Document:

exv10w1

 

Exhibit 10.1

DEUTSCHE BANK TRUST COMPANY AMERICAS

60 Wall Street

New York, New York 10005

DEUTSCHE BANK SECURITIES INC.

60 Wall Street

New York, New York 10005

December 21, 2005

Trizec Properties, Inc.

10 S. Riverside Plaza, Suite 1100

Chicago, IL 60606

	 	 	 
	Attention:

	 	Mr. Michael Colleran
	 

	 	Mr. Patrick Aldrich

Senior Secured Interim Term Loan Facility

And

Senior Unsecured Revolving Credit Facility

COMMITMENT LETTER

Ladies and Gentlemen:

Trizec Properties, Inc. (“Trizec”) has advised Deutsche Bank Trust Company Americas (“DBTCA”) and
Deutsche Bank Securities, Inc. (“DBSI” and together with DBTCA, “DB”) (A) that it desires to
acquire, through a newly-formed, wholly-owned subsidiary of Trizec (the “Borrower”), for a total
consideration of approximately $1.626 billion, a portfolio of thirteen (13) office properties and
four (4) entitled sites totaling 7.8 acres of land, all located in southern California (the
“Portfolio Acquisition”), from Arden Realty Limited Partnership (“Arden OP”) (in conjunction with
the acquisition of Arden Realty Inc. (“Arden”) by General Electric Capital Corporation (“GECC”))
pursuant to (i) a purchase and sale agreement dated as of December 19, 2005 (the “Acquisition
Agreement”) between Trizec Holding Operating LLC, a subsidiary of Trizec (“THO”), and GECC, and
(ii) a merger agreement (the “Merger Agreement”) among Arden, Arden OP, GECC and certain of its
subsidiaries and Trizec and THO, (B) that such Portfolio Acquisition will be accomplished (as
contemplated in the Acquisition Agreement and the Merger Agreement) through a qualified
intermediary arrangement to facilitate a series of 1031 Exchanges that are contemplated to effect
planned asset dispositions subsequent to closing (collectively, the “Transactions”), and (C) that,
in connection with the above, Trizec desires to establish a senior secured interim term loan
facility of up to $1.475 billion for the Borrower (the “Interim Facility”). The proceeds of the
Interim Facility, together with the Equity Investment (as defined below), will be used by the
Borrower (i) to finance the Portfolio Acquisition and (ii) to pay closing costs in connection

 

 

therewith. You have asked for a financing commitment for the entire amount of the Interim Facility
as provided herein. Capitalized terms used in this letter agreement but not defined herein shall
have the meanings given them in the summary of terms and conditions of the Interim Facility which
is attached as Exhibit A hereto.

Promptly following the public announcement of the Portfolio Acquisition and the Merger Transaction
(as defined below), you have requested that DB request the lenders (the “Existing Revolving
Facility Lenders”) under Trizec’s existing $750 million revolving credit facility (the “Existing
Revolving Facility”) to approve an amendment to the Existing Revolving Facility (the “Existing
Revolving Facility Amendment”) which reflects the changes blacklined in the summary of terms and
conditions of the Existing Revolving Facility which is attached as Exhibit B hereto. If
the Existing Revolving Facility Amendment is approved by the affirmative vote of the Required
Lenders (as defined in the Existing Revolving Facility Loan documents), the effectiveness of such
amendment will be conditioned upon consummation of the Portfolio Acquisition and the closing of the
Interim Facility in accordance with the terms of this Commitment Letter and the Fee Letter. If the
Existing Revolving Facility Amendment is not so approved, Trizec desires to establish a replacement
$750 million revolving credit facility (the “Replacement Revolving Facility”) on substantially the
same terms as those in the Existing Revolving Facility, as amended to reflect the changes shown in
Exhibit B hereto. The effectiveness of the Replacement Revolving Facility will be
conditioned upon consummation of the Portfolio Acquisition and the closing of the Interim Facility
in accordance with the terms of this Commitment Letter and the Fee Letter.

Subject to the terms and conditions described in this Commitment Letter and the summaries of terms
and conditions set forth in Exhibits A and B hereto (collectively, together with
the Fee Letter referred to below, this “Commitment Letter”), DBTCA is pleased to inform you of its
commitment to provide the entire amount of the Interim Facility and the Replacement Revolving
Facility (each a “Facility” and together, the “Facilities”).

For purposes of this Commitment Letter, “DB” shall mean DBTCA, DBSI and/or any affiliate thereof as
they shall determine to be appropriate to provide the services contemplated herein. Each of DBTCA
and DBSI may, in performance of its services under this Commitment Letter, delegate such of its
functions as it may select to and/or employ the services of any of its affiliates; provided,
however, that no such delegation shall affect the terms hereof. Each of DBTCA and DBSI may
allocate, in whole or in part, to such affiliates any fees payable to it in such manner as it may
in its sole discretion see fit.

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Section 1. Conditions Precedent.

