Trizec Hahn Corporation et al. - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - relief from prospectus and registrationrequirements in respect of trades made pursuant to a statutoryarrangement; relief from strict application of resale provisionsrequiring twelve month reporting issuer history - reportingissuer history of predecessor issuer considered in grantingrelief following plan of arrangement; relief granted to "successorissuer" as defined in the rule regarding the Prompt OfferingQualification System, from requirement to file an annual informationform promptly after a reorganization; issuer granted relieffrom form and legislative requirements to allow issuer's shortform prospectus and 2002 and 2003 financial statements to beprepared on the basis of combined results of the issuer andthe predecessor issuer; Subsection 59(1) of Schedule 1 - issuersgranted exemption from the payment of fees in respect of certaintrades in securities pursuant to a statutory arrangement, wherethe issuers will not acquire new or additional capital fromthe public as a result of such trades, or where such tradeswould merely reorganize interests represented by currently outstandingsecurities; relief from mutual fund requirements in legislation;two issuers in the arrangement be deemed reporting issuers inQuebec for 12 months before effective date of arrangement.

Applicable Ontario Statutory Provisions

Statute Cited

Securities Act, R.S.O. 1990, c.S.5, as am. ss.25, 53,74(1), 80(b).

Regulation Cited

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am., ss. 23(3)(b), 59(1) of Schedule 1.

Rules Cited

Rule 45-501 Exempt Distributions, s. 2.8.

National and Multilateral Instruments Cited

National Instrument 44-101 Short Form ProspectusDistributions, ss. 2.1, 3.2.
Multilateral Instrument 45-102 Resale of Securities, s. 2.6.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA,
SASKATCHEWAN, MANITOBA, ONTARIO,
QUÉBEC, NEW BRUNSWICK, NOVA SCOTIA, NEWFOUNDLAND ANDLABRADOR,
PRINCE EDWARD ISLAND,
THE NORTHWEST TERRITORIES,
THE YUKON TERRITORY AND
THE TERRITORY OF NUNAVUT

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
TRIZEC HAHN CORPORATION,
TRIZEC CANADA INC.,
4007069 CANADA INC. AND
TRIZEC PROPERTIES, INC.

MRRS DECISION DOCUMENT

WHEREAS the local securities authorityor regulator (the "Decision Maker") in each of theProvinces of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Québec, New Brunswick, Nova Scotia, Newfoundlandand Labrador, Prince Edward Island, the Northwest Territories,the Yukon Territory and the Territory of Nunavut (collectively,the "Jurisdictions") has received an application (the"Application") from Trizec Hahn Corporation ("TrizecHahn"),on its own behalf and on behalf of Trizec Properties, Inc. ("TrizecProperties"), and from Trizec Canada Inc. ("TrizecCanada") on its own behalf and on behalf of 4007069 CanadaInc. ("Trizec Subco"), for a decision under the securitieslegislation of the Jurisdictions (the "Legislation")that:

1. except in British Columbia, the provisionsrelating to mutual funds in the Legislation shall not applyto Trizec Canada;

2. the requirements contained in the Legislationto be registered to trade in a security and to file a preliminaryprospectus and a prospectus and receive receipts therefor (the"Registration and Prospectus Requirements") shallnot apply to certain intended trades in connection with an arrangementinvolving TrizecHahn, Trizec Canada, Trizec Subco and TrizecProperties (the "Arrangement") which are not otherwiseexempt from such requirements;

3. certain requirements contained in the Legislationrelating to the first trades of securities shall not apply tofirst trades in Trizec Canada Shares, shares of Trizec PropertiesCommon Stock, Trizec Properties Warrants and Exchange Certificates(all as defined below) acquired pursuant to the Arrangementand the exercise of certain securities;

4. Trizec Canada and Trizec Properties be deemedto have been reporting issuers in Québec for a twelve-monthperiod preceding the effective date of the Arrangement (the"Effective Date);

5. Trizec Canada be granted a waiver from theprovisions of section 2.1 of National Instrument 44-101 ("NI44-101") so as to permit Trizec Canada to make distributionsof securities using a short form prospectus pursuant to NI 44-101without having to file an initial AIF (as defined in NI 44-101);

6. Trizec Canada be permitted to modify certainform requirements applicable to short form prospectuses as setout in NI 44-101 on the basis described under "Short FormProspectus" below;

7. Trizec Canada be permitted to file with theDecision Makers and deliver to its shareholders its interimand annual financial statements for 2002 and 2003 on the basisdescribed below under "2002 Financial Statements"and "2003 Financial Statements"; and

8. TrizecHahn, Trizec Canada, Trizec Subco andTrizec Properties be exempt from the requirements containedin the Legislation to pay fees in Ontario associated with theArrangement;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS TrizecHahn and Trizec Canadahave represented to the Decision Makers that:

Trizec Hahn Corporation

1. TrizecHahn is a corporation incorporatedunder the Business Corporations Act (Ontario) is a reportingissuer (and has been for a period of at least twelve months)in each of the Jurisdictions in which such concept exists and,to the best of its knowledge, is not in default of any of therequirements of the Legislation. TrizecHahn is one of the largestpublic real estate companies in North America.

