EXHIBIT 2
EXECUTION COPY
FOUR SEASONS HOTELS INC.
$220,000,000 1.875% CONVERTIBLE SENIOR NOTES DUE 2024
UNDERWRITING AGREEMENT
June 14, 2004
June 14, 2004
Morgan Stanley & Co. Incorporated
c/o Morgan Stanley & Co Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Four Seasons Hotels Inc., a corporation incorporated under the laws of
Ontario (the "Company"), proposes to issue and sell to the firms named in
Schedule I hereto (the "Underwriters") $220,000,000 principal amount of its
1.875% Convertible Senior Notes due 2024 (the "Firm Securities") to be issued
pursuant to the provisions of an Indenture to be dated as of June 18, 2004
between the Company and The Bank of Nova Scotia Trust Company of New York, as
Trustee (the "Trustee"), as supplemented by a Supplemental Indenture to be dated
June 18, 2004 between the Company and the Trustee (the Indenture, as amended by
the Supplemental Indenture is referred to herein as the "Indenture"). Morgan
Stanley & Co. Incorporated shall act as representative (the "Representative") of
the several Underwriters. The Company also proposes to issue and sell to the
Underwriters not more than an additional $30,000,000 principal amount of its
1.875% Convertible Senior Notes due 2024 (the "Additional Securities") if and to
the extent that the Representative, shall have determined to exercise, on behalf
of the Underwriters, the right to purchase such 1.875% Convertible Senior Notes
due 2024 granted to the Underwriters in Section 2 hereof. The Firm Securities
and the Additional Securities are hereinafter collectively referred to as the
"Securities". The Securities will be convertible into Limited Voting Shares (the
"Underlying Securities").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to, and
agrees with, you that:
(a) The Company meets the requirements under the Securities Act (Ontario)
and the rules, regulations and national, multijurisdictional or local
instruments and published policy statements applicable in the Province
of Ontario, including the rules and procedures established pursuant to
National Instrument 44-101 - Short Form Prospectus Distributions, for
the distribution of securities by way of short form prospectus and
National Instrument 44-102 - Shelf Distributions, for the distribution
of securities on a continuous or delayed basis (the "Shelf
Procedures") pursuant to a final short form base shelf prospectus with
respect to the Securities (collectively, the "Ontario Securities
Laws"); a preliminary short form base shelf prospectus and a final
short form base shelf prospectus have been filed with the Ontario
Securities Commission (the "Reviewing Authority") as the review
jurisdiction under National Instrument 44-101 in respect of the
offering of the Securities; a receipt has been obtained from the
Reviewing Authority in respect of such final short form base shelf
prospectus in the form heretofore
delivered or to be delivered to the Underwriters (together with all
documents filed in connection therewith and all documents incorporated
by reference therein); no other document pertaining to such final
short form base shelf prospectus or document incorporated by reference
therein has been filed or transmitted for filing with the Reviewing
Authority except for any documents heretofore delivered to the
Underwriters; no order having the effect of ceasing or suspending the
distribution of the Securities has been issued by the Reviewing
Authority and no proceeding for that purpose has been initiated or, to
the best of the Company's knowledge, threatened by the Reviewing
Authority (the final short form base shelf prospectus filed with the
Reviewing Authority on or before the date of this Agreement for which
a receipt has been obtained, and including the documents incorporated
therein by reference, being hereinafter called the "Canadian
Prospectus"; and any reference to the Canadian Prospectus herein shall
be deemed to refer to the Canadian Prospectus as amended or
supplemented in relation to the Securities, in the form in which it is
filed with the Reviewing Authority pursuant to the Shelf Procedures
and Ontario Securities Laws in accordance with Section 6(a) hereof
including any documents then incorporated by reference therein).
(b) The Company meets the general eligibility requirements for use of Form
F-10 under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), has filed a registration statement on Form F-10
(File No. 333-113665) providing for the registration of the debt
securities and Limited Voting Shares of the Company, including the
Securities and the Underlying Securities, under the Securities Act of
1933, as amended (the "Securities Act") and the rules and regulations
of the Securities and Exchange Commission (the "Commission")
thereunder, has filed an appointment of agent for service of process
on Form F-X (the "Form F-X") in conjunction with the filing of such
registration statement on Form F-10 with the Commission and has caused
the Trustee to prepare and file with the Commission a Form T-1 (the
"Form T-1"); such registration statement and any post-effective
amendment thereto filed prior to the date hereof, in each case
including the Canadian Prospectus (with such deletions therefrom and
additions thereto as are permitted or required by Form F-10 and the
applicable rules and regulations of the Commission), each in the form
heretofore delivered or to be delivered to the Underwriters, including
exhibits to such registration statements and all documents
incorporated by reference in the prospectus contained therein, have
become effective pursuant to Rule 467 under the Securities Act in such
form; no other document with respect to such registration statement or
document incorporated by reference therein has heretofore been filed
or transmitted for filing with the Commission and no other document
incorporated by reference in the prospectus contained therein has
heretofore been filed with the Reviewing Authority, except for any
documents filed with the Commission or the Reviewing Authority
subsequent to the date of such effectiveness in the form heretofore
delivered to the Underwriters; no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been initiated
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or, to the Company's knowledge, threatened by the Commission (the
registration statement, including all exhibits thereto and the
documents incorporated by reference therein at the time such
registration statement became effective and in the event of any
post-effective amendment, as of the date of the effectiveness of such
amendment are hereinafter collectively called the "Registration
Statement"; the prospectus relating to the Securities, in the form in
which it has most recently been filed, or transmitted for filing, with
the Commission on or prior to the date of this Agreement, being
hereinafter called the "U.S. Prospectus" and the Canadian Prospectus
and the U.S. Prospectus being hereinafter collectively called
collectively the "Prospectus"; any reference herein to the Prospectus,
the Canadian Prospectus or the U.S. Prospectus or to any preliminary
prospectus or preliminary prospectus supplement shall be deemed to
refer to and include the documents incorporated by reference therein
as of the date of such Prospectus or such preliminary prospectus or
preliminary prospectus supplement, as the case may be; any reference
to any amendment or supplement to the Prospectus or to any further
amendment or supplement to the Prospectus shall be deemed to refer to
and include any documents filed after the date of such Prospectus, and
prior to the Closing Date (as defined in Section 4 hereof) under
Ontario Securities Laws or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and incorporated by
reference in such Prospectus, as the case may be; and any reference to
"the Prospectus as amended or supplemented" shall be deemed to refer
to the Prospectus as amended or supplemented by the prospectus
supplement dated the date hereof relating to the offering of the
Securities containing pricing information, in the form first provided
to the Underwriters for use in confirming sales of the Securities,
including any documents incorporated by reference therein as of the
date of such prospectus supplement.