The commitment and all other obligations of DB hereunder with respect to the Facilities are subject
to the satisfaction of the following conditions precedent, all as determined by DBTCA:

     (a) the delivery to DBTCA of the final executed Merger Agreement and confirmation by
DBTCA that there have been no changes or modifications reflected in the final executed
Merger Agreement from the draft thereof attached as Exhibit K to the final executed
Acquisition Agreement delivered to DBTCA on December 19, 2005 by Trizec as part of its
proposal for the Transactions, that are adverse to the interests of the lenders in any
material respect (all references in this Commitment Letter to the Acquisition Agreement or
the Merger Agreement are references to the final executed version thereof delivered to and
confirmed to be acceptable by DBTCA as provided in this clause (a) and clause (b) below);

     (b) confirmation by DBTCA that there have been no changes or modifications to the
final executed Acquisition Agreement delivered to it by Trizec on December 19, 2005 other
than any changes or modifications that (i) are required due to changes or modifications to
the final executed Merger Agreement that are confirmed to be acceptable by DBTCA as
provided in clause (a) above and (ii) are not adverse to the interests of the lenders in
any material respect;

     (c) the satisfaction of all conditions precedent to the closing of the Portfolio
Acquisition contemplated under the Acquisition Agreement and the concurrent closing of the
Portfolio Acquisition and the transactions contemplated by the Merger Transaction;

     (d) the preparation, execution, delivery and effectiveness of loan documentation with
respect to the Interim Facility, including, without limitation, a credit agreement,
security agreements, guaranties, and other agreements incorporating and substantially
consistent with the terms and conditions outlined in this Commitment Letter with respect to
the Interim Facility, and with such other terms as may be reasonably satisfactory to DB and
its counsel and Trizec and its counsel (the “Interim Facility Operative Documents”);

     (e) the preparation, execution, delivery and effectiveness of loan documentation with
respect to the Existing Revolving Facility Amendment or the Replacement Revolving Facility,
as applicable, including, without limitation, a credit agreement or credit agreement
amendment, guaranties, and other agreements incorporating and substantially consistent with
the terms and conditions outlined in this Commitment Letter with respect to the Existing
Revolving Facility Amendment or the Replacement Revolving Facility, as applicable, and with
such other terms as may be reasonably satisfactory to DB and its counsel and Trizec and its
counsel (the “Revolving Facility Operative

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Documents” and together with the Interim Facility Operative Documents, the “Facility
Operative Documents”);

     (f) Trizec shall make an equity investment in the Borrower of approximately $167
million in order to fund the balance of the purchase price for the Portfolio Acquisition
and closing costs in connection therewith;

     (g) since September 30, 2005, after giving effect to the pro-forma condition of Trizec
and its affiliates described in the projections delivered to DB on December 20, 2005, there
has not been any change, event, condition, development or occurrence that could, in the
opinion of DB, have, individually or in the aggregate, a material adverse effect on the
business, condition (financial or otherwise), operation or performance of Trizec and its
affiliates taken as a whole;

     (h) since the date of the Merger Agreement, there has been no “Material Adverse
Effect” (as defined in the Merger Agreement) such that the condition set forth in Section
9.02(e) of the Merger Agreement is not satisfied; and

     (i) the satisfaction of the other conditions precedent to (x) the funding of the
Interim Facility contained in Exhibit A hereto and (y) the effectiveness of the
Existing Revolving Facility Amendment or the funding of the Replacement Revolving Facility,
as applicable, contained in Exhibit B hereto.

Section 2. Commitment Termination.

DB’s commitment hereunder will terminate on the earliest of (a) the date the Facility Operative
Documents become effective in accordance with their respective terms and the Transactions have been
consummated, (b) the date of the termination of the Acquisition Agreement and the Merger Agreement,
(c) June 30, 2006, and (d) December 22, 2005 in the event that Trizec fails on or before 5:00 p.m.
(New York City time) on such date (i) to accept the provisions hereof by signing the enclosed copy
of this Commitment Letter (including the Fee Letter) and returning them to DB, (ii) to make the
initial payment to DB required pursuant to the Fee Letter, (iii) to deliver the final executed
Merger Agreement in the form required pursuant to clause (a) of Section 1 hereof and (iv) to
deliver the final executed Acquisition Agreement in the form required pursuant to clause (b) of
Section 1 hereof. In addition, DB’s commitment hereunder with respect to the Replacement Revolving
Facility shall in any event terminate on the effective date of the Existing Revolving Facility
Amendment. Each of the parties acknowledges and agrees that the commitment letters dated December
19, 2005 and December 20, 2005 among DB and Trizec are of no further force or effect and are
superceded and replaced by this Commitment Letter in all respects.

Section 3. Syndication.

DB reserves the right, prior to or after the execution of the Facility Operative Documents, to
syndicate all or a portion of its commitment under each of the Interim Facility and the Replacement
Revolving Facility (if applicable) to one or more other financial institutions,

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trusts, funds or other entities in consultation with Trizec, that will become parties to the
relevant Facility Operative Documents pursuant to a syndication to be managed by DB (the financial
institutions, trusts, funds and other entities becoming parties to the Facility Operative Documents
with respect to either of the Facilities being collectively referred to herein as the “Lenders”).
DB will manage all aspects of the syndication of each of the Facilities in consultation with
Trizec, including, without limitation, the timing of all offers to potential Lenders, the
determination of the amounts offered to, and selection of, potential Lenders, the acceptance and
allocations of commitments of the Lenders and the titles and compensation to be provided to the
Lenders under each of the Facilities. The commitment of DBTCA hereunder is not subject to the
successful completion of any such syndication.

