Operating Company Merger. The parties agree that, in accordance with Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) (as applied to both Spinco leaving the group of which IP is the common parent and Unisource Sub joining the group of which Spinco is the common parent), the Operating Company Merger is properly allocable to the portion of the Closing Date that is subsequent to the Distribution and subsequent to the Parent Company Merger, and that the tax consequences of the Operating Company Merger are reportable on the U.S. federal consolidated income Tax Return of the group of which Spinco is the common parent and Unisource Sub is a member that begins with the day immediately following the Closing Date.
Operating Company Merger. In connection with the Operating Company Merger, each of the members of the Operating Company (not including the membership interests held by Trizec) will receive a Redeemable Preferred Unit with the rights set forth on Exhibit E hereto, subject to the Amended Operating Agreement. The Amended Operating Agreement shall be negotiated in good faith and mutually agreed upon by Parent, Trizec and the Operating Company following the date hereof. Parent agrees that the Amended Operating Agreement shall provide rights for the holders of the Continuing Common Units and Redeemable Preferred Units comparable to those afforded to the “Non-Managing Members” in the Operating Company LLC Agreement so as to qualify for the exception from the definition of “Adverse Modification” set forth in the second sentence of the definition of such term in the Redemption and Contribution Agreement dated as of May 1, 2006. Notwithstanding any provision of this Agreement to the contrary, none of Trizec Parties shall have any liability hereunder either for any failure to qualify for such exception or for the Operating Company Merger being deemed to violate the Operating Company LLC Agreement and any such failure or violation shall not be asserted as the basis for a breach by the Trizec Parties of this Agreement or as the basis for a failure to satisfy the conditions for obligations of the parties set forth in Article IX. TZ Canada, Trizec and the Operating Company agree to cooperate in good faith and use their reasonable best efforts to take all actions necessary or advisable to effect the foregoing.