2. The authorized share capital of TrizecHahnconsists of an unlimited number of preferred shares, issuablein one or more series, an unlimited number of subordinate votingshares ("TrizecHahn Subordinate Voting Shares"), withoutpar value, carrying one vote per share, and 7,522,283 multiplevoting shares ("TrizecHahn Multiple Voting Shares"),carrying 50 votes per share. As at February 28, 2002, no preferredshares, 142,061,665 TrizecHahn Subordinate Voting Shares and7,522,283 TrizecHahn Multiple Voting Shares were issued andoutstanding. The TrizecHahn Multiple Voting Shares and TrizecHahnSubordinate Voting Shares are hereinafter collectively referredto as the "TrizecHahn Shares".

3. Options ("TrizecHahn Stock Options")have been granted under the amended and restated 1987 stockoption plan of TrizecHahn. As at February 28, 2002, optionsto acquire 17,322,350 TrizecHahn Subordinate Voting Shares wereoutstanding.

4. TrizecHahn is currently eligible to makedistributions under a preliminary short form prospectus andshort form prospectus (collectively, a "Short Form Prospectus")pursuant to NI 44-101 and the eligibility criteria set forththerein which permit issuers which meet specified market capitalizationthresholds and certain other criteria to utilize NI 44-101.

5. The TrizecHahn Subordinate Voting Sharesare listed and posted for trading on the Toronto Stock Exchange(the "TSE") and the New York Stock Exchange (the "NYSE").

Trizec Canada Inc.

6. Trizec Canada is a corporation incorporatedunder the Canada Business Corporations Act ("CBCA")on January 29, 2002.

7. The authorized share capital of Trizec Canadaconsists of an unlimited number of subordinate voting shares("Trizec Canada Subordinate Voting Shares"), of whichno shares will be outstanding prior to the Arrangement and anestimated 52,295,296 shares are expected to be outstanding aftergiving effect to the Arrangement; and 7,522,283 multiple votingshares ("Trizec Canada Multiple Voting Shares"), ofwhich no shares will be outstanding prior to the Arrangementand all of which are expected to be outstanding after givingeffect to the Arrangement. The Trizec Canada Subordinate VotingShares and Trizec Canada Multiple Voting Shares are hereinaftercollectively referred to as "Trizec Canada Shares".

8. Conditional listing approval has been grantedby the TSE to have the Trizec Canada Subordinate Voting Shareslisted and posted for trading on the TSE.

9. It is intended that Trizec Canada will bea "mutual fund corporation" under the Income Tax Act(Canada) upon completion of the Arrangement. Trizec Canada'sarticles will include restrictions on ownership that are intendedto prevent it from becoming majority foreign-owned.

4007069 Canada Inc.

10. Trizec Subco is a corporation incorporatedunder the CBCA on January 29, 2002 and is a wholly-owned subsidiaryof Trizec Canada.

Trizec Properties, Inc.

11. Trizec Properties, an indirect subsidiaryof TrizecHahn, was incorporated under the laws of the Stateof Delaware as Trizec (USA) Holdings, Inc. on October 25, 1989and changed its name to TrizecHahn (USA) Corporation in 1996and to Trizec Properties, Inc. in February 2002.

12. The outstanding share capital of TrizecProperties as at February 25, 2002 consisted of 38,220,000 sharesof common stock ("Trizec Properties Common Stock"),100 shares of special voting stock ("Trizec PropertiesSpecial Stock"), 1,100,000 shares of series B convertiblepreferred stock ("Trizec Properties Series B ConvertiblePreferred Stock"), 376,504 shares of class C convertiblepreferred stock ("Trizec Properties Class C ConvertiblePreferred Stock") and 100,000 shares of class F convertiblestock ("Trizec Properties Convertible Stock").