Trizec agrees to cooperate with DB to assist DB in syndicating the Facilities by (i) making senior
management, representatives and advisors of Trizec available to participate in information meetings
with potential Lenders under the Facilities at such times and places as mutually agreed; (ii) using
its commercially reasonable efforts to ensure that DB’s syndication efforts benefit from Trizec’s
lending relationships; (iii) assisting in the preparation of a customary confidential information
memorandum for each of the Facilities and other customary marketing and rating agency materials to
be used in connection with the syndication of each of the Facilities; (iv) providing DB with all
projections, including updated projections, from time to time requested by DB from the date of this
Commitment Letter through the successful completion of the syndication of each of the Facilities;
and (v) promptly providing DB with all other information reasonably deemed necessary by DB to
successfully complete the syndication of each of the Facilities so long as disclosure of such
information could not result, in the opinion of Trizec’s counsel, in a violation of, or expose
Trizec, Borrower, any guarantor of either of the Facilities or their respective subsidiaries to any
material liability under: (x) any applicable law, ordinance or regulation or (y) any agreement with
any unaffiliated third party which is binding on Trizec, Borrower, any such guarantor or any of
their respective subsidiaries or on any property of any of them. Trizec agrees to use commercially
reasonable efforts to obtain the consent to the disclosure of such information from any
counterparty to any agreement referred to in subclause (v) of the immediately preceding sentence.

To ensure an orderly and effective syndication of each of the Facilities, Trizec agrees that until
the earlier of (i) the completion of the syndication of each Facility (as determined by DB) and
(ii) 120 days following the Closing Date, it will not, and it will not permit any of its
subsidiaries to, syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions concerning the syndication
or issuance of, any debt facility or debt security or convertible financing (whether by way of a
loan, note, bond or otherwise) (other than (x) the Facilities and (y) ordinary course non-recourse
mortgage financing, provided that guaranties of customary non-recourse carveouts and environmental
indemnities shall not, by themselves, cause such mortgage financing to be characterized as recourse
mortgage financing), including, without limitation, the renewal of any thereof that would have an
adverse effect on the syndication of either Facility (as reasonably determined by DB), without the
prior written consent of DB.

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DBTCA will act as sole administrative agent for each Facility and DBSI will act as sole lead
arranger or manager and bookrunner for each Facility. No other person or entity shall be appointed
as agent, co-agent, arranger or bookrunner and no other titles conferred, without the consent of
DB. Trizec agrees that no Lender or other person or entity will receive any compensation of any
kind for its participation in either Facility, except as expressly provided for herein, in the Fee
Letter or in Exhibits A and B hereto unless DB shall so agree.

Section 4. Fees.

Trizec shall pay the fees set forth in the separate letter agreement relating to the Facilities
dated the date hereof (the “Fee Letter”) between Trizec and DB. The terms of the Fee Letter are an
integral part of DB’s commitment hereunder and constitute part of this Commitment Letter for all
purposes hereof. Each of the fees described in the Fee Letter shall be non-refundable when paid.

Section 5. Indemnification.

Trizec shall indemnify and hold harmless DB, each Lender and each of their respective affiliates
and each of their respective officers, directors, employees, agents, advisors, attorneys and
representatives (each, an “Indemnified Party”) from and against any and all actions, suits,
proceedings, claims, damages, losses, liabilities and expenses (including, without limitation,
reasonable fees and disbursements of counsel), joint or several and of any kind or nature, that may
be incurred by or asserted or awarded against any Indemnified Party (including, without limitation,
in connection with or relating to any investigation, litigation or proceeding or the preparation of
a defense in connection therewith), in each case arising out of or in connection with or by reason
of this Commitment Letter or the Facility Operative Documents, the Transactions, the transactions
contemplated hereby or thereby, or any actual or proposed use of the proceeds of the Facilities,
except to the extent such claim, damage, loss, liability or expense is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnified Party or any of its affiliates. In the case
of an investigation, litigation or other proceeding to which the indemnity in this paragraph
applies, such indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by Trizec or any of its affiliates or any of their respective directors (or
the equivalent thereof), security holders or creditors, an Indemnified Party or any other person or
entity, or an Indemnified Party is otherwise a party thereto and whether or not any of the
Transactions are consummated.

No Indemnified Party shall have any liability (whether in contract, tort or otherwise) to Trizec,
its subsidiaries and affiliates or any of their respective directors (or the equivalent thereof),
security holders or creditors for or in connection with this Commitment Letter or the Facility
Operative Documents, the Transactions or any of the transactions contemplated hereby or thereby,
except to the extent such liability is determined in a final non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful misconduct of such
Indemnified Party or any of its affiliates.

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In no event, however, shall any Indemnified Party be liable on any theory of liability for any
special, indirect, consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings).

