Exhibit 10.1

August 14, 2002

Mr. Timothy H. Callahan

 

Dear Tim:

            It has been a pleasure becoming acquainted with you, and I am very
happy to offer you the position of President and Chief Executive Officer of
Trizec Properties, Inc. (the "Company"), subject to the terms described below,
and effective as of the approval of this letter agreement (this "Agreement") by
the board of directors of the Company (the "Board"). 

            Term.  The term of your employment will commence on August 14, 2002
(the "Effective Date") (although you will not become President and Chief
Executive Officer until 12:01 AM on August 15, 2002) and will terminate on the
third anniversary of the Effective Date.  The initial three-year term, however,
shall be extended automatically without further action by the Company or you for
additional one year periods, unless written notification of non-renewal is given
by either party to the other by the second anniversary of the Effective Date, or
each successive anniversary of the Effective Date, as the case may be.  As used
herein, the "Term" means the original three-year term and any extension in
effect pursuant to the immediately preceding sentence.

            Board of Directors.  On the Effective Date you shall be appointed as
a member of the Board.

            Compensation and Benefits.  During the Term you shall receive an
annual base salary of no less than$850,000 and a discretionary bonus as
determined by the Board from time to time.  All amounts shall be payable in
accordance with the Company's regular payroll practices for its senior
executives as in effect from time to time and shall be subject to all
applicable, federal, state and local withholding taxes.  You shall also be
eligible to participate in all incentive, retirement, welfare and other benefit
plans, programs and arrangements generally available to other senior executive
officers of the Company from time to time. 

            Stock Options.  Effective as of the Effective Date, you will be
awarded options to purchase one million shares of the Company's common stock
pursuant to the Company's 2002 Stock Option Plan.  Your stock options will be
fully vested and exercisable on the Effective Date and will have an exercise
price equal to the fair market value of a share of the common stock on the
Effective Date, as determined in accordance with such plan.  The remaining terms
applicable to your stock options will be as set forth in your stock option
agreement and the 2002 Stock Option Plan. 

            Vacation.  During the Term you shall be entitled to six weeks
vacation, subject to appropriate scheduling thereof in accordance with the
Company's policy as in effect from time to time.

            Termination.  The Company may terminate your employment at any time
with or without Cause (as defined below).  If your employment is terminated
during the Term without Cause you shall be entitled to receive (a) any earned
but unpaid bonus for a previously completed fiscal year of the Company, (b) a
pro rata bonus for the year of termination, determined using the Reference Bonus
(as hereinafter defined) and (c) continuation of your Total Compensation (as
hereinafter defined) for a period equal to the lesser of (i) the remainder of
the Term and (ii) two years following the date of termination (the "Severance
Period").  As used herein:  (a) "Reference Bonus" means, as of your date of
termination (i) the average of your two then most recently paid annual bonuses
from the Company, or (ii) if only one annual bonus has then been paid to you,
such annual bonus, or (iii) if no annual bonus has then been paid to you, the
target bonus established by the Board for the year of termination; and (b)
"Total Compensation" means an annual rate of compensation equal to the sum of
your base salary and Reference Bonus as in effect on your date of termination. 
In addition, during the Severance Period you shall continue to participate, on
the same terms and conditions that would have applied had your remained employed
by the Company, in all health, medical, dental and other welfare plans generally
made available to senior executives of the Company; provided, however, that your
benefits continuation shall cease on the date that you become eligible to
participate in the welfare programs of a subsequent employer.  Payment of the
salary and benefits continuation is contingent upon your executing a waiver and
release of all claims in favor of the Company and its subsidiaries and its
affiliates.

            In the event your employment is terminated for any reason by you or
the Company within one year following a Change of Control (as hereinafter
defined), you will be deemed to have been terminated by the Company without
Cause and will receive the payments and benefits described in the immediately
preceding paragraph.  For this purpose, "Change of Control" means a "change in
ownership or effective control" of the Company within the meaning of Section
280G of the Internal Revenue Code, provided that no Change of Control shall be
deemed to have occurred if Peter Munk has or shares effective control over the
Company.

            Except as set forth in this Agreement, you shall not be entitled to
any other payments or benefits upon a termination of your employment for any
reason, including, without limitation, pursuant to any other plan, program,
policy or arrangement maintained by the Company.  In addition, if at any time
you breach of any of the provisions of this Agreement, you shall not be entitled
to continuation of your salary and welfare benefits. 

            For purposes of this Agreement, "Cause" shall be determined by the
Board in its sole discretion and shall based upon its good faith determination
that your conduct or circumstances of employment provide the Company with cause
for your termination.  You will be provided notice in writing outlining in
reasonable detail the conduct or circumstances the Board believes provides it
with cause for your termination.  You will be provided with an opportunity to
meet with the Board or a Committee thereof not more than ten days after the date
of notice.  Your employment will not be terminated until you have had an
opportunity to be heard by the Board or a Committee thereof.

            Confidentiality.  You recognize that in connection with your
employment, you will acquire secret and confidential information concerning the
operations of the Company and its subsidiaries and affiliates, the use or
disclosure of which could cause the Company substantial loss and damages which
could not be readily calculated, and for which no remedy at law would be
adequate.  Accordingly, you agree with the Company that you will not, at any
time, directly or indirectly, reveal to any person or entity any of the trade
secrets or proprietary or confidential information that you learned by reason of
your association with the Company; provided, however, that this restriction
shall not apply to any information that is in the public domain through no fault
by you, that is disclosed in connection with the performance of your obligations
pursuant to this Agreement or that is approved for release by written
authorization of the Board. 

            Nonsolicitaton.  For so long as you are employed by the Company and
for a period ending on the later of (i) the last date of the Severance Period
and (ii) one year following your termination of employment for any reason, you
shall not directly or indirectly solicit business from, entice away from or
otherwise interfere with the relationship of the Company and its subsidiaries
and affiliates with their respective employees, clients and providers of
material services and products.  You also agree that you will not encourage any
other person in carrying out any such prohibited activity.

            This agreement shall be governed by the laws of the State of New
York.  You expressly agree that if any term or provision of this agreement is
determined to be invalid or unenforceable in a final court or arbitration
proceeding, (i) the remaining terms and provisions shall be unimpaired and (ii)
the invalid or unenforceable term or provision shall be deemed replaced by a
term or provisions that is valid and enforceable to maximum extent permitted by
law. 

            You may not assign any rights or benefits pursuant to this
Agreement.  This Agreement may only be amended by written consent of you and the
Company.

            The effectiveness of this Agreement is contingent upon its approval
by the Board.  If you agree with the terms set forth in this Agreement, kindly
sign where indicated below and return the letter to me.  If you have any further
questions regarding the foregoing, please do not hesitate to contact me.   

            We are very excited to have you on our team.

 

 

Sincerely,

/s/ Peter Munk        
Peter Munk
Chairman

 

 

Acknowledgement

            I agree and accept the terms and conditions of this Agreement and I
declare that all career and employment information provided by me to the Company
is true, accurate and complete.  By signing this Agreement, I hereby acknowledge
that I am not subject to any restrictive covenants or other agreement, which
would interfere with or preclude my acceptance of this Agreement or my ability
to perform my duties to the Company. 

/s/ Timothy H. Callahan              
Timothy H. Callahan

 

Date:  August 14, 2002

 

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