(c) The documents incorporated by reference in the Canadian Prospectus,
when they were filed with the Reviewing Authority, conformed in all
material respects to the requirements of Ontario Securities Laws and
the Shelf Procedures as interpreted and applied by the Reviewing
Authority, and none of such documents, as of their respective dates,
contained an untrue statement of material fact or omitted to state a
material fact required to be stated therein or that was necessary to
make a statement therein not misleading in light of the circumstances
under which it was made; and any further documents so filed and
incorporated by reference in the Canadian Prospectus or any further
amendment or supplement thereto, when such documents are filed with
the Reviewing Authority, will conform in all material respects to the
requirements of Ontario Securities Laws and the Shelf Procedures as
interpreted and applied by the Reviewing Authority and will not
contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or that is necessary to
make a statement therein not misleading in light of the circumstances
under which it was made; the documents incorporated by reference in
the U.S. Prospectus when they were filed with the Commission,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they were made, and any further documents so filed and
incorporated by reference in the U.S. Prospectus or any further
amendment or supplement thereto, when such documents are filed with
the Commission, will conform in all material respects with the
requirements of the Securities Act and the Exchange Act, as
applicable, and the rules and regulations of the Commission
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thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances under which they were made; PROVIDED, HOWEVER, that
this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the
Underwriters expressly for use in the Prospectus as amended or
supplemented and any further amendments or supplements thereto.
(d) The Prospectus, the Registration Statement and the Form F-X conform,
the Prospectus as amended or supplemented will conform and any further
amendments or supplements to the Prospectus or the Registration
Statement will conform, in all material respects with the applicable
requirements of Ontario Securities Laws, the Securities Act and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and the rules and regulations of the Commission thereunder; the
Registration Statement and any amendment thereto, as of their
applicable effective dates, did not or will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading; and the
Prospectus as amended or supplemented and any further amendments or
supplements to the Prospectus, as of their respective dates, did not,
do not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Canadian Prospectus as of its filing date
constituted full, true and plain disclosure of all material facts
relating to the Securities within the meaning of the Securities Act
(Ontario); PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by the Underwriter of the Securities expressly for use in the
Prospectus as amended or supplemented and any further amendments or
supplements thereto.
(e) The consolidated financial statements of the Company incorporated by
reference in the Registration Statement and the Prospectus as amended
or supplemented present fairly in all material respects the
consolidated financial position of the Company and its subsidiaries as
of the dates indicated and the cash flows, consolidated results of
operation and the consolidated changes in financial position of the
Company and its subsidiaries for the periods specified; and such
financial statements have been prepared in conformity with generally
accepted
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accounting principles in Canada, consistently applied throughout the
periods involved, and to the extent required, have been reconciled to
generally accepted accounting principles in the United States in
accordance with Item 18 of Form 20-F under the Exchange Act. The
selected financial data included or incorporated by reference in the
Registration Statement and the Prospectus as amended or supplemented
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited consolidated financial
information incorporated by reference in the Registration Statement
and the Prospectus as amended or supplemented.
(f) The Company and its subsidiaries do not have any material liabilities
or obligations, direct or contingent (including off-balance sheet
obligations), not disclosed in the Prospectus as amended or
supplemented.
(g) KPMG LLP, who have reported upon the audited financial statements of
the Company incorporated by reference in the Prospectus as amended or
supplemented, are, and during the periods covered by its reports were,
independent with respect to the Company within the meaning of the
Business Corporations Act (Ontario) and applicable Canadian securities
laws, and are independent as required by the Securities Act.
(h) The Company has been duly incorporated, is validly existing under the
laws of the Province of Ontario, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus as amended or supplemented and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole.
(i) Each subsidiary of the Company that accounts for more than 5% of the
revenues, earnings or assets of the Company and its subsidiaries on a
consolidated basis (a "Material Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus as amended or supplemented and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
Material Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
by the Company directly or through subsidiaries, free and clear of all
liens, encumbrances, equities or claims. The subsidiaries set forth on
Schedule II hereto
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are the only "significant subsidiaries" (as such term is defined in
Rule 1-02 of Regulation S-X under the Securities Act) of the Company.
(j) This Agreement has been duly authorized, executed and delivered by the
Company.
(k) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus as
amended or supplemented.