Section 6. Costs and Expenses.

Except as provided below in this Section 6, on the closing date of the Facilities (the “Closing
Date”) or such earlier date as provided in the Fee Letter if the Closing Date does not occur,
Trizec shall pay or reimburse DB on demand for all reasonable costs and expenses incurred by DB
(whether incurred before or after the date hereof) in connection with the Transactions and the
Facilities and the syndication of the Facilities and the preparation, negotiation, execution and
delivery of this Commitment Letter, the Facility Operative Documents and any security arrangements
in connection therewith, including, without limitation, the reasonable fees and disbursements of
counsel of DB identified in Exhibits A and B (and of local and/or special counsel
to DB) and other consultants engaged by DB (or by you at DB’s request). Trizec further agrees to
pay all costs and expenses of DB (including, without limitation, reasonable fees and disbursements
of counsel and consultants) incurred in connection with the enforcement of any of its rights and
remedies hereunder.

Section 7. Confidentiality.

By accepting delivery of this Commitment Letter, Trizec agrees that this Commitment Letter is for
its confidential use only and that neither its existence nor the terms hereof will be disclosed to
any person or other entity other than (i) Trizec’s officers, directors, employees, accountants,
attorneys and other advisors, and then only on a confidential and “need to know” basis in
connection with the Transactions and (ii) as required by law or compulsory legal process; provided,
however, that Trizec may disclose the existence and contents of this Commitment Letter (including
the Exhibits attached hereto but not the Fee Letter) to Arden and GECC and any of their respective
officers, directors, employees, accountants, attorneys and other advisors, and then only on a
confidential and “need to know” basis in connection with the Transactions; and provided further,
that following Trizec’s acceptance of the provisions hereto as provided below and its return of an
executed counterpart of this Commitment Letter and the Fee Letter to DB, (i) Trizec may file a copy
of this Commitment Letter (other than the Fee Letter) in any public record in which it is required
by law to be filed, (ii) Trizec may make such other public disclosures of the terms and conditions
hereof as Trizec is required by law, or compulsory legal process, to make, (iii) Trizec may
disclose the existence and contents of this Commitment Letter (including the Exhibits attached
hereto but not the Fee Letter) to any rating agency in connection with the Transactions, (iv)
Trizec may disclose the existence and contents of this Commitment Letter (including the Exhibits
attached hereto but not the Fee Letter) in any public filing, prospectus or offering memorandum
made by it in connection with the Acquisition or the financing thereof, (v) Trizec may disclose the
existence and contents of this Commitment Letter (including the Exhibits attached hereto but not
the Fee Letter) (and, with DB’s prior approval, certain other matters related to the Commitment
Letter (including the Exhibits attached hereto but not the Fee Letter)) in the Acquisition
Agreement and Merger Agreement, and (vi) Trizec may disclose the

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existence and contents of this Commitment Letter (including the Exhibits attached hereto but not
the Fee Letter) to Arden and GECC and any of their respective officers, directors, employees,
accountants, attorneys and other advisors, and then only on a confidential and “need to know” basis
in connection with the Transactions, and Arden or GECC or any of their respective affiliates may
file a copy of this Commitment Letter (including the Exhibits attached hereto but not the Fee
Letter) in any public record in which it is required by law to be filed, may make such other public
disclosures of the terms and conditions hereof as Arden, GECC or any such affiliate is required by
law, or compulsory legal process, to make, and may disclose the existence and contents of this
Commitment Letter (including the Exhibits attached hereto but not the Fee Letter) to any rating
agency in connection with the Transactions or in any public filing, prospectus or offering
memorandum made by Arden, GECC or any such affiliate in connection with the Transactions.
Notwithstanding any other provision in this Commitment Letter, DB hereby confirms that Trizec shall
not be limited from disclosing the U.S. tax treatment or U.S. tax structure of the Facilities and
the other Transactions.

Section 8. Representations and Warranties.

Trizec represents and warrants that to the best of its knowledge, (i) all written information other
than financial projections) that has been or will hereafter be made available to DB, any Lender or
any potential Lender by or on behalf of Trizec, the Borrower and of their respective affiliates or
any of their respective representatives in connection with the transactions contemplated hereby
(the “Information”), taken as a whole, does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statements were or are made
and (ii) all financial projections, if any, that have been or will be prepared by or on behalf of
Trizec, the Borrower, any of their respective affiliates or any of their respective representatives
and made available to DB, any Lender or any potential Lender (the “Projections”) have been or will
be prepared in good faith based upon assumptions that were believed by the preparer to be
reasonable as of the date of the preparation of such Projections. If, at any time from the date
hereof until the execution, delivery and effectiveness of the Facility Operative Documents, any of
the representations and warranties in the preceding sentence would be incorrect in any material
respect if the Information or Projections were being furnished, and such representations and
warranties were being made, at such time, then Trizec agrees to supplement the Information and
Projections from time to time (including, without limitation, promptly following the reasonable
request of DB) so that the representations and warranties contained in this paragraph remain
correct in all material respects under those circumstances.

