FORM 51-102F3
MATERIAL CHANGE REPORT
1. NAME AND ADDRESS OF COMPANY
Four Seasons Hotels Inc.
1165 Leslie Street
Toronto, Ontario
M3C 2K8
2. DATE OF MATERIAL CHANGE
February 9, 2007
3. NEWS RELEASE
Four Seasons Hotels Inc. ("FOUR SEASONS" or the "COMPANY") issued a news
release though Canada NewsWire on February 12, 2007 with respect to a
material change. A copy of that news release is attached hereto as
Schedule A and forms a part hereof.
4. SUMMARY OF MATERIAL CHANGE
On February 12, 2007, Four Seasons announced that it had entered into a
definitive acquisition agreement dated February 9, 2007 with FS
Acquisition Corp. (the "PURCHASER") to implement the previously announced
proposal to take Four Seasons private. The Purchaser is a company owned by
affiliates of Cascade Investment, L.L.C. (an entity owned by William H.
Gates III) ("CASCADE"), Kingdom Hotels International, a company owned by a
trust created for the benefit of His Royal Highness Prince Alwaleed Bin
Talal Bin Abdulaziz Alsaud and his family ("KINGDOM") and Isadore Sharp.
Pursuant to the acquisition agreement, all of the outstanding Limited
Voting Shares of Four Seasons would be acquired for US$82.00 per share in
cash.
5. FULL DESCRIPTION OF MATERIAL CHANGE
On February 12, 2007, Four Seasons announced that it had entered into a
definitive acquisition agreement dated February 9, 2007 with the
Purchaser, a company owned by affiliates of Cascade, Kingdom, and Isadore
Sharp, to implement the previously announced proposal to take Four Seasons
private. Pursuant to the acquisition agreement, all of the outstanding
Limited Voting Shares of Four Seasons would be acquired for US$82.00 per
share in cash. A copy of the acquisition agreement is attached hereto as
Schedule B and forms a part hereof.
The transaction has been approved unanimously by the Board of Directors of
Four Seasons (with interested directors abstaining) following the report
and favourable, unanimous recommendation of a Special Committee of
independent directors. In doing so, the Four Seasons Board determined that
the arrangement is fair to the shareholders of Four Seasons (other than
Mr. Sharp, Kingdom, Cascade, their respective directors and senior
officers and any other "related parties", "interested parties" and "joint
actors") and in the best interests of the Company and authorized the
submission of the arrangement to
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shareholders of Four Seasons for their approval at a special meeting of
shareholders. The Board of Four Seasons also has determined unanimously
(with interested directors abstaining) to recommend to Four Seasons
shareholders that they vote in favour of the transaction.
The Special Committee was advised by Merrill Lynch, as independent
valuator and financial advisor, and Osler, Hoskin & Harcourt LLP, as
independent legal advisor. Merrill Lynch has concluded that as at February
5, 2007, the consideration to be received under the arrangement is fair,
from a financial point of view, to the holders of Limited Voting Shares
(other than Mr. Sharp, Kingdom, Cascade, their respective directors and
senior officers and any other "related parties", "interested parties" and
"joint actors").
Upon completion of the transaction Triples Holdings Limited ("TRIPLES")
(which is Mr. Sharp's family holding company) would hold a significant
continuing interest in Four Seasons and Mr. Sharp would, as Chairman and
Chief Executive Officer, continue to be directly involved in all aspects
of the operations and the strategic direction of the Company, which will
remain headquartered in Toronto. If the transaction is completed, Mr.
Sharp will be entitled to realize proceeds of approximately US$289 million
related to a long-term incentive agreement that was approved by the
Company's shareholders before it was put in place in 1989.
The transaction will be implemented by way of a court-approved plan of
arrangement and will require approval by two-thirds of the votes cast by
holders of Limited Voting Shares, voting separately as a class, and
approval by Triples, as the sole holder of the Variable Multiple Voting
Shares, voting separately as a class. Kingdom, Cascade and Triples have
entered into a voting agreement pursuant to which they have agreed to vote
their Limited Voting Shares and Variable Multiple Voting Shares to approve
the arrangement. A copy of the voting agreement is attached hereto as
Schedule C and forms a part hereof. The arrangement also will require
approval by a simple majority of the votes cast by holders of Limited
Voting Shares, other than Mr. Sharp, Kingdom, Cascade, their respective
directors and senior officers and any other "related parties", "interested
parties" or "joint actors". In addition, the arrangement will require
approval by the Ontario Superior Court of Justice. The transaction also
will be subject to certain other customary conditions, including receipt
of a limited number of regulatory approvals. The transaction is not
subject to any financing condition, and Four Seasons has been advised that
commitments for the required debt financing have been received from
Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and JPMorgan
Chase Bank, N.A. Four Seasons has received from Cascade and Kingdom a
limited guaranty of certain obligations of the Purchaser under the
acquisition agreement. A copy of the limited guaranty is attached hereto
as Schedule D and forms a part hereof.
6. RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102
No significant facts remain confidential in, and no information has been
omitted from, this report.
7. OMITTED INFORMATION
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Not applicable.
8. EXECUTIVE OFFICER
Any enquiries with respect to this material change report or the
transaction described in this material change report should be made to:
Randolph Weisz
Executive Vice President, Business Administration, General
Counsel and Secretary
Four Seasons Hotels Inc.
1165 Leslie Street
Toronto, Ontario
M3C 2K8
(416) 449-1750
9. DATE OF MATERIAL CHANGE REPORT
February 13, 2007.
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SCHEDULE A
N E W S
[logo]
FEBRUARY 12, 2007
FOUR SEASONS ENTERS INTO AGREEMENT TO BE TAKEN PRIVATE AT
US$82.00 PER SHARE IN CASH
Toronto, Canada -- Four Seasons Hotels Inc. (TSX Symbol "FSH"; NYSE Symbol "FS")
announced today that it has entered into a definitive acquisition agreement to
implement the previously announced proposal to take Four Seasons private at a
price of US$82.00 cash per Limited Voting Share. Following completion of the
transaction, Four Seasons would be owned by affiliates of Cascade Investment,
L.L.C. (an entity owned by William H. Gates III), Kingdom Hotels International,
a company owned by a trust created for the benefit of His Royal Highness Prince
Alwaleed Bin Talal Bin Abdulaziz Alsaud and his family, and Isadore Sharp.
The transaction, which values Four Seasons at US $3.8 billion (including debt),
will be implemented by way of a court-approved plan of arrangement under Ontario
law.
The transaction has been approved unanimously by the Board of Directors of Four
Seasons (with interested directors abstaining) following the report and
favourable, unanimous recommendation of a Special Committee of independent
directors comprised of Ronald Osborne (Chair), William Anderson and Brent
Belzberg. In doing so, the Four Seasons Board determined that the arrangement is
fair to the shareholders of Four Seasons (other than Mr. Sharp, Kingdom,
Cascade, their respective directors and senior officers and any other "related
parties", "interested parties" and "joint actors") and in the best interests of
the Company and authorized the submission of the arrangement to shareholders of
Four Seasons for their approval at a special meeting of shareholders. The Board
of Four Seasons also has determined unanimously (with interested directors
abstaining) to recommend to Four Seasons shareholders that they vote in favour
of the transaction.
The Special Committee was advised by Merrill Lynch, as independent valuator and
financial advisor, and Osler, Hoskin & Harcourt LLP, as independent legal
advisor. Merrill Lynch has concluded that as at February 5, 2007, the
consideration to be received under the arrangement is fair, from a financial
point of view, to the holders of Limited Voting Shares (other than Mr. Sharp,
Kingdom, Cascade, their respective directors and senior officers and any other
"related parties", "interested parties" and "joint actors"). A copy of the
Merrill Lynch valuation and fairness opinion, factors considered by the Special
Committee and the Board and other relevant background information will be
included in the management information circular that will be
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sent to holders of Limited Voting Shares in connection with the special meeting
to consider the arrangement.
"I am delighted that the Board, after considering the recommendations developed
by the Special Committee and its advisors, has determined to support what I
believe is the best way to preserve and expand the long-term strategy, vision
and core values of Four Seasons," said Isadore Sharp, Chairman and Chief
Executive Officer of Four Seasons.
Pursuant to the arrangement, holders of the outstanding Limited Voting Shares of
the Company (other than Kingdom, Cascade and certain of their affiliates) would
receive US$82.00 cash per share, which represents a 28.4% premium over the
closing price of the Limited Voting Shares of Four Seasons on the New York Stock
Exchange on November 3, 2006, the last trading day on the NYSE before the
announcement of the proposed transaction, and a 33.1% premium over the weighted
average closing price over the six months preceding that date.
As previously disclosed, upon completion of the transaction Triples (which is
Mr. Sharp's family holding company) would hold a significant continuing interest
in Four Seasons and Mr. Sharp would, as Chairman and Chief Executive Officer,
continue to be directly involved in all aspects of the operations and the
strategic direction of the Company, which will remain headquartered in Toronto.
If the transaction is completed, Mr. Sharp will be entitled to realize proceeds
of approximately US$289 million related to a long-term incentive agreement that
was approved by the Company's shareholders before it was put in place in 1989.
A meeting of shareholders to consider the arrangement is anticipated to take
place in April. To be implemented, the arrangement will require approval by
two-thirds of the votes cast by holders of Limited Voting Shares, voting
separately as a class, and approval by Triples, as the sole holder of the
Variable Multiple Voting Shares, voting separately as a class. Kingdom, Cascade
and Triples have agreed to vote their Limited Voting Shares and Variable
Multiple Voting Shares to approve the arrangement. The arrangement also will
require approval by a simple majority of the votes cast by holders of Limited
Voting Shares, other than Mr. Sharp, Kingdom, Cascade, their respective
directors and senior officers and any other "related parties", "interested
parties" and "joint actors". In addition, the arrangement will require approval
by the Ontario Superior Court of Justice. The transaction also will be subject
to certain other customary conditions, including receipt of a limited number of
regulatory approvals. The transaction is not subject to any financing condition,
and Four Seasons has been advised that commitments for the required debt
financing have been received from Citigroup Global Markets Inc., J.P. Morgan
Securities Inc. and JPMorgan Chase Bank, N.A. Four Seasons has received from
Cascade and Kingdom a limited guaranty of certain obligations of FS Acquisition
Corp., the newly-formed company that is the purchaser under the Acquisition
Agreement.
Copies of the acquisition agreement and certain related documents will be filed
with Canadian securities regulators and with the United States Securities and
Exchange Commission and will be available at the Canadian SEDAR website at
WWW.SEDAR.COM and at the U.S. Securities and Exchange Commission's website at
WWW.SEC.GOV. The management information circular in connection with the special
meeting of shareholders to consider the arrangement is expected to be mailed to
shareholders over the coming weeks. The circular also will be available as part
of Four Seasons public filings at WWW.SEDAR.COM and WWW.SEC.GOV.
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It is anticipated that the transaction, if approved by shareholders, will be
completed in the second quarter of 2007.
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CONTACT:
FOUR SEASONS HOTELS INC.
BARBARA HENDERSON
JOHN DAVISON
SENIOR VICE PRESIDENT, CORPORATE
CHIEF FINANCIAL OFFICER FINANCE
(416) 441-6714 (416) 441-4408
KINGDOM HOTELS INTERNATIONAL
CHARLES HENRY
HOTEL CAPITAL ADVISERS, INC.
212-599-5151
EMAIL: CHUCK@HCADVISERS.COM
This news release contains "forward-looking statements" within the meaning of
applicable securities laws relating to the proposal to take Four Seasons Hotels
Inc. private, including statements regarding the terms and conditions of the
proposed transaction. Readers are cautioned not to place undue reliance on
forward-looking statements. Actual results and developments may differ
materially from those contemplated by these statements depending on, among other
things, the risks that the parties will not proceed with a transaction, that the
ultimate terms of the transaction will differ from those that currently are
contemplated, and that the transaction will be not be successfully completed for
any reason (including the failure to obtain the required approvals or clearances
from regulatory authorities). The statements in this news release are made as of
the date of this release and, except as required by applicable law, we undertake
no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
Additionally, we undertake no obligation to comment on analyses, expectations or
statements made by third parties in respect of Four Seasons, its financial or
operating results or its securities or any of the properties that we manage or
in which we may have an interest.
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EXECUTION VERSION
SCHEDULE B
ACQUISITION AGREEMENT
THIS AGREEMENT is made as of February 9, 2007,
B E T W E E N:
FS ACQUISITION CORP., a corporation incorporated
under the laws of the Province of British Columbia
(the "PURCHASER")
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FOUR SEASONS HOTELS INC., a corporation incorporated
under the laws of the Province of Ontario ("FOUR
SEASONS").
NOW THEREFORE, in consideration of the covenants and agreements herein
contained, the parties agree as follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless something in the subject matter or the context
is inconsistent therewith:
"ACQUISITION PROPOSAL" means, any proposal or offer (written or oral)
relating to any merger, consolidation, amalgamation, take-over bid, tender
offer, exchange offer, arrangement, recapitalization, liquidation,
dissolution, share exchange, sale of assets representing 20% or more of
the net income, revenues or assets of Four Seasons and its subsidiaries,
taken as a whole (or any lease, long-term supply agreement or other
arrangement having the same economic effect as a sale of assets
representing 20% or more of the net income, revenues or assets of Four
Seasons and its subsidiaries, taken as a whole), purchase or sale of
shares or other securities of Four Seasons or any of its subsidiaries or
rights or interests therein or thereto representing 20% or more of the
voting power of the capital of Four Seasons (in terms of number of shares
or voting power) or any of its subsidiaries representing 20% or more of
the net income, revenues or assets of Four Seasons and its subsidiaries,
taken as a whole, or similar transactions involving Four Seasons and/or
such subsidiaries, excluding the Arrangement and the transactions
contemplated by this Agreement;
"AFFILIATE" has the meaning ascribed thereto in the Securities Act; and
for purposes of this Agreement (other than Section 7.5), the Bill &
Melinda Gates Foundation Trust shall not be considered an affiliate of
Cascade or the Purchaser;
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"AGREEMENT" means this acquisition agreement as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the terms hereof;
"ARRANGEMENT" means an arrangement under Section 182 of the OBCA on the
terms and subject to the conditions set out in the Plan of Arrangement,
subject to any amendments or variations thereto made in accordance with
Section 8.3 hereof or Article 6 of the Plan of Arrangement or made at the
direction of the Court in the Final Order;
"ARRANGEMENT RESOLUTION" means the special resolution of the holders of
Four Seasons Shares, to be substantially in the form and content of
Schedule B;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of Four
Seasons in respect of the Arrangement, required by the OBCA to be sent to
the Director after the Final Order is made;
"BOARD" means the board of directors of Four Seasons;
"BUSINESS DAY" means any day, other than a Saturday, a Sunday and a
statutory holiday in Toronto, Ontario, Canada, Seattle, Washington, United
States of America or New York, New York, United States of America;
"CASCADE" means Cascade Investment, L.L.C.;
"CLOSING DATE" has the meaning ascribed thereto in Section 2.3;
"COMMERCIALLY REASONABLE EFFORTS" with respect to any Party means the
agreement of such Party to cooperate and to use its reasonable efforts
consistent with commercial practice on the part of a person desirous of
achieving a result without (a) payment or incurrence of any liability or
obligation, other than reasonable expenses, or (b) the requirement to
initiate or commence litigation;
"COMMITMENT LETTERS" has the meaning ascribed thereto in Section 4.1(c);
"COMPETITION ACT" means the COMPETITION ACT (CANADA), as amended from
time to time;
"CONFIDENTIALITY AGREEMENTS" means (a) the letter agreement dated November
4, 2006, as amended, between Kingdom and Four Seasons pursuant to which
Kingdom has been provided with access to confidential information of Four
Seasons and (b) the letter agreement dated June 2, 2006, as amended,
between Cascade and Four Seasons pursuant to which Cascade has been
provided with access to confidential information of Four Seasons, in each
case as may be further amended from time to time;
"CONTRACT" means any contract, agreement, license, franchise, lease,
arrangement, commitment, understanding or other right or obligation
(written or oral) to which Four Seasons or any of its subsidiaries is a
party or by which Four Seasons or any of its subsidiaries is bound or
affected or to which any of their respective properties or assets is
subject, other than, in each case, the Four Seasons Plans;
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"CONVERTIBLE NOTES TENDER OFFER" has the meaning ascribed thereto in
Section 7.13;
"COURT" means the Ontario Superior Court of Justice;
"DATA ROOM" means the data room established by Four Seasons at the
offices of Goodmans LLP;
"DEBT FINANCING" has the meaning ascribed thereto in Section 4.1(c);
"DIRECTOR" means the Director appointed pursuant to Section 278 of the
OBCA;
"DISCLOSURE LETTER" means the letter of disclosure dated as of the date of
this Agreement and signed by one or more officers of Four Seasons (other
than Isadore Sharp) and delivered to the Purchaser;
"DISSENT RIGHTS" means the rights of dissent in respect of the Arrangement
described in Article 4 of the Plan of Arrangement;
"EFFECTIVE TIME" has the meaning ascribed thereto in the Plan of
Arrangement;
"ENVIRONMENT" means the natural environment (including soil, land surface
or subsurface strata), surface waters, groundwater, sediment, ambient air
(including all layers of the atmosphere), organic and inorganic matter and
living organisms, and any other environmental medium or natural resource
and all sewer systems;
"ENVIRONMENTAL LAWS" means all applicable Laws (including in the United
States, the COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND
LIABILITY ACT) relating to public health and safety, noise control,
pollution or the protection of the Environment or to the generation,
production, installation, use, storage, treatment, transportation, Release
or threatened Release of Hazardous Substances, including civil
responsibility for acts or omissions with respect to the Environment, and
all Permits issued pursuant to such Laws;
"EQUITY FUNDING LETTER" has the meaning ascribed thereto in Section
4.1(c);
"EXCHANGE" or "EXCHANGES" means the Toronto Stock Exchange and/or the
New York Stock Exchange, as applicable;
"EXCHANGE ACT" means the UNITED STATES SECURITIES EXCHANGE ACT OF 1934,
as amended;
"FINAL ORDER" means the final order of the Court approving the
Arrangement, as such order may be amended or varied at any time prior to
the Effective Time or, if appealed, then unless such appeal is withdrawn
or denied, as affirmed or as amended on appeal;
"FINANCIAL ADVISOR" has the meaning ascribed thereto in Section 3.1(a);
"FOUR SEASONS CIRCULAR" means the notice of the Four Seasons Meeting and
accompanying Four Seasons management information circular, including all
schedules, appendices and exhibits thereto, to be sent to the shareholders
of Four Seasons in
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connection with the Four Seasons Meeting, as amended, supplemented or
otherwise modified;
"FOUR SEASONS CONVERTIBLE NOTES" means the $250,000,000 aggregate amount
of 1.875% convertible senior notes of Four Seasons maturing July 30, 2024;
"FOUR SEASONS CURRENT PUBLIC DISCLOSURE" means the disclosure made by Four
Seasons in its Form 40-F dated March 9, 2006 and its Forms 6-K dated May
5, 2006, August 10, 2006 and November 9, 2006 filed on the Electronic
Document Gathering, Analysis and Retrieval System (EDGAR), excluding any
documents incorporated by reference therein but including any exhibits
attached thereto;
"FOUR SEASONS EMPLOYEES" means all employees of Four Seasons and its
subsidiaries, other than those employees in respect of whom an owner of a
hotel managed by Four Seasons or its subsidiaries is liable pursuant to a
written and enforceable agreement to reimburse and/or indemnify Four