13. The authorized share capital of Trizec Propertiesas of the Effective Date is expected to consist of 300 millionshares of Trizec Properties Common Stock, of which approximately150 million shares will be outstanding, 100 shares of TrizecProperties Special Stock, all of which are expected to be outstanding,and 100,000 shares of Trizec Properties Convertible Stock, allof which are expected to be outstanding. There will be no sharesof the Series B Convertible Preferred Stock, and it is expectedthat there will be no shares of Class C Convertible PreferredStock, outstanding as of the Effective Date.

14. The NYSE has approved the listing of theTrizec Properties Common Stock and Exchange Certificates (ashereinafter defined). The TSE has conditionally approved thelisting of the Exchange Certificates.

Summary of and Effects of the Arrangement

15. Under the Arrangement, Trizec Canada andits wholly-owned subsidiary, Trizec Subco, will acquire allof the TrizecHahn Shares from their holders in exchange forTrizec Canada Shares, shares of Trizec Properties Common Stock(some of which may be represented by Exchange Certificates)or a combination thereof. All holders of TrizecHahn SubordinateVoting Shares may elect in the letter of transmittal and shareelection form that accompanied the Circular (the "ShareElection Form") to exchange their TrizecHahn Shares (i)with Trizec Subco for shares of Trizec Properties Common Stock,(ii) with Trizec Subco for Trizec Canada Subordinate VotingShares or (iii) in certain cases, with Trizec Canada for TrizecCanada Subordinate Voting Shares, in each case to the extentthey are available and subject to pro-ration. Holders of TrizecHahnSubordinate Voting Shares who do not elect a particular exchangein the Share Election Form will be deemed to have elected toexchange such shares for Trizec Canada Subordinate Voting Shares.Any holder of TrizecHahn Subordinate Voting Shares who is a"Qualifying U.S. Person" and who validly completesthe required information in the Share Election Form will havefirst priority to exchange TrizecHahn Shares for shares of TrizecProperties Common Stock. A "Qualifying U.S. Person"is a U.S. person who falls within certain categories of eligibilityfor the purposes of the U.S. Internal Revenue Code of 1986,as amended. Subject to this priority and ensuring that the allocationof Trizec Canada Shares results in at least 55% of the TrizecCanada Shares being owned by Canadian Residents, over-electionsfor either shares of Trizec Properties Common Stock or TrizecCanada Subordinate Voting Shares will be satisfied on a prorata basis. Any TrizecHahn Shareholder who exchanges its TrizecHahnShares with Trizec Subco for shares of Trizec Properties CommonStock and who has not delivered the Share Election Form dulycompleted and validly certifying that the shareholder is a QualifyingU.S. Person will receive exchange certificates ("ExchangeCertificates") representing any shares of Trizec PropertiesCommon Stock it acquires. Additionally, if there is an over-electionfor Trizec Canada Subordinate Voting Shares, then, as a resultof pro ration, TrizecHahn Shareholders electing to exchangeTrizecHahn Subordinate Voting Shares for Trizec Canada SubordinateVoting Shares may receive Exchange Certificates representingtheir pro rata number of shares of Trizec Properties CommonStock.

16. The plan of arrangement relating to theArrangement (the "Plan of Arrangement") also providesthat TrizecHahn Shareholders who hold TrizecHahn Shares indirectlythrough a holding company (a "Holding Company") meetingcertain requirements (including that the number of outstandingshares of such Holding Company is equal to the number of TrizecHahnShares owned by such Holding Company) and who are electing toexchange their shares for Trizec Canada Subordinate Voting Shareshave the option of participating in the Arrangement by exchangingtheir common shares in the capital of the Holding Company (the"Holding Company Shares") for Trizec Canada SubordinateVoting Shares. Pursuant to the terms of the Plan of Arrangement,all Holding Company Shares held by the TrizecHahn Shareholderwill be exchanged in the Arrangement such that the TrizecHahnShareholder will receive the identical consideration that wouldhave been received by the Holding Company in the Arrangementif the TrizecHahn Shares held by such Holding Company were acquireddirectly by Trizec Canada or Trizec Subco, as applicable, underthe Arrangement.

17. Pursuant to the Arrangement, the TrizecHahnStock Options will be cancelled and the holders thereof willbe issued, in consideration for each cancelled TrizecHahn StockOption, one of: (i) an option (a "Trizec Canada Stock Option")exercisable to acquire one Trizec Canada Subordinate VotingShare; (ii) an option (a "Trizec Properties Stock Option")exercisable to acquire one share of Trizec Properties CommonStock; or (iii) a warrant (a "Trizec Properties Warrant")exercisable to acquire one share of Trizec Properties CommonStock. Whether a holder of a TrizecHahn Stock Option will receivea Trizec Canada Stock Option, Trizec Properties Stock Optionor a Trizec Properties Warrant has been determined by the compensationcommittee of the TrizecHahn Board.