In providing this Commitment Letter (which includes its agreement to request the Existing Revolving
Facility Amendment) and underwriting the Facilities including the syndication of the Facilities, DB
is relying on the accuracy of the Information furnished to it by or on behalf of Trizec, the
Borrower, and their respective affiliates and representatives without independent verification
thereof.

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Section 9. No Third Party Reliance, Etc.

The agreements of DB hereunder and in the Fee Letter and of any Lender that issues a commitment to
provide financing under either of the Facilities are made solely for the benefit of Trizec and the
Borrower and may not be relied upon or enforced by any other person or entity. Please note that
those matters that are not covered or made clear in this Commitment Letter or in the Fee Letter are
subject to mutual agreement of the parties hereto. Neither Trizec nor the Borrower may assign or
delegate any of its rights or obligations hereunder without DB’s prior written consent. This
Commitment Letter may not be amended or modified, or any provisions hereof waived, except by a
written agreement signed by all parties hereto. Neither this Commitment Letter nor the Fee Letter
is intended to create a fiduciary relationship among the parties hereto.

Trizec acknowledges that DB and/or one or more of its affiliates may be providing financing, equity
capital, financial advisory and/or other services to parties whose interests may conflict with
Trizec’s interests, including, for the avoidance of doubt, financing of alternative bids for the
Portfolio Acquisition and/or the Merger Transaction. Consistent with DB’s policy to hold in
confidence the affairs of its customers, neither DB nor any of its affiliates will furnish
confidential information obtained by or on behalf of Trizec, the Borrower, or any of their
respective affiliates or representatives in connection with the transactions contemplated hereby to
any of DB’s other customers. Furthermore, neither DB nor any of its affiliates will make available
to Trizec or the Borrower confidential information that DB obtained or may obtain from any other
person.

Section 10. Governing Law, Jurisdiction, Etc.

This Commitment Letter and the Fee Letter shall be governed by, and construed in accordance with,
the law of the State of New York. This Commitment Letter and the Fee Letter sets forth the entire
agreement among the parties with respect to the matters addressed herein and supersede all prior
communications, written or oral, with respect hereto. This Commitment Letter and the Fee Letter
may be executed in any number of counterparts, each of which, when so executed, shall be deemed to
be an original and all of which, taken together, shall constitute one and the same Commitment
Letter or Fee Letter, as applicable. Delivery of an executed counterpart of a signature page to
this Commitment Letter or the Fee Letter by fax shall be as effective as delivery of an original,
executed counterpart of this Commitment Letter or Fee Letter, as applicable. Sections 3, 5, 6, 7,
9, 10, 11 and 12 hereof shall survive the termination of this Commitment Letter. Trizec
acknowledges that information and documents relating to the Existing Revolving Facility Amendment
and the Facilities may be transmitted through IntralinksTM, the internet or similar electronic
transmission systems.

With respect to all matters relating to this Commitment Letter and the transactions contemplated
hereby, each of the parties hereto irrevocably (i) submits to the non-exclusive jurisdiction of any
New York State or Federal court sitting in the State of New York, County of New York, and any
appellate court from any thereof, (ii) agrees that all claims related hereto may be heard and
determined in such courts, (iii) waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum, (iv) agrees

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that a final judgment of such courts shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law, and (v) waives any immunity
(sovereign or otherwise) from jurisdiction of any court or from any legal process.

Section 11. Waiver of Jury Trial.

Each party hereto irrevocably waives all right to trial by jury in any claim, action, suit,
proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Commitment Letter, the Fee Letter or the Transactions or the actions of the
parties hereto or any of their affiliates in the negotiation, performance or enforcement of this
Commitment Letter or the Fee Letter.

Section 12. Payments.

All payments under this Commitment Letter (including under the Fee Letter) shall be made without
any set-off or counter-claim and free and clear of any withholding or deduction (whether on account
of tax or otherwise) except as may be required by law. If Trizec or any of its affiliates is
required by law to make any deduction or withholding from any sum payable under this Commitment
Letter (including under the Fee Letter), the sum in respect of which the deduction or withholding
is required to be made shall be increased to the extent necessary to ensure that DB (or as the case
may be, the relevant Indemnified Party) receives a net sum equal to that which it would have
received had no such deduction or withholding been required to be made. All payments to be made
under this Commitment Letter (including under the Fee Letter) shall be made in immediately
available freely transferable funds to such account with such bank as DB shall notify.

Section 13. Patriot Act Notification.

DB hereby notifies you that pursuant to the requirements of the USA Patriot Act, Title III of Pub.
L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”), DB and each Lender is required to
obtain, verify and record information that identifies any borrower, which information includes the
name, address, tax identification number and other information regarding any such borrower that
will allow DB and such Lender to identify such borrower in accordance with the Patriot Act. This
notice is given in accordance with the requirements of the Patriot Act and is effective as to each
Lender.

[Remainder of page intentionally left blank]

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Please indicate Trizec’s acceptance of the provisions hereof by signing the enclosed copy of this
Commitment Letter (including the Fee Letter) and returning them to DB at or before 5:00 p.m. (New
York City time) on December 22, 2005, the time at which the commitment of DB set forth above (if
not so accepted prior thereto) will terminate. If Trizec elects to deliver this Commitment Letter
by fax, please arrange for the executed original to follow by next-day courier.