Seasons or any of its subsidiaries for all costs and expenses of, and
liabilities related to, such employees;
"FOUR SEASONS FINANCIAL STATEMENTS" has the meaning ascribed thereto in
Section 3.1(i);
"FOUR SEASONS MEETING" means the special meeting of Four Seasons
Shareholders, including any adjournment or postponement thereof, to be
called and held in accordance with the Interim Order to consider the
Arrangement;
"FOUR SEASONS OPTION" means an option to purchase Limited Voting Shares
granted under the Four Seasons Stock Option Plan;
"FOUR SEASONS ORGANIZATIONAL DOCUMENTS" has the meaning ascribed thereto
in Section 3.1(b);
"FOUR SEASONS PLANS" has the meaning ascribed thereto in Section
3.1(r)(i);
"FOUR SEASONS' PUBLIC DISCLOSURE RECORD" means all documents filed on the
System for Electronic Document Analysis Retrieval (SEDAR) or the
Electronic Document Gathering, Analysis and Retrieval System (EDGAR) after
December 31, 2003;
"FOUR SEASONS SHAREHOLDERS" means the holders of Four Seasons Limited
Voting Shares;
"FOUR SEASONS SHARES" means, collectively, the Limited Voting Shares
and the Variable Multiple Voting Shares;
"FOUR SEASONS STOCK OPTION PLAN" means the Four Seasons Restated
Director, Executive and Employee Stock Option Plan, as amended through
February 26, 2004;
"GAAP" means Canadian generally accepted accounting principles;
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"GOVERNMENTAL ENTITY" means (a) any multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or
public department, ministry, central bank, court, tribunal, arbitral body,
commission, commissioner, board, bureau or agency, domestic or foreign,
(b) any subdivision, agent or authority of any of the foregoing or (c) any
quasi-governmental or private body, including any tribunal, commission,
regulatory agency or self-regulatory organization, exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"HAZARDOUS SUBSTANCES" means any waste or other substance that is
prohibited, listed, defined, designated or classified as dangerous,
hazardous, radioactive, explosive or toxic or a pollutant or a contaminant
under or pursuant to any applicable Environmental Laws, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials or any substance
which is deemed under Environmental Laws to be deleterious to natural
resources or worker or public health and safety;
"HSR ACT" means the United States HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, as amended from time to time;
"IMMATERIAL SUBSIDIARY" means any subsidiary of Four Seasons that (a) is
not a material subsidiary, (b) held assets with an aggregate book value
not exceeding $5,000,000 as at the end of the subsidiary's most recently
completed fiscal year, (c) generated revenues (other than any employee
cost reimbursements from property owners, dividends from subsidiaries and
revenues from food and beverage operations in connection with managed
properties) not exceeding $5,000,000 in the subsidiary's most recently
completed fiscal year (to be calculated on a pro rata basis in the event
that such subsidiary was not in existence for the entire most recently
completed fiscal year), and (d) is not a party to a Management Agreement;
"INCLUDING" means including without limitation, and "INCLUDE" and
"INCLUDES" have a corresponding meaning;
"INDEBTEDNESS" means, with respect to any person, without duplication but
excluding indebtedness between a person and its wholly-owned subsidiaries
(a) indebtedness of such person for borrowed money, secured or unsecured,
(b) every obligation of such person evidenced by bonds, debentures, notes
or other similar instruments, (c) every obligation of such person under
purchase money mortgages, conditional sale agreements or other similar
instruments relating to purchased property or assets, (d) every
capitalized lease obligation of such person, (e) every obligation of such
person under interest rate cap, swap, collar or similar transactions or
currency hedging transactions (valued at the termination value thereof),
and (f) every obligation of the type referred to above of any other
person, the payment of which such person has guaranteed or for which such
person is otherwise responsible or liable;
"INDENTURE" has the meaning ascribed thereto in Section 3.1(e);
"INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed thereto in
Section 3.1(t);
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"INTERESTED SHAREHOLDERS" means, collectively, (i) Isadore Sharp, Triples,
the Purchaser, Kingdom, Cascade and their respective directors and senior
officers, (ii) any other related party of Isadore Sharp, Triples, the
Purchaser, Kingdom or Cascade within the meaning of Ontario Securities
Commission Rule 61-501 and the Autorite des marches financiers du Quebec
Regulation Q-27, subject to the exceptions set out therein, (iii) any
interested party to the Arrangement within the meaning of Ontario
Securities Commission Rule 61-501 and the Autorite des marches financiers
du Quebec Regulation Q-27, and (iv) any person that is a joint actor with
any of the foregoing for the purposes of Ontario Securities Commission
Rule 61-501 and the Autorite des marches financiers du Quebec Regulation
Q-27.
"INTERIM ORDER" means the interim order of the Court, as the same may be
amended in respect of the Arrangement, as contemplated by Section 2.2;
"JV INTERESTS" has the meaning ascribed thereto in Section 3.1(g);
"KINGDOM" means Kingdom Hotels International;
"LAW" or "LAWS" means all laws (including common law), by-laws, statutes,
rules, regulations, principles of law and equity, orders, rulings,
ordinances, judgments, injunctions, determinations, awards, decrees or
other requirements, whether domestic or foreign, and the terms and
conditions of any grant of approval, permission, authority or license of
any Governmental Entity or self-regulatory authority (including either of
the Exchanges), and the term "APPLICABLE" with respect to such Laws
(including Environmental Laws) and in a context that refers to one or more
Parties, means such Laws as are applicable to such Party or its business,
undertaking, property or securities and emanate from a person having
jurisdiction over the Party or Parties or its or their business,
undertaking, property or securities;
"LEASE DOCUMENTS" has the meaning ascribed thereto in Section
3.1(n)(ii);
"LEASED PROPERTIES" has the meaning ascribed thereto in Section
3.1(n)(ii);
"LEGAL ACTIONS" has the meaning ascribed thereto in Section 3.1(l);
"LENDER" has the meaning ascribed thereto in Section 4.1(c);
"LIENS" means any hypothecations, mortgages, liens, charges, security
interests, pledges, claims, encumbrances and adverse rights or claims;
"LIMITED VOTING SHARES" means the limited voting shares of Four Seasons;
"MANAGEMENT AGREEMENTS" has the meaning ascribed thereto in Section
3.1(p)(i)(H);
"MATERIAL ADVERSE EFFECT" means, when used in connection with Four
Seasons, any fact, circumstance, change, effect, matter, action,
condition, event or occurrence that, individually or in the aggregate with
all other facts, circumstances, changes, effects, matters, actions,
conditions, events or occurrences, (a) is material and adverse to the
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business, affairs, assets, operations, results of operations, or financial
condition of Four Seasons and its subsidiaries, taken as a whole, or (b)
would materially impair or delay the consummation of the transactions
contemplated by this Agreement by Four Seasons beyond the Outside Date or
materially impair or delay the ability of Four Seasons to perform its
obligations hereunder provided that the pendency of any litigation seeking
to restrain, enjoin or otherwise prohibit the consummation of the
Arrangement shall be disregarded for the purpose of this clause (b), other
than, in the case of either clause (a) or (b) above, any fact,
circumstance, change, effect, matter, action, condition, event or
occurrence resulting from (i) the announcement of the execution of this
Agreement or the transactions contemplated hereby or the performance of
any obligation hereunder, (ii) changes in the U.S. or Canadian economies
or securities or currency markets in general, (iii) changes generally
affecting the hospitality business in one or more countries or geographic
markets where Four Seasons and its subsidiaries operate or conduct
business, (iv) any change in applicable Laws, regulations or GAAP, (v) any
natural disaster, or (vi) any outbreak or escalation of hostilities,
declared or undeclared acts of war or terrorism, except in the case of
clauses (iii), (iv), (v) and (vi) to the extent any such fact,
circumstance, change, effect, matter, action, condition, event or
occurrence has had a materially disproportionate effect on Four Seasons
and its subsidiaries, taken as a whole, compared to other persons in the
five-star hospitality management business in one or more countries or
geographic markets so affected; provided that (x) a failure to meet any
earnings estimates previously made public by Four Seasons, or (y) any
decrease in the market price or any decline in the trading volume of the
Limited Voting Shares on either of the Exchanges shall not, in and of
itself, constitute a Material Adverse Effect; provided, however, that any
fact, circumstance, change, effect, matter, action, condition, event or
occurrence underlying any such decrease in market price or decline in
trading volume that is not excluded pursuant to clause (i) through (vi)
may be considered in determining whether there has been a Material Adverse
Effect;
"MATERIAL CONTRACTS" has the meaning ascribed thereto in Section
3.1(p)(i)(J);
"MATERIAL FACT" has the meaning ascribed thereto in the SECURITIES ACT;
"MATERIAL SUBSIDIARIES" means those subsidiaries of Four Seasons which
are listed in Section 3.1(b) of the Disclosure Letter;
"MD&A" has the meaning ascribed thereto in Section 3.1(i);
"OBCA" means the BUSINESS CORPORATIONS ACT (Ontario) and the regulations
made thereunder, as now in effect and as they may be promulgated or
amended from time to time;
"OTHER PLAN" has the meaning ascribed thereto in Section 3.1(r)(i);
"OUTSIDE DATE" means June 30, 2007, subject to the right of either Party
to postpone the Outside Date for up to an additional 90 days (in 30-day
increments) if the Regulatory Approvals have not been obtained and have
not been denied by a non-appealable decision of a Governmental Entity, by
giving written notice to the other Party to such effect no
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later than 5:00 p.m. (Eastern time) on the date that is not less than 15
days prior to the original Outside Date (and any subsequent Outside Date),
or such later date as may be agreed to in writing by the Parties; provided
that notwithstanding the foregoing, a Party shall not be permitted to
postpone the Outside Date if the failure to obtain a Regulatory Approval
is materially the result of such Party's failure to cooperate in
accordance with Section 5.5(a) in obtaining such Regulatory Approval;
"OWNED REAL PROPERTIES" has the meaning ascribed thereto in Section
3.1(n)(i);
"PARTIES" means, collectively, the Purchaser and Four Seasons, and
"PARTY" means either of them;
"PERMIT" means any license, permit, certificate, consent, order, grant,
approval, classification, registration, flagging or other authorization of
and from any Governmental Entity, including any liquor license;
"PERMITTED LIENS" means, in respect of any property or asset of any person
at any time, any one or more of the following:
(a) Liens for current real estate Taxes and assessments not yet due and
payable or Liens for income and similar Taxes that are being contested
in good faith and for which Four Seasons has made adequate provision
in accordance with GAAP;
(b) inchoate mechanics' and materialmen's Liens for construction in
progress;
(c) to the extent such Liens would not reasonably be expected to have a
Material Adverse Effect, (i) workmen's, repairmen's, warehousemen's
and carriers' Liens arising in the ordinary course of business of Four
Seasons or a subsidiary thereof consistent with past practice, (ii)
all matters of record, whether or not registered, which do not
individually or in the aggregate render title to any real estate asset
invalid or unmarketable, and (iii) all Liens and other imperfections
of title and encumbrances which would not reasonably be expected to
materially interfere with the conduct of the business of Four Seasons
or a subsidiary thereof;
(d) rights reserved to or vested in any Governmental Entity by the terms
of any lease, license, franchise, grant or permit, or by any statutory
provision, to terminate the same, to take action which results in an
expropriation or condemnation, or to require annual or other payments
as a condition to the continuance thereof;
(e) deposits of cash or securities in connection with any appeal, review
or contestation of any Lien or any matter giving rise to any Lien
described in (a) or (c) above and for which adequate reserves have
been provided for in the books of Four Seasons in accordance with
GAAP;
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(f) the provisions of applicable Law including zoning, land use and
building restrictions, by-laws, regulations and ordinances of federal,
state, provincial, municipal or other governmental bodies or
regulatory authorities, including municipal by-laws and regulations,
airport zoning regulations, restrictive covenants and other land use
limitations, public or private, by-laws and regulations and other
similar Liens or privileges in respect of real property which in the
aggregate do not materially impair the use of such property by such
person in the operation of its business, and which are not violated in
any material respect by existing or proposed structures or land use;
(g) Permits, reservations, water course, right of access or user licenses,
easements, rights of way, restrictions, building schemes, licenses,
restrictive covenants and servitudes, rights of access or use, airport
zoning regulations and other similar rights in land (including
licenses, easements, rights of way, servitudes and rights in the
nature of easements for walkways, sidewalks, public ways, sewers,
drains, gas, soil, steam and water mains or pipelines, electrical
lights and power, telephone, television and cable conduits, poles,
wires or cables) granted to, reserved or taken by any person which
would not materially impair the use of the real property to which they
relate, and any rights reserved or vested in any Governmental Entity
or public or private utility or railway company by the terms of any
lease, licence, franchise, grant, agreement or permit, subdivision,
development, servicing, encroachment, site plan or other similar
agreement with any Governmental Entity or public or private utility or
railway company that would not materially impair the use of the real
property to which they relate;
(h) purchase money security interests securing Indebtedness in the
ordinary course of business;
(i) security given by such person to a public utility or any Governmental
Entity, when required by such utility or Governmental Entity in
connection with the operations of such person, in the ordinary course
of business;
(j) the reservations, limitations, exceptions, provisos and conditions, if
any, expressed in the original grant from the Crown, including the
reservation for mines and minerals in the Crown or in any other
person;
(k) encroachments by any real property over adjoining lands or easements,
or rights of way and encroachments over any of the real property by
improvements of adjoining land owners or agreements relating to any of
the foregoing; and
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(l) guest rental and license arrangements, residency agreements and
customer contracts and all other leases, agreements to lease,
agreements in the nature of a lease and occupancy agreements;
"PERSON" includes an individual, limited or general partnership, limited
liability company, limited liability partnership, trust, joint venture,
association, body corporate, unincorporated organization, trustee,
executor, administrator, legal representative, government (including any
Governmental Entity) or any other entity, whether or not having legal
status;
"PLAN OF ARRANGEMENT" means the plan of arrangement, substantially in the
form of Schedule A hereto and any amendments or variations thereto made in
accordance with Section 8.3 hereof or Article 6 of the Plan of Arrangement
or made at the direction of the Court in the Final Order;
"POST-SIGNING RETURNS" has the meaning ascribed thereto in Section
7.10(1);
"PRE-ACQUISITION REORGANIZATION" has the meaning ascribed thereto in
Section 5.2;
"PROPERTIES" has the meaning ascribed thereto in Section 3.1(n)(ii);
"PURCHASER MATERIAL ADVERSE EFFECT" means any fact, circumstance, change,
effect, matter, action, condition, event or occurrence that, individually
or in the aggregate with all other facts, circumstances, changes, effects,
matters, actions, conditions, events or occurrences, would reasonably be
expected to materially impair or delay the consummation of the
transactions contemplated by this Agreement by the Purchaser beyond the
Outside Date or materially impair or delay the ability of the Purchaser to
perform its obligations hereunder;
"PURCHASER PARTIES" means, collectively, Cascade, Kingdom and Triples;
"PURCHASER PAYMENT PARTIES" means collectively, FS Acquisition Corp.,
Kingdom Investments I (TSF) Sarl and Triples.
"REGULATORY APPROVALS" means (i) those sanctions, rulings, consents,
orders, exemptions, permits and other approvals (including the lapse,
without objection, of a prescribed time under a statute or regulation that
states that a transaction may be implemented if a prescribed time lapses
following the giving of notice without an objection being made) of
Governmental Entities set forth in Schedule C, and (ii) such other
sanctions, rulings, consents, orders, exemptions, permits and other
approvals (including the lapse, without objection, of a prescribed time
under any Law that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice without an objection
being made) of Governmental Entities required to consummate the Plan of
Arrangement, except, in the case of (ii) only, for those sanctions,
rulings, consents, orders, exemptions, permits and other approvals, the
failure of which to obtain individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect or a
Purchaser Material Adverse Effect, and for greater certainty, except, in
the case of (i) and (ii), for such sanctions, rulings, consents, orders,
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exemptions, permits and other approvals required solely in connection with
any Pre-Acquisition Reorganization or the Debt Financing;
"RELEASE" has the meaning prescribed in any Environmental Law and includes
any sudden, intermittent or gradual release, spill, leak, pumping,
addition, pouring, emission, emptying, discharge, migration, injection,
escape, leaching, disposal, dumping, deposit, spraying, burial,
abandonment, incineration, seepage, placement or introduction of a
Hazardous Substance, whether accidental or intentional, into the
environment;
"REQUIRED VOTE" has the meaning ascribed thereto in Section 2.2(b);
"RETURNS" means all reports, forms, elections, designations, schedules,
statements, estimates, declarations of estimated tax, information
statements and returns required to be filed with a Governmental Entity
with respect to Taxes;
"SARBANES-OXLEY ACT" means the United States SARBANES-OXLEY ACT OF 2002
and the rules and regulations promulgated under such Act;
"SCHEDULE 13E-3" means the Rule 13e-3 transaction statement on Schedule
13E-3 under the Exchange Act to be filed by Four Seasons, Cascade,
Kingdom, Triples and Isadore Sharp in connection with this Agreement and
the Plan of Arrangement;
"SECURITIES ACT" means the SECURITIES ACT (Ontario) and the rules,
regulations and published policies made thereunder, as now in effect and
as they may be promulgated or amended from time to time;
"SECURITIES AUTHORITIES" means the applicable securities commissions and
other securities regulatory authorities in Canada and the United States;
"SECURITIES LAWS" means the SECURITIES ACT, all other applicable Canadian
provincial and United States federal and state securities laws, rules and
regulations and published policies thereunder; "SPECIAL COMMITTEE" means
the special committee of independent members of the Board formed in
relation to the proposal to effect the transactions contemplated by this
Agreement;
"SPONSOR GUARANTEE" has the meaning ascribed thereto in Section 4.1(c);
"SUBSIDIARY" means, with respect to a specified person, any person of
which at least 50% of the voting power ordinarily entitled to elect a
majority of the board of directors thereof (whether or not shares of any
other class or classes shall or might be entitled to vote upon the
happening of any event or contingency) are at the time owned directly or
indirectly by such specified person and shall include any person over
which such specified person exercises direction or control or which is in
a like relation to a subsidiary;
"SUPERIOR PROPOSAL" shall mean any unsolicited bona fide written
Acquisition Proposal (i) that relates to not less than 50.1% of the
outstanding Limited Voting Shares or assets
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of Four Seasons or any of its subsidiaries representing not less than
50.1% of the assets of Four Seasons and its subsidiaries taken as a whole,
(ii) that is reasonably capable of being completed without undue delay,
taking into account to the extent considered appropriate by the Board, all
financial, legal, regulatory and other aspects of such proposal and the
person making such proposal, (iii) which the Board determines, in its good
faith judgment, after receiving the advice of its outside legal and
Financial Advisors and after taking into account all the terms and
conditions of the Acquisition Proposal, is on terms and conditions more
favourable from a financial point of view to the Four Seasons Shareholders
(other than Interested Shareholders, provided that the terms and
conditions of such Acquisition Proposal apply equally to all Four Seasons
Shareholders) than those contemplated by this Agreement, and (iv) for
which financing, to the extent required, is then committed.