18. On and after the Effective Date, the followingtrades involving the issuance of underlying securities uponthe exercise of exchangeable securities issued under the Arrangementmay occur: (i) the issuance of Trizec Canada Subordinate VotingShares pursuant to the exercise of Trizec Canada Stock Options;(ii) the issuance of shares of Trizec Properties Common Stockpursuant to the exercise of Trizec Properties Stock Options;(iii) the issuance of shares of Trizec Properties Common Stockpursuant to the exercise of Trizec Properties Warrants; and(iv) the delivery of shares of Trizec Properties Common Stockpursuant to the exercise of Exchange Certificates.

19. The following definitions are used hereinin respect of all trades made in connection with or subsequentto the Arrangement (collectively, the "Trades"):

(a) all trades in securities made in connectionwith the Arrangement are referred to herein as "Type 1Trades";

(b) all trades involving the issuance of underlyingsecurities upon the exercise of exchangeable securities issuedunder the Arrangement are referred to herein as "Type 2Trades";

(c) the delivery of shares of Trizec PropertiesCommon Stock upon a redemption of Trizec Canada Shares is referredto herein as a "Type 3 Trade";

(d) first trades in securities issued underthe Arrangement are referred to herein as "Type 4 Trades";
(e) first trades of underlying securities issued upon the exerciseof exchangeable securities issued under the Arrangement arereferred to herein as "Type 5 Trades"; and

(f) first trades in shares of Trizec PropertiesCommon Stock delivered upon a redemption of Trizec Canada Sharesare referred to herein as "Type 6 Trades".

Miscellaneous

20. The Arrangement is subject to shareholderapproval at the meeting on April 23, 2002 with respect to theArrangement and requires the final approval of the SuperiorCourt of Justice of Ontario.

21. In connection with the shareholder meetingto approve the Arrangement, the Circular was prepared in conformitywith the provisions of the Legislation and the OBCA, containedprospectus level disclosure regarding the particulars of theArrangement and was mailed to TrizecHahn shareholders.

22. TrizecHahn shareholders who do not votein favour of the Arrangement will be entitled to exercise theirright to dissent and seek to be paid the fair value of theirshares in accordance with section 185 of the OBCA as modifiedby the Plan of Arrangement.

AND WHEREAS under the System this MRRSDecision Document evidences the decision of the Decision Makers(the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makersunder the Legislation is that the Registration and ProspectusRequirements shall not apply to the Type 4 Trades, Type 5 Tradesand Type 6 Trades provided that:

(a) except in Québec, the conditionsin subsection (4) of section 2.6 of Multilateral Instrument45?102 are satisfied; and

(b) in Québec:

(i) the issuer or one of the parties to theArrangement is a reporting issuer and has complied with theapplicable requirements for 12 months immediately precedingthe trade;

(ii) no unusual effort is made to prepare themarket or to create a demand for the securities that are thesubject of the trade;

(iii) no extraordinary commission or considerationis paid to a person or company in respect of the trade; and

(iv) if the seller of the securities is aninsider or officer of the issuer the selling shareholder hasno reasonable grounds to believe that the issuer is in defaultof any requirement of securities legislation;

THE DECISION of the Decision Makersunder NI 44-101 and the Legislation is that Trizec Canada begranted a waiver from the provisions of section 2.1 of NI 44-101so as to permit Trizec Canada, until the earlier of May 20,2003 and the date that Trizec Canada files an AIF in respectof its 2002 financial year, to make distributions of securitiesusing a Short Form Prospectus pursuant to NI 44-101 withouthaving to file an initial AIF (as defined in NI 44-101), inreliance upon the renewal AIF of TrizecHahn expected to be filedno later than May 20, 2002 under section 3.2 of NI 44-101; and

THE DECISION of the Decision Makersunder NI 44-101 and the Legislation is that Trizec Canada bepermitted to:

Short Form Prospectus

1. incorporate by reference in any Short FormProspectus filed by Trizec Canada prior to the approval by thedirectors of Trizec Canada of its financial statements for theyear ended December 31, 2002:

(a) the audited financial statements relatingto TrizecHahn for the year ended December 31, 2001, giving effectto reclassifications, if any, to make such financial statementsconsistent with the presentation of Trizec Canada's financialstatements, together with the report of the auditor thereon;

(b) the interim financial statements of TrizecHahnfor the three?month periods ended March 31, 2002 and March 31,2001, and, if applicable, the interim financial statements ofTrizecHahn for the six-month period ended June 30, 2001 andthe interim financial statements of TrizecHahn for the nine-monthperiod ended September 30, 2001, giving effect to reclassifications,if any, to make such financial statements consistent with thepresentation of Trizec Canada's financial statements; and

(c) any material change reports and annualfilings filed by TrizecHahn from January 1, 2002 to April 30,2002, including the Circular;

2. calculate the coverage ratios required bythe form of Short Form Prospectus specified in NI 44-101 (the"Prospectus Form"), to the extent that the calculationwould include information from the period pre-dating the EffectiveDate, on the basis of the combined results of the operationsof TrizecHahn during such periods; and

3. include in any Short Form Prospectus of TrizecCanada, in lieu of information in respect of Trizec Canada,the description of the business, financial information and management'sdiscussion and analysis of financial condition and results ofoperation in respect of TrizecHahn for periods pre?dating theEffective Date to the extent that such information would otherwisebe required by the Prospectus Form in respect of Trizec Canada.

May 3, 2002.

"Iva Vranic"

THE DECISION of the Decision Makersunder the Legislation is that, except in British Columbia, theprovisions in the Legislation applicable to mutual funds shallnot apply to Trizec Canada;

THE DECISION of the Decision Makersunder the Legislation is that the Registration and ProspectusRequirements contained in the Legislation shall not apply toType 1 Trades, Type 2 Trades or Type 3 Trades to the extentthat there are no Registration and Prospectus Requirement exemptionsavailable in the Legislation for such trades and any notificationrequired by the Legislation in respect of the Type 3 Tradesmay be satisfied by one notification filed by Trizec Canadaupon the Arrangement becoming effective;

THE DECISION of the Decision Maker inQuébec under the Québec Legislation is that TrizecCanada and Trizec Properties shall be deemed to have been reportingissuers in Québec for a twelve-month period precedingthe Effective Date;

THE DECISION of the Decision Makersunder the Legislation is that Trizec Canada be permitted to:

2002 Financial Statements

(a) provided that the Effective Date is priorto June 30, 2002, prepare interim financial statements for thesix-month period ended June 30, 2002 based on TrizecHahn's resultsfrom January 1 to the Effective Date and Trizec Canada's resultsfrom the Effective Date to June 30 which will be compared toTrizecHahn's results for the comparable period in 2001, givingeffect to reclassifications, if any, to make such results consistentwith the presentation of Trizec Canada's results;

(b) provided that the Effective Date is priorto September 30, 2002, prepare interim financial statementsfor the nine-month period ended September 30, 2002 based onTrizecHahn's results from January 1 to the Effective Date andTrizec Canada's results from the Effective Date to September30 which will be compared to TrizecHahn's results for the comparableperiod in 2001, giving effect to reclassifications, if any,to make such results consistent with the presentation of TrizecCanada's results; and

(c) provided that the Effective Date is priorto December 31, 2002, prepare audited financial statements forthe year ended December 31, 2002 based on TrizecHahn's resultsfrom January 1 to the Effective Date and Trizec Canada's resultsfrom the Effective Date to December 31 which will be comparedto TrizecHahn's results for the year ended 2001, giving effectto reclassifications, if any, to make such results consistentwith the presentation of Trizec Canada's results;

2003 Financial Statements

(d) prepare interim financial statements forthe three-month period ended March 31, 2003 based on a comparisonof Trizec Canada's actual results to TrizecHahn's results forthe comparable period in 2002, giving effect to reclassifications,if any, to make such results consistent with the presentationof Trizec Canada's results;

(e) prepare interim financial statements forthe six-month period ended June 30, 2003 based on a comparisonof Trizec Canada's actual results to the combined financialstatements for the six-month period ended June 30, 2002, asdescribed above under "2002 Financial Statements";

(f) prepare interim financial statements forthe nine-month period ended September 30, 2003 based on a comparisonof Trizec Canada's actual results to the combined financialstatements for the nine-month period ended September 30, 2002,as described above under "2002 Financial Statements";and

(g) prepare audited 2003 year-end financialstatements based on a comparison of Trizec Canada's actual resultsto the combined annual financial statements for the year endedDecember 31, 2002 as described above under "2002 FinancialStatements";

provided that the basis of presentation noteto the financial statements includes an explanation in the caseswhere the financial statements of TrizecHahn and Trizec Canadaare combined; and

THE DECISION of the Decision Maker inOntario is that TrizecHahn, Trizec Canada, Trizec Subco andTrizec Properties are exempt from the requirements containedin the Legislation to pay the fees payable in Ontario in respectof the trades made in securities in connection with the Arrangement.

May 3, 2002.

"Howard I. Wetston"      "H. Lorne Morphy"