(l) The outstanding Limited Voting Shares have been duly authorized and
are validly issued, fully paid and non-assessable and except for the
Company's outstanding Liquid Yield Option Notes, any options granted
pursuant to the Company's stock option plans and securities issued on
the exercise of options since the most recent date that the number of
outstanding options is presented within the documents incorporated by
reference in to the Prospectus as amended or supplemented, no options,
warrants or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in
the Company are outstanding.
(m) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to the
effects of applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and equitable principles of
general applicability, and will be entitled to the benefits of the
Indenture and the issuance of such Securities will not be subject to
any preemptive or similar rights.
(n) The Underlying Securities issuable upon conversion of the Securities
have been duly authorized and reserved and, when issued and delivered
upon conversion of the Securities in accordance with the terms of the
Securities including the payment therefor, will be validly issued,
fully paid and non-assessable, and the issuance of the Underlying
Securities will not be subject to any preemptive or similar rights.
(o) The Indenture has been duly authorized and, when executed and
delivered by the Company and assuming due execution and delivery by
the Trustee, will be a valid and binding agreement of the Company,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and general principles of equity.
(p) The execution and delivery by the Company of, and the performance by
the Company of its obligations under this Agreement, the Indenture and
the Securities will not contravene any provision of applicable law or
the articles of incorporation or by-laws of the Company or any of its
Material Subsidiaries or any agreement or other instrument binding
upon the Company or any of its subsidiaries that is
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material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any such subsidiary except
where such contravention (other than a contravention of the articles
and by-laws) would not have a material adverse effect on the Company
and its subsidiaries taken as a whole.
(q) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency of (A) any province of Canada,
(B) the federal government of Canada, (C) the federal government of
the United States or (D) the various states of the United States in
which the Securities are to be offered for sale or sold, or of any
political subdivision of any thereof is required for the issue and
sale of the Securities or the performance by the Company of its
obligations under this Agreement, the Indenture or the Securities,
except such as have been obtained or may be required by the securities
or Blue Sky laws of the various states of the United States and the
Canadian securities laws in connection with the offer and sale of the
Securities or for the listing of the Underlying Securities on the New
York Stock Exchange and the Toronto Stock Exchange or under the
Business Corporations Act (Ontario).
(r) There has not occurred any material adverse change, or any development
reasonably likely to involve a material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus as amended or supplemented.
(s) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
set forth in the Prospectus as amended or supplemented and proceedings
that would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the
Company to perform its obligations under this Agreement, the Indenture
or the Securities or to consummate the transactions contemplated by
the Prospectus as amended or supplemented.
(t) The Company and its subsidiaries (i) are in compliance with any and
all applicable foreign, federal, provincial, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in
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the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(u) There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as
a whole.
(v) The Company is not, and after giving effect to the offering and sale
of the Securities and the application of the proceeds thereof as
described in the Prospectus as amended or supplemented will not be,
required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(w) The Securities conform as to legal matters in all material respects to
the description thereof contained in the Prospectus as amended or
supplemented under the captions "Description of Debt Securities" and
"Description of the Notes".
(x) The Company and its subsidiaries own, possess or have obtained all
material governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to own or lease,
as the case may be, and to operate their properties and to carry on
their business as presently conducted, and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to
revocation or modification of any such licenses, permits,
certificates, consents, orders, approvals or authorizations except
where such proceedings or the failure to own, possess or have obtained
such licenses, permits, certificates, consents, orders, approvals or
authorizations would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(y) The Company and its subsidiaries own or possess adequate patents,
patent licenses, trademarks, service marks and trade names necessary
to carry on their business as presently conducted (except where lack
of ownership or possession would not, singly or in the aggregate, have
a material adverse effect on the Company and its subsidiaries, taken
as a whole), and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any patents, patent licenses,
trademarks, service marks or trade names that in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could have a
material adverse effect on the Company and its subsidiaries taken as a
whole.
(z) Neither the Company nor any of its subsidiaries is in violation of its
charter or by-laws or in default in the performance or observance of
any obligation, agreement,
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covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it may be bound, or to which any
of the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments"), except for such defaults
that would not, singly or in the aggregate, result in a material
adverse effect on the Company and its subsidiaries, taken as a whole;
and the execution, delivery and performance of this Agreement, the
Indenture and the Securities and the consummation of the transactions
contemplated herein and in the Prospectus as amended or supplemented
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the
Prospectus as amended or supplemented under the caption "Use of
Proceeds") and compliance by the Company with its obligations
hereunder and under the Indenture and the Securities have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or a
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to, the Agreements
and Instruments (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not, singly or in the
aggregate, result in a material adverse effect on the Company and its
subsidiaries, taken as a whole). As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company
or any subsidiary.
(aa) The Company is a reporting issuer not in default of any requirements
under Ontario Securities Laws.
(bb) None of the Company, its subsidiaries or the properties they manage is
involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened or imminent, which dispute would have a
material adverse effect on the Company and its subsidiaries, taken as
a whole.
(cc) The Company and its subsidiaries have good title to the items of real
and personal property which are referred to in the Prospectus as
amended or supplemented as being owned by them, and have valid and
enforceable leasehold interests in the items of real and personal
property referred to in the Prospectus as amended or supplemented as
being leased by them, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, other than those
which would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(dd) No withholding tax imposed under the federal laws of Canada or the
laws of the Province of Ontario will be payable in respect of the
payment of the commissions
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contemplated by this Agreement to an Underwriter, or in respect of any
interest or deemed interest on the resale of Securities by an
Underwriter to U.S. residents provided the Underwriters deal at arm's
length with the Company (as such term is understood for purposes of
the Income Tax Act (Canada)), that the Underwriters are residents of
the United States for purposes of the Canada U.S. Tax Convention of
1980 and that such commissions are payable in respect of services
rendered by the Underwriters wholly outside of Canada that are
performed in the ordinary course of business carried on by the
Underwriters that includes the performance of such services for a fee
and any such amount is reasonable in the circumstances.