"TAX ACT" means the INCOME TAX ACT (Canada) and the regulations made
thereunder, as now in effect and as they may be promulgated or amended
from time to time;
"TAXES" means any and all domestic and foreign federal, state, provincial,
municipal and local taxes, assessments and other governmental charges,
duties, impositions and liabilities imposed by any Governmental Entity,
including Canada Pension Plan and Provincial pension plan contributions,
installments, unemployment insurance contributions and employment
insurance contributions, worker's compensation and deductions at source,
including taxes based on or measured by gross receipts, income, profits,
sales, capital, use, and occupation, and including goods and services,
value added, AD VALOREM, transfer, franchise, withholding, customs,
payroll, recapture, employment, excise and property duties and taxes,
together with all interest, penalties, fines and additions imposed with
respect to such amounts;
"TECHNOLOGY" has the meaning ascribed thereto in Section 3.1(t);
"TERMINATION FEE" has the meaning ascribed thereto in Section 7.3;
"TRIPLES" means Triples Holdings Limited;
"VALUATION AND FAIRNESS OPINION" means the formal valuation of the Limited
Voting Shares prepared by the Financial Advisor, as required pursuant to
Ontario Securities Commission Rule 61-501 and the Autorite des marches
financiers du Quebec Regulation Q-27, and the opinion of the Financial
Advisor to the Special Committee as to the fairness, from a financial
point of view, of the consideration being offered under the Arrangement to
Four Seasons Shareholders, other than the Interested Shareholders; and
"VARIABLE MULTIPLE VOTING SHARES" means the variable multiple voting
shares of Four Seasons.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement into Articles and Sections and the
insertion of a table of contents and headings are for convenience of reference
only and do not affect the construction or interpretation of this Agreement. The
terms "hereof", "hereunder" and similar expressions refer
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to this Agreement and not to any particular Article, Section or other portion
hereof. Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles, Sections and Schedules are to Articles
and Sections of and Schedules to this Agreement.
1.3 INTERPRETATION
In this Agreement words importing the singular number include the plural
and VICE VERSA, and words importing any gender include all genders. The term
"third party" means any person other than Four Seasons, the Purchaser or any of
the Purchaser Parties. The term "made available" means that (i) copies of the
subject materials were included in the Data Room on or prior to February 7,
2007, (ii) copies of the subject materials were provided to the Purchaser, or
(iii) the subject material was listed in the Disclosure Letter or referred to in
the Data Room on or prior to February 7, 2007 and copies were provided to the
Purchaser by Four Seasons if requested.
1.4 DATE FOR ANY ACTION
If the date on which any action is required to be taken hereunder by a
Party is not a business day, such action shall be required to be taken on the
next succeeding day which is a business day.
1.5 STATUTORY REFERENCES
In this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to any
statute is to that statute as now enacted or as the same may from time to time
be amended, re-enacted or replaced and includes any regulations made thereunder.
1.6 CURRENCY
Unless otherwise stated, all references in this Agreement to sums of money
are expressed in lawful money of the United States of America and "$" refers to
United States dollars.
1.7 ACCOUNTING PRINCIPLES
Wherever in this Agreement reference is made to a calculation to be made
or an action to be taken in accordance with GAAP, such reference will be deemed
to be to the GAAP from time to time approved by the Canadian Institute of
Chartered Accountants, or any successor institute, applicable as at the date on
which such calculation or action is made or taken or required to be made or
taken.
1.8 KNOWLEDGE
In this Agreement (other than in Section 3.1(v)), references to "the
knowledge of Four Seasons" means the actual knowledge, in their capacity as
officers of Four Seasons and not in their personal capacity, of Sarah Cohen,
John M. Davison, Craig O. Reith, Kathleen Taylor or Randolph Weisz, after
reasonable inquiry within Four Seasons.
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1.9 SCHEDULES
The following Schedules are annexed to this Agreement and are incorporated
by reference into this Agreement and form a part hereof:
Schedule A - Plan of Arrangement
Schedule B - Special Resolution of the Four Seasons Shareholders
Schedule C - Regulatory Approvals
ARTICLE II
THE ACQUISITION
2.1 IMPLEMENTATION STEPS BY FOUR SEASONS
Four Seasons covenants in favour of the Purchaser that Four Seasons shall:
(a) subject to the terms of this Agreement, as soon as reasonably
practicable, but in any event in sufficient time to hold the Four
Seasons Meeting in accordance with Section 2.1(b), apply in a
manner reasonably acceptable to Purchaser under Section 182 of
the OBCA for the Interim Order;
(b) subject to the terms of this Agreement and in accordance with the
Interim Order, as soon as reasonably practicable, but in no event
later than the fifth business day immediately preceding the
Outside Date, convene and hold the Four Seasons Meeting for the
purpose of considering the Arrangement Resolution;
(c) not cancel the Four Seasons Meeting without the Purchaser's prior
written consent;
(d) subject to compliance by the directors and officers of Four
Seasons with their fiduciary duties, use commercially reasonable
efforts to solicit from the Four Seasons Shareholders proxies in
favour of the approval of the Arrangement Resolution;
(e) subject to obtaining such approvals as are required by the
Interim Order, proceed with and diligently pursue the application
to the Court for the Final Order; and
(f) subject to obtaining the Final Order and in accordance with
Section 2.3, send to the Director, for endorsement and filing by
the Director, the Articles of Arrangement and such other
documents as may be required in connection therewith under the
OBCA to give effect to the Arrangement.
2.2 INTERIM ORDER
The notice of motion for the application referred to in Section 2.1(a)
shall request that the Interim Order provide:
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(a) for the class of persons to whom notice is to be provided in
respect of the Arrangement and the Four Seasons Meeting and for
the manner in which such notice is to be provided;
(b) that, subject to the approval of the Court, the requisite
approval for the Arrangement Resolution shall be (i) 66(2)/3 % of
the votes cast on the Arrangement Resolution by Four Seasons
Shareholders and of the votes cast on the Arrangement Resolution
by the holder(s) of the Variable Multiple Voting Shares
(including by way of a written resolution of the holder(s) of the
Variable Multiple Voting Shares), each voting separately as a
class, present in person or represented by proxy at the Four
Seasons Meeting, and (ii) a majority of the votes cast on the
Arrangement Resolution by the Four Seasons Shareholders (other
than the Interested Shareholders), present in person or
represented by proxy at the Four Seasons Meeting voting
separately as a class (such approval described in this Section
2.2(b), the "REQUIRED VOTE");
(c) that the terms, restrictions and conditions of the by-laws and
articles of Four Seasons, including quorum requirements and all
other matters, shall apply in respect of the Four Seasons
Meeting;
(d) for the grant of the Dissent Rights; and
(e) for the notice requirements with respect to the presentation of
the application to the Court for a Final Order.
2.3 ARTICLES OF ARRANGEMENT; CLOSING
The Articles of Arrangement shall implement the Plan of Arrangement. On
the second business day after the satisfaction or waiver (subject to applicable
Laws) of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date, but subject to the satisfaction or, where
permitted, waiver of those conditions as of the Closing Date) set forth in
Article VI but, in any event, not earlier than March 15, 2007, and unless
another time or date is agreed to in writing by the parties hereto (the "CLOSING
DATE"), the Articles of Arrangement shall be filed with the Director. At the
Effective Time, among other things, each Limited Voting Share outstanding
immediately prior to the Effective Time will be exchanged as provided in the
Plan of Arrangement, and the Arrangement will, from and after the Effective
Time, have all of the effects provided by applicable Laws, including the OBCA.
The closing of the transactions contemplated hereby and by the Arrangement will
take place at the Toronto, Ontario offices of Goodmans LLP on the Closing Date.
2.4 CIRCULAR
Subject to compliance with Section 2.5, as promptly as reasonably
practicable after the execution and delivery of this Agreement, Four Seasons
shall prepare the Four Seasons Circular together with any other documents
required by the Securities Laws or other applicable Laws in connection with the
Four Seasons Meeting required to be filed or prepared by Four Seasons, and,
subject to Section 2.5(2) as promptly as is reasonably practicable after the
execution and delivery
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of this Agreement, Four Seasons shall, unless otherwise
agreed by the Parties, cause the Four Seasons Circular and other documentation
required in connection with the Four Seasons Meeting to be sent to Four Seasons
Shareholders and filed as required by the Interim Order and applicable Laws. The
Four Seasons Circular shall include the recommendation of the Board that Four
Seasons Shareholders vote in favour of the Arrangement Resolution unless such
recommendation has been withdrawn, modified or amended in accordance with the
terms of this Agreement and will include a copy of the Valuation and Fairness
Opinion.
2.5 PREPARATION OF FILINGS
(1) The Parties shall co-operate in the preparation of any application for
the Regulatory Approvals and any other orders, registrations,
consents, filings, rulings, exemptions, no-action letters and
approvals and the preparation of any documents reasonably deemed by
any of the Parties to be necessary to discharge its respective
obligations or otherwise advisable under applicable Laws in connection
with the Arrangement and this Agreement as promptly as practicable
hereafter.
(2) The Parties shall co-operate in the preparation and filing of the Four
Seasons Circular and the Schedule 13E-3, and in the mailing of the
Four Seasons Circular. Four Seasons shall provide the Purchaser and
its representatives with a reasonable opportunity to review and
comment on the Four Seasons Circular and the Schedule 13E-3, including
by providing on a timely basis a description of any information
required to be supplied by the Purchaser for inclusion in the Four
Seasons Circular, prior to its mailing to Four Seasons Shareholders
and filing in accordance with the Interim Order and applicable Laws
and a description of any information required to be supplied by the
Purchaser prior to the filing of the Schedule 13E-3 with the U.S.
Securities and Exchange Commission; and will accept the reasonable
comments of the Purchaser and its legal counsel with respect to any
such information required to be supplied by the Purchaser and included
in the Four Seasons Circular or the Schedule 13E-3. Except as provided
in the immediately preceding sentence, the Purchaser acknowledges that
whether or not such comments are appropriate or any revisions will be
made as a result thereof to the Four Seasons Circular or the Schedule
13E-3 will be determined solely by Four Seasons acting reasonably.
(3) The Purchaser shall provide Four Seasons with any information for
inclusion in the Four Seasons Circular or the Schedule 13E-3 which may
be required under applicable Law and/or which is reasonably requested
by Four Seasons.
(4) Four Seasons shall ensure that the Four Seasons Circular and the
Schedule 13E-3 (other than disclosure relating to and provided by the
Purchaser, Kingdom, Cascade and Triples) complies with the Interim
Order and all applicable Laws and, without limiting the generality of
the foregoing, that the Four Seasons Circular does not, at the time of
mailing, and that the Schedule 13E-3 does not, at the time of filing,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements
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contained therein not misleading in light of the circumstances under
which they are made (other than with respect to any information
relating to and provided by the Purchaser, Kingdom, Cascade and
Triples).
(5) The Purchaser shall ensure that the information to be provided by it
for inclusion in the Four Seasons Circular and the Schedule 13E-3
will, at the time of the mailing of the Four Seasons Circular and the
filing of the Schedule 13E-3, respectively, not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or that is necessary to make the
statements contained therein, not misleading in light of the
circumstances under which they are made.
(6) Each of the Parties shall promptly notify the other if at any time
before the Effective Time it becomes aware that the Four Seasons
Circular, the Schedule 13E-3, an application for a Regulatory Approval
or any other order, registration, consent, ruling, exemption,
no-action letter or approval, any registration statement or any
circular or other filing under applicable Laws contains an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or that is necessary to make the
statements contained therein not misleading in light of the
circumstances under which they are made, or of information that
otherwise requires an amendment or supplement to the Four Seasons
Circular or the Schedule 13E-3, such application, registration
statement, circular or filing, and the Parties shall co-operate in the
preparation of such amendment or supplement as required, including the
distribution and filing of such amendment or supplement by Four
Seasons.
(7) Four Seasons will promptly inform the Purchaser of any requests or
comments made by Securities Authorities in connection with the Four
Seasons Circular or the Schedule 13E-3. Each of the Parties will use
its respective commercially reasonable efforts to resolve all requests
or comments made by Securities Authorities with respect to the Four
Seasons Circular, the Schedule 13E-3 and any other required filings
under applicable securities Laws as promptly as practicable after
receipt thereof.
(8) Four Seasons will advise the Purchaser as the Purchaser may reasonably
request, and on a daily basis on each of the last seven business days
prior to the Four Seasons Meeting, as to the aggregate tally of the
proxies received by Four Seasons in respect of the Arrangement
Resolution and any other matters to be considered at the Four Seasons
Meeting.
(9) Four Seasons will promptly advise the Purchaser of any written notice
of Dissent Rights exercised or purported to have been exercised by any
Four Seasons Shareholder received by Four Seasons in relation to the
Four Seasons Meeting and the Arrangement Resolution and any withdrawal
of Dissent Rights received by Four Seasons and, subject to applicable
Laws, any written communications sent by or on behalf of Four Seasons
to any Four Seasons Shareholder exercising
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or purporting to exercise Dissent Rights in relation to the
Arrangement Resolution.
(10) Four Seasons will give notice to the Purchaser of the Four Seasons
Meeting and allow the Purchaser's representatives and legal counsel to
attend the Four Seasons Meeting.
2.6 COURT PROCEEDINGS
Four Seasons will provide Purchaser and its legal counsel with reasonable
opportunity to review and comment upon drafts of all material to be filed with
the Court in connection with the Arrangement, including by providing on a timely
basis a description of any information required to be supplied by the Purchaser
for inclusion in such material, prior to the service and filing of that
material, and will accept the reasonable comments of the Purchaser and its legal
counsel with respect to any such information required to be supplied by the
Purchaser and included in such material. Four Seasons will ensure that all
material filed with the Court in connection with the Arrangement is consistent
in all material respects with the terms of this Agreement and the Plan of
Arrangement. In addition, Four Seasons will not object to legal counsel to the
Purchaser making such submissions on the hearing of the motion for the Interim
Order and the application for the Final Order as such counsel considers
appropriate, provided that Four Seasons is advised of the nature of any
submissions prior to the hearing and such submissions are consistent with this
Agreement, the agreements that it contemplates and the Plan of Arrangement. Four
Seasons will also provide legal counsel to the Purchaser on a timely basis with
copies of any notice of appearance and evidence served on Four Seasons or its
legal counsel in respect of the application for the Final Order or any appeal
therefrom. Subject to applicable Laws, Four Seasons will not file any material
with the Court in connection with the Arrangement or serve any such material,
and will not agree to modify or amend materials so filed or served, except as
contemplated hereby or with the Purchaser's prior written consent, such consent
not to be unreasonably withheld or delayed; provided that nothing herein shall
require the Purchaser to agree or consent to any increased purchase price or
other consideration or other modification or amendment to such filed or served
materials that expands or increases the Purchaser's obligations set forth in any
such filed or served materials or under this Agreement.
2.7 PUBLIC COMMUNICATIONS
The Parties agree to co-operate in the preparation of presentations, if
any, to Four Seasons Shareholders regarding the Arrangement, and no Party shall
issue any press release or otherwise make public statements with respect to the
Arrangement or this Agreement, without the consent of the other Party (which
consent shall not be unreasonably withheld or delayed); and Four Seasons shall
not make any filing with any Governmental Entity or with any Exchange with
respect to the Arrangement without prior consultation with the Purchaser, and
the Purchaser shall not make any filing with any Governmental Entity or with any
Exchange with respect to the Arrangement without prior consultation with Four
Seasons; PROVIDED, HOWEVER, that the foregoing shall be subject to each Party's
overriding obligation to make any disclosure or filing required under applicable
Laws, and the Party making any such disclosure shall use all commercially
reasonable efforts to give prior oral or written notice to the other Party and
reasonable opportunity for the other Party to review or comment on the
disclosure or filing (other
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than with respect to confidential information contained in such disclosure or
filing), and if such prior notice is not possible, to give such notice
immediately following the making of any such disclosure or filing, and provided
further, that, except as otherwise required by Section 7.2(4) of this Agreement,
Four Seasons shall have no obligation to consult with the Purchaser prior to any
disclosure by Four Seasons with regard to an Acquisition Proposal.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FOUR SEASONS
3.1 REPRESENTATIONS AND WARRANTIES
Contemporaneously with the execution and delivery of this Agreement, Four
Seasons is delivering to the Purchaser the Disclosure Letter required to be
delivered pursuant to this Agreement, which is deemed to constitute an integral
part of this Agreement and to modify the representations and warranties of Four
Seasons contained in this Agreement; provided that no disclosures set forth in
the Disclosure Letter will modify a particular representation and warranty of
Four Seasons contained in this Agreement except for such disclosures, if any, as
are set forth in the Disclosure Letter under a Section heading that corresponds
to the Section of this Agreement containing the particular representation and
warranty or an appropriate cross-reference. Four Seasons represents and warrants
to and in favour of the Purchaser as follows and acknowledges that the Purchaser
is relying upon such representations and warranties in connection with the
entering into of this Agreement, provided, however, that each of the
representations and warranties of Four Seasons set forth in Sections 3.1(b) to
3.1(y), inclusive, is qualified by and is made subject to (i) any actions that
are permitted or contemplated pursuant to the terms of this Agreement, and (ii)
other than with respect to the first three sentences of Section 3.1(e) and
Section 3.1(k), the Four Seasons Current Public Disclosure:
(a) BOARD AND SPECIAL COMMITTEE APPROVAL. (i) As of the date hereof,
the Special Committee, after consultation with its financial and
legal advisors, has unanimously recommended that the Board
approve the Arrangement and recommend that Four Seasons
Shareholders vote in favour of the Arrangement Resolution, and
(ii) as of the date hereof, the Board, after consultation with
its financial and legal advisors, has determined unanimously
(with Isadore Sharp, Anthony Sharp, Charles Henry and Simon
Turner abstaining) that the Arrangement is fair to the Four
Seasons Shareholders (other than the Interested Shareholders) and
is in the best interests of Four Seasons and has resolved
unanimously (with Isadore Sharp, Anthony Sharp, Charles Henry and
Simon Turner abstaining) to recommend to the Four Seasons
Shareholders that they vote their Limited Voting Shares in favour
of the Arrangement. The Board has unanimously (with Isadore
Sharp, Anthony Sharp, Charles Henry and Simon Turner abstaining)
approved the Arrangement and the execution and performance of
this Agreement. The Special Committee and the Board have received
the Valuation and Fairness Opinion from Merrill Lynch Canada Inc.
(the "FINANCIAL ADVISOR").
-20-
(b) ORGANIZATION AND QUALIFICATION. Four Seasons and each of the
material subsidiaries and, except as would not have a Material
Adverse Effect, each of its other subsidiaries, is a corporation
duly incorporated, continued or amalgamated or an entity duly
created and validly existing under the laws of its jurisdiction
of incorporation, continuance, amalgamation or creation and has
the requisite corporate or other power and authority to own its
assets as now owned and to carry on its business as it is now
being conducted. Four Seasons and each of its subsidiaries is
duly registered or otherwise authorized to do business and each
is in good standing in each jurisdiction in which the character
of its properties, owned, leased, licensed or otherwise held, or
the nature of its activities makes such registration or
authorization necessary, except where the failure to be so
registered, authorized or in good standing would not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Correct, current and complete copies
of the articles of incorporation, continuance or amalgamation and
by-laws (or the equivalent organizational documents), each as
amended to date, of Four Seasons and each of the material
subsidiaries (collectively, the "FOUR SEASONS ORGANIZATIONAL
DOCUMENTS") have been made available to the Purchaser.
(c) AUTHORITY RELATIVE TO THIS AGREEMENT. Four Seasons has the
requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by Four Seasons and,
subject to the Required Vote, the consummation by Four Seasons of
the transactions contemplated by this Agreement have been duly
authorized by the Board, and no other corporate proceedings on
the part of Four Seasons are necessary to authorize the execution
and delivery by it of this Agreement or any agreement ancillary
hereto and the consummation by it of the transactions
contemplated hereby and thereby, subject, in the case of
consummation of the Arrangement, to the receipt of the Required
Vote, approval by the Court and filing of the Articles of
Arrangement. This Agreement has been duly executed and delivered
by Four Seasons and constitutes a legal, valid and binding
obligation of Four Seasons enforceable against Four Seasons in
accordance with its terms, subject to the qualification that such
enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting rights of creditors and that equitable remedies,
including specific performance, are discretionary and may not be
ordered.
(d) NO VIOLATIONS. None of the execution and delivery of this
Agreement by Four Seasons, the consummation of the Arrangement by
Four Seasons or compliance by Four Seasons with any of the
provisions hereof will: (1) violate, conflict with, or result in
a breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which with or
without notice or lapse of time or both, would constitute a
default) under, or result in granting to a third party a right to
reduce
-21-
rentals, fees or other payments to Four Seasons or any of its
subsidiaries under, or result in granting to a third party a
right of first refusal, first opportunity, or other right or
option to acquire properties or assets of Four Seasons or any of
its subsidiaries under, or grant to a third party a right to
force Four Seasons or any of its subsidiaries to purchase one or
more assets under, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon,
any of the properties or assets of Four Seasons or any of its
subsidiaries or cause any Indebtedness of Four Seasons or any of
its subsidiaries to come due before its stated maturity or cause
any credit commitment to cease to be available or cause any
payment or other obligation to be imposed on Four Seasons or any
of its subsidiaries under, any of the terms, conditions or
provisions of (A) their respective charters or by-laws or other
comparable organizational documents or (B) any note, bond,
mortgage, indenture, loan agreement, deed of trust, Lien, or
other Contract to which Four Seasons or any of its subsidiaries
is a party or to which any of them, or any of their respective
properties or assets, may be subject or by which Four Seasons or
any of its subsidiaries is bound; or (2) subject to obtaining the
Regulatory Approvals and the Required Vote and except for
complying with applicable corporate, securities, competition and
antitrust Laws, (x) violate any Law applicable to Four Seasons or
any of its subsidiaries or any of their respective properties or
assets; or (y) cause the suspension or revocation of any Permit
currently in effect (except, in the case of clauses (1)(B) and
(2) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of Liens which, or any
consents, approvals or notices which, if not given or received,
or any Permits which, if suspended or revoked, would not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect).
(e) CAPITALIZATION. The authorized share capital of Four Seasons
consists of 3,725,698 Variable Multiple Voting Shares, an
unlimited number of Limited Voting Shares, an unlimited number of
First Preference Shares, issuable in series and an unlimited
number of Second Preference Shares, issuable in series. As of the
close of business on September 30, 2006, there were issued and
outstanding 3,725,698 Variable Multiple Voting Shares and
33,078,418 Limited Voting Shares; since such date, Four Seasons
has not issued any shares (except upon exercise of Four Seasons
Options or conversion of Four Seasons Convertible Notes
outstanding on such date), and there has not been any split,
combination or reclassification or redemption or repurchase of
Four Seasons Shares; and, as of the date hereof, there are
outstanding no other shares of any class or series in the capital
of Four Seasons. As of the close of business on September 30,
2006, an aggregate of up to 4,289,343 Limited Voting Shares were
issuable upon the exercise of the Four Seasons Options, the
exercise prices, expiration dates and other material terms of
which are set forth in Section 3.1(e) of the Disclosure Letter,
and an aggregate of up to 3,489,525 Limited Voting Shares were
issuable upon the exercise of the
-22-
conversion rights attaching to the Four Seasons Convertible
Notes; and, except as set forth above, there are no options,
warrants or other rights, shareholder rights plans, agreements or
commitments of any character whatsoever requiring or which may
require the issuance, sale or transfer by Four Seasons of any
shares of Four Seasons (including Four Seasons Shares) or any
securities convertible into, or exchangeable or exercisable for,
or otherwise evidencing a right to acquire, any shares of Four
Seasons (including Four Seasons Shares). All outstanding Four
Seasons Shares have been duly authorized and validly issued, are
fully paid and non-assessable, and all Four Seasons Shares
issuable upon the exercise of rights under the Four Seasons
Options and the exercise of conversion rights attaching to the
Four Seasons Convertible Notes in accordance with their
respective terms have been duly authorized and, upon issuance,
will be validly issued as fully paid and non-assessable. All
securities of Four Seasons (including the Four Seasons Shares,
the Four Seasons Convertible Notes, the Four Seasons Options and
all options, rights or other convertible or exchangeable
securities) have been issued in compliance, in all material
respects, with all applicable Securities Laws. Other than the
Variable Multiple Voting Shares, the Four Seasons Options and the
Four Seasons Convertible Notes, there are no securities of Four
Seasons or of any of its subsidiaries outstanding which have the
right to vote generally (or are convertible into or exchangeable
for securities having the right to vote generally) with the Four
Seasons Shareholders on any matter. Except as contemplated by the
Plan of Arrangement, there are no outstanding contractual or
other obligations of Four Seasons to (i) repurchase, redeem or
otherwise acquire any of its securities, other than as set forth
in the Indenture, (ii) make any investment in or provide any
funds to (whether in the form of a loan, capital contribution or
otherwise) any person, other than a wholly-owned subsidiary of
Four Seasons, or (iii) provide any guarantee with respect to any
person (other than a wholly-owned subsidiary of Four Seasons),
except, in the cases of clauses (ii) and (iii), any obligations
arising from Management Agreements that are less than $5,000,000
individually or any obligations not arising from Management
Agreements that are less than $2,500,000 individually. Four
Seasons is a party to an indenture, dated as of June 18, 2004 (as
supplemented and amended in accordance with the terms thereof,
the "Indenture"), with The Bank of Nova Scotia Trust Company of
New York, as trustee, under which the Four Seasons Convertible
Notes have been issued. The Conversion Rate (as defined in the
Indenture), as of the date hereof, is 13.9581. The Arrangement
will constitute a Fundamental Change (and, under these
circumstances, a Designated Event) under the terms of the
Indenture, and, following the period during which the conversion
rights associated with the Fundamental Change may be exercised
pursuant to the Indenture, Four Seasons will be entitled to
satisfy any conversion of the Four Seasons Convertible Notes by
way of a cash payment. If, for the purposes of the Indenture the
"Conversion Date", the date of the
-23-
Fundamental Change and the date on which Four Seasons provided
notice of its election to deliver cash in lieu of Limited Voting
Shares that otherwise would be issued on conversion of a Four
Seasons Convertible Note was January 15, 2007, the amount of the
cash payment referred to in the immediately preceding sentence
would have been equal to (A) $1,252.25 for each $1,000 principal
amount of Four Seasons Convertible Notes plus (B) accrued
interest. As of the date of this Agreement, the only outstanding
Indebtedness for borrowed money of Four Seasons and its
subsidiaries (excluding any Indebtedness between Four Seasons and
any of its subsidiaries) is set forth in Section 3.1(e) of the
Disclosure Letter.
(f) REPORTING STATUS AND SECURITIES LAWS MATTERS. Four Seasons is (x)
a "reporting issuer" and not on the list of reporting issuers in
default under the applicable Canadian provincial and territorial
Securities Laws and (y) a "foreign private issuer" as defined in
Rule 405 of the United States SECURITIES ACT OF 1933, as amended,
and is in compliance in all material respects with all Securities
Laws. No delisting of, suspension of trading in or cease trading
order with respect to any securities of Four Seasons and, to the
knowledge of Four Seasons, no inquiry or investigation (formal or
informal) of any Securities Authority, is in effect or ongoing
or, to the knowledge of Four Seasons, expected to be implemented
or undertaken. Four Seasons is not an investment company
registered or required to be registered under the United States
INVESTMENT COMPANY ACT OF 1940, as amended. No subsidiary of Four
Seasons is subject to the continuous disclosure requirements
under any Securities Laws. Section 3.1(f) of the Disclosure
Letter contains a listing of all material correspondence between
the Securities Authorities, on the one hand, and Four Seasons or
any of its subsidiaries, on the other hand, since December 31,
2003 through the date of this Agreement.
(g) OWNERSHIP OF SUBSIDIARIES. Section 3.1(g) of the Disclosure
Letter sets forth a complete and accurate list and/or chart of
all subsidiaries owned, directly or indirectly, by Four Seasons,
each of which is wholly-owned except as otherwise noted in such
list or chart. All of the outstanding shares of capital stock and
other ownership interests in Four Seasons' subsidiaries, other
than shares of capital stock and other ownership interests in any
immaterial subsidiary, are duly authorized, validly issued, fully
paid and non-assessable, and all such shares and other ownership
interests held directly or indirectly by Four Seasons are, except
pursuant to restrictions on transfer contained in constituting
documents or pursuant to existing financing arrangements
involving Four Seasons or its subsidiaries, other than any
immaterial subsidiary, (which transfer restrictions are set forth
in Section 3.1(g) of the Disclosure Letter), owned free and clear
of all Liens and subject to no proxy, voting trust or other
agreement relating to the voting of such shares, and there are no
outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to
acquire any such shares of
-24-
capital stock or other ownership interests in or real properties
of any of Four Seasons' subsidiaries, other than any immaterial
subsidiary. There are no outstanding contractual or other
obligations of any subsidiaries of Four Seasons to (i)
repurchase, redeem or otherwise acquire any of its securities or
with respect to the voting or disposition of any outstanding
securities of any subsidiaries of Four Seasons, (ii) make any
investment in or provide any funds to (whether in the form of a
loan, capital contribution or otherwise) any person, other than a
wholly-owned subsidiary of Four Seasons or (iii) provide any
guarantee with respect to any person (other than a wholly-owned
subsidiary of Four Seasons), except in the case of clauses (ii)
and (iii), any obligations arising from Management Agreements
that are less than $5,000,000 individually or any obligations not
arising from Management Agreements that are less than $2,500,000
individually. Section 3.1(g) of the Disclosure Letter contains a
list of all joint ventures (other than a subsidiary of Four
Seasons disclosed in Section 3.1(g) in response to the first
sentence of this Section 3.1(g)) in which Four Seasons or one of
its subsidiaries is a participant and of which Four Seasons or
one of its subsidiaries owns, directly or indirectly, any capital
stock or other equity interest or any other securities
convertible or exchangeable into or exercisable for capital stock
or other equity interests where such capital stock, equity
interest or other security has a book value to Four Seasons in
excess of $5,000,000 (such capital stock or equity interests, the
"JV INTERESTS"). All JV Interests are owned free and clear of all
Liens, and there are no outstanding options, rights,
entitlements, understandings or commitments (contingent or
otherwise) regarding the right to acquire or the obligation to
dispose of any such JV Interests.
(h) REPORTS. The documents comprising Four Seasons' Public Disclosure
Record (1) did not at the time filed with Securities Authorities
or, as applicable, the time of becoming effective, contain any
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, and (2) included all documents
required to be filed in accordance with Securities Laws with the
Securities Authorities and the Exchanges and complied in all
material respects with Securities Laws. Four Seasons has timely
filed with the Securities Authorities all forms, reports,
schedules, statements and other documents required to be filed by
Four Seasons with the Securities Authorities since December 31,
2003.
(i) FOUR SEASONS FINANCIAL STATEMENTS. Four Seasons' audited
consolidated financial statements as at and for the fiscal years
ended December 31, 2005 and 2004 (including the notes thereto and
related management's discussion and analysis ("MD&A")) and Four
Seasons' unaudited financial statements as at and for the nine
months ended September 30, 2006 (including the notes thereto and
related MD&A) (collectively, the "FOUR SEASONS FINANCIAL
STATEMENTS") and all consolidated financial
25
statements of Four Seasons and its subsidiaries included or
incorporated by reference in information circulars, forms,
reports, statements, prospectuses and other documents filed with
Securities Authorities since January 1, 2003 were prepared in
accordance with GAAP consistently applied (except (A) as
otherwise indicated in such financial statements and the notes
thereto or, in the case of audited statements, in the related
report of Four Seasons' independent auditors, or (B) in the case
of unaudited interim consolidated financial statements, are
subject to normal period-end adjustments and they may omit notes
which are not required by applicable Laws and GAAP in the
unaudited statements) and fairly present in all material respects
the consolidated financial position, results of operations and
cash flows of Four Seasons and its subsidiaries as of the dates
thereof and for the periods indicated therein (subject, in the
case of any unaudited interim consolidated financial statements,
to normal period-end adjustments). There has been no material
change in Four Seasons' accounting policies, except as described
in the notes to the Four Seasons Financial Statements, since
December 31, 2005.
(j) BOOKS, RECORDS AND DISCLOSURE CONTROLS. Four Seasons and, to the
knowledge of Four Seasons, each of its officers and directors are
in compliance with, and have complied in all material respects
with, the applicable provisions of the Sarbanes-Oxley Act and the
Exchange Act and the applicable requirements of the Exchanges.
Four Seasons and its subsidiaries have devised and maintain a
system of internal control over financial reporting sufficient to
provide reasonable assurance regarding the reliability of
financial reporting and preparation of financial statements in
accordance with GAAP. Four Seasons' and each of the material
subsidiaries' corporate records and minute books have been
maintained in material compliance with applicable Laws and are
complete and accurate in all material respects.
(k) ABSENCE OF CERTAIN CHANGES. Since September 30, 2006, (i) Four
Seasons and each of its subsidiaries have conducted their
business in the ordinary course of business consistent with past
practice, except for the transactions contemplated by this
Agreement, (ii) there has been no Material Adverse Effect or any
event or occurrence that would be reasonably expected to have a
Material Adverse Effect, and (iii) neither Four Seasons nor any
of its subsidiaries has taken any action which, if taken after
the date of this Agreement, would be prohibited by Sections
5.1(b), (d), (f), (g) or (h). Four Seasons and its subsidiaries
have no liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which is material to Four
Seasons and its subsidiaries, taken as a whole, including any
agreement, contract or commitment to create, assume or issue any
bond, debenture, note or other similar instrument or any
agreement, contract or commitment providing for the guarantee,
indemnification, assumption or endorsement or any similar
commitment with respect to the obligations, liabilities
(contingent or otherwise) or indebtedness of any
-26-
other person, required by GAAP to be set forth in a consolidated
balance sheet of Four Seasons and its subsidiaries or in the
notes thereto, which individually or in the aggregate has not
been reflected in the consolidated balance sheet of Four Seasons
and its subsidiaries dated September 30, 2006 forming part of the
unaudited consolidated financial statements of Four Seasons as
at, and for the nine months ended September 30, 2006, including
the notes thereto and the related management's discussion and
analysis filed under the Securities Laws, other than liabilities,
indebtedness or obligations incurred by Four Seasons and its
subsidiaries in the ordinary course of business since September
30, 2006.