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	 	Very truly yours,

 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS

 	 
	 	By:  	     /s/ Alexander B.V. Johnson
 	 
	 	 	Name:  	Alexander B.V. Johnson 	 
	 	 	Title:  	Managing Director 	 

	 	 	 	 	 
	 	By:  	                                                       /s/ James Rolison
 	 
	 	 	Name:  	James Rolison 	 
	 	 	Title:  	Director 	 

	 	 	 	 	 
	 	DEUTSCHE BANK SECURITIES INC.

 	 
	 	By:  	     /s/ James Rolison
 	 
	 	 	Name:  	James Rolison 	 
	 	 	Title:  	Director 	 

	 	 	 	 	 
	 	By:  	                                                       /s/ George R. Reynolds
 	 
	 	 	Name:  	George R. Reynolds 	 
	 	 	Title:  	Vice President 	 

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ACCEPTED this 21st day

of December, 2005

TRIZEC PROPERTIES, INC.

	 	 	 	 	 	 	 
	By:	 	/s/ Michael C. Colleran	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Michael C. Colleran	 	 
	 

	 	Title:
	 	Executive Vice President and	 	 
	 

	 	 	 	Chief Financial Officer	 	 

13<PAGE>

                                                                    Exhibit 10.1

                         EXPENSE AND INDEMNITY AGREEMENT

            This Expense and Indemnity Agreement (this "Agreement") is entered
into as of [ o ], by and between Principal Life Insurance Company, an Iowa life
insurance company ("Principal Life"), and U.S. Bank Trust National Association,
as trustee (the "Trustee"), on behalf of itself and on behalf of each Trust
organized in connection with the Program.

            WHEREAS, in consideration of the Trustee providing services to each
Trust created in connection with the Program and pursuant to the Program
Documents under which the Trustee will have certain duties and obligations,
Principal Life hereby agrees to the following compensation arrangements and
terms of indemnity with the Trustee and reimbursement arrangements and terms of
indemnity with each Trust organized in connection with the Program; and

            WHEREAS, the Trustee is entering into this Agreement on behalf of
itself and on behalf of each Trust to be organized in connection with the
Program and, therefore, this Agreement shall inure to the benefit of and be
binding upon each such Trust.

            NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, each party hereby agrees as follows:

                                    ARTICLE I
                                   DEFINITIONS

            Section 1.01 Definitions. All capitalized terms not otherwise
defined herein will have the meanings set forth in the Standard Indenture Terms
attached as Exhibit 4.1 to Registration Statement on Form S-3 (File Nos.
333-129763 and 333-129763-01) filed with the Securities and Exchange Commission
by Principal Life and Principal Financial Group, Inc. on November 17, 2005, as
may be amended. The following terms, as used herein, have the following
meanings:

            "Excluded Amounts" means (i) any obligation of any Trust to make any
payment to any Holder in accordance with the terms of the applicable Indenture
or such Trust's Notes, (ii) any obligation or expense of any Trust to the extent
that such obligation or expense has actually been paid utilizing funds available
to such Trust from payments under the applicable Funding Agreement or the
Guarantee, (iii) any cost, loss, damage, claim, action, suit, expense,
disbursement, tax, penalty or liability of any kind or nature whatsoever
resulting from or relating to any insurance regulatory or other governmental
authority asserting that: (a) any Trust's Notes are, or are deemed to be, (1)
participations in the applicable Funding Agreement or (2) contracts of
insurance, or (b) the offer, purchase, sale and/or transfer of any Trust's Notes
and/or the pledge and collateral assignment of the applicable Funding Agreement
by any Trust to the Indenture Trustee on behalf of the Holders of such Trust's
Notes (1) constitutes the conduct of the business of insurance or reinsurance in
any jurisdiction or (2) requires such Trust or any Holder of such Trust's Notes
to be licensed as an insurer, insurance agent or broker in any jurisdiction,
(iv) any cost, loss, damage, claim, action, suit, expense, disbursement, tax,
penalty or liability of any kind or nature whatsoever imposed on the Trustee
that results from the bad faith, misconduct or negligence of the Trustee, (v)
any costs and expenses attributable solely

<PAGE>

to the Trustee's administrative overhead unrelated to the Program, (vi) any tax
imposed on fees paid to the Trustee, (vii) any withholding taxes imposed on or
with respect of payments made under the applicable Funding Agreement, the
applicable Indenture or a Trust's Note and (viii) any Additional Amounts paid to
any Holder.

            "Fees" means the fees agreed to between Principal Life and the
Trustee as set forth in the fee schedule attached as Exhibit A to this
Agreement.

            "Obligation" means any and all (i) costs and expenses reasonably
incurred (including the reasonable fees and expenses of counsel), relating to
the offering, sale or issuance of any Notes by any Trust under the Program or
the administration of any Trust and (ii) costs, expenses and taxes of each
Trust; provided, however, that Obligations do not include Excluded Amounts.

                                   ARTICLE II
                                SERVICES AND FEES

            Section 2.01 Fees. Principal Life hereby agrees to pay the Trustee
its Fees. Such Fees may be subject to amendment upon the written agreement of
Principal Life and the Trustee in the event of a substantive change in the
nature of the Trustee's duties under the Program, as agreed to by the Trustee
and Principal Life.

            Section 2.02 Repayment of Fees. In the event that the Trustee
resigns or its appointment is revoked pursuant to any of the Program Documents
under which the Trustee has duties or obligations, the Trustee will repay to
Principal Life such portion of any Fee paid to it as may be agreed between the
Trustee and Principal Life.

            Section 2.03 Payment of Obligations. (a) In the event that the
Trustee delivers written notice and evidence, reasonably satisfactory to
Principal Life, of any Obligation of the Trustee or any Trust, Principal Life
shall, upon receipt of such notice, promptly pay such Obligation. Notice of any
Obligation (including any invoices) should be sent to Principal Life at its
address set forth in Section 4.05, or at such other address as such party shall
hereafter furnish in writing.

            (b) The Trustee will (i) from time to time execute all such
instruments and other agreements and take all such other actions as may be
necessary or desirable on behalf of itself or any Trust, or that Principal Life
may reasonably request, to protect any interest of Principal Life with respect
to any Obligation or to enable Principal Life to exercise or enforce any right,
interest or remedy it may have with respect to any such Obligation, and (ii)
release to Principal Life any amount received from Principal Life relating to
any Obligation or any portion of any Obligation, immediately after any such
amount relating to such Obligation, or any portion of any such Obligation, is
otherwise received by the Trustee or any Trust from a party other than Principal
Life.

            (c) Principal Life and the Trustee, on behalf of itself and each
Trust, hereby agree that all payments due under this Agreement in respect of any
Obligation shall be effected, and any responsibility of Principal Life to pay
such Obligation pursuant to this Agreement shall be discharged, by the payment
by Principal Life to the account of the person to whom such Obligation is owed.

<PAGE>

                                   ARTICLE III
                                 INDEMNIFICATION

            Section 3.01 (a) Subject to the remaining sections of this Article
III, Principal Life covenants to fully indemnify and defend the Trustee and its
executive officers and directors (each, a "Trustee Indemnified Person") for, and
to hold it harmless against, any and all loss, liability, claim, damage or
reasonable expense (including the reasonable compensation, expenses and
disbursements of its counsel) arising out of the acceptance by the Trustee, in
its capacity as Trustee, of administration of the applicable Trust Agreement or
any Trust and/or the performance of the Trustee's duties and/or the exercise of
the Trustee's respective rights under the applicable Trust Agreement, including
the costs and expenses of defending itself against or investigating any claim of
liability in the premises, except to the extent such loss, liability, claim,
damage or expense arises out of or is related to the bad faith, misconduct or
negligence of the Trustee (collectively, "Claims"). Notwithstanding anything to
the contrary, Principal Life shall have no obligation to indemnify or defend the
Trustee for any loss, liability, claim, damage or expense relating to (i) any
costs and expenses attributable solely to the Trustee's administrative overhead
unrelated to the Program or (ii) any tax imposed on the Fees paid to the
Trustee.

            (b) Subject to the remaining sections of this Article III, Principal
Life covenants to fully indemnify and defend each Trust and its respective
executive officers and directors (each, a "Trust Indemnified Person," each Trust
Indemnified Person and each Trustee Indemnified Person are referred to herein as
an "Indemnified Person") for, and to hold it harmless against, any and all loss,
liability, claim, damage or reasonable expense (including the reasonable
compensation, expenses and disbursements of its counsel) arising out of the
performance of each Trust's duties and/or the exercise of each Trust's
respective rights under the applicable Trust Agreement, including the costs and
expenses of defending itself against or investigating any claim of liability in
the premises, except to the extent such loss, liability, claim, damage or
expense arises out of or is related to the bad faith, misconduct or negligence
of any Trust.

            Section 3.02 The indemnification provided for herein supersedes in
all respects any indemnification provision contained in any other Program
Document or any other agreement relating to the Program to which any Trust or
the Trustee is or becomes party.

            Section 3.03 An Indemnified Person shall give prompt written notice
to Principal Life of any action, suit or proceeding commenced or threatened
against the Indemnified Person. In case any such action, suit or proceeding
shall be brought involving an Indemnified Person, Principal Life may, in its
sole discretion, elect to assume the defense of the Indemnified Person, and if
it so elects, Principal Life shall, in consultation with such Indemnified
Person, select counsel, reasonably acceptable to the Indemnified Person, to
represent the Indemnified Person and pay the reasonable fees and expenses of
such counsel. In any such action, investigation or proceeding, the Indemnified
Person shall have the right to retain its own counsel but Principal Life shall
not be obligated to pay the fees and disbursements of such counsel unless (i)
Principal Life and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such action,
investigation or proceeding (including any impleaded parties) include both
Principal Life and the Indemnified Person and representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. Subject to the immediately preceding sentence, it is
understood that Principal Life shall

<PAGE>

not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons.

            Section 3.04 If the indemnification provided for herein is invalid
or unenforceable in accordance with its terms, then Principal Life shall
contribute to the amount paid or payable by an Indemnified Person as a result of
such liability in such proportion as is appropriate to reflect the relative
benefits received by Principal Life and the Trust (if the Trust is not an
Indemnified Person), on one hand, and the Trustee or the Trust (if the Trust is
an Indemnified Person), on the other hand, from the transactions contemplated by
the Program Documents. For this purpose, the benefits received by Principal Life
or the Trust (if applicable) shall be the aggregate value of the relevant
Collateral, and the benefits received by the Trustee shall be the Fees it has
been paid up to that point as the Trustee less costs and unreimbursed expenses
incurred by it as Trustee in relation to such Collateral, and the benefits
received by the Trust (if applicable) shall be determined by the Trustee and
Principal Life. If, however, the allocation provided by the immediately
preceding two sentences is not permitted by applicable law, then Principal Life
shall contribute to such amount paid or payable by the Indemnified Person in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of Principal Life and the Trust (if applicable), on the
one hand, and the Trustee or the Trust (if applicable), on the other hand, in
connection with the actions or omissions which resulted in such liability, as
well as any other relevant equitable considerations.

            Section 3.05 Principal Life shall be subrogated to any right of the
Indemnified Person in respect of the matter as to which any indemnity was paid
hereunder.

            Section 3.06 The Indemnified Person may not settle any action,
investigation or proceeding without the consent of Principal Life, not to be
unreasonably withheld.

            Section 3.07 Notwithstanding any provision contained herein to the
contrary, the obligations of Principal Life under this Article III to any
Indemnified Person shall survive the termination of this Agreement pursuant to
Section 4.03.

                                   ARTICLE IV
                                  MISCELLANEOUS

            Section 4.01 No waiver, modification or amendment of this Agreement
shall be valid unless executed in writing by the parties hereto.

            Section 4.02 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles.

            Section 4.03 This Agreement shall terminate and be of no further
force and effect upon the date on which (i) there is no Obligation due and
payable under this Agreement and (ii) each Program Document has terminated;
provided, however, that this Agreement shall continue to be effective or shall
be reinstated, as the case may be, if at any time any Trust or the Trustee must
restore payment of any sums paid under any Obligation or under this Agreement
for any reason whatsoever or the Trustee or a Trust becomes subject to a claim.
This Agreement is continuing, irrevocable, unconditional and absolute.

<PAGE>

            Section 4.04 Principal Life understands and agrees that each Trust
shall be a third party beneficiary of the obligations of Principal Life under
this Agreement, subject to the limitations set forth in this Agreement. Other
than each Trust, the Trustee and each Indemnified Person, no other Person shall
have any legal or equitable right, remedy or claim under or in respect of this
Agreement or any covenant, condition or provision contained herein.

            Section 4.05 All notices, demands, instructions and other
communications required or permitted to be given to or made upon either party
hereto shall be in writing (including by facsimile transmission) and shall be
personally delivered or sent by guaranteed overnight delivery or by facsimile
transmission (to be followed by personal or guaranteed overnight delivery) and
shall be deemed to be given for purposes of this Agreement on the day that such
writing is received by the intended recipient thereof in accordance with the
provisions of this Section. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section, notices,
demands, instructions and other communications in writing shall be given to or
made upon the respective parties thereto at their respective addresses (or their
respective facsimile numbers) indicated below:

            To the Trust:

            Principal Life Income Fundings Trust (followed by the appropriate
                     number of the Trust designated in the Omnibus Instrument)
            c/o U.S. Bank Trust National Association
            100 Wall Street, 16th Floor
            New York, NY 10005
            Attention: Corporate Trust Administration
            Telephone: (212) 361-2184
            Facsimile: (212) 509-3384

            To Principal Life:

            Principal Life Insurance Company
            711 High Street
            Des Moines, IA 50392
            Attention: General Counsel
            Telephone: (515) 247-5111
            Facsimile: (515) 248-3011

            Principal Life Insurance Company
            711 High Street
            Des Moines, IA 50392
            Attention: Jim Fifield
            Telephone: (515) 248-9196
            Facsimile: (515) 235-9353

<PAGE>

            To the Trustee:

            U.S. Bank Trust National Association
            100 Wall Street, 16th Floor
            New York, NY 10005
            Attention: Corporate Trust Administration
            Telephone: (212) 361-6184
            Facsimile: (212) 509-3384

             [The remainder of this page left intentionally blank.]

<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Expense and
Indemnity Agreement by their duly authorized officers as of the date hereof.

                                   PRINCIPAL LIFE INSURANCE COMPANY

                                   By:
                                      ------------------------------------------
                                   Name:
                                   Title:

                                   U.S. BANK TRUST NATIONAL ASSOCIATION,
                                   as Trustee on behalf of itself and each Trust
                                   organized in connection with the Program

                                   By:
                                      ------------------------------------------
                                   Name:
                                   Title:

<PAGE>

                                                                       EXHIBIT A

                                      FEES

The Trustee shall be entitled to receive the following fees at the times set
forth below:

                        [TO COME.]

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