(ee) No goods and services tax imposed under the federal laws of Canada
will be collectable by an Underwriter in respect of the payment of the
commissions as contemplated by this Agreement to an Underwriter,
provided that any such commissions are in respect of services
performed by the Underwriter wholly outside of Canada.
(ff) No stamp duty, documentary taxes or similar taxes are payable by the
Company under the federal laws of Canada or the laws of the Province
of Ontario in connection with the creation, issuance, sale and
delivery of the Securities to an Underwriter or the resale of
Securities by an Underwriter to U.S. residents.
(gg) (A) The Indenture and the form and terms of the Securities will meet
all legal requirements under the Business Corporations Act (Ontario)
and (B) the provisions of the Business Corporations Act (Ontario) have
been complied with by the Company in respect of the issue,
certification and delivery of the Securities; an exemption has been
obtained to exempt the Indenture from the application of Part V of the
Business Corporations Act (Ontario); and no registration, filing or
recording of the Indenture under the laws of the Province of Ontario
or the federal laws of Canada applicable therein is necessary in order
to preserve or protect the validity or enforceability of the Indenture
or the Securities issued thereunder which are unsecured obligations of
the Company.
(hh) None of the Company, its subsidiaries or, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries is aware of or has taken any
action, directly or indirectly, that would result in a violation by
such persons of Foreign Corrupt Practices Act of 1977, as amended, and
the rules and regulations thereunder (the "FCPA"), including, without
limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of
anything of value to any "foreign official" (as such term is defined
in the FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the FCPA;
and the Company, its subsidiaries and, to the knowledge of the
Company, its affiliates have conducted their businesses in compliance
with the FCPA and have
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instituted and maintain policies and procedures designed to ensure,
and which are reasonably expected to continue to ensure, continued
compliance therewith.
(ii) Except as contemplated hereby, there are no contracts, agreements or
understandings between the Company and any person granting such person
the right to require the Company to file a registration statement
under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the
Securities registered pursuant to the Registration Statement.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to the
several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company the respective principal amount of Firm
Securities set forth in Schedule I hereto opposite its name at a purchase
price of 100% of the principal amount thereof (the "Purchase Price") plus
accrued interest, if any, to the Closing Date. As compensation for the
Underwriters' several commitments to purchase the Securities from the
Company, the Company will pay to the Underwriters an underwriting
commission of 2.50% of the principal amount of the Firm Securities.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Securities, and the Underwriters shall have
the right to purchase, severally and not jointly, up to $30,000,000 principal
amount of Additional Securities at the Purchase Price plus accrued interest, if
any, to the date of payment and delivery. As compensation for the Underwriters'
several commitments to purchase the Additional Securities from the Company, the
Company will pay to the Underwriters an underwriting commission of 2.50% of the
principal amount of the Additional Securities. The Representative may exercise
this right on behalf of the Underwriters in whole or from time to time in part
by giving written notice of each election to exercise this option not later than
30 days after the date of this Agreement. Any exercise notice shall specify the
principal amount of Additional Securities to be purchased by the Underwriters
and the date on which such Additional Securities are to be purchased. Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the Closing Date for the Firm Securities nor
later than ten business days after the date of such notice. Additional
Securities may be purchased as provided in Section 4 solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Securities. On each day, if any, that Additional Securities are to be purchased
(an "Option Closing Date"), each Underwriter agrees, severally and not jointly,
to purchase the principal amount of Additional Securities (subject to such
adjustments to eliminate fractional Securities as the Representative may
determine) that bears the same proportion to the total principal amount of
Additional Securities to be purchased on such Option Closing Date as the
principal amount of Firm Securities set forth in Schedule I opposite the name of
such Underwriter bears to the total principal amount of Firm Securities.
The Company hereby agrees that, without the prior written consent of the
Representative on behalf of the Underwriters, it will not, enter into agreements
with the Representative in the form set forth in Exhibit C to the effect that
they will not, during the period ending 90 days after
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the date of the Prospectus as amended or supplemented, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any Limited Voting
Shares or any securities convertible into or exercisable or exchangeable for
Limited Voting Shares (including, without limitation, Variable Multiple Voting
Shares) or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Limited Voting Shares or such other securities, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Limited
Voting Shares or such other securities, in cash or otherwise. The foregoing
shall not apply to (A) the sale of the Securities under this Agreement or (B)
the issuance by the Company of Limited Voting Shares upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof. The Company also agrees not to file any registration statement with
respect to any Limited Voting Shares or any securities convertible into or
exercisable or exchangeable for Limited Voting Shares for a period of 90 days
after the date of the Prospectus as amended or supplemented without the prior
written consent of the Representative on behalf of the Underwriters.
Notwithstanding the foregoing, the Company may file a registration statement to
register any shares permitted to be issued pursuant to this paragraph.
3. TERMS OF PUBLIC OFFERING. The Company is advised by the Representative that
the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has been entered
into as in the Representative's judgment is advisable. The terms of the
public offering of the Securities are as set forth in the Prospectus as
amended or supplemented. The Underwriters covenant that they will not
offer, sell or deliver the Securities directly or indirectly in Canada or
to any resident of Canada in contravention of the securities laws of any
province or territory of Canada.
4. PAYMENT AND DELIVERY. Payment for the Firm Securities less the underwriting
commission payable to the Underwriters shall be made to the Company in
Federal or other funds immediately available in New York City against
delivery of such Firm Securities for the respective accounts of the several
Underwriters at the offices of Goodmans LLP, 250 Yonge Street, Suite 2400,
Toronto, Ontario M5B 2M6, at 10:00 a.m., New York City time, on June 18,
2004, or at such other time on the same or such other date, not later than
June 30, 2004, as shall be designated in writing by the Representative. The
time and date of such payment are hereinafter referred to as the "Closing
Date."
Payment for any Additional Securities less the underwriting commission
payable to the Underwriters shall be made to the Company in Federal or other
funds immediately available in New York City against delivery of such Additional
Securities for the respective accounts of the several Underwriters at 10:00
a.m., New York City time, on the date specified in the corresponding notice
described in Section 2 or at such other time on the same or on such other date,
in any event not later than 30 days from the date of the Prospectus as amended
or supplemented.
Certificates for the Securities shall be in definitive form or global form,
as specified by
12
the Representative, and registered in such names and in such denominations as
the Representative shall request in writing not later than one full business day
prior to the Closing Date or the applicable Option Closing Date, as the case may
be. The certificates evidencing the Securities shall be delivered to the
Representative on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid, against payment of the Purchase Price therefor plus
accrued interest, if any, to the date of payment and delivery.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several obligations of the
Underwriters to purchase and pay for the Firm Securities on the Closing
Date are subject to the following conditions:
(a) (i) A receipt has been obtained from the Reviewing Authority for the
Canadian Prospectus and the Canadian Prospectus as amended or
supplemented in relation to the Securities shall have been filed with
the Reviewing Authority as soon as practicable after the date hereof
and, in any event, within the time period prescribed under Ontario
Securities Laws and the Shelf Procedures and (ii) the U.S. Prospectus
as amended or supplemented shall have been filed with the Commission
pursuant to General Instruction II.L. of Form F-10 under the
Securities Act, in each case within the applicable time period
prescribed for such filing thereunder and in accordance with Section
6(a) hereof; no order having the effect of ceasing or suspending the
distribution of the Securities or stop order suspending the
effectiveness of the Registration Statement or any part thereof or
having the effect of preventing or suspending the use of the Canadian
Prospectus or U.S. Prospectus as amended or supplemented shall have
been issued and no proceeding for that purpose shall have been
initiated or to the knowledge of the Company or the Underwriters
threatened by the Reviewing Authority or the Commission; and all
requests for additional information on the part of the Reviewing
Authority or the Commission shall have been complied with to the
Underwriters' reasonable satisfaction.
(b) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded the
Company or any of the Company's securities or in the rating
outlook for the Company by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
reasonably likely to involve a change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries,
13
taken as a whole, from that set forth in the Prospectus as
amended or supplemented that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated
in the Prospectus as amended or supplemented.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(b)(i) and to the
effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing
Date as if made on and as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(d) The Underwriters shall have received on the Closing Date an opinion of
Goodmans LLP, Canadian counsel for the Company, dated the Closing
Date, to the effect set forth in Exhibit A.
(e) The Underwriters shall have received on the Closing Date an opinion of
Wachtell, Lipton, Rosen & Katz, outside U.S. counsel for the Company,
dated the Closing Date, to the effect set forth in Exhibit B. Such
opinion shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(f) The Underwriters shall have received on the Closing Date an opinion of
Shearman & Sterling LLP, U.S. counsel for the Underwriters, dated the
Closing Date in form reasonably acceptable to the Underwriters.
(g) The Underwriters shall have received on the Closing Date an opinion of
Osler, Hoskin & Harcourt LLP, Canadian counsel for the Underwriters,
dated the Closing Date in form reasonably acceptable to the
Underwriters.
(h) The Underwriters shall have received on the Closing Date an opinion of
Shook Lin & Bok, special counsel for the Company, dated the Closing
Date, to the effect that Four Seasons Hotels and Resorts Asia Pacific
Pte Ltd. has been duly incorporated, is validly existing as a
corporation under the laws of Singapore, has the corporate power and
authority to own its property and to conduct its business in
Singapore, and all of the outstanding shares in the capital of Four
Seasons Hotels and Resorts Asia Pacific Pte Ltd. have been validly
issued and are fully paid and non-assessable and are held by Four
Seasons Hotels (Barbados) Investments Limited.
(i) The Underwriters shall have received on the Closing Date an opinion of
Chancery Chambers, special counsel for the Company, dated the Closing
Date, to the effect
14
that Four Seasons Hotels (Barbados) Ltd. has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business, is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole and that all of the outstanding shares in the capital
of Four Seasons Hotels (Barbados) Ltd. have been duly authorized and
validly issued and are fully paid and non-assessable and owned by the
Company free and clear of all liens, encumbrances, equities or claims.
(j) The Underwriters shall have received on the Closing Date an opinion of
De Brauw Blackstone Westbroek, special counsel for the Company, dated
the Closing Date, to the effect that Four Seasons Hotels and Resorts
B.V. is a company duly incorporated and is existing under the laws of
the Netherlands as a private company with limited liability, has the
power and authority to conduct any business within the limits of its
objects clause as set forth in article 2 of its articles of
association and that all of the issued shares in the capital of Four
Seasons Hotels and Resorts B.V. are fully paid and owned by the
Company free of limited rights and attachment.
(k) The Underwriters shall have received on the Closing Date an opinion of
Heller Ehrman, special counsel for the Company, dated the Closing
Date, to the effect that Four Seasons Hotels (U.S.) Inc. has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the State of Delaware, has the corporate power and
authority to own its property and to conduct its business and that the
offering of the Securities would not conflict with any provision of
the certificate of incorporation of Four Seasons Hotels (U.S.) Inc.
(l) The Underwriters shall have received on the Closing Date an opinion,
dated the Closing Date, of Fross Zelnick Lehrman & Zissu, P.C.,
Trademark counsel of the Company, to the effect that, to the best of
their knowledge, as defined in said opinion:
(i) Schedule I to such opinion sets out all trademarks and
service marks which have been registered, or for which applications
have been filed, in the countries listed thereon by the Company or its
subsidiaries (the "Registrations" or "Applications", respectively).
The Company or its subsidiaries is the sole and exclusive owner of all
right, title and interest in and to the Registrations and
Applications. The Registrations and Applications are not subject to
any liens, security interests, charges, assignments or encumbrances of
any kind;
(ii) the Registrations are all subsisting and in good standing,
and as of
15
the date of such opinion, all filings that are required in order to
maintain the Registrations have been timely made; and
(iii) each of the Company and its subsidiaries owns or has the
unrestricted right to use subject to the obligations of existing
management agreements such trademarks and service marks as are
necessary to carry on its business as presently conducted, except
where the failure to own or possess the right to use any of said marks
would not have a material and adverse effect on the Company and its
subsidiaries taken as a whole. There is no claim of invalidity or
other opposition to or conflict with any of the Registrations, nor any
claim, suit, action or proceeding, pending or threatened against the
Company or any of its subsidiaries, that involves a claim that the use
of any of the Registrations constitutes trademark, service mark or
trade name infringement, or unfair competition, or conflicts with the
asserted rights of others, that in the aggregate would materially and
adversely affect the Company and its subsidiaries taken as a whole.
(m) The Underwriters shall have received on each of the date hereof and
the Closing Date a letter, dated the date hereof or the Closing Date,
as the case may be, in form and substance reasonably satisfactory to
the Underwriters, from KPMG LLP, independent public accountants,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement or the
Prospectus as amended or supplemented; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(n) The "lock-up" agreements, each substantially in the form of Exhibit C
hereto, between the Representative and those persons and entities
listed on Schedule III hereto relating to sales and certain other
dispositions of Limited Voting Shares or certain other securities,
delivered to the Representative on or before the date hereof, shall be
in full force and effect on the Closing Date.
(o) The Underlying Securities initially issuable upon the conversion of
the Securities shall have been duly authorized for trading by the New
York Stock Exchange ("NYSE") and the Toronto Stock Exchange ("TSX")
subject only to notice of issuance thereof.
(p) The several obligations of the Underwriters to purchase Additional
Securities hereunder are subject to the delivery to you on the
applicable Option Closing Date of such documents as you may reasonably
request with respect to the good standing of the Company, the due
authorization, execution, authentication and issuance of the
Additional Securities to be sold on such Option Closing Date and other
matters related to the execution, authentication and issuance of such
Additional Securities.
16
6. COVENANTS OF THE COMPANY. In further consideration of the agreements of the
Underwriters contained in this Agreement, the Company covenants with each
Underwriter as follows:
(a) To prepare the supplement to the Canadian Prospectus and the U.S.
Prospectus in relation to the Securities in a form approved by the
Underwriters and (i) to file such supplement with the Reviewing
Authority in accordance with the Shelf Procedures not later than the
Reviewing Authority's close of business on the second business day
following the execution and delivery of this Agreement relating to the
Securities and (ii) to file the U.S. Prospectus as amended or
supplemented with the Commission pursuant to General Instruction II.L.
of Form F-10 not later than the Commission's close of business on the
business day following the date of filing of the supplement referred
to in clause (i) above with the Reviewing Authority; to make no
further amendment or any supplement to the Registration Statement or
Prospectus as amended or supplemented after the date of this Agreement
and prior to the Closing Date for such Securities unless such
amendment or supplement is approved by the Underwriters promptly after
reasonable notice thereof, PROVIDED, HOWEVER, such approval shall not
be unreasonably withheld or delayed; to advise the Underwriters
promptly of any such amendment or supplement relating to such
Securities after the date of this Agreement and furnish the
Underwriters with copies thereof; to file promptly all reports
required to be filed by the Company with the Reviewing Authority
pursuant to Ontario Securities Laws and the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act for so long as the
delivery of a prospectus is required in connection with the offering
or sale of such Securities, and during such same period to advise the
Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Canadian Prospectus has been filed or
receipted, when any supplement to the Canadian Prospectus has been
filed, when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the U.S. Prospectus or the
U.S. Prospectus as amended or supplemented has been filed with the
Reviewing Authority or the Commission, of the issuance by the
Reviewing Authority or the Commission of any stop order or of any
order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of such
Securities for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose, or of any
request by the Reviewing Authority or the Commission for the amending
or supplementing of the Canadian Prospectus, the Registration
Statement or the U.S. Prospectus or the Prospectus as amended or
supplemented or for additional information relating to the Securities;
and, in the event of the issuance of any such stop order or of any
such order preventing or suspending the use of any prospectus relating
to the Securities or suspending any such qualification, to promptly
use its reasonable best efforts to obtain the withdrawal of such
order.
(b) Promptly from time to time to take such action as the Underwriters may
request to endeavor to qualify the Securities for offering and sale
under the securities laws of
17
such jurisdictions in the United States as the Underwriters may
reasonably request to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as
long as required to complete the distribution of such Securities,
provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction or subject the
Company to taxation in any jurisdiction.
(c) Prior to 3:00 p.m., New York City time, on the business day next
succeeding the date of this Agreement, to furnish the Underwriters
with copies of the U.S. Prospectus as amended or supplemented in New
York City and in such other cities, in each case in such quantities as
the Underwriters may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time in connection with
the offering or sale of the Securities and if at such time any event
shall have occurred as a result of which the Prospectus as amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus as amended or supplemented is
delivered, not misleading, or, if in the opinion of counsel to the
Company and counsel to the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law or, if for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus as amended or supplemented or to file under
Ontario Securities Laws or the Exchange Act any document incorporated
by reference in the Prospectus as amended or supplemented in order to
comply with Ontario Securities Laws, the Securities Act, the Exchange
Act or the Trust Indenture Act, to notify the Underwriters and, upon
their reasonable request, to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Underwriters may from time to time
reasonably request of an amendment or a supplement to the Prospectus
as amended or supplemented which will correct such statement or
omission or effect such compliance.
(d) Prior to amending or supplementing the Registration Statement or the
Prospectus with respect to the Securities, to furnish the
Representative a copy of each such proposed amendment or supplement
and not file any such proposed amendment or supplement to which the
Representative reasonably objects.
(e) To use commercially reasonably efforts to maintain the listing of the
Underlying Securities issuable upon conversion of the Securities on
the NYSE and the TSX for so long as any Securities remain outstanding.
(f) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule
158(c) under the Securities Act), an earnings statement of the Company
and its subsidiaries (which need not be
18
audited) complying with Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158).
(g) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of
the Company's counsel and the Company's accountants in connection with
the filing of the Canadian Prospectus with the Reviewing Authority,
the registration of the Securities under the Securities Act and all
other fees or expenses in connection with the preparation of the
Registration Statement, any preliminary prospectus and the Prospectus
and all amendments and supplements thereto, including all printing
costs associated therewith, and the delivering of copies thereof to
the Underwriters, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the
Securities to the Underwriters, including any transfer or other taxes
payable thereon, (iii) all fees and expenses incident to listing the
Underlying Securities on the NYSE and the TSX, (iv) the cost of
printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Securities under state
securities laws and all expenses in connection with the qualification
of the Securities for offer and sale under state securities laws as
provided in Section 6(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky
or legal investment memorandum, (v) any fees charged by rating
agencies for the rating of the Securities, (vi) all document
production charges and expenses of counsel to the Underwriters (but
not including their fees for professional services) in connection with
the preparation of this Agreement, (vii) any filing fees incident to
and reasonable fees and disbursements of counsel to the Underwriters
in connection with any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities,
(viii) the costs and charges of the Trustee and any transfer agent,
registrar or depositary, (ix) the cost of the preparation, issuance
and delivery of the Securities, (x) the costs and expenses of the
Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with
the production of road show slides and graphics, fees and expenses of
any consultants engaged in connection with the road show presentations
with the prior approval of the Company, travel and lodging expenses of
the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with
the road show, (xi) the document production charges and expenses
associated with printing this Agreement and (xii) all other cost and
expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section.
It is understood, however, that except as provided in this Section,
Section 7, and the last paragraph of Section 9, the Underwriters will
pay all of
19
their costs and expenses, including fees and disbursements of their
counsel, transfer taxes payable on resale of any of the Securities by
them and any advertising expenses connected with any offers they may
make.
(h) Not to take any action prohibited by Regulation M under the Exchange
Act in connection with the distribution of the Securities contemplated
hereby.
(i) The Company will use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Prospectus as amended or supplemented under the caption "Use of
Proceeds" and in this respect neither the Company nor any of its
subsidiaries will take, directly or indirectly, any action that will
result in a violation by any U.S. person participating in the offering
of the U.S. economic sanctions measures, including, without
limitation, the International Emergency Economic Powers Act, the
Trading with the Enemy Act, the United Nations Participation Act, and
the Syria Accountability and Lebanese Sovereignty Act, all as amended,
and an Executive order, directive, or regulation, that are publicly
available or otherwise made known to the Company, imposing or
implementing sanctions pursuant to the authority of any of the
foregoing, including the regulations of the United States Treasury
Department set forth under 31 CFR, Subtitle B, Chapter V, as amended,
or any orders or licenses issued thereunder, that are publicly
available or otherwise made known to the Company (collectively, the
"Sanctions Measures") with respect to the sale of the Securities
hereunder and the use of proceeds thereof. Without limiting the
foregoing, the Company will not, and will cause each of its
subsidiaries not to, directly or indirectly, use the proceeds of the
sale of the Securities to fund any activities or business with any
entity or individual with respect to which U.S. persons are prohibited
from doing business under the Sanctions Measures.
(j) The Company will comply with all applicable securities laws,
including, without limitation, to the extent applicable, the Sarbanes
Oxley Act, and use its reasonable efforts to cause the Company's
directors and officers, in their capacities as such, to comply with
such laws, rules and regulations to the extent applicable, including,
without limitation, the provisions of the Sarbanes Oxley Act, to the
extent applicable.
7. INDEMNITY AND CONTRIBUTION. (a) The Company agrees to indemnify and hold
harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each affiliate of any Underwriter
within the meaning of Rule 405 under the Securities Act from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection
with defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or preliminary prospectus supplement or the Prospectus or the
Prospectus as amended or supplemented (in each case as amended or
supplemented or as further amended or supplemented, as the case may be if
the
20
Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representative expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act (including, for greater certainty,
any officer who so controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act,
even if such officer did not sign the Registration Statement) to the
same extent as the foregoing indemnity from the Company to such
Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter
through the Representative expressly for use in the Registration
Statement, any preliminary prospectus or preliminary prospectus
supplement, the Prospectus or the Prospectus as amended or
supplemented or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity
may be sought pursuant to Section 7(a) or 7(b), such person (the
"indemnified party") shall promptly notify the person against whom
such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party
may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings 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 such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Representative, in the case of parties
indemnified pursuant to Section 7(a), and by the Company, in the case
of parties indemnified pursuant to Section 7(b). The indemnifying
party shall not be liable
21
for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or 7(b)
is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company
on the one hand and the Underwriters on the other hand from the
offering of the Securities or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause 7(d)(i) above but also the relative fault of the
Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities shall be deemed to be
in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the
Company and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the Prospectus as
amended or supplemented, bear to the aggregate offering price of the
Securities. The relative fault of the Company on the one hand and of
the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
principal amount of Securities they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in
Section 7(d). The amount paid or payable by an
22
indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 7(d) shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 7 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 7
and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter, any
person controlling any Underwriter or any affiliate of any Underwriter
or by or on behalf of the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for
any of the Securities.
8. TERMINATION. The Underwriters may terminate this Agreement by notice given
by the Representative to the Company, if after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall
have been suspended or materially limited on, or by, as the case may be,
any of the New York Stock Exchange, the Nasdaq National Market or the TSX,
(ii) trading of any securities of the Company shall have been suspended on
any exchange or in any over-the-counter market, (iii) a material disruption
in securities settlement, payment or clearance services in the United
States or Canada shall have occurred, (iv) any moratorium on commercial
banking activities shall have been declared by Federal or New York State or
Canadian authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets, currency
exchange rates or controls or any calamity or crisis that, in the
Representative's judgment, is material and adverse and which, singly or
together with any other event specified in this clause (v), makes it, in
the Representative's judgment, impracticable to proceed with the offer,
sale or delivery of the Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Securities that
it or they have agreed to
23
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, the other Underwriters shall
be obligated severally in the proportions that the principal amount of Firm
Securities set forth opposite their respective names in Schedule I bears to the
aggregate principal amount of Firm Securities set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as the
Representative may specify, to purchase the Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; PROVIDED that in no event shall the principal amount of Securities that
any Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such principal
amount of Securities without the written consent of such Underwriter. If, on the
Closing Date any Underwriter or Underwriters shall fail or refuse to purchase
Firm Securities which it or they have agreed to purchase hereunder on such date
and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of Firm
Securities to be purchased on such date, and arrangements satisfactory to the
Representative and the Company for the purchase of such Firm Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or of the Company. In
any such case either the Representative or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement or the
Prospectus as amended or supplemented or in any other documents or arrangements
may be effected. If, on an Option Closing Date, any Underwriter or Underwriters
shall fail or refuse to purchase Additional Securities and the aggregate
principal amount of Additional Securities with respect to which such default
occurs is more than one-tenth of the aggregate principal amount of Additional
Securities to be purchased on such Option Closing Date, the non-defaulting
Underwriters shall have the option to (a) terminate their obligation hereunder
to purchase the Additional Securities to be sold on such Option Closing Date or
(b) purchase not less than the principal amount of Additional Securities that
such non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. By the
execution and delivery of this Agreement, the Company (i) acknowledges that
it has, by separate written instrument, irrevocably designated and
appointed The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware, 1980 (or any successor) (together with any successor, the "Agent
for Service"), as its authorized agent upon which process
24
may be served in any suit or proceeding arising out of or relating to this
Agreement or the Securities that may be instituted in any federal or state
court in the State of New York, or brought under federal or state
securities laws, and acknowledges that the Agent for Service has accepted
such designation, (ii) submits to the jurisdiction of any such court in any
such suit or proceeding, and (iii) agrees that service of process upon the
Agent for Service and written notice of said service to the Company (mailed
or delivered to its Chief Financial Officer at its principal office in
Toronto, Ontario, Canada), shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. The
Company further agrees to take any and all action, including the execution
and filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of the Agent for
Service in full force and effect for a period of six years from the date of
this Agreement.
If for the purposes of obtaining judgment in any court it is necessary to
convert a sum due hereunder into any currency other than United States dollars,
the parties hereto agree, to the fullest extent that they may effectively do so
that the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Underwriters could purchase United States dollars
with such other currency in The City of New York at the close of business on the
business day preceding that on which final judgment is given. The obligations of
the Company in respect of any sum due from it to any Underwriter shall,
notwithstanding any judgment in a currency other than United States dollars, not
be discharged until the first business day, following receipt by such
Underwriter of any sum adjudged to be so due in such other currency, on which
(and only to the extent that) such Underwriter may in accordance with normal
banking procedures purchase United States dollars with such other currency; if
the United States dollars so purchased are less than the sum originally due to
such Underwriter hereunder, the Company agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Underwriter against such
loss. If the United States dollars so purchased are greater than the sum
originally due to such Underwriter hereunder, such Underwriter agrees to pay to
the Company (but without duplication) an amount equal to the excess of the
dollars so purchased over the sum originally due to such Underwriter hereunder.
To the extent that the Company has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, it hereby
irrevocably waives such immunity in respect of its obligations under the
above-referenced documents, to the extent permitted by law.
11. COUNTERPARTS. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
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Very truly yours,
FOUR SEASONS HOTELS INC.
By: /s/ Randolph Weisz
--------------------------------------
Name: Randolph Weisz
Title: Executive Vice President, General
Counsel & Secretary
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ David Schwarzbach
--------------------------------------
Name: David Schwarzbach
Title: Executive Director