(l) LITIGATION. There are no claims, actions, suits, demands,
arbitrations, charges, indictments, hearings or other civil,
criminal, administrative or investigative proceedings, or other
investigations or examinations known to Four Seasons
(collectively, "LEGAL ACTIONS") pending or, to the knowledge of
Four Seasons, threatened, against (i) Four Seasons or any of its
subsidiaries or against any of their respective property or
assets at law or in equity before or by any Governmental Entity
or (ii) any director or officer of Four Seasons or any of its
subsidiaries or any Four Seasons Employee, which Legal Actions
would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Neither Four Seasons nor any
of its subsidiaries nor their respective assets or properties is
subject to any outstanding judgment, order, writ, injunction or
decree that would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(m) TAXES. (i) Four Seasons and each of its subsidiaries has, (A)
duly and timely filed, or caused to be filed, all material
Returns required to be filed by it prior to the date hereof,
other than those which have been administratively waived, and all
such Returns are true and correct in all material respects; (B)
paid on a timely basis all Taxes and all assessments and
reassessments of Taxes due on or before the date hereof, other
than Taxes which are being or have been contested in good faith
and for which, in the reasonable opinion of Four Seasons,
adequate reserves have been provided in the Four Seasons
Financial Statements, and other than Taxes the failure to pay
which would not, individually or in the aggregate, reasonably be
expected to have, a Material Adverse Effect; (C) duly and timely
withheld, or caused to be withheld, all Taxes required by Law to
be withheld by it (including Taxes and other amounts required to
be withheld by it in respect of any amount paid or credited or
deemed to be paid or credited by it to or for the account of any
person, including any employees, officers or directors and any
non resident person) and duly and timely remitted, or caused to
be remitted, to the appropriate Tax authority such Taxes required
by Law to be remitted by it, except to the extent that such
failure would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; and (D) duly and
timely collected, or caused to be collected, any sales or
transfer taxes, including
-27-
goods and services, harmonized sales and provincial or
territorial sales taxes, required by Law to be collected by it
and duly and timely remitted to the appropriate Tax authority any
such amounts required by Law to be remitted by it, except to the
extent that such failure would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect; (ii) the unpaid Taxes of Four Seasons and its
subsidiaries did not, as of the date of the Four Seasons
Financial Statements, exceed the reserves and provisions for
Taxes accrued but not yet due as reflected in Four Seasons
Financial Statements, and Taxes payable by Four Seasons and its
subsidiaries as of the Closing Date will not exceed such reserves
and provisions for Taxes as adjusted through the Closing Date in
accordance with the past custom and practice of Four Seasons and
its subsidiaries; (iii) no deficiencies, litigation, proposed
adjustments or matters in controversy with respect to Taxes exist
or have been asserted which remain unresolved at the date hereof,
and no action or proceeding for assessment or collection of Taxes
has been taken, asserted, or to the knowledge of Four Seasons,
threatened, against Four Seasons or any of its subsidiaries or
any of their respective assets, except, in each case, as
disclosed or provided for in the Four Seasons Financial
Statements or except such deficiencies, litigation, proposed
adjustments, confirmations, actions or proceedings that would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; (iv) there are no currently
effective elections, agreements or waivers extending the
statutory period or providing for an extension of time with
respect to the assessment or reassessment of any Taxes of, or the
filing of any Return or any payment of any Taxes by, Four Seasons
or any of its subsidiaries, other than any immaterial subsidiary;
(v) Four Seasons is a "taxable Canadian corporation" as defined
in the TAX ACT; (vi) there are no Liens, other than Permitted
Liens, for Taxes upon any of the assets of Four Seasons and its
subsidiaries; (vii) Four Seasons and its subsidiaries are
substantially in compliance with the Laws of Canada, the United
States, Switzerland and Singapore, including any documentation
and recordkeeping requirements thereunder, applicable to the
allocation of income and deductions and transactions among
related taxpayers; and (viii) neither Four Seasons nor any of its
subsidiaries is a party to any indemnification, allocation or
sharing agreement with respect to Taxes that could give rise to a
payment or indemnification obligation (other than agreements
among Four Seasons and its subsidiaries and other than customary
Tax indemnification provisions contained in credit or loan
agreements or Management Agreements or agreements related thereto
or other transactions entered into in the ordinary course) and
neither Four Seasons nor any of its subsidiaries has any
liability for Taxes of any person (other than Four Seasons and
its subsidiaries) as a transferee or successor, by contract, or
otherwise.
(n) PROPERTY.
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(i) Each parcel of real property currently owned by Four Seasons
or any of its subsidiaries (collectively, the "OWNED REAL
PROPERTIES") is set forth in Section 3.1(n) of the
Disclosure Letter. Four Seasons or its applicable subsidiary
owns good and marketable fee simple title to the Owned Real
Properties, free and clear of all Liens, other than
Permitted Liens and any failures of title that do not
materially adversely affect the operations of the business
as they are now being conducted or the ability to sell such
property. To the knowledge of Four Seasons, none of the
Owned Real Properties is subject to any governmental decree
or order to be sold or is being condemned, expropriated or
otherwise taken by any public authority with or without
payment of compensation therefor, nor, to the knowledge of
Four Seasons, has any such condemnation, expropriation or
taking been proposed. To the knowledge of Four Seasons, none
of Four Seasons or any of its subsidiaries is in violation
of any covenants or not in compliance with any conditions,
restrictions or Permitted Liens affecting any Owned Real
Properties which violations or non-compliances would,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(ii) Each hotel property currently leased (including hotel
properties subject to ground leases) or subleased by Four
Seasons or any of its subsidiaries from a third party other
than Four Seasons or any of its subsidiaries (collectively,
the "LEASED PROPERTIES" and together with the Owned Real
Properties, the "PROPERTIES") is listed in Section 3.1(n) of
the Disclosure Letter identifying the name of the entity
(i.e., Four Seasons or its subsidiary) holding such
leasehold interest and the documents under which such
leasehold interests are held (collectively, the "LEASE
Documents"). Four Seasons or its applicable subsidiary holds
good and valid leasehold interests in the Leased Properties,
free and clear of all Liens other than Permitted Liens and
the Lease Documents. Each of the Lease Documents is valid,
binding and in full force and effect as against Four Seasons
or its subsidiaries and, to the knowledge of Four Seasons,
as against the other party thereto. None of Four Seasons or
any of its subsidiaries and, to the knowledge of Four
Seasons, any of the other parties to the Lease Documents, is
in breach or violation or default (in each case, with or
without notice or lapse of time or both) under any of the
Lease Documents which breach, violation or default has not
been cured and would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect,
and none of Four Seasons or any of its subsidiaries has
received or given any notice of default under any such
agreement which remains uncured which would, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the knowledge of Four Seasons, neither
Four Seasons
-29-
nor any of its subsidiaries is in violation of any
covenants, or not in compliance with any condition,
restrictions or Permitted Liens, affecting any Leased
Properties which violations or non-compliances would,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(iii) There are no management, franchise, license or other
agreements providing for the management of any substantial
portion of any Property by any party other than Four Seasons
or any of its subsidiaries.
(iv) The Properties and all buildings and improvements thereon
are in good operating condition and repair, subject to
normal wear and tear. To Four Seasons' knowledge, there are
no latent defects of adverse physical conditions affecting
any Property or the buildings or improvements thereon, other
than those that would not, individually or in the aggregate,
have a Material Adverse Effect.
(o) PERSONAL PROPERTY. Four Seasons and its subsidiaries have good and
valid title to, or a valid and enforceable leasehold interest in, all
personal property owned or leased, except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect. Neither Four Seasons' nor any of its subsidiaries' ownership
of or leasehold interest in any such personal property is subject to
any Liens, except for Liens that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(p) CONTRACTS.
(i) Section 3.1(p) of the Disclosure Letter contains a list of
the following contracts, correct, current and complete
copies of which have been made available to the Purchaser:
(A) any lease of real property by Four Seasons or any of its
subsidiaries, as tenant, with third parties providing for
annual rentals of $1,000,000 or more;
(B) any Contract under which Four Seasons or any of its
subsidiaries is obliged to make payments on an annual basis
in excess of $2,500,000 in the aggregate;
(C) any partnership, limited liability company agreement, joint
venture, alliance agreement or other similar agreement or
arrangement relating to the formation, creation, operation,
management, business or control of any partnership or joint
venture which is not a wholly-owned subsidiary of Four
Seasons (other than any such agreement or arrangement
relating to the operation or business of a property in the
ordinary course and
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which is not material with respect to such property) where
Four Seasons' obligations with respect to any such
partnership or joint venture exceed $5,000,000 individually
where such obligations arise from Management Agreements or
exceed $2,500,000 individually where such obligations do not
arise from Management Agreements;
(D) any Contract (other than with or among wholly-owned
subsidiaries) under which Indebtedness for borrowed money in
excess of $2,500,000 is outstanding or may be incurred or
pursuant to which any property or asset of Four Seasons or
any of its subsidiaries is mortgaged, pledged or otherwise
subject to a Lien (other than a Permitted Lien), or any
Contract restricting the incurrence of Indebtedness by Four
Seasons or any wholly-owned subsidiary or the incurrence of
Liens (other than Permitted Liens) on any Properties or
securities of wholly-owned subsidiaries or restricting the
payment of dividends or the transfer of any Owned Real
Properties;
(E) except pursuant to any Management Agreement or any agreement
relating thereto, any Contract that purports to limit the
right of Four Seasons or any of its subsidiaries or
affiliates to, in any material respect (i) engage in any
line of business, or (ii) compete with any person or operate
in any location;
(F) any Contract providing for the sale or exchange of, or
option to sell or exchange, any Property with a fair market
value in excess of $5,000,000, or for the purchase or
exchange of, or option to purchase or exchange, any Property
with a fair market value in excess of $5,000,000 entered
into in the past 12 months or in respect of which the
applicable transaction has not been consummated;
(G) any Contract entered into in the past 12 months or in
respect of which the applicable transaction has not yet been
consummated for the acquisition or disposition, directly or
indirectly (by amalgamation, merger or otherwise), of assets
(other than Contracts referenced in clause (F) of this
Section 3.1(p)(i)) or capital stock or other equity
interests of another person for aggregate consideration in
excess of $2,500,000, in each case other than in the
ordinary course of business and in a manner consistent with
past practice;
(H) each Contract pursuant to which Four Seasons or any of its
subsidiaries or affiliates manages, operates or provides
goods or services to or for any hotel, resort, fractional
interest program, condominium, development, food and
beverage operation or other
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similar business or property of a third party owner
(together with any Contract related thereto, the "MANAGEMENT
Agreements"), and each franchise or other agreement pursuant
to which Four Seasons or any of its subsidiaries grants any
rights to a third party (other than Four Seasons or any of
its wholly-owned subsidiaries) to operate any hotel, resort,
fractional interest program, condominium, development, food
and beverage operation or other similar business or property
utilizing any of the Intellectual Property Rights, other
than agreements incidental to the operation of a particular
hotel property in the ordinary course of business;
(I) except for any radius restrictions contained in any
Management Agreement, any standstill or similar Contract
currently restricting the ability of Four Seasons or any of
its subsidiaries to offer to purchase or purchase the assets
or equity securities of another person; and
(J) any Contract (other than Contracts referenced in clauses (A)
through (I) of this Section 3.1(p)(i)) which has been filed
by Four Seasons or its affiliates with Securities
Authorities as a material contract and forming part of Four
Seasons' Public Disclosure Record (the Contracts described
in clauses (A) through (J), together with all exhibits and
schedules thereto being, the "MATERIAL CONTRACTS").
(ii) None of Four Seasons or any of its subsidiaries or
affiliates or, to the knowledge of Four Seasons, any of the
other parties thereto, is in breach or violation of, or
default (in each case, with or without notice or lapse of
time or both) where such breach or violation of, or default,
has resulted in, or is reasonably likely to result in, a
right of termination or other material remedy by any party
thereto under, any Management Agreement, and none of Four
Seasons or any of its subsidiaries or affiliates has
received or given any notice of default under any Management
Agreement which remains uncured and, to the knowledge of
Four Seasons, there exists no state of facts which after
notice or lapse of time or both would constitute a default
or breach of such Management Agreement. All Management
Agreements are in full force and effect without modification
thereto (subject to the effects of bankruptcy, insolvency,
reorganization, moratorium or laws relating to or affecting
creditors' rights generally).
(iii) Except as has not and would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, (a) none of Four Seasons, its subsidiaries or, to
the knowledge of Four Seasons, any of the other parties
thereto, is in breach or violation of, or default (in each
case, with or without notice or lapse of time
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or both) under, any Contract (other than the Management
Agreements) and none of Four Seasons or any of its
subsidiaries has received or given any notice of default
under any such Contract which remains uncured, and (b) to
the knowledge of Four Seasons, there exists no state of
facts which after notice or lapse of time or both would
constitute a default or breach of a Material Contract (other
than a Management Agreement).
(q) PERMITS. Four Seasons and each of its subsidiaries has obtained
and is in compliance with all Permits required by applicable Laws
necessary to conduct its current businesses as they are now being
conducted, other than, for greater certainty, Permits required to
be obtained by the owner of a Property in connection with its
ownership or operation of a hotel (where Four Seasons is not the
owner of such Property) and other than where the absence of such
Permits or the failure to comply would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(r) PENSION AND EMPLOYEE BENEFITS
(i) Section 3.1(r) of the Disclosure Letter contains a list of
all health, welfare, supplemental unemployment benefit,
bonus, profit sharing, option, insurance, incentive,
incentive compensation, deferred compensation, share
purchase, share compensation, disability, pension or
retirement plans and other material employee or director
compensation or benefit plans, policies, trusts, funds,
agreements or arrangements for the benefit of directors or
former directors of Four Seasons or any of its subsidiaries,
Four Seasons Employees or former Four Seasons Employees,
which are maintained by or binding upon Four Seasons or any
of its subsidiaries or in respect of which Four Seasons or
any of its subsidiaries has any actual or potential
liability (including the Four Seasons Stock Option Plan)
(collectively, the "FOUR SEASONS PLANS"). Any other pension
or retirement (including retiree health) plan that is
maintained by or is binding upon Four Seasons or any of its
subsidiaries or in respect of which Four Seasons or any of
its subsidiaries has any actual or potential liability is
referred to herein as an "OTHER PLAN". True, current and
complete copies of the following have been made available to
Purchaser: (A) the Four Seasons Plans, (B) the most recently
received Internal Revenue Service determination letter, if
any, relating to a Four Seasons Plan, and (C) the most
recently prepared actuarial report or financial statement,
if any, relating to a Four Seasons Plan.
(ii) All of the Four Seasons Plans are and have been established,
registered, qualified and, in all material respects,
administered in accordance with all applicable Laws, and in
accordance with their
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terms and the terms of agreements between Four Seasons
and/or any of its subsidiaries, as the case may be, and
their respective employees and former employees who are
members of, or beneficiaries under, the Four Seasons Plans.
(iii) All current obligations of Four Seasons or any of its
subsidiaries regarding the Four Seasons Plans and the Other
Plans have been satisfied in all material respects. All
contributions, premiums or taxes required to be made or paid
by Four Seasons or any of its subsidiaries, as the case may
be, under the terms of each Four Seasons Plan, each Other
Plan or by applicable Laws in respect of the Four Seasons
Plans and the Other Plans have been made in a timely fashion
in accordance with applicable Laws in all material respects
and in accordance with the terms of the applicable Four
Seasons Plan or Other Plan. The obligations of Four Seasons
or any of its subsidiaries to any of the Four Seasons Plans
or the Other Plans that are multi-employer plans are
restricted to providing information and making contributions
and are set out completely and accurately in the collective
bargaining agreements for the properties listed in Section
3.1(w) of the Disclosure Letter.
(iv) As of the date hereof, no currently outstanding notice of
under-funding, non-compliance, failure to be in good
standing or otherwise has been received by Four Seasons or
any of its subsidiaries from any applicable Governmental
Entities in respect of any Four Seasons Plan that is a
pension or retirement plan or any Other Plan; and no such
Four Seasons Plan or Other Plan provides any non-pension
post-retirement or post-employment benefits. No Four Seasons
Plan or Other Plan is a defined benefit pension plan
(whether registered or not) and no Four Seasons Plan or
Other Plan that is a defined contribution pension plan is an
unfunded plan. None of Four Seasons or any of its
subsidiaries would incur any material withdrawal liability
from withdrawing from any such Four Seasons Plan or any
Other Plan. Four Seasons has an effective reservation of
rights for each non-pension post-retirement or
post-employment benefit plan applicable to Four Seasons
Employees or former Four Seasons Employees which allows Four
Seasons to amend or terminate such plan, subject to
applicable Law.
(v) To the knowledge of Four Seasons, no Four Seasons Plan or
Other Plan is subject to any pending investigation,
examination or other proceeding, action or claim initiated
by any Governmental Entity, or by any other party (other
than routine claims for benefits) and, to the knowledge of
Four Seasons, there exists no state of facts which after
notice or lapse of time or both would reasonably be expected
to give rise to any such investigation, examination or
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other proceeding, action or claim or to affect the
registration or qualification of any Four Seasons Plan or
Other Plan required to be registered or qualified.
(vi) None of the execution and delivery of this Agreement by Four
Seasons or consummation of the Arrangement or compliance by
Four Seasons with any of the provisions hereof shall result
in any payment (including severance, unemployment
compensation, bonuses or otherwise) becoming due to any
director of Four Seasons or Four Seasons Employee or result
in any increase or acceleration of contributions,
liabilities or benefits, or acceleration of vesting, under
any Four Seasons Plan or restriction held in connection with
a Four Seasons Plan.
(s) COMPLIANCE WITH LAWS. Four Seasons and its subsidiaries, have
complied, in all material respects, with and are not, in any
material respect, in violation of any applicable Laws. None of
Four Seasons or, to the knowledge of Four Seasons, any of its
subsidiaries or any of their respective directors, executives,
representatives, agents or employees (i) has used or is using any
corporate funds for any illegal contributions, gifts,
entertainment or other expenses relating to political activity
that would be illegal, (ii) has used or is using any corporate
funds for any direct or indirect illegal payments to any foreign
or domestic governmental officials or employees, (iii) has
violated or is violating any provision of the United States
FOREIGN CORRUPT PRACTICES ACT OF 1977, (iv) has established or
maintained, or is maintaining, any illegal fund of corporate
monies or other properties or (v) has made any bribe, illegal
rebate, illegal payoff, influence payment, kickback or other
illegal payment of any nature.
(t) INTELLECTUAL PROPERTY. (i) Four Seasons and its subsidiaries own
all right, title and interest in and to, or are validly licensed
(and are not in material breach of such licenses), all patents,
trade-marks, trade names, service marks, copyrights, know-how,
trade secrets, software, technology, and all other intellectual
property and proprietary rights that are material to the conduct
of the business, as presently conducted, of Four Seasons and its
subsidiaries taken as a whole (collectively, the "INTELLECTUAL
PROPERTY RIGHTS"); (ii) all such Intellectual Property Rights are
sufficient, in all material respects, for conducting the
business, as presently conducted, of Four Seasons and its
subsidiaries taken as a whole; (iii) to the knowledge of Four
Seasons, all such Intellectual Property Rights are valid and
enforceable (subject to the effects of bankruptcy, insolvency,
reorganization, moratorium or laws relating to or affecting
creditors' rights generally), and do not infringe in any material
way upon any third parties' intellectual property and proprietary
rights, and no event will occur as a result of the transactions
contemplated hereby that would render invalid or unenforceable
any such Intellectual Property Rights; (iv) to the knowledge of
Four Seasons, no third party is infringing upon such Intellectual
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Property Rights in a manner that currently would reasonably be
expected to adversely affect such Intellectual Property Rights in
any material respect; (v) all computer hardware and their
associated firmware and operating systems, application software,
database engines and processed data, technology infrastructure
and other computer systems used in connection with the conduct of
the business, as presently conducted, of Four Seasons and its
subsidiaries taken as a whole (collectively, the "TECHNOLOGY")
are up-to-date and sufficient, in all material respects, for
conducting the business, as presently conducted, of Four Seasons
and its subsidiaries taken as a whole; (vi) Four Seasons and its
subsidiaries own or have validly licensed (and are not in
material breach of such licenses) such Technology and have
commercially reasonable virus protection and security measures in
place in relation to such Technology; and (vii) Four Seasons and
its subsidiaries have reasonable back-up systems and audited
procedures and disaster recovery strategies adequate to ensure
the continuing availability of the functionality provided by the
Technology, and have ownership of or a valid license to the
Intellectual Property Rights necessary to allow them to continue
to provide, in all material respects, the functionality provided
by the Technology in the event of any malfunction of the
Technology or other form of disaster affecting the Technology.
Four Seasons owns all right, title and interest in and to the
trademarks, trade names and service marks listed in Section
3.1(t) of the Disclosure Letter. Section 3.1(t) of the Disclosure
Letter sets forth the Intellectual Property Rights that are
licensed by Four Seasons to a third party (other than pursuant to
any Management Agreement).
(u) INSURANCE. Four Seasons and its subsidiaries maintain policies or
binders of insurance as are listed in Section 3.1(u) of the
Disclosure Letter. Section 3.1(u) of the Disclosure Letter
contains a description of all rights to indemnification now
existing in favour of present or former officers and directors of
Four Seasons or any of its material subsidiaries that arise in
connection with their serving as directors or officers of Four
Seasons or any such subsidiary, except for any rights of
indemnification that are included in Four Seasons' or any of its
material subsidiaries' charters, by-laws or other comparable
organizational documents. Except as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect, Four Seasons and each of its subsidiaries is covered by
valid and currently effective insurance policies issued in favour
of Four Seasons or any of its subsidiaries that Four Seasons
reasonably has determined to be commercially reasonable, taking
into account the industries in which Four Seasons and its
subsidiaries operate. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, with respect to each insurance policy issued in favour of
Four Seasons or any of its subsidiaries (other than any
immaterial subsidiary) or pursuant to which Four Seasons or any
of its subsidiaries (other than any immaterial subsidiary) is a
named insured or otherwise a beneficiary under an insurance
policy (i) the policy is in full
-36-
force and effect and all premiums due thereon have been paid,
(ii) none of Four Seasons or any of its subsidiaries (other than
any immaterial subsidiary) is in breach or default, and none of
Four Seasons or any of its subsidiaries (other than any
immaterial subsidiary) has taken any action or failed to take any
action which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification
of, any such policy, (iii) to the knowledge of Four Seasons, no
insurer on any such policy has been declared insolvent or placed
in receivership, debt restructuring proceedings or liquidation,
and no notice of cancellation or termination has been received by
Four Seasons or any of its subsidiaries (other than any
immaterial subsidiary) with respect to any such policy, (iv) to
the knowledge of Four Seasons, none of such policies will
terminate or lapse by reason of the transactions contemplated by
this Agreement, (v) no insurer under any such policy has
cancelled or generally disclaimed liability under any such policy
or indicated any intent to do so or not to renew any such policy,
(vi) there is no claim by Four Seasons or any of its subsidiaries
(other than any immaterial subsidiary) pending under any such
policy that has been denied or disputed by the insurer, and (vii)
all claims under such policies have been filed in a timely
fashion.
(v) ENVIRONMENT.
(i) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect,
each of Four Seasons and its subsidiaries is in compliance
with all, and has not violated any, Environmental Laws;
(ii) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect,
(x) neither Four Seasons nor any of its subsidiaries has
Released, and, to the knowledge of Four Seasons, no other
person has Released, any Hazardous Substances (in each case
except in compliance with applicable Environmental Laws) on,
at, in, under or from any of the immovable Properties or
real properties (including the workplace environment)
currently or, to Four Seasons' knowledge, previously owned,
leased or operated by Four Seasons or any of its
subsidiaries, and (y), to the knowledge of Four Seasons,
there are no Hazardous Substances or other conditions that
could reasonably be expected to result in liability of or
adversely affect Four Seasons or any of its subsidiaries
under or related to any Environmental Law on, at, in, under
or from any of the immovable Properties or real properties
(including the workplace environment) currently or, to Four
Seasons' knowledge, previously owned, leased or operated by
Four Seasons or any of its subsidiaries;
-37-
(iii) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect,
there are no pending claims or, to the knowledge of Four
Seasons, threatened claims, against Four Seasons or any of
its subsidiaries arising out of any Environmental Laws;
(iv) No Lien in favour of a Governmental Entity arising under
Environmental Laws is pending or, to the knowledge of Four
Seasons, threatened, affecting Four Seasons or any of its
subsidiaries or any real property owned, or leased by Four
Seasons or any of its subsidiaries, except as would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and
(v) Four Seasons has made available to Purchaser, its affiliates
and their respective advisors copies of (x) all material
environmental assessments, reports, audits and other
documents in its possession (to the extent not superseded by
a subsequent assessment, report, audit or other document, as
applicable) relating to any real property currently owned or
leased by Four Seasons or any of its subsidiaries and (y)
any other such assessments, reports, audits and other
documents which, to the knowledge of Four Seasons, are in
its possession in its offices in Toronto that relate to the
current or past environmental condition of any real property
currently or formerly owned, leased or operated by Four
Seasons or any of its subsidiaries.
The Parties agree that the representations and warranties contained in
this Section 3.1(v) are the sole representations and warranties of
Four Seasons relating to compliance with the Environmental Laws. For
purposes of this Section 3.1(v) only, references to "the knowledge of
Four Seasons" means the actual knowledge, in their capacity as
officers of Four Seasons and not in their personal capacity, of Sarah
Cohen and Randolph Weisz, without further inquiry.
(w) EMPLOYMENT AGREEMENTS AND COLLECTIVE AGREEMENTS. Four Seasons and
each of its subsidiaries is not a party to or bound or governed
by:
(i) in respect of the Four Seasons Employees, except for the
Contracts with those individuals listed in Section 3.1(w) of
the Disclosure Letter and employment offer and promotion
letters delivered in the ordinary course of business, (a)
any existing employment agreement with any member of the
Four Seasons management committee, any other officer of Four
Seasons or any other person providing for payments in excess
of $200,000 annually, or (b) any change of control agreement
with any officer or senior employee or any written or, to
the knowledge of Four Seasons, oral agreement, arrangement
or understanding providing for an existing
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retention, severance or termination compensation or benefits
to any officer or senior employee;
(ii) except for the hotel properties listed in Section 3.1(w) of
the Disclosure Letter, any existing collective bargaining or
union agreements in place at the hotel properties managed by
Four Seasons or any of its subsidiaries; or
(iii) in respect of the Four Seasons Employees, except for the
Contracts with those individuals listed in Section 3.1(w) of
the Disclosure Letter and employment offer and promotion
letters delivered in the ordinary course of business, any
change of control agreement with any officer or senior
employee or any written or, to the knowledge of Four
Seasons, oral agreement, arrangement or understanding
providing for retention, severance or termination
compensation or benefits to any officer or senior employee
of Four Seasons that would, to the extent subject to United
States Tax Laws, not be deductible pursuant to Section 162
or Section 280G of the Code or would be subject to the
excise tax imposed by Section 4999 of the Code.
Four Seasons has made available to the Purchaser, complete copies
(or descriptions, where applicable) of the Contracts referred to
in clauses (i), (ii) or (iii) of this Section 3.1(w). There are
no material labour disputes, strikes or lock-outs relating to or
involving any employees of Four Seasons or any of its
subsidiaries that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There
are no actual or, to the knowledge of Four Seasons, threatened
applications for certification, voluntary recognition, related
employer, successor employer or union bargaining rights in
respect of Four Seasons or any of its subsidiaries.
(x) VOTE REQUIRED.
(i) The only vote of holders of securities of Four Seasons
necessary (under the Four Seasons Organizational Documents,
the OBCA and other applicable Laws) to approve the
Arrangement is, subject to any requirements of the Interim
Order, the Required Vote.
(ii) There are no shareholders agreements, registration rights
agreements, voting trusts, proxies or similar agreements,
arrangements or commitments to which Four Seasons or any of
its subsidiaries is a party or, to the knowledge of Four
Seasons, with respect to any shares or other equity
interests of Four Seasons or any of its subsidiaries or any
other Contract relating to disposition, voting or dividends
with respect to any equity securities of Four Seasons or of
any of its subsidiaries.
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(y) BROKERS. Except for the Financial Advisor (in respect of the
Valuation and Fairness Opinion), and Goldman, Sachs & Co., no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission from, or to the reimbursement
of any of its expenses by, Four Seasons or any of its
subsidiaries in connection with this Agreement or the
Arrangement. Four Seasons has provided to Purchaser a correct and
complete copy of all agreements relating to the arrangements
between it and each of Goldman, Sachs & Co. and the Financial
Advisor which are in effect at the date hereof.
3.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
No investigation by or on behalf of, or knowledge of, the Purchaser,
Triples or any of their respective affiliates, or Isadore Sharp, will mitigate,
diminish or affect the representations or warranties made by Four Seasons in
this Agreement or any certificate delivered by Four Seasons pursuant to this
Agreement. Except for the representations and warranties contained in this
Article III, neither Four Seasons nor any other persons on behalf of Four
Seasons makes any express or implied representation or warranty with respect to
Four Seasons or with respect to any other information provided or otherwise made
available to the Purchaser in connection with the transactions contemplated
hereby. The representations and warranties of Four Seasons contained in this
Agreement shall not survive the completion of the Arrangement and shall expire
and be terminated on the earlier of the Effective Time and the date on which
this Agreement is terminated in accordance with its terms. This Section 3.2
shall not limit any covenant or agreement of Four Seasons or any of its
subsidiaries which, by its terms, contemplates performance after the Effective
Time or date on which this Agreement is terminated, as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to and in favour of Four
Seasons as follows and acknowledges that Four Seasons is relying upon such
representations and warranties in connection with the entering into of this
Agreement:
(a) AUTHORITY RELATIVE TO THIS AGREEMENT. The Purchaser is a
corporation duly incorporated under the laws of its jurisdiction
of incorporation for the purpose of consummating the Arrangement
and has not carried on any active business prior to the date of
this Agreement other than activities in connection with this
Agreement, the documents ancillary hereto and the transactions
contemplated hereby and thereby. The Purchaser has the requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation by the
Purchaser of the transactions contemplated by this Agreement have
been duly authorized by the board and shareholders of the
Purchaser, and no other
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corporate proceedings on the part of the Purchaser are necessary
to authorize the execution and delivery by it of this Agreement
or any agreement ancillary hereto and the consummation by it of
the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by the Purchaser and
constitutes a legal, valid and binding obligation of the
Purchaser enforceable against it in accordance with its terms,
subject to the qualification that such enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws
of general application relating to or affecting rights of
creditors and that equitable remedies, including specific
performance, are discretionary and may not be ordered.
(b) NO VIOLATIONS. Neither the execution and delivery of this
Agreement by the Purchaser nor the consummation of the
Arrangement by the Purchaser nor compliance by the Purchaser with
any of the provisions hereof will violate, conflict with, or
result in a breach of any provision of, require any consent,
approval or notice under, or constitute a default (or an event
which, with notice or lapse of time or both, would (i) constitute
a default) under (A) the articles of incorporation or Laws
governing the Purchaser or (B) any material contract or other
instrument or obligation to which the Purchaser or any Purchaser
Party is a party or to which any of them, or any of their
respective properties or assets, may be subject or by which the
Purchaser or any Purchaser Party is bound and, in each case,
individually or in the aggregate would materially adversely
affect the Purchaser's ability to perform its obligations under
this Agreement, or (ii) subject to obtaining the Regulatory
Approvals, violate any Law applicable to the Purchaser or any of
its properties or assets (except, in the case of clause (ii)
above, for such violations which would not reasonably be expected
to have a Purchaser Material Adverse Effect). Subject to
obtaining the Regulatory Approvals set forth in Schedule C hereto
and other than in connection with or in compliance with the
provisions of applicable corporate, competition, anti-trust and
securities Laws, no filing or registration with, or
authorization, consent or approval of, any Governmental Entity is
required of the Purchaser in connection with the Arrangement,
except for such filings or registrations which, if not made, or
for such authorizations, consents or approvals which, if not
received, would not reasonably be expected to have a Purchaser
Material Adverse Effect.
(c) FINANCING; SPONSOR GUARANTEE. Concurrently with the execution and
delivery hereof, the Purchaser has delivered to Four Seasons
copies of (i) an executed Amended and Restated Funding and
Cooperation Agreement pursuant to which Kingdom and Cascade have
agreed to provide cash equity financing in the aggregate amount
of up to $1.8 billion (the "EQUITY FUNDING LETTER"), (ii) an
executed commitment letter (the "COMMITMENT LETTER") from
Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and
JPMorgan Chase Bank, N.A. (collectively, the
-41-
"LENDER"), pursuant to which the Lender has committed to provide
the Purchaser and certain existing or future subsidiaries of
Purchaser with financing in an aggregate amount of $950 million
(such financing or any alternative financing in the same amount,
the "DEBT FINANCING"), and (iii) an executed limited guarantee by
Kingdom and Cascade of the Purchaser's obligations hereunder (the
"SPONSOR GUARANTEE"). The Equity Funding Letter and the Sponsor
Guarantee, in the form so delivered, is a legal, valid and
binding obligation of the parties thereto and, solely in the case
of the Sponsor Guarantee, enforceable by Four Seasons in
accordance with its terms, and is in full force and effect as of
the date hereof. The Purchaser has fully paid any and all
commitment fees or other fees required by the Commitment Letter
or as otherwise required pursuant to the Debt Financing that have
come due. As of the date hereof, the Commitment Letter is in full
force and effect and is a legal, valid and binding obligation of
the Purchaser, and to the knowledge of the Purchaser, the other
parties thereto. No event has occurred which, with or without
notice, lapse of time or both, would constitute a default on the
part of the Purchaser under the Equity Funding Letter, the
Commitment Letter or the Sponsor Guarantee. The Purchaser has no
reason to believe that it will be unable to satisfy on a timely
basis any term or condition of closing to be satisfied by it
contained in the Equity Funding Letter or the Commitment Letter.
The Purchaser shall have at the Closing Date and at the Effective
Time proceeds in connection with equity financing as contemplated
by the Equity Funding Letter and the Debt Financing sufficient to
consummate the Arrangement and the transactions contemplated
thereby upon the terms contemplated by this Agreement.
(d) INVESTMENT CANADA. The Purchaser is not a Canadian within the
meaning of the INVESTMENT CANADA ACT (Canada).
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Purchaser contained in this
Agreement shall expire and be terminated on the earlier of the Effective Time
and the date on which this Agreement is terminated in accordance with its terms.
This Section 4.2 shall not limit any covenant or agreement of the Purchaser
which, by its terms, contemplates performance after the Effective Time or date
on which this Agreement is terminated, as the case may be.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 COVENANTS OF FOUR SEASONS REGARDING THE CONDUCT OF BUSINESS
Four Seasons covenants and agrees that, during the period from the date of
this Agreement until the earlier of the Effective Time and the time that this
Agreement is terminated in accordance with its terms, unless the Purchaser shall
otherwise agree in writing (to the extent that such consent is permitted by
applicable Law), such agreement not to be unreasonably
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withheld or delayed (except as otherwise provided herein), or except as is
otherwise expressly permitted or contemplated by this Agreement, or the Plan of
Arrangement or contemplated by the reforecasted fiscal 2006 budget contained in
the indicative fiscal 2007 budget or by the indicative fiscal 2007 budget (all
as set forth in Section 5.1 of the Disclosure Letter), or as is contemplated by
Section 5.1 of the Disclosure Letter or as is otherwise required by applicable
Law:
(a) the business of Four Seasons and its subsidiaries shall be
conducted only, and Four Seasons and its subsidiaries shall not
take any action except, in the ordinary course of business
consistent with past practice, and Four Seasons shall use all
commercially reasonable efforts to maintain and preserve its and
its subsidiaries' business organization, assets, properties,
employees, goodwill and business relationships, including with
any hotel and resort property owner;
(b) Four Seasons shall not, and shall not permit any of its
subsidiaries to, directly or indirectly: (i) amend its articles,
charter or by-laws or other comparable organizational documents;
(ii) declare, set aside or pay any dividend or other distribution
or payment (whether in cash, shares or property) in respect of
the Four Seasons Shares owned by any person or the securities of
any subsidiary owned by a person other than Four Seasons other
than, in the case of Four Seasons, regularly scheduled
semi-annual cash dividends, consistent with past practice and, in
the case of any subsidiary wholly-owned by Four Seasons, any
dividends payable to Four Seasons or any other wholly-owned
subsidiary of Four Seasons; (iii) with respect to Four Seasons
and its subsidiaries (other than any immaterial subsidiary) only,
adjust, split, combine or reclassify its shares; (iv) issue,
grant, sell or cause or, except in the case of Four Seasons in
respect of shares of Four Seasons, permit a Lien (other than
Permitted Liens) to be created on, or agree to issue, grant, sell
or cause or, except in the case of Four Seasons in respect of
shares of Four Seasons, permit a Lien (other than Permitted
Liens) to be created on any shares of Four Seasons or its
subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire,
shares of Four Seasons or any of its subsidiaries, other than (A)
the issuance of Limited Voting Shares issuable pursuant to the
terms of the outstanding Four Seasons Options and the Four
Seasons Convertible Notes, and (B) transactions between two or
more Four Seasons wholly-owned subsidiaries or between Four
Seasons and a Four Seasons wholly-owned subsidiary; (v) redeem,
purchase or otherwise acquire or subject to a Lien any of its
outstanding securities or securities convertible or exchangeable
into or exercisable for any such securities, unless otherwise
required by the terms of such securities and other than in
transactions between two or more Four Seasons wholly-owned
subsidiaries or between Four Seasons and a Four Seasons
wholly-owned subsidiary; (vi) with respect to Four Seasons and
its material subsidiaries only, amend or modify the terms of any
of its securities; (vii) adopt a plan of liquidation or
resolution providing for the
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liquidation or dissolution of Four Seasons or any of its
subsidiaries; (viii) amend its accounting policies or adopt new
accounting policies, in each case except as required in
accordance with GAAP; (ix) make any material Tax election or
settle or compromise any material Tax liability; or (x) authorize
or propose any of the foregoing, or enter into, modify or
terminate any Contract with respect to any of the foregoing;
(c) Four Seasons shall promptly notify Purchaser in writing of (i)
any circumstance or development that, to the knowledge of Four
Seasons, is or would reasonably be expected to have a Material
Adverse Effect or any change in any material fact set forth in
the Data Room or the Disclosure Letter, or in Four Seasons'
Public Disclosure Record filed before February 7, 2007, and (ii)
the occurrence of any loss, breakage or damage to a hotel
property owned or managed by Four Seasons or any of its
subsidiaries in excess of $5,000,000 (irrespective of insurance
or third party proceeds which have been or may be received in
connection with such loss, breakage or damage); provided that the
delivery of any such notification shall not modify, amend or
supersede any disclosure set forth in the Disclosure Letter or
any representation or warranty of Four Seasons contained in this
Agreement or in any certificate or other instrument delivered in
connection herewith;
(d) Four Seasons shall not, and shall not permit any of its
subsidiaries to, directly or indirectly, except, in the case of
clauses (i), (ii) and (iv) below (and, to the extent that it
relates to the foregoing clauses, clause (viii) below), in the
ordinary course of business consistent with past practice: (i)
sell, pledge, lease, license, dispose of or cause or permit a
Lien to be created on any assets (including the shares of any
subsidiary) of Four Seasons or of any subsidiary; (ii) acquire
(by merger, amalgamation, consolidation or acquisition of shares
or assets or otherwise) any corporation, partnership or other
business organization or division thereof or any property or
asset, or make any investment either by the purchase of
securities, contributions of capital (other than to wholly-owned
subsidiaries), property transfer, or purchase of any property or
assets of any other person, or enter into or extend any option to
acquire, or exercise an option to acquire, any real property or
commence construction of, or enter into any Contract to develop
or construct, any real estate projects, if any of the foregoing
would reasonably be expected to be material to Four Seasons and
its subsidiaries taken as a whole and are otherwise not in the
ordinary course of business consistent with past practice; (iii)
incur any Indebtedness or issue any debt securities or assume,
guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other person, or make any
loans or advances in excess of $5,000,000 individually or
$25,000,000 in the aggregate, except for extensions of existing
Indebtedness and the issuance of letters of credit; (iv) make or
commit to make capital expenditures or charitable contributions
that, together with capital expenditures or charitable
contributions made or
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committed to be made since September 30, 2006, are, in the
aggregate, in excess of $2,500,000; (v) pay, discharge or satisfy
any material claims, liabilities or obligations other than the
payment, discharge or satisfaction of liabilities reflected or
reserved against in the Four Seasons Financial Statements; (vi)
waive, release, grant or transfer any rights of material value
other than as permitted by Sections 5.1 (e) or (h); (vii) enter
into a new line of business; or (viii) authorize or propose any
of the foregoing, or enter into or modify any Contract to do any
of the foregoing;
(e) Four Seasons shall not, and shall not permit any of its
subsidiaries to, directly or indirectly (i) enter into any
Management Agreement or Contract with respect to the purchase or
sale or development of any hotel or property outside the ordinary
course of business or that would impose payment or other
obligations on Four Seasons or any of its subsidiaries in excess
of $5,000,000 individually or $25,000,000 in the aggregate; (ii)
amend in a manner materially adverse to Four Seasons or any of
its subsidiaries or voluntarily terminate any Management
Agreement; (iii) enter into any Contract or series of Contracts
(other than a Management Agreement or Contract with respect to
the purchase or sale or development of any hotel or property)
resulting in a new Contract or series of related new Contracts
outside of the ordinary course of business that would result in
any Contract having a term in excess of 12 months and that would
not be terminable by Four Seasons or its subsidiaries upon notice
of 90 days or less from the date of the relevant Contract or
modification of the Contract, or that would impose payment or
other financial obligations on Four Seasons or any of its
subsidiaries in excess of $2,500,000 individually or $25,000,000,
in the aggregate, (iv) enter into any Contract that would limit
or otherwise restrict Four Seasons or any of its subsidiaries or
any of their successors, or that would, after the Effective Time,
limit or otherwise restrict the Purchaser or any of its
affiliates or any of their successors, from engaging or competing
in any line of business or in any geographic area, except as
contemplated by any Management Agreement; or (v) terminate,
cancel or amend in any manner materially adverse to Four Seasons
or any of its subsidiaries any Material Contract not otherwise
contemplated in this section 5.1(e);
(f) other than as is necessary to comply with applicable Laws, Four
Seasons Plans or Contracts, neither Four Seasons nor any of its
subsidiaries, in respect of the Four Seasons Employees, (i) shall
grant to any officer or director of Four Seasons or any of its
subsidiaries an increase in compensation in any form; (ii) grant
any general salary increase; (iii) take any action with respect
to the grant of any severance or termination pay; (iv) enter into
any employment agreement with any officer or director of Four
Seasons or any of its subsidiaries; (v) increase any benefits
payable under its current severance or termination pay policies;
or (vi) adopt or materially amend or make any contribution to any
Four Seasons Plan;
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(g) except as permitted pursuant to this Section 5.1, Four Seasons
shall not, and shall not permit any of its subsidiaries to, make
any loans, advances or capital contributions to, or investments
in, or guarantees (other than performance guarantees on behalf of
wholly-owned subsidiaries) to, any other person other than to
wholly-owned subsidiaries, or make any loans to any officer, or
director of Four Seasons or any of its subsidiaries;
(h) Four Seasons shall not, and shall not permit any of its
subsidiaries to, waive, release, assign, settle or compromise (i)
any material Legal Actions or any material claim or material
liability other than in the ordinary course of business
consistent with past practice or (ii) any Legal Action that is
brought by any current, former or purported holder of any
securities of Four Seasons in its capacity as such and that (A)
requires any payment to such security holders by Four Seasons or
any subsidiary or (B) adversely affects in any material respect
the ability of Four Seasons and the subsidiaries to conduct their
business in a manner consistent with past practice; and
(i) Four Seasons shall use its commercially reasonable efforts to
cause the current insurance (or re-insurance) policies maintained
by Four Seasons or any of its subsidiaries that is placed by Four
Seasons, including directors' and officers' insurance, not to be
cancelled or terminated and to prevent any of the coverage
thereunder from lapsing, unless simultaneously with such
termination, cancellation or lapse, replacement policies
underwritten by insurance or re-insurance companies of nationally
recognized standing having comparable deductions and providing
coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect; provided that Four
Seasons shall not place or renew any insurance (or re-insurance)
policy for a term exceeding 12 months.
(j) Four Seasons will not enter into or amend any Contract with any
broker, finder or investment banker as contemplated in Section
3.1(y), including any amendment of any of the Contracts referred
to in the second sentence of Section 3.1(y) without the prior
written approval of the Purchaser, which approval may be withheld
in the sole discretion of the Purchaser; provided that the
Purchaser will not unreasonably withhold its consent in
connection with Four Seasons entering into or amending any such
Contract with a financial advisor to the Special Committee.
5.2 PRE-ACQUISITION REORGANIZATIONS
Subject to the following sentences, Four Seasons agrees that, upon request
by the Purchaser, Four Seasons shall, and shall cause its subsidiaries to, at
the expense of Purchaser, use its commercially reasonable efforts to (i) effect
such reorganizations of its business, operations and assets and the integration
of other affiliated businesses as the Purchaser may request, acting reasonably
(each a "PRE-ACQUISITION REORGANIZATION") and (ii) cooperate with the Purchaser
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and its advisors to determine the nature of the Pre-Acquisition Reorganizations
that might be undertaken and the manner in which they may most effectively be
undertaken. The Purchaser acknowledges and agrees that the Pre-Acquisition
Reorganizations shall (A) not impede, delay or prevent consummation of the
Arrangement (including by giving rise to litigation by third parties); (B) be
such that, in the opinion of Four Seasons, acting reasonably, would not
prejudice the Four Seasons Shareholders or the holders of Four Seasons Options;
(C) not require Four Seasons to obtain the approval of Four Seasons
Shareholders; or (D) not be considered in determining whether a representation,
warranty or covenant of Four Seasons hereunder has been breached, it being
acknowledged by the Purchaser that these actions could require the consent of
third parties under applicable Contracts and Governmental Entities. The
Purchaser shall provide written notice to Four Seasons of any proposed
Pre-Acquisition Reorganization at least twenty days prior to the anticipated
Effective Time. Upon receipt of such notice, the Purchaser and Four Seasons
shall, at the expense of the Purchaser, work cooperatively and use commercially
reasonable efforts to prepare prior to the Effective Time all documentation
necessary and do such other acts and things as are necessary to give effect to
any Pre-Acquisition Reorganizations. The Parties shall seek to have any such
Pre-Acquisition Reorganization made effective as of the last moment of the day
ending immediately prior to the Closing Date (but after the Purchaser shall have
waived or confirmed that all conditions to Closing have been satisfied),
provided that no such Pre-Acquisition Reorganization will be made effective
unless (i) it is reasonably certain, after consulting with Four Seasons, that
the Arrangement will become effective; (ii) such Pre-Acquisition Reorganization
can be reversed or unwound without adversely affecting Four Seasons or its
subsidiaries in the event the Arrangement does not become effective and this
Agreement is terminated; or (iii) Four Seasons otherwise reasonably agrees. If
the Arrangement is not completed, the Purchaser will forthwith reimburse Four
Seasons for all reasonable fees and expenses (including any professional fees
and expenses) incurred by Four Seasons and its subsidiaries in considering and
effecting a Pre-Acquisition Reorganization and shall be responsible for any
costs of Four Seasons and its subsidiaries in reversing or unwinding any
Pre-Acquisition Reorganization that was effected prior to termination of the
Agreement at the Purchaser's request. The obligation of the Purchaser to
reimburse Four Seasons for fees and expenses and be responsible for costs as set
out in this Section will be in addition to any other payment the Purchaser may
be obligated to make hereunder and will survive termination of this Agreement.
The completion of the Pre-Acquisition Reorganization shall not be a condition to
completion of the Arrangement.
5.3 COVENANTS OF FOUR SEASONS REGARDING THE ARRANGEMENT
Four Seasons shall perform, and shall cause its subsidiaries to perform,
all obligations required or desirable to be performed by Four Seasons or any of
its subsidiaries under this Agreement, co-operate with the Purchaser in
connection therewith, and do all such other acts and things as may be necessary
or desirable in order to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated in this Agreement and, without
limiting the generality of the foregoing, Four Seasons shall and, where
appropriate, shall cause its subsidiaries to:
(a) except as specifically permitted by Section 7.2, use all
commercially reasonable efforts to obtain the Required Vote;
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(b) unless this Agreement shall have been terminated in accordance
with Section 8.2, submit this Agreement to the Four Seasons
Shareholders at the Four Seasons Meeting no later than the fifth
business day immediately preceding the Outside Date, even if its
Board shall have withdrawn, amended, modified or qualified its
recommendation of this Agreement or the Arrangement;
(c) use all commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by Four
Seasons or a subsidiary in connection with the Arrangement from
other parties to the Contracts; notwithstanding anything to the
contrary in this Agreement, in connection with obtaining any
approval or consent from any person (other than a Governmental
Entity) with respect to any transaction contemplated by this
Agreement, (i) without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld or delayed, not
pay or commit to pay to such person whose approval or consent is
being solicited any cash or other consideration, or make any
commitment or incur any liability or other obligation due to such
person, and (ii) neither the Purchaser nor any of its affiliates
shall be required to pay or commit to pay to such person whose
approval or consent is being solicited any cash or other
consideration, or make any commitment or incur any liability or
other obligation to such person;
(d) use its commercially reasonable efforts to effect all necessary
registrations, filings and submissions of information required by
Governmental Entities from Four Seasons or any of its
subsidiaries relating to the Arrangement;
(e) apply for and use all commercially reasonable efforts to obtain,
and use all commercially reasonable efforts to assist the
Purchaser to obtain, all Regulatory Approvals relating to Four
Seasons or any of its subsidiaries and, in doing so, keep the
Purchaser reasonably informed as to the status of the proceedings
related to obtaining the Regulatory Approvals, including
providing the Purchaser with copies of all related applications
and notifications (other than confidential information contained
in such applications and notifications), in draft form, in order
for the Purchaser to provide its comments thereon;
(f) defend all lawsuits or other legal, regulatory or other
proceedings against Four Seasons or any of its subsidiaries
challenging or affecting this Agreement or the consummation of
the transactions contemplated hereby; and
(g) take all actions required under the Indenture, including the
giving of any notices to the trustee or the holders of the Four
Seasons Convertible Notes and the execution of any supplemental
indenture, (i) in connection with the consummation of the
transactions contemplated by this Agreement,
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and (ii) to ensure that the treatment of the Four Seasons
Convertible Notes contemplated by the second to last sentence of
Section 3.1(e) is achieved.
5.4 COVENANTS OF THE PURCHASER REGARDING THE PERFORMANCE OF OBLIGATIONS
Except as contemplated in this Agreement, the Purchaser shall perform all
obligations required or desirable to be performed by it under this Agreement,
co-operate with Four Seasons in connection therewith, and do all such other acts
and things as may be necessary or desirable in order to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated in
this Agreement and, without limiting the generality of the foregoing, the
Purchaser shall:
(a) apply for and use all commercially reasonable efforts to obtain
all Regulatory Approvals relating to it and relating to Four
Seasons or any of Four Seasons' subsidiaries and, in doing so,
keep Four Seasons reasonably informed as to the status of the
proceedings related to obtaining the Regulatory Approvals,
including providing Four Seasons with copies of all related
applications and notifications in draft form (other than
confidential information contained in such applications and
notifications), in order for Four Seasons to provide its
reasonable comments thereon; provided, however, that nothing in
this Agreement shall require the Purchaser, any Purchaser Party,
Four Seasons or any of their respective significant affiliates to
divest or hold separate or otherwise take or commit to take any
action to obtain any such Regulatory Approval that would
adversely affect the activities of the Purchaser, any Purchaser
Party, Four Seasons or any of their respective significant
affiliates as conducted on the date hereof in any material
respect;
(b) use its commercially reasonable efforts to effect all necessary
registrations, filings and submissions of information required by
Governmental Entities from the Purchaser or any of its affiliates
relating to the Arrangement;
(c) defend all lawsuits or other legal, regulatory or other
proceedings against it challenging or affecting this Agreement or
the consummation of the transactions contemplated hereby;
(d) make available to Four Seasons, on a timely basis after
consummation of the Arrangement, sufficient funds to permit Four
Seasons to meet its obligations under the Indenture with respect
to the conversion or any required repurchase of Four Seasons
Convertible Notes; and
(e) vote and cause its affiliates to vote (or cause to be voted) all
Four Seasons Shares held by each of them in favour of the
Arrangement and transactions contemplated hereby.
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5.5 MUTUAL COVENANTS
Each of the Parties covenants and agrees that, except as contemplated in
this Agreement, during the period from the date of this Agreement until the
earlier of the Effective Time and the time that this Agreement is terminated in
accordance with its terms:
(a) it shall, and shall cause its subsidiaries to, use commercially
reasonable efforts to satisfy (or cause the satisfaction of) the
conditions precedent to its obligations hereunder as set forth in
Article VI to the extent the same is within its control and to
take, or cause to be taken, all other action and to do, or cause
to be done, all other things necessary, proper or advisable under
all applicable Laws to consummate the Arrangement, including
using its commercially reasonable efforts to: (i) oppose, lift or
rescind any injunction or restraining order against it or other
order or action against it seeking to stop, or otherwise
adversely affecting its ability to make and complete, the
Arrangement; and (ii) co-operate with the other Party in
connection with the performance by it and its subsidiaries of
their obligations hereunder; and
(b) it shall not take any action, refrain from taking any
commercially reasonable action, or permit any action to be taken
or commercially reasonable action to not be taken, which is
inconsistent with this Agreement or which would reasonably be
expected to significantly impede the consummation of the
Arrangement or to prevent or materially delay the consummation of
the transactions contemplated hereby, in each case, except as
permitted by this Agreement.
5.6 STOCK OPTIONS
Purchaser acknowledges that, subject to receipt of all appropriate
approvals and consents from any Governmental Entity, and pursuant to the
provisions of the Four Seasons Stock Option Plan, Four Seasons shall facilitate
the acceleration of the vesting of any unvested Four Seasons Options as may be
necessary or desirable to allow all persons holding Four Seasons Options to
exercise such Options for the purpose of participating in the Arrangement.
Pursuant to the Arrangement, any Four Seasons Options that have not been
exercised prior to the Effective Time will be transferred by each holder thereof
to Four Seasons without any act or formality on its or their part in exchange
for a cash amount equal to the excess, if any, of (i) the product of the number
of Four Seasons Shares underlying the Four Seasons Options held by such holder
and $82.00, over (ii) the aggregate exercise price for all Four Seasons Shares
underlying the Four Seasons Options held by such holder (converted at the Bank
of Canada's published rate of exchange for United States dollars at noon on the
day prior to the Closing Date). Pursuant to the Plan of Arrangement, Four
Seasons will be entitled to deduct and withhold from any consideration otherwise
payable to any holder of Four Seasons Options such amounts as Four Seasons is
required to deduct and withhold with respect to such payment under the Tax Act,
the UNITED STATES INTERNAL REVENUE CODE OF 1986 or any provision of provincial,
state, local or foreign tax law, in each case, as amended or succeeded and
subject to the provisions of any applicable income tax treaty between Canada and
the country where the holder is resident.
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5.7 DISCLOSURE OF MATERIAL INFORMATION UPON TERMINATION
If this Agreement is terminated prior to the Effective Time (other than
pursuant to Section 8.2(4)), Four Seasons shall, within 5 Business Days of such
termination, disclose all Material Information to the public generally by means
of a material change report and a filing on Form 8-K or other periodic report
required or permitted to be filed under applicable laws. For purposes of this
Section 5.7, "Material Information" shall mean all material and non-public
information concerning Four Seasons or any of its subsidiaries that has been
furnished to the Purchaser or any of it affiliates, in written, electronic or
other form, in connection with this Agreement, the contemplated transactions or
the due diligence therefor.
ARTICLE VI
CONDITIONS
6.1 MUTUAL CONDITION PRECEDENTS
The obligations of the Parties to complete the transactions contemplated
by this Agreement are subject to the fulfillment, on or before the Effective
Time, of each of the following conditions precedent, each of which may only be
waived by the mutual consent of the Parties:
(a) the Arrangement shall have been approved at the Four Seasons
Meeting by not less than the Required Vote;
(b) the Interim Order and the Final Order shall each have been
obtained in form and on terms reasonably satisfactory to each of
the Parties, and shall not have been set aside or modified in a
manner unacceptable to such parties, acting reasonably, on appeal
or otherwise;
(c) all Regulatory Approvals shall have been obtained or concluded
or, in the case of waiting or suspensory periods, expired or been
terminated;
(d) no Governmental Entity shall have enacted, issued, promulgated,
applied for (or advised either Four Seasons or the Purchaser in
writing that it has determined to make such application),
enforced or entered any Law (whether temporary, preliminary or
permanent) that restrains, enjoins or otherwise prohibits
consummation of, or dissolves the Arrangement or the other
transactions contemplated by this Agreement; and
(e) this Agreement shall not have been terminated in accordance with
its terms.
6.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to complete the transactions contemplated
by this Agreement shall also be subject to the fulfillment of each of the
following conditions precedent (each of which is for the exclusive benefit of
the Purchaser and may be waived by Purchaser):
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(a) all covenants of Four Seasons under this Agreement to be
performed on or before the Effective Time shall have been duly
performed by Four Seasons in all material respects, and Purchaser
shall have received a certificate of Four Seasons addressed to
Purchaser and dated the Effective Time, signed on behalf of Four
Seasons by two senior executive officers of Four Seasons (on Four
Seasons' behalf and without personal liability), confirming the
same as at the Effective Time;
(b) the representations and warranties of Four Seasons set forth in
this Agreement shall be true and correct in all respects, without
regard to any materiality or Material Adverse Effect
qualifications contained in them as of the Effective Time, as
though made on and as of the Effective Time (except for
representations and warranties made as of a specified date, the
accuracy of which shall be determined as of that specified date),
except where the failure or failures of all such representations
and warranties to be so true and correct in all respects would
not reasonably be expected to have a Material Adverse Effect. In
addition, the representations and warranties set forth in the
first three sentences of Section 3.1(e) shall be true and correct
in all material respects. The Purchaser shall have received a
certificate of Four Seasons addressed to Purchaser and dated the
Effective Time, signed on behalf of Four Seasons by two senior
executive officers of Four Seasons (on Four Seasons' behalf and
without personal liability), confirming the above as at the
Effective Time;
(c) all Regulatory Approvals shall have been obtained or concluded on
terms and conditions that do not adversely affect the activities
of the Purchaser, any Purchaser Party, Four Seasons or any of
their respective significant affiliates as conducted on the date
hereof in any material respect and no Governmental Entity shall
have advised Purchaser, any Purchaser Party, Four Seasons or any
of their respective affiliates that it intends to seek to impose
any restriction on their respective activities (as conducted on
the date hereof) as a result of the consummation of the
Arrangement that would adversely affect Purchaser, any Purchaser
Party, Four Seasons or any of their respective significant
affiliates in any material respect;
(d) between the date hereof and the Effective Time, there shall not
have occurred a Material Adverse Effect with respect to Four
Seasons or any event or occurrence that would reasonably be
expected to have a Material Adverse Effect; and
(e) the aggregate number of Limited Voting Shares held, directly or
indirectly, by the Four Seasons Shareholders who have properly
exercised Dissent Rights in connection with the Arrangement shall
not exceed 10% of the outstanding Limited Voting Shares.
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6.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF FOUR SEASONS
The obligations of Four Seasons to complete the transactions contemplated
by this Agreement shall also be subject to the following conditions precedent
(each of which is for the exclusive benefit of Four Seasons and may be waived by
Four Seasons):
(a) all covenants of the Purchaser under this Agreement to be
performed on or before the Effective Time shall have been duly
performed by the Purchaser in all material respects, and Four
Seasons shall have received a certificate of the Purchaser,
addressed to Four Seasons and dated the Effective Time, signed on
behalf of the Purchaser by two of its senior executive officers
(on such Party's behalf and without personal liability),
confirming the same as of the Effective Time; and
(b) the representations and warranties of the Purchaser set forth in
this Agreement shall be true and correct in all respects, without
regard to any materiality or Material Adverse Effect
qualifications contained in them, as of the Effective Time, as
though made on and as of the Effective Time (except for
representations and warranties made as of a specified date, the
accuracy of which shall be determined as of that specified date),
except where the failure or failures of all such representations
and warranties to be so true and correct in all respects would
not reasonably be expected to have a Purchaser Material Adverse
Effect. Four Seasons shall have received a certificate of the
Purchaser, addressed to Four Seasons and dated the Effective
Time, signed on behalf of the Purchaser by two senior executive
officers of such Party (on such Party's behalf and without
personal liability), confirming the above as of the Effective
Time.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 NOTICE AND CURE PROVISIONS
(1) Each Party will give prompt notice to the other of the occurrence, or
failure to occur, at any time from the date hereof until the earlier
to occur of the termination of this Agreement and the Effective Time
of any event or state of facts which occurrence or failure would, or
would be likely to:
(a) cause any of the representations or warranties of any Party
contained herein to be untrue or inaccurate in any material
respect on the date hereof or at the Effective Time; or
(b) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by any
Party hereunder prior to the Effective Time.
(2) Purchaser may not exercise its right to terminate this Agreement
pursuant to Section 8.2(3)(b) and Four Seasons may not exercise its
right to terminate this
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Agreement pursuant to Section 8.2(4) unless the Party seeking to
terminate the Agreement shall have delivered a written notice to the
other Party specifying in reasonable detail all breaches of covenants,
representations and warranties or other matters which the Party
delivering such notice is asserting as the basis for the termination
right. If any such notice is delivered, provided that a Party is
proceeding diligently to cure such matter and such matter is capable
of being cured (except matters arising out of the failure to make
appropriate disclosure in the Disclosure Letter), no Party may
exercise such termination right, until the earlier of (i) the Outside
Date, and (ii) the date that is 15 business days following receipt of
such notice by the Party to whom the notice was delivered, if such
matter has not been cured by such date. If such notice has been
delivered prior to the date of the Four Seasons Meeting, such meeting
shall, unless the Parties agree otherwise, be postponed or adjourned
until the expiry of such period (without causing any breach of any
other provision contained herein). If such notice has been delivered
prior to the filing of the Articles of Arrangement with the Director,
such filing shall be postponed until two business days after the
expiry of such period.
(3) Each Party shall promptly notify the other Party of (i) any
communication from any person alleging that the consent of such person
(or another person) is or may be required in connection with the
transactions contemplated by this Agreement (and the response thereto
from such Party, its subsidiaries or its representatives), (ii) any
material communication from any Governmental Entity in connection with
the transactions contemplated by this Agreement (and the response
thereto from such Party, its subsidiaries or its representatives), and
(iii) any material Legal Actions threatened or commenced against or
otherwise affecting such Party or any of its subsidiaries that are
related to the transactions contemplated by the Agreement.
7.2 NON-SOLICITATION
(1) Except as expressly provided in this Article VII, Four Seasons shall
not, directly or indirectly, through any officer, director, employee,
representative (including any financial or other advisor) or agent of
Four Seasons or any of its subsidiaries, (i) solicit, initiate,
knowingly facilitate or knowingly encourage (including by way of
furnishing information or entering into any Contract) the initiation
of any inquiries or proposals regarding an Acquisition Proposal, (ii)
participate in any substantive discussions or negotiations with any
person (other than the Purchaser and Triples and their respective
affiliates) regarding an Acquisition Proposal, (iii) withdraw, amend,
modify or qualify, or propose publicly to withdraw, amend, modify or
qualify, in a manner adverse to the Purchaser, the approval or
recommendation of the Board or any committee thereof (including the
Special Committee) of this Agreement or the Arrangement, (iv) accept,
approve, endorse or recommend, or propose publicly to approve, endorse
or recommend, any Acquisition Proposal, or (v) accept or enter into,
or publicly propose to enter into, any Contract in respect of an
Acquisition Proposal (other than a confidentiality agreement permitted
by Section 7.2(2)).
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(2) Notwithstanding Section 7.2(1) and any other provision of this
Agreement, the Board shall be permitted to (i) withdraw, amend, modify
or qualify (or propose publicly to withdraw, amend, modify or qualify)
in a manner adverse to the Purchaser the approval or recommendation of
the Board or any committee thereof (including the Special Committee)
of this Agreement or the Arrangement; (ii) participate in any
discussions or negotiations with, or furnish information to, any
person in response to an Acquisition Proposal by such person; and
(iii) approve, endorse or recommend or propose publicly to approve,
endorse or recommend any Acquisition Proposal, if and only to the
extent that:
(a) Four Seasons has received an unsolicited bona fide written
Acquisition Proposal from such person;
(b) Four Seasons shall have complied with all other requirements of
this Section 7.2;
(c) the Board, after consultation with its financial advisors and
outside legal counsel, determines in good faith that the
Acquisition Proposal would be reasonably likely to result in a
Superior Proposal; and
(d) in the case of clause (ii) of this Section 7.2(2), prior to
providing any information or data to such person in connection
with such Acquisition Proposal, the Board receives from such
person an executed confidentiality agreement having substantially
the same terms as the Confidentiality Agreements and, taken as a
whole, being no less favourable to Four Seasons than the
Confidentiality Agreements, and Four Seasons sends a copy of any
such confidentiality agreement to the Purchaser promptly upon its
execution and the Purchaser is provided promptly with a list of,
or in the case of information that was not previously made
available to the Purchaser, copies of, any information provided
to such person.
(3) Four Seasons shall, and shall cause the officers, directors,
employees, representatives and agents of Four Seasons and its
subsidiaries to, immediately terminate any existing solicitations,
discussions or negotiations with any person (other than the Purchaser
and Triples and their respective affiliates) that has made, indicated
any interest to make or may reasonably be expected to make, an
Acquisition Proposal. Four Seasons agrees not to release any third
party from any standstill agreement to which it is a party unless such
party has made an Acquisition Proposal that the Board, after
consultation with its financial advisors and outside legal counsel,
has determined in good faith would be reasonably likely to result in a
Superior Proposal. Four Seasons shall promptly request the return or
destruction of all information provided to any third party which, at
any time since January 1, 2006, has entered into a confidentiality
agreement with Four Seasons relating to a potential Acquisition
Proposal to the extent that such information has not previously been
returned or destroyed, and shall use all commercially reasonable
efforts to ensure that such requests are honoured in accordance with
the terms of such agreement.
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(4) Four Seasons shall promptly (and in any event within 72 hours of
receipt by Four Seasons) notify the Purchaser, at first orally and
thereafter in writing, of any proposal, inquiry, offer (or any
amendment thereto) or request relating to or constituting an
Acquisition Proposal, in each case received after the date hereof, of
which any of its directors, officers, representatives or agents are or
become aware, or any amendments to the foregoing, any request for
discussions or negotiations, or any request for non-public information
relating to Four Seasons or any of its subsidiaries in connection with
an Acquisition Proposal or for access to the books or records of Four
Seasons or any of its subsidiaries by any person that informs Four
Seasons or such subsidiary that it is considering making, or has made,
an Acquisition Proposal and any amendment thereto; and Four Seasons
shall promptly provide to Purchaser a description of the material
terms and conditions of any such Acquisition Proposal or proposal,
inquiry, offer or request. Four Seasons shall keep Purchaser informed
of any material change to the material terms of any such Acquisition
Proposal or proposal, inquiry, offer or request.
(5) Nothing contained in this Section 7.2 (but subject to the Purchaser's
rights in Section 8.2(3)(a)) shall prohibit the Board from making any
disclosure to Four Seasons' Shareholders prior to the Effective Time
if, in the good faith judgment of the Board, after consultation with
outside legal counsel, such disclosure is necessary for the Board to
act in a manner consistent with its fiduciary duties or is otherwise
required under applicable Law, including its obligations under Rule
14e-2 under the Exchange Act.
(6) Nothing contained in this Agreement shall limit in any way the
obligation of Four Seasons to convene and hold the Four Seasons
Meeting in accordance with Section 2.1 of this Agreement unless this
Agreement is terminated in accordance with Article VIII.
7.3 AGREEMENT AS TO DAMAGES
(1) Notwithstanding any other provision relating to the payment of fees or
expenses, including the payment of brokerage fees, Four Seasons shall
pay, or cause to be paid, to the Purchaser Payment Parties in such
proportions as the Purchaser Payment Parties may advise Four Seasons
jointly in writing by wire transfer of immediately available funds an
amount equal to $75 million (the "TERMINATION FEE") LESS any amounts
actually paid or required to be paid by Four Seasons to the Purchaser
pursuant to Section 7.3(2), if:
(a) the Purchaser shall have terminated this Agreement pursuant to
Section 8.2(3)(c) or Section 8.2(3)(d), in which case payment
shall be made within two business days of such termination; or
(b) (i) after the date hereof, (A) and prior to the Four Seasons
Meeting, a BONA FIDE Acquisition Proposal shall have been made or
proposed to Four Seasons or publicly announced, or a person shall
have publicly announced
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an intention to do so (which has not been withdrawn), or (B) any
of the events referred to in Section 8.2(3)(a) shall have
occurred, (ii) this Agreement is terminated by the Purchaser or
Four Seasons pursuant to Section 8.2(2)(b) and (iii) within 365
days after the date of such termination either (A) Four Seasons
or any of its subsidiaries enters into a Contract providing for
the implementation of an Acquisition Proposal (whether or not
such Acquisition Proposal is the same Acquisition Proposal
referred to in clause (i)(A) above) and Four Seasons shall
consummate such Acquisition Proposal, whether or not amended
prior to its consummation and whether such consummation is before
or after such 365th day or (B) an Acquisition Proposal (whether
or not such Acquisition Proposal is the same Acquisition Proposal
referred to in clause (i)(A) above) is consummated, in which case
payment shall be made on the date on which such Acquisition
Proposal is consummated; or
(c) the Purchaser shall have terminated this Agreement pursuant to
Section 8.2(2)(a) or Section 8.2(3)(b) and (i) the reason that
the Effective Time did not occur prior to the Outside Date (in
the case of termination pursuant to Section 8.2(2)(a)) was the
failure of Four Seasons to complete the transactions contemplated
hereby when required to do so, or (ii) the breach that gave rise
to the Purchaser's right to terminate (in the case of termination
pursuant to Section 8.2(3)(b)) was wilful, in which case payment
shall be made within two business days of such termination.
(2) Four Seasons shall pay, or cause to be paid, to the Purchaser by wire
transfer of immediately available funds, the reasonable documented
expenses of the Purchaser and its affiliates incurred in connection
with the transactions contemplated hereby (other than any expenses
related to a broker, finder or investment banker) not to exceed $10
million if:
(a) (i) after the date hereof and prior to the Four Seasons Meeting,
any of the events referred to in Section 8.2(3)(a) shall have
occurred, and (ii) this Agreement shall have been terminated by
the Purchaser or Four Seasons pursuant to Section 8.2(2)(b); or
(b) this Agreement shall have been terminated by the Purchaser
pursuant to Section 8.2(3)(b),
such payment to be made within two business days of any such
termination.
(3) The Purchaser shall pay, or cause to be paid, to Four Seasons by wire
transfer of immediately available funds an amount equal to $100
million if this Agreement shall have been terminated by Four Seasons
pursuant to Section 8.2(2)(a) or Section 8.2(4), provided that, in the
case of termination pursuant to Section 8.2(2)(a), the reason that the
Effective Time did not occur prior to the Outside Date was the failure
of the Purchaser to complete the transactions contemplated
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hereby when required to do so. Such payment shall be made within two
business days of any such termination.
(4) In no event shall Four Seasons be required to pay under Section 7.3(1)
and 7.3(2), in the aggregate, an amount in excess of the Termination
Fee.
7.4 FEES AND EXPENSES
Except as provided in Section 7.3, each Party shall pay all fees, costs
and expenses incurred by such Party in connection with this Agreement and the
Arrangement.
7.5 LIQUIDATED DAMAGES, INJUNCTIVE RELIEF AND NO LIABILITY OF OTHERS
The Parties acknowledge that all of the payment amounts set out in Section
7.3 are payments of liquidated damages which are a genuine pre-estimate of the
damages a Party will suffer or incur as a result of the event giving rise to
such payment and the resultant termination of this Agreement and are not
penalties. Each Party irrevocably waives any right it may have to raise as a
defense that any such liquidated damages are excessive or punitive. For greater
certainty, the Parties agree that the right to receive payment of the amount
determined pursuant to Section 7.3 in the manner provided therein is the sole
and exclusive remedy of the Party entitled to such payment in respect of the
event giving rise to such payment, other than the right to injunctive relief in
accordance with Section 9.3 hereof to restrain any breach or threatened breach
of the covenants or agreements set forth in this Agreement or the
Confidentiality Agreements or otherwise to obtain specific performance of any of
such acts, covenants or agreements, without the necessity of posting a bond or
security in connection therewith. Other than amounts that may become payable
pursuant to the Sponsor Guarantee, there shall be no liability of any
shareholder, director, officer, employee, advisor or representative of the
Purchaser, any Purchaser Party or any affiliate thereof, whether to Four
Seasons, the Purchaser or any other person (including any shareholder, director,
officer, employee, advisor or representative thereof) in connection with any
liability or other obligation of the Purchaser, any Purchaser Party or any
affiliate thereof, whether hereunder or otherwise in connection with the
transactions contemplated hereby (including in connection with the Equity
Funding Letter).
7.6 ACCESS TO INFORMATION; CONFIDENTIALITY
From the date hereof until the earlier of the Effective Time and the
termination of this Agreement, subject to compliance with applicable Law and the
terms of any existing Contracts, Four Seasons shall, and shall cause its
subsidiaries and their respective officers, directors, employees, independent
auditors, accounting advisers and agents to, afford to the Purchaser and to its
officers, employees, agