.
4.3 Merger of Conditions
The conditions set out in Sections 4.1 and 4.2 hereof shall be conclusively
deemed to have been satisfied, waived or released on the filing by TrizecHahn of
articles of arrangement under the OBCA to give effect to the Plan of
Arrangement.
ARTICLE 5
INDEMNITIES
5.1 Indemnity
Each Party (the "Indemnifier") will indemnify and hold each other Party
(each an "Indemnified Party") harmless against any Loss suffered or incurred by
an Indemnified Party resulting from a breach of a representation, warranty or
covenant herein or pursuant hereto.
5.2 Notice of Third Party Claims
(a) If an Indemnified Party receives notice of the commencement or
assertion of any Third Party Claim, the Indemnified Party shall notify the
Indemnifier within a reasonable time thereafter, but in any event, no later than
30 days after receipt of such notice of such Third Party Claim. Such notice to
the Indemnifier shall describe the Third Party Claim in reasonable detail and
shall indicate, to the extent reasonably practicable, the estimated amount of
the Loss that has been or may be sustained by the Indemnified Party. The
Indemnifier shall then have a period of 30 days (the "Notice Period") within
which to satisfy such Third Party Claim or, failing that, to give notice to the
Indemnified Party that it intends to dispute such Third Party Claim and
participate in or assume that defence thereof, which notice shall be accompanied
by reasonably particulars in writing of the basis of such dispute.
(b) If an Indemnified Party has reason to believe that a person may be
investigating the possibility of asserting a Third Party Claim, it shall notify
the Indemnifier as soon as reasonably practicable and provide
13
reasonable details of the circumstances thereof. The Indemnified Party and the
Indemnifier shall seek to cooperate with a view to satisfying the person who may
assert the Third Party Claim that there is no reasonable basis therefor.
5.3 Defence of Third Party Claims
If the Indemnifier elects to assume the defence of any Third Party Claim,
the Indemnifier shall at all times act reasonably and in good faith in pursuing
such defence, keep the Indemnified Party fully informed as to the progress and
status of such defence of the Third Party Claim and provide copies to the
Indemnified Party of all material documents, records and other materials
relating to such defence or the Third Party Claim. The Indemnifier shall provide
the Indemnified Party with drafts of documents which the Indemnifier proposes to
send or file in advance of the sending of or filing of the same and the
Indemnified Party shall have the right to provide comments thereon to the
Indemnifier; provided, however, that it shall not result in any undue delays.
The Indemnifier agrees to pay all of its own expenses of participating in or
assuming such defence. The Indemnified Party shall cooperate in good faith in
the defence of each Third Party Claim, even if the defence has been assumed by
the Indemnifier, and may participate in such defence assisted by counsel of its
choice and at its own expense, except in those circumstances in which there are
material issues between the Indemnifier and the Indemnified Party or there are
defences available to the Indemnified Party which are not available to the
Indemnifier, in either of which case the Indemnified Party may participate in
such defence assisted by counsel of its choice at the expense of the Indemnifier
to the extent such expenses are reasonable. Neither the Indemnifier nor the
Indemnified Party shall enter into any compromise or settlement of any Third
Party Claim without obtaining the prior written consent of the other of them,
such consent not to be unreasonably withheld or delayed. If the Indemnifier
wishes to settle a Third Party Claim in an amount acceptable to the third party
claimant, but the Indemnified Party does not wish to settle, the Indemnifier
shall be required to indemnify the Indemnified Party only up to the lesser of
the amount for which the Indemnifier would have settled the Third Party Claim
and the amount which the Indemnified Party was or will be required to pay such
third party in connection with such Third Party Claim. If the Indemnified Party
has not received notice within the Notice Period that the Indemnifier has
elected to assume the defence of a Third Party Claim or if the Indemnifier,
having elected to assume the defence of any Third Party Claim, fails to take
reasonable steps necessary to defend diligently such Third Party Claim within 30
days after receiving notice from the Indemnified Party that the Indemnified
Party bona fide believes on reasonable grounds that the Indemnifier has failed
to take such steps (with such grounds to be specified in reasonable detail), the
Indemnified Party may, at its option, elect to settle or compromise the Third
Party Claim or assume such defence, assisted by counsel of its choosing, and the
Indemnifier shall be liable for all reasonable costs and expenses paid or
incurred in connection therewith and any Loss suffered or incurred by the
Indemnified Party with respect to such Third Party Claim.
5.4 Assistance for Third Party Claim
The Indemnifier and the Indemnified Party shall use all reasonable efforts
to make available:
(a) those employees, representatives or advisors, whose assistance,
testimony or presence is necessary to assist in evaluating and
defending any Third Party Claim; and
(b) all documents, records and other materials reasonably required for use
in defending any Third Party Claim;
and shall otherwise cooperate in such defence.
5.5 Direct Claims
Any Direct Claim shall be asserted by providing notice to the Indemnifier
within a reasonable time after the Indemnified Party becomes aware of such
Direct Claim, but in any event not later than 60 days after the Indemnified
Party becomes aware of such Direct Claim. The Indemnifier shall then have a
period of 30 days within which to satisfy such Direct Claim or, failing that, to
give notice to the Indemnified Party that it intends to dispute such Direct
Claim, which notice shall be accompanied by reasonable particulars in writing of
the basis of such dispute.
14
5.6 Failure to Give Timely Notice
The failure to give timely notice as provided in this Article 5 shall not
affect the rights or obligations of any Party except and only to the extent
that, as a result of such failure, the Party which was entitled to receive such
notice suffered damage.
5.7 Reduction in Subrogation
If at any time subsequent to the making of an Indemnity Payment the amount
of the indemnified Loss is reduced pursuant to any claim, recovery, settlement
or payment by or against any other Person (a "Recovery"), such that, taking the
Recovery into account, the amount of the Indemnity Payment in respect of the
Loss exceeds the amount of the Loss, the Indemnified Party shall promptly repay
to the Indemnifier the amount of the excess (the "Excess") (less any costs,
expenses (including Taxes) or premiums incurred in connection therewith)
together with interest (1) from the date of payment of the Indemnity Payment in
respect of which the repayment is being made to but excluding the earlier of the
date of repayment of the Excess and the date that is 60 days after the Excess
arises, but only to the extent that the Recovery giving rise to the Excess
included interest, at the rate applied to the amount of the Recovery and (2)
from and including the date that is 60 days after the Excess arises to but
excluding the date of repayment of the Excess, at the Prime Rate.
Notwithstanding the foregoing provisions of this Section 5.7, no payment shall
be made hereunder to the extent the Indemnified Party is entitled to an
Indemnity Payment hereunder that remains unpaid. Upon making a full Indemnity
Payment, the Indemnifier shall, to the extent of such Indemnity Payment, be
subrogated to all rights of the Indemnified Party against any third party in
respect of the Loss to which the Indemnity Payment relates. Until the
Indemnified Party recovers full payment of its Loss, any and all claims of the
Indemnifier against such third party on account of such Indemnity Payment shall
be postponed and subordinated in right of payment to the Indemnified Party's
rights against such third party.
5.8 Tax Effect
If any Indemnity Payment received by an Indemnified Party would be subject
to withholding tax or constitute income for tax purposes to such Indemnified
Party, the Indemnifier shall pay a Tax Gross Up to the Indemnified Party at the
same time and on the same terms, as to interest and otherwise, as the Indemnity
Payment. The amount of any Loss for which indemnification is provided shall be
adjusted to take into account any tax benefit realized by the Indemnified Party
or any of its affiliates by reason of the Loss for which indemnification is so
provided or the circumstances giving rise to such Loss. For purposes of this
Section, any tax benefit shall be taken into account at such time as it is
received by the Indemnified Party or its affiliate. Notwithstanding the
foregoing provisions of this Section 5.8, if an Indemnity Payment is included in
the Indemnified Party's income pursuant to paragraph 12(1)(x) of the Tax Act (or
an equivalent provision of any relevant provincial legislation), the Indemnified
Party covenants and agrees to make an election pursuant to subsection 12(2.2) of
the Tax Act (and the equivalent provision of any applicable provincial
legislation) with respect to the Indemnity Payment to the maximum extent
possible such that the amount of the Indemnity Payment included in the
Indemnified Party's income for tax purposes is minimized or eliminated.
5.9 Payment and Interest
The Equivalent Amount of all Losses (other than Taxes) in Canadian dollars
shall bear interest at a rate per annum, calculated and payable monthly, equal
to the Prime Rate per annum from and including the date the Indemnified Party
disbursed funds or suffered or incurred a Loss to but excluding the day of
payment by the Indemnifier to the Indemnified Party, with interest on overdue
interest at the same rate. All Losses that are Taxes shall bear interest at a
rate per annum, calculated and payable monthly, equal to the Prime Rate from and
including the date the Indemnified Party paid such Taxes to but excluding the
day of payment by the Indemnifier to the Indemnified Party of the Indemnified
Payment in respect of such Taxes, with interest on overdue interest at the same
rate.
15
ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Amendment
This Agreement may, at any time and from time to time before and after the
holding of the Meeting but not later than the Effective Date, be amended by
written agreement of the Parties without, subject to applicable law, further
notice to or authorization on the part of their respective shareholders. Without
limiting the generality of the foregoing, any such amendment may:
(a) change the time for performance of any of the obligations or acts of
the Parties;
(b) waive any inaccuracies or modify any representation contained herein
or in any document to be delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
or waive or modify performance of any of the obligations of the
Parties; or
(d) make such other alterations to this Agreement as the Parties may
consider necessary or desirable, including in connection with the
Interim Order.
6.2 Termination
This Agreement may, at any time before or after the holding of the Meeting
but prior to the issue under the OBCA of a certificate of arrangement giving
effect to the Arrangement, be terminated by TrizecHahn by approval by the board
at any time without approval of the TrizecHahn Shareholders. This Agreement
shall terminate without any further action by the parties if the Effective Date
shall not have occurred on or before June 30, 2002 or such later date as
TrizecHahn may determine.
ARTICLE 7
GENERAL
7.1 Notices
All notices that may or are required to be given pursuant to any provision
of this Agreement shall be given in writing and shall be delivered personally or
by facsimile addressed to the recipient as follows:
if to TrizecHahn, Trizec Canada or Trizec Subco:
BCE Place, 000 Xxx Xxxxxx
Xxxxx 0000, X.X. Xxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx Xxxxxxxx
Fax No: (000) 000-0000
if to Trizec Properties:
1114 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
X.X.X.
16
Attention: Xxxxxxxxxxx Xxxxxxxxx
Fax No: (000) 000-0000
or such other address of which a Party may, from time to time, advise the other
Parties hereto by notice in writing given in accordance with the foregoing. Date
of receipt of any such notice shall be deemed to be the date of delivery thereof
or, if given by facsimile, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the next Business Day, if not
given during such hours.
7.2 Judgment Currency
To the extent permitted by applicable law, if any judgment or order is
rendered against any Party (the "Judgment Debtor") and expressed in a currency
other than Canadian dollars (the "Agreement Currency") hereunder in favour of
any Party (the "Judgment Creditor"), the Judgment Creditor after recovery in
full of the aggregate amount to which the Judgment Creditor is entitled pursuant
to the judgment or order, will be entitled to receive immediately from the
Judgment Debtor the amount of any shortfall in the Agreement Currency received
by the Judgment Creditor as a consequence of sums paid in such other currency
and will refund promptly to the Judgment Debtor any excess of the Agreement
Currency received by the Judgment Creditor as a consequence of sums paid in such
other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Agreement Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which the Judgment Creditor is
able, acting in a reasonable manner and in good faith in converting the currency
received into the Agreement Currency, to purchase the Agreement Currency with
the amount of the currency of the judgment or order actually received by the
Judgment Creditor. The term "rate of exchange" includes, without limitation, any
premiums and costs of exchange payable in connection with the purchase of or
conversion into the Agreement Currency.
7.3 Assignment
No Party may assign its rights or obligations under this Agreement or the
Arrangement.
7.4 Binding Effect
This Agreement shall be binding upon and shall enure to the benefit of the
Parties hereto and their respective successors and specific references to
"successors" elsewhere in this Agreement shall not be construed to be in
derogation of the foregoing.
7.5 Waiver
Any waiver or release of any of the provisions of this Agreement, to be
effective, must be in writing executed by the Party granting the same.
7.6 Governing Law
This Agreement shall governed by and construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein and shall
be treated in all respects as an Ontario contract.
7.7 Counterparts
This Agreement and any amendment, supplement or restatement thereof may be
executed in one or more counterparts, each of which shall be deemed to
constitute an original.
17
IN WITNESS WHEREOF the Parties hereto have executed this Agreement.
TRIZEC XXXX CORPORATION
by: (signed) XXXXXXXXXXX XXXXXXXXX
----------------------------------------
Xxxxxxxxxxx Xxxxxxxxx
President and Chief Executive Officer
by: (signed) XXXXX X. XXXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxxx
Senior Vice President, General Counsel
TRIZEC CANADA INC.
by: (signed) XXXXXX XXXXXXX
----------------------------------------
Xxxxxx X. Xxxxxxx
Chief Financial Officer and Secretary
4007069 CANADA INC.
by: (signed) XXXXX X. XXXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxxx
Secretary
TRIZEC PROPERTIES, INC.
by: (signed) XXXXX X. XXXXXXXX
----------------------------------------
Xxxxx X. Xxxxxxxx
Vice President
18
APPENDIX I
PLAN OF ARRANGEMENT UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Plan of Arrangement, unless something in the subject matter or
context is inconsistent therewith:
"1987 SOP" means the TrizecHahn Amended and Restated 1987 Stock Option
Plan;
"Arrangement" means the proposed arrangement under the provisions of
section 182 of the OBCA, on and subject to the terms and conditions set
forth in this Plan of Arrangement and any amendments hereto;
"Available Number of Trizec Properties Shares" means the difference between
(i) the Number of Trizec Subco Trizec Properties Shares and (ii) the
aggregate number of TrizecHahn Shares held by Dissenting Shareholders
immediately before the Effective Time;
"Business Day" means a day, other than a Saturday or Sunday, on which the
Toronto Stock Exchange is open for trading;
"Canadian Resident" means a partnership or a person who is a resident of
Canada for the purposes of the Tax Act and who has so certified in the
Share Election Form, but does not include (i) a partnership that is not a
"Canadian partnership" as defined in the Tax Act or (ii) a trust unless the
trust is a resident of Canada for purposes of the Tax Act and the interests
in such trust of beneficiaries who are Canadian Residents have an aggregate
value equal to or greater than 95% of the value of the interests of all
beneficiaries in the trust;
"CBCA" means the Canada Business Corporations Act, as amended;
"Circular" means the Management Information Circular of TrizecHahn dated
March 13, 2002 relating to the Arrangement;
"Custodian" means Mellon Investor Services LLC, in its capacity as
custodian under the Exchange Certificate Agreement;
"Director" means the person appointed as the Director under the OBCA;
"Dissent Rights" means the right of a TrizecHahn SVS Shareholder to dissent
in respect of the Arrangement pursuant to the procedures set forth in
section 185 of the OBCA as modified by Section 3.1;
"Dissenting Shareholder" means a TrizecHahn SVS Shareholder who exercises
such holder's Dissent Rights;
"Effective Date" means the effective date of the Arrangement, being the
date of effectiveness of the certificate of arrangement to be issued by the
Director under the OBCA giving effect to the Arrangement;
"Effective Time" means the earliest moment on the Effective Date;
"Election Deadline" means 5:00 p.m. (Toronto time) on April 23, 2002, or in
the case of any postponement(s) or adjournment(s) of the Meeting, 5:00 p.m.
(Toronto time) on that date on which the adjourned Meeting is reconvened or
the postponed Meeting is convened;
19
"Eligible Shareholder" means (a) a TrizecHahn Shareholder who is (i)
resident in Canada for purposes of the Tax Act and not exempt from tax
thereunder, (ii) a non-resident of Canada for purposes of the Tax Act to
whom the TrizecHahn SVS are "taxable Canadian property" and not "treaty
protected property" (as those terms are defined in the Tax Act) or (iii) a
partnership if one or more of its members would be described in (i) or (ii)
if such member held the partnership's TrizecHahn SVS directly, or (b) a
Holdco Shareholder;
"Exchange Certificate" means a certificate delivered to a holder of a share
of Trizec Properties Common Stock who is not, or has not certified that it
is, a Qualifying U.S. Person evidencing the ownership of a share of Trizec
Properties Common Stock by such person, subject to the terms and conditions
set out in the Exchange Certificate Agreement;
"Exchange Certificate Agreement" means the custody agreement to be entered
into between Trizec Properties and the Custodian and all owners and
beneficial owners, from time to time, of Exchange Certificates, pursuant to
which, among other things, each such holder agrees that the shares of
Trizec Properties Common Stock transferred to it pursuant to Section
2.2(a)(v) will be held by the Custodian on such holder's behalf on the
terms and conditions provided for in such agreement;
"Holdco" has the meaning ascribed to such term in Section 2.4(a);
"Holdco Agreement" means a share purchase agreement relating to the
acquisition of a particular Holdco among all of the Holdco Shareholders of
such Holdco, Trizec Canada and Trizec Subco providing for the acquisition
of all issued and outstanding Holdco Shares of such Holdco in accordance
with Section 2.4(b) and containing such representations and warranties,
terms and conditions and indemnities as Trizec Canada and Trizec Subco may
reasonably request in connection therewith, including, without limitation,
the representations and warranties, terms and conditions and indemnities
set out in Appendix 1;
"Holdco Election" has the meaning ascribed to such term in Section 2.4(a);
"Holdco Election Deadline" means 5:00 p.m. (Toronto time) on April 16,
2002, or in the case of any postponement(s) or adjournment(s) of the
Meeting, 5:00 p.m. (Toronto time) on that date which is five business days
prior to the date the adjourned Meeting is reconvened or the postponed
Meeting is convened;
"Holdco Share" means a common share in the capital of a Holdco;
"Holdco Shareholder" has the meaning ascribed to such term in Section
2.4(a);
"Meeting" means the meeting of TrizecHahn Shareholders called for April 23,
2002, and any adjournment(s) or postponement(s) thereof, to be held for the
purpose of considering, and if considered advisable, approving the
Arrangement;
"MVS Security" means a Holdco Share of a particular Holdco where the only
asset of such Holdco is TrizecHahn MVS, or a TrizecHahn MVS held by any
person other than such a Holdco;
"Number of Trizec Canada SVS" means the result obtained by (i) subtracting
the sum of the Number of Trizec Subco Trizec Properties Shares and the
number of TrizecHahn MVS outstanding immediately before the Effective Time
from (ii) the number of TrizecHahn Shares outstanding immediately before
the Effective Time;
"Number of Trizec Subco Trizec Properties Shares" means that number of
outstanding shares of Trizec Properties Common Stock held by Trizec Subco
immediately before the Effective Time, which is estimated to be 60% of the
aggregate of the then issued and outstanding number of TrizecHahn Shares
[actual number to be determined immediately prior to Effective Date];
"OBCA" means the Business Corporations Act (Ontario), as amended;
20
"Plan of Arrangement" means this plan of arrangement as the same may be
amended from time to time;
"Qualifying U.S. Person" means a person who has satisfied the conditions
set out in Annex M to the Circular and has so certified in the Share
Election Form;
"Share Election Form" means the letter of transmittal and share election
form accompanying the Circular pursuant to which, inter alia, a TrizecHahn
Shareholder makes elections with respect to its TrizecHahn Shares and
represents certain other matters;
"Tax Act" means the Income Tax Act (Canada), as amended;
"Tax Deferral Election" means an election to exchange Trizec Canada Elected
Shares or Trizec Properties Elected Shares that, by virtue of Section 2.3,
are not Trizec Properties Exchanged Shares with Trizec Canada made in the
Share Election Form by an Eligible Shareholder;
"Trizec Canada" means Trizec Canada Inc., a corporation existing under the
CBCA;
"Trizec Canada Elected Share" means a TrizecHahn SVS or a Holdco Share, the
holder of which is an Eligible Shareholder who has validly elected in the
Share Election Form or Holdco Agreement, as applicable, to exchange such
TrizecHahn SVS or Holdco Share with Trizec Canada for a Trizec Canada SVS;
"Trizec Canada Exchanged Share" means a TrizecHahn SVS or a Holdco Share
exchanged with Trizec Canada for a Trizec Canada SVS pursuant to Section
2.2(a)(ii), as determined in accordance with Section 2.3;
"Trizec Canada MVS" means the multiple voting shares in the capital of
Trizec Canada;
"Trizec Canada Option" means an option to purchase Trizec Canada SVS
governed by the Trizec Canada SOP and issued in replacement of a TrizecHahn
Option pursuant to Section 2.2(b);
"Trizec Canada Shares" means, collectively, the Trizec Canada SVS and
Trizec Canada MVS;
"Trizec Canada SOP" means the stock option plan adopted by Trizec Canada in
accordance with section 33(c) of the Arrangement Agreement;
"Trizec Canada SVS" means the subordinate voting shares in the capital of
Trizec Canada;
"Trizec Properties" means Trizec Properties, Inc., a corporation governed
by the laws of the State of Delaware;
"Trizec Properties Common Stock" means the common stock of Trizec
Properties;
"Trizec Properties Elected Share" means a TrizecHahn SVS which the holder
has validly elected in the Share Election Form to exchange with Trizec
Subco for a share of Trizec Properties Common Stock;
"Trizec Properties Exchanged Share" means a TrizecHahn SVS or a Holdco
Share exchanged with Trizec Subco for a share of Trizec Properties Common
Stock pursuant to Section 2.2(a)(v), as determined in accordance with
Section 2.3;
"Trizec Properties Option" means an option to purchase Trizec Properties
Common Stock governed by the Trizec Properties SOP and issued in
replacement of a TrizecHahn Option pursuant to Section 2.2(b);
"Trizec Properties SOP" means the Trizec Properties, Inc. 2002 Stock Option
Plan adopted by Trizec Properties on February 8, 2002, to be effective as
of the Effective Date;
21
"Trizec Properties Warrant" means a warrant to purchase a share of Trizec
Properties Common Stock issued in replacement of, or in connection with the
replacement of, a TrizecHahn Option pursuant to Section 2.2(b);
"Trizec Subco" means 4007069 Canada Inc., a corporation existing under the
CBCA and a wholly-owned subsidiary of Trizec Canada;
"Trizec Subco Common Shares" means common shares in the capital of Trizec
Subco;
"Trizec Subco Elected Share" means a TrizecHahn SVS or a Holdco Share which
the holder has validly elected (or is deemed to have elected) in the Share
Election Form or Holdco Agreement, as applicable, to exchange with Trizec
Subco for a Trizec Canada SVS;
"Trizee Subco Exchanged Share" means a TrizecHahn SVS or a Holdco Share
exchanged with Trizec Subco for a Trizec Canada SVS pursuant to Section
2.2(a)(iii), as determined in accordance with Section 2.3;
"TrizecHahn" means Trizec Xxxx Corporation, a corporation governed by the
OBCA;
"TrizecHahn MVS" means the multiple voting shares in the capital of
TrizecHahn;
"TrizecHahn Option" means an option to purchase TrizecHahn SVS granted by
TrizecHahn pursuant to the 1987 SOP and outstanding immediately prior to
the Effective Time;
"TrizecHahn Shareholder" means a holder of TrizecHahn Shares;
"TrizecHahn Shares" means, collectively, the TrizecHahn SVS and TrizecHahn
MVS;
"TrizecHahn SVS" means the subordinate voting shares in the capital of
TrizecHahn; and
"TrizecHahn SVS Shareholder" means a holder of TrizecHahn SVS.
1.2 Construction
In this Plan of Arrangement, unless otherwise expressly stated or the
context otherwise requires:
(a) reference to "herein", "hereby", "hereunder", "hereof" and similar
expressions are references to this Plan of Arrangement and not to any
particular Article, Section or Appendix;
(b) references to an "Article", "Section" or "Appendix" are references to
an Article or Section of or Appendix to this Plan of Arrangement;
(c) words importing the singular shall include the plural and vice versa,
words importing gender shall include the masculine, feminine and
neuter genders, and references to a "person" or "persons" shall
include individuals, corporations, partnerships, associations, bodies
politic and other entities, all as may be applicable in the context;
(d) the use of headings is for convenience of reference only and shall not
affect the construction or interpretation hereof;
(e) the word "including", when following any general term or statement, is
not to be construed as limiting the general term or statement to the
specific items or matters set forth or to similar items or matters,
but as referring to all other items or matters that could reasonably
fall within the broadest possible scope of the general term or
statement; and
22
(f) a reference to a statute or code includes every regulation made
pursuant thereto, all amendments to the statute or code or to any such
regulation in force from time to time, and any statute, code or
regulation which supplements or supersedes such statute, code or any
such regulation.
1.3 Currency
All references to currency herein are to lawful money of the United States
unless otherwise specified.
ARTICLE 2
THE ARRANGEMENT
2.1 Arrangement
This Plan of Arrangement is made pursuant to, and constitutes an
arrangement as referred to in, Section 182 of the OBCA.
2.2 Arrangement Transactions
Commencing at the Effective Time the following shall occur and be deemed to
occur in the following order without any further act or formality, with the
transactions or events described in each paragraph being deemed to occur
immediately after the occurrence of the transactions or events in the
immediately preceding paragraph:
(a) Simultaneously:
(i) each holder of MVS Securities will transfer such MVS Securities
to Trizec Canada and Trizec Canada will issue one Trizec Canada
MVS to such holder in exchange for each such MVS Security
transferred to it by such holder pursuant to this Section
2.2(a)(i);
(ii) each holder of Trizec Canada Exchanged Shares will transfer such
shares to Trizec Canada and Trizec Canada will issue one Trizec
Canada SVS to such holder in exchange for each Trizec Canada
Exchanged Share transferred to Trizec Canada by such holder
pursuant to this Section 2.2(a)(ii);
(iii) each holder of Trizec Subco Exchanged Shares will transfer such
shares to Trizec Subco and Trizec Canada, on behalf of Trizec
Subco, will deliver one Trizec Canada SVS to such holder in
exchange for each Trizec Subco Exchanged Share transferred to it
by such holder pursuant to this Section 2.2(a)(iii);
(iv) in consideration for the issuance by Trizec Canada of that number
of Trizec Canada SVS as is equal to the number of Trizec Subco
Exchanged Shares, Trizec Subco will issue to Trizec Canada art
equal number of Trizec Subco Common Shares; and
(v) each holder of Trizec Properties Exchanged Shares will transfer
such shares to Trizec Subco and Trizec Subco will transfer one
share of Trizec Properties Common Stock to such holder in
exchange for each Trizec Properties Exchanged Share transferred
to it by such holder pursuant to this Section 2.2(a)(v); provided
that, if a holder of Trizec Properties Exchanged Shares is not a
Qualifying U.S. Person such person will acquire its shares of
Trizec Properties Common Stock subject to the terms of the
Exchange Certificate Agreement and, in furtherance thereof,
Trizec Subco will deliver the shares of Trizec Properties Common
Stock to which such holder is entitled pursuant to this Section
2.2(a)(v) to the Custodian and the Custodian will deliver that
number of` Exchange Certificates as is equal to the number of
shares of Trizec Properties Common Stock delivered to the
Custodian.
23
(b) Each TrizecHahn Option will be cancelled (each such TrizecHahn Option
referred to hereinafter as the "cancelled TrizecHahn Option") and
Trizec Canada, TrizecHahn or Trizec Properties, as applicable, will
issue or cause to be delivered, in replacement of each cancelled
TrizecHahn Option, one Trizec Canada Option, one Trizec Properties
Option or one Trizec Properties Warrant, as determined by the
compensation committee of the board of directors of TrizecHahn.
2.3 Pro ration
The number of Trizec Properties Exchanged Shares shall equal the Available
Number of Trizec Properties Shares. Accordingly, the number of Trizec Properties
Exchanged Shares, Trizec Subco Exchanged Shares and Trizec Canada Exchanged
Shares shall be determined as follows:
(a) If the Available Number of Trizec Properties Shares is equal to or
less than the aggregate number of Trizec Properties Elected Shares of
Qualifying U.S. Persons, then (i) the number of Trizec Properties
Exchanged Shares of each TrizecHahn Shareholder who is not a
Qualifying U.S. Person will be zero and each TrizecHahn SVS held by
such a TrizecHahn Shareholder (other than a Dissenting Shareholder)
shall be a Trizec Canada Exchanged Share where the holder has validly
made a Tax Deferral Election and a Trizec Subco Exchanged Share where
the holder has not done so, and (ii) the number of Trizec Properties
Exchanged Shares of each TrizecHahn Shareholder who is a Qualifying
U.S. Person shall be the number determined in accordance with the
following formula:
B
A x ---
C
Where:
A = the Available Number of Trizec Properties Shares;
B = the number of Trizec Properties Elected Shares of the
particular Qualifying U.S. Person; and
C = the aggregate number of Trizee Properties Elected Shares
of all Qualifying U.S. Persons,
and each other TrizecHahn Share held by such Qualifying U.S. Persons
shall be a Trizec Canada Exchanged Share where the holder has validly
made a Tax Deferral Election and a Trizec Subco Exchanged Share where
the holder has not done so.
(b) If the Available Number of Trizec Properties Shares exceeds the
aggregate number of Trizec Properties Elected Shares of Qualifying
U.S. Persons but is less than the aggregate number of Trizec
Properties Elected Shares of all TrizecHahn Shareholders, then (i)
each Qualifying U.S. Person's Trizec Properties Elected Shares shall
be Trizec Properties Exchanged Shares and (ii) subject to Section
2.3(d), the number of Trizec Properties Exchanged Shares of each
TrizecHahn Shareholder other than a Qualifying U.S. Person shall be
the number determined in accordance with the following formula:
C
(A-B) X ---
D
Where:
A = the Available Number of Trizec Properties Shares;
B = the aggregate number of Trizec Properties Elected Shares
held by Qualifying U.S. Persons;
24
C = the number of Trizec Properties Elected Shares of the
particular TrizecHahn Shareholder; and
D = the aggregate number of Trizec Properties Elected Shares
of all TrizecHahn Shareholders other than Qualifying U.S.
Persons,
and each other TrizecHahn Share held by such a TrizecHahn Shareholder
(other than a Dissenting Shareholder) shall be a Trizec Canada
Exchanged Share where the holder has validly made a Tax Deferral
Election and a Trizec Subco Exchanged Share where the holder has not
done so.
(c) If the Available Number of Trizec Properties Shares exceeds the number
of Trizec Properties Elected Shares, then, subject to Section 23(d),
(i) each Trizec Properties Elected Share shall be a Trizec Properties
Exchanged Share; (ii) the number of Trizec Canada Exchanged Shares of
each TrizecHahn Shareholder or Holdco Shareholder shall be the number
determined in accordance with the following formula:
B
A x ---
C
Where:
A = the Number of Trizec Canada SVS;
B = the number of Trizec Canada Elected Shares of the
particular TrizecHahn Shareholder or Holdco Shareholder; and
C = the aggregate number of Trizec Canada Elected Shares and
Trizec Subco Elected Shares of all TrizecHahn Shareholders
and Holdco Shareholders,
and (iii) the number of Trizec Subco Exchanged Shares of each
TrizecHahn Shareholder or Holdco Shareholder shall be the number
determined in accordance with the following formula:
B
A x ---
C
Where:
A = the Number of Trizec Canada SVS;
B = the number of Trizec Subco Elected Shares of the
particular TrizecHahn Shareholder or Holdco Shareholder; and
C = the aggregate number of Trizec Subco Elected Shares and
Trizec Canada Elected Shares of all TrizecHahn Shareholders
and Holdco Shareholders,
and each other TrizecHahn Share or Holdco Share held by a TrizecHahn
Shareholder or Holdco Shareholder (other than a Dissenting
Shareholder) shall be deemed to be a Trizee Properties Exchanged
Share.
(d) Where, but for this Section 2.3(d), following the application of
Section 2.3(b) or (c) the number of Trizec Canada Constrained Shares
that would be held by persons or partnerships other than Canadian
Residents (in this Section, the "Initial Non-Canadian Shares"), would
be more than the Maximum Aggregate Holdings and Canadian Residents
would, but for this Section 2.3(d), have
25
Trizec Properties Exchanged Shares in a number determined pursuant to
Section 2.3(b) or (c), then:
(i) the number of Trizec Properties Exchanged Shares of each Canadian
Resident (other than a Dissenting Shareholder) as determined
without regard to this Section 2.3(d) shall be reduced by the
number determined by the formula:
B
A x ---
C
Where:
A = the difference between (x) the number of Initial
Non-Canadian Shares and (y) the Maximum Aggregate Holdings
on the Effective Date;
B = the number of such Canadian Resident's Trizec Properties
Exchanged Shares, determined without reference to this
Section 2.3(d); and
C = the aggregate number of Trizec Properties Exchanged Shares
of all Canadian Residents, determined without reference to
this Section 2.3(d);
(ii) the number of each such Canadian Resident's Trizec Subco
Exchanged Shares, or, where such Canadian Resident has validly
made a Tax Deferral Election, Trizec Canada Exchanged Shares,
shall be the total of (x) the number of such shares as determined
without regard to this Section 2.3(d) and (y) the number by which
the number of such Canadian Resident's Trizec Properties
Exchanged Shares is reduced pursuant to Section 2.3(d)(i);
(iii) the number of Trizec Properties Exchanged Shares of each
TrizecHahn Shareholder (other than a Dissenting Shareholder) who
is not a Canadian Resident as determined without regard to this
Section 2.3(d) shall be increased by the number determined by the
formula:
B
A x ---
C
Where:
A = the difference between (x) the number of Initial
Non-Canadian Shares and (y) the Maximum Aggregate Holdings
on the Effective Date;
B = the number of such TrizecHahn Shareholder's Trizec Canada
Exchanged Shares or Trizec Subco Exchanged Shares,
determined without reference to this Section 2.3(d); and
C = the aggregate number of Trizec Canada Exchanged Shares and
Trizec Subco Exchanged Shares of all such TrizecHahn
Shareholders, determined without reference to this Section
2.3(d); and
26
(iv) the number of Trizec Subco Exchanged Shares of each TrizecHahn
Shareholder (other than a Dissenting Shareholder) who is not a
Canadian Resident, or Trizec Canada Exchanged Shares where such
person has validly made a Tax Deferral Election, shall be the
difference between (x) the number of such shares as determined
without regard to this Section 2.3(d) and (y) the number by which
the number of such TrizecHahn Shareholder's Trizec Properties
Exchanged Shares is increased pursuant to Section 2.3(d)(iii).
2.4 Holdco Election
(a) Persons resident in Canada for purposes of the Tax Act ("Holdco
Shareholders") who are taxable Canadian corporations as defined in the Tax Act
and who are shareholders of a corporation ("Holdco") which: (i) was incorporated
under the OBCA on or after April 1, 2002; (ii) has never had any assets other
than TrizecHahn Shares, (iii) has no liabilities whatsoever; and (iv) on the
Effective Date has, as its only issued and outstanding securities, a number of
common shares of Holdco equal to the number of TrizecHahn Shares which are owned
by such Holdco, may elect in respect of all the TrizecHahn Shares held by such
Holdco (the "Holdco Election"), prior to the Holdco Election Deadline, to have
all the issued and outstanding common shares of the Holdco treated as Trizec
Canada Elected Shares or Trizec Subco Elected Shares and transferred to Trizec
Canada or Trizec Subco in accordance herewith. For greater certainty, the
consideration received for such Holdco Shares shall be identical to the
consideration which such Holdco would have been entitled to receive if the
TrizecHahn Shares held by such Holdco were acquired directly by Trizec Canada or
Trizec Subco, as applicable, under the Plan of Arrangement.
(b) Each Holdco Shareholder that has made the Holdco Election will be
required to enter into a share purchase agreement (the "Holdco Agreement") with
Trizec Canada and Trizec Subco providing for the acquisition by Trizec Canada
and/or Trizec Subco of all the issued and outstanding Holdco Shares in
accordance with Section 2.2 and containing such representations and warranties,
terms and conditions and indemnities as Trizec Canada and Trizec Subco may
reasonably request in connection therewith, including, without limitation, the
representations and warranties, terms and conditions and indemnities set out in
Appendix 1, and containing the requirement for the Holdco Shareholders to
arrange for the provision of a legal opinion of such holders' legal counsel in a
form satisfactory to Trizec Canada and Trizec Subco, acting reasonably, in
connection with the purchase and sale of such Holdco Shares. Failure of any
holder of TrizecHahn Shares to properly make a Holdco Election on or prior to
the Holdco Election Deadline or failure of Holdco Shareholders to properly enter
into a Holdco Agreement will disentitle such shareholders to the Holdco
Election.
(c) Any election under this Section 2.4 in respect of TrizecHahn SVS Shares
shall be subject to pro ration as provided in Section 2.3.
2.5 Elections
Each person who, at or prior to the Election Deadline, is a holder of
record of TrizecHahn SVS will be entitled, with respect to all or a portion of
such shares, to elect, at or prior to the Election Deadline, to exchange such
shares for Trizec Properties Shares or Trizec Canada Shares, or a combination
thereof, on the basis set forth herein and in the Share Election Form; Holdco
Shareholders will be required in the Holdco Agreement to elect to exchange
Holdco Shares for Trizec Canada Shares. If a holder of record of TrizecHahn
Shares (other than a Dissenting Shareholder) fails to make a proper election in
the Share Election Form, such holder shall be deemed to have elected to exchange
their TrizecHahn Shares under the Arrangement with Trizec Subco in exchange for
Trizec Canada Shares and each TrizecHahn Share of such holder shall be deemed to
be a Trizec Subco Elected Share. An Eligible Shareholder may make a Tax Deferral
Election in which event it will elect to exchange its TrizecHahn Shares or
Holdco Shares with Trizec Canada. No TrizecHahn Shares or Holdco Shares of a
person who is not an Eligible Shareholder will be Trizec Canada Exchanged
Shares. Any election described in this Section 2.5 shall be subject to pro
ration as provided in Section 2.3.
2.6 Fractional TrizecHahn Shares
Each fraction of a TrizecHahn SVS that is equal to or greater than one half
of a TrizecHahn SVS shall participate in the Arrangement as if it were a whole
share and each fraction of a TrizecHahn SVS that is less than
27
one half of a TrizecHahn SVS shall not participate in the Arrangement and shall
be cancelled without payment of consideration in respect of such cancellation.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent
(a) TrizecHahn SVS Shareholders may exercise dissent rights pursuant to and
in the manner set forth in Section 185 of the OBCA, as amended by this Section
3.1, in connection with the Arrangement.
(b) A Dissenting Shareholder shall transfer its TrizecHahn SVS to Trizec
Subco simultaneously with the Arrangement steps described in Section 2.2(a) and,
as such, shall not be permitted to withdraw its notice of dissent after the
Effective Time and the only right of a Dissenting Shareholder, as such, after
the Effective Time shall be to be paid fair value for his TrizecHahn Shares. In
no case shall any person be required to recognize such holders as holders of
TrizecHahn Shares, Trizec Canada Shares or Trizec Properties Common Stock after
the Effective Time and the names of such holders shall be deleted from the
applicable register of TrizecHahn Shareholders at the Effective Time.
(c) References to "the corporation" in sections 185(15) through 185(30) of
the OBCA shall be construed as referring to Trizec Subco (with the exceptions
that, for the purposes of section 185(15) the day the corporation received the
notice referred to in subsection (10) shall be the day TrizecHahn received such
notice and for the purposes of section 185(15)(a) the determination of fair
value shall be made by the directors of Trizec Canada) and any TrizecHahn SVS
held by Dissenting Shareholders in respect of which the Dissenting Shareholders
dissent shall be acquired by, and shall be paid for by, Trizec Subco.
ARTICLE 4
CERTIFICATES
4.1 Issuance of Certificates
At or promptly after the Effective Time, Trizec Canada or Trizec Subco, as
applicable, shall deposit or cause to be deposited with the Depositary, for the
benefit of the holders of TrizecHahn SVS (other than Dissenting Shareholders),
certificates representing the Trizec Canada SVS, shares of Trizee Properties
Common Stock (other than shares of Trizec Properties Common Stock represented by
Exchange Certificates) and Exchange Certificates acquired by such holders
pursuant to Section 2.2(a). Upon surrender to the Depositary for cancellation of
a certificate that immediately prior to the Effective Time represented one or
more TrizecHahn SVS that were exchanged under the Arrangement, together with
such other documents and instruments as would have been required to effect the
transfer of the shares formerly represented by such certificate under the OBCA
and the by-laws of TrizecHahn and such additional documents and instruments as
the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefore, and the
Depositary shall deliver to such holder, as applicable, certificate(s)
representing that number of Trizec Canada SVS, shares of Trizec Properties
Common Stock and/or Exchange Certificates, and/or a combination thereof, that
such holder as the right to receive (together with any dividends or
distributions with respect thereto pursuant to Section 4.2), and the surrendered
certificate shall forthwith be cancelled. In the event of a transfer of
ownership of TrizecHahn SVS that is not registered in the transfer records of
TrizecHahn, certificate(s) representing the proper number of Trizec Canada,
shares of Trizec Properties Common Stock and/or Exchange Certificates, and/or a
combination thereof may be issued to the transferee if the certificate
representing such TrizecHahn SVS is presented to the Depositary, accompanied by
all documents required to evidence and effect such transfer. Until surrendered
as contemplated by this Section 4.1, each certificate which immediately prior to
the Effective Time represented TrizecHahn SVS (other than TrizecHahn SVS held by
Dissenting Shareholders) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender (i) the certificate(s)
representing Trizec Canada SVS, shares of Trizec Properties Common Stock and/or
Exchange Certificates as contemplated by this Section 4.1, and (ii) any
dividends or distributions with a record date after the Effective Time
theretofore paid or payable with respect to
28
Trizec Canada SVS or shares of Trizec Properties Common Stock (including shares
represented by Exchangeable Certificates) as contemplated by Section 4.2.
4.2 Distributions with Respect to Unsurrendered Certificates
No dividends or other distributions declared or made after the Effective
Time with respect to Trizec Canada SVS or shares of Trizec Properties Common
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered certificate that immediately prior to the Effective Time
represented outstanding TrizecHahn SVS that were acquired pursuant to Section
2.2(a) unless and until the holder of record of such certificate shall surrender
such certificate in accordance with Section 4.1. Subject to applicable law,
there shall be paid to the record holder of the certificates representing Trizec
Canada SVS or shares of Trizec Properties Common Stock (including shares
represented by Exchange Certificates), as the case may be, without interest, (i)
at the time of such surrender of any such certificate, the amount of dividends
or other distributions with a record date after the Effective Time theretofore
paid with respect to such Trizec Canada SVS or shares of Trizec Properties
Common Stock (including shares represented by Exchange Certificates), as the
case may be, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
surrender and with a payment date subsequent to surrender that is payable with
respect to such Trizec Canada SVS or shares of Trizec Properties Common Stock
(including shares represented by Exchange Certificates), as the case may be.
4.3 Lost Certificates
In the event any certificate which immediately prior to the Effective Time
represented one or more outstanding TrizecHahn SVS (other than TrizecHahn SVS
held by Dissenting Shareholders) shall have been lost, stolen or destroyed, the
Depositary will deliver in exchange for such lost, stolen or destroyed
certificate, one or more certificates representing one or more of Trizec Canada
SVS, shares of Trizec Properties Common Stock and/or Exchange Certificates (and
any dividends or distributions with respect thereto) deliverable in accordance
with such holder's Share Election Form and this Plan of Arrangement. When
authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the person to whom certificates representing Trizec Canada SVS,
shares of Trizec Properties Common Stock and/or Exchange Certificates are to be
issued shall, as a condition precedent to the issuance thereof, give a bond
satisfactory to Trizec Canada, Trizec Subco, and/or the transfer agent and
registrar, as the case may be, in such sum as Trizec Canada, Trizec Subco and/or
the transfer agent and registrar may, acting reasonably, direct or otherwise
indemnify Trizec Canada, Trizec Subco and/or the transfer agent and registrar,
acting reasonably, against any claim that may be made against Trizec Canada,
Trizec Subco and/or the transfer agent and registrar with respect to the
certificate alleged to have been lost, stolen or destroyed.
4.4 Fractional Shares
No certificates or scrip representing fractional Trizec Canada Shares,
fractional shares of Trizec Properties Common Stock or fractional Exchange
Certificates shall be issued upon the surrender for exchange of certificates
pursuant to Section 4.1 and no dividend, stock split or other change in the
capital structure of Trizec Canada or Trizec Properties shall relate to any such
fractional security and such fractional interests shall not entitle the owner
thereof to vote or to exercise any rights as a security holder of Trizec Canada
or Trizec Properties. In lieu of such fractional securities:
(a) each person otherwise entitled as a result of the Arrangement to a
fractional interest in a Trizec Canada Share, the fractional amount of
which is less than the fractional amount of a share of Trizec
Properties Common Stock to which such person is entitled as a result
of the Arrangement, shall receive, in respect of both such fractional
interests, one whole share of Trizec Properties Common Stock; and
(b) each person otherwise entitled as a result of the Arrangement to a
fractional interest in a Trizec Canada Share, the fractional amount of
which is at least equal to the fractional amount of a share of Trizec
Properties Common Stock to which such person is entitled as a result
of the Arrangement, shall receive, in respect of both such fractional
interests, one whole Trizec Canada Share;
29
subject to adjustment in the discretion of Trizec Subco so that the total number
of Trizec Properties Exchanged Shares equals the Available Number of Trizec
Properties Shares.
30
APPENDIX 1
PROVISIONS TO BE INCLUDED
IN HOLDCO AGREEMENT
Each Holdco Agreement shall include the following representations and
warranties, terms and conditions, and indemnities in favour of Trizec Canada and
Trizec Subco:
I. Representations and Warranties of the Holdco Shareholders
Each of the Holdco Shareholders hereby represents and warrants to Trizec
Canada and Trizec Subco as follows and hereby acknowledges and confirms that
Trizec Canada and Trizec Subco are relying on such representations and
warranties in connection with the purchase by Trizec Canada and/or Trizec Subco
of the Holdco Shares:
(a) the execution and delivery of this Holdco Agreement by the Holdco
Shareholders and Holdco and the completion by the Holdco Shareholders
and Holdco of the transactions contemplated hereby:
(i) will not conflict with, result in the breach of or constitute a
default under the articles, by-laws or resolutions of Holdco or
any agreement, indenture, contract, lease, deed of trust,
licence, option, instrument or other commitment, whether written
or oral (a "Contract") to which the Holdco Shareholders or Holdco
is a party; and
(ii) do not and will not violate any provision of law or
administrative regulation or any judicial or administrative
award, judgment or decree binding upon the Holdco Shareholders or
Holdco;
(b) the TrizecHahn Shares which are owned by Holdco on the Effective Date
have been held since April 1, 2002 by Holdco or by a Holdco
Shareholder;
(c) each of the Holdco Shareholders is a taxable Canadian corporation for
the purposes of the Tax Act;
(d) Holdco is a resident of Canada for the purposes of the Tax Act;
(e) this Holdco Agreement has been duly executed and delivered by each of
the Holdco Shareholders and Holdco and is a valid and binding
obligation of each of the Holdco Shareholders and Holdco enforceable
against each of the Holdco Shareholders and Holdco in accordance with
its terms, subject to applicable bankruptcy, insolvency and other laws
affecting the enforcement of creditors' rights generally and provided
that equitable remedies will only be awarded in the discretion of a
court of competent jurisdiction;
(f) all of the Holdco Shares are registered in the name of, and
beneficially owned by, not more than five Holdco Shareholders free and
clear of all liens, charges, encumbrances, claims and equities
(collectively, "Liens");
(g) no person has any Contract, warrant or option or any right capable of
becoming a Contract, warrant or option for the purchase from any of
the Holdco Shareholders of any of the Holdco Shares or from Holdco of
any shares or other securities of Holdco or of any of the [insert
number] TrizecHahn Shares held by Holdco (the "Subject Shares");
(h) the Holdco Shares are validly issued and outstanding as fully paid and
non-assessable shares in the capital of Holdco and are the only issued
and outstanding shares in the capital of Holdco and, as of the
Effective Date, the number of Holdco Shares outstanding is equal to
the number of Subject Shares;
31
(i) Holdco is a corporation duly incorporated under the OBCA on or after
April 1, 2002 and duly organized and validly existing under the laws
of the Province of Ontario;
(j) Holdco is the beneficial and registered holder of the Subject Shares
all of which are held by Holdco free and clear of all Liens;
(k) Holdco does not own or hold and has never owned or held property or
assets or any interests therein of any nature or kind whatsoever other
than the Subject Shares and Holdco does not carry on, and has never
carried on, an active business;
(l) Holdco has no obligations, liabilities (whether actual or contingent)
or indebtedness to any person, including without limitation any
liabilities in respect of federal or provincial income, corporate,
goods and services, capital, harmonized sales, sales, excise, employer
health, surtaxes, education, social services, social security,
employment insurance, health insurance, Canada, Quebec and other
governmental pension plan premiums or contributions, land transfer or
any other taxes, duties or imposts of any nature or kind whatsoever,
or in respect of any judgments, orders, fines, interest, penalties,
awards or decrees of any court, tribunal or governmental,
administrative or regulatory department, commission, board, bureau,
agency or instrumentality, domestic or foreign;
(m) Holdco has no subsidiaries and is not bound by any Contract to acquire
or lease in any manner any shares or assets of any nature or kind
whatsoever;
(n) Holdco does not have, and has never had, any employees and its
directors and officers receive no remuneration or compensation from
Holdco;
(o) Holdco is not a party to any Contract of any nature or kind whatsoever
except for the Contract with the Holdco Shareholder(s) pursuant to
which Holdco acquired the Subject Shares (a true and complete copy of
which has been provided to Trizec Canada and Trizec Subco);
(p) there are no claims, investigations, actions, suits or proceedings
pending or threatened against or affecting Holdco or the Holdco
Shareholders, whether at law or in equity or before or by any federal,
provincial, municipal or other governmental or administrative or
regulatory department, commission, board, tribunal, bureau, agency or
instrumentality, domestic or foreign, that would adversely affect in
any manner the ability of Holdco and the Holdco Shareholders to enter
into this Holdco Agreement and perform their obligations hereunder;
(q) there are no claims, investigations, actions, suits or proceedings
pending or threatened against or affecting Holdco, whether at law or
in equity or before or by any federal, provincial, municipal or other
governmental or administrative or regulatory department, commission,
board, tribunal, bureau, agency or instrumentality, domestic or
foreign;
(r) Holdco is in full compliance with all laws, rules or regulations to
which Holdco or the Subject Shares may be subject;
(s) the books and records of Holdco fairly and correctly set out and
disclose in all respects, in accordance with generally accepted
accounting principles in Canada consistently applied, the financial
position of Holdco as of the date hereof and all financial
transactions of Holdco have been accurately recorded in such books and
records; and
(t) the corporate records and minute books of Holdco contain complete and
accurate minutes of all meetings of the directors and shareholders of
Holdco held since its incorporation and all such meetings were duly
called and held and the share certificate books, register of
shareholders, register of transfers and register of directors and
officers of Holdco are complete and accurate.
32
II. Covenants
(a) Holdco Documents. The Holdco Shareholders and Holdco shall forthwith
make available to Trizec Canada and Trizec Subco and their authorized
representatives all minute books, share certificate books, share
registers, books of account, accounting records, corporate documents
and all other books or records, documents, information or data
relating to Holdco (collectively the "Holdco Documents"). At the time
of closing, all of the Holdco Documents shall be delivered to Trizec
Canada and Trizec Subco by the Holdco Shareholders and Holdco.
(b) No Share Issuances or Distributions. No Holdco Shareholder that is a
corporation shall (i) issue any shares from and after the date hereof
to and including the Effective Date in connection with any direct or
indirect transfer of TrizecHahn Shares or (ii) declare or pay any
dividends (other than stock dividends) or effect other redemptions or
distributions at any time prior to the Effective Date.
(c) Opinion. The Holdco Shareholders shall deliver to Trizec Canada and
Trizec Subco a written legal opinion satisfactory to Trizec Canada and
Trizec Subco in connection with the purchase and sale of the Holdco
Shares.
III. Indemnification
(a) Obligations to Indemnify. Each of the Holdco Shareholders agrees to
indemnify and save harmless Trizec Canada and Trizec Subco from all
claims, demands, proceedings, losses, damages, liabilities,
deficiencies, costs and expenses (including, without limitation,
reasonable legal and other professional fees and disbursements,
interest, penalties and amounts paid in settlement) (singly a "Loss"
and collectively "Losses") suffered or incurred by Trizec Canada or
Trizec Subco as a result of or arising directly or indirectly out of
or in connection with any breach by the Holdco Shareholders or Holdco
of any representation, warranty, obligation or covenant of the Holdco
Shareholders or Holdco contained in this Holdco Agreement. Trizec
Canada and Trizec Subco agree to indemnify and save harmless the
Holdco Shareholders from all Losses suffered or incurred by them as a
result of or arising directly or indirectly out of or in connection
with any breach by Trizec Canada or Trizec Subco of any
representation, warranty, obligation or covenant of Trizec Canada or
Trizec Subco contained in this Holdco Agreement.
(b) Notice of Claim. In the event that a party (the "Indemnified Party")
shall become aware of any claim, proceeding or other matter (a
"Claim") in respect of which another party (the "Indemnifying Party")
agreed to indemnify the Indemnified Party pursuant to this Holdco
Agreement, the Indemnified Party shall promptly give written notice
thereof to the Indemnifying Party. Such notice shall specify whether
the Claim arises as a result of a claim by a person against the
Indemnified Party (a "Third Party Claim") or whether the Claim does
not so arise (a "Direct Claim"), and shall also specify with
reasonable particularity (to the extent that the information is
available) the factual basis for the Claim and the amount of the
Claim, if known. If, through the fault of the Indemnified Party, the
Indemnifying Party does not receive notice of any Claim in time to
contest effectively the determination of any liability susceptible of
being contested, the Indemnifying Party shall be entitled to set off
against the amount claimed by the Indemnified Party the amount of any
Losses incurred by the Indemnifying Party resulting directly from the
Indemnified Party's failure to give such notice on a timely basis.
(c) Direct Claims. With respect to any Direct Claim, following receipt of
notice from the Indemnified Party of the Claim, the Indemnifying Party
shall have 60 days to make such investigation of the Claim as is
considered necessary or desirable. For the purpose of such
investigation, the Indemnified Party shall make available to the
Indemnifying Party the information relied upon by the Indemnified
Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both
parties agree at or prior to the expiration of such 60-day period (or
any mutually agreed upon extension thereof) to the validity and amount
of
33
such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the Claim.
(d) Third Party Claims. With respect to any Third Party Claim, the
Indemnified Party shall have the exclusive right, at the expense of
the Indemnifying Party, to contest, settle or pay the amount claimed
and to retain counsel and other experts or advisers selected by the
Indemnified Party in its sole discretion in connection therewith;
provided, however, that the Indemnified Party shall not settle any
Third Party Claim without the written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed. If
the Indemnified Party elects to assume such control, the Indemnifying
Party shall have the right, at its sole expense, to participate in the
negotiation, settlement or defence of such Third Party Claim. If any
Third Party Claim is of a nature such that the Indemnified Party is
required by applicable law to make a payment to any person (a "Third
Party") with respect to the Third Party Claim before the completion of
settlement negotiations or related legal proceedings, the Indemnified
Party may make such payment and the Indemnifying Party shall,
forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for such payment. If the amount of any liability of
the Indemnified Party under the Third Party Claim in respect of which
such payment was made, as finally determined, is less than the amount
that was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, forthwith after receipt of the difference
from the Third Party, pay the amount of such difference to the
Indemnifying Party.
(e) Payment and Cooperation. The Indemnifying Party shall pay to the
Indemnified Party all amounts for which the Indemnifying Party is
liable pursuant to this Section promptly after the Indemnified Party
incurs the Loss in respect of which such liability arises. The
Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep
each other fully advised with respect thereto (including supplying
copies of all relevant documentation promptly as it becomes
available).
(f) Tax Effect. If any payment received by an Indemnified Party hereunder
(an "Indemnity Payment") would constitute income for tax purposes to
such Indemnified Party, the Indemnifying Party shall pay a Tax Gross
Up to the Indemnified Party at the same time and on the same terms, as
to interest and otherwise, as the Indemnity Payment. The amount of any
Loss for which indemnification is provided shall be adjusted to take
into account any tax benefit realized by the Indemnified Party or any
of its affiliates by reason of the Loss for which indemnification is
so provided or the circumstances giving rise to such Loss. For
purposes of this paragraph (f), any tax benefit shall be taken into
account at such time as it is received by the Indemnified Party or its
affiliate. For purposes of this paragraph (f), "Tax Gross Up" shall
mean, with respect to any Indemnity Payment, such additional amount
(calculated in accordance with the Calculation Method) as is necessary
to place the Indemnified Party in the same after tax position as it
would have been in had such Indemnity Payment been received tax free;
and "Calculation Method" with respect to the calculation of any Tax
Gross Up on any Indemnity Payments shall mean that such Tax Gross Up
shall be calculated by using the combined Canadian federal and
Canadian provincial income tax rate applicable to the Indemnified
Party and, except as provided in this paragraph (f), without regard to
any losses, credits, refunds or deductions that the Indemnified Party
may have which could affect the amount of tax payable on any such
Indemnity Payment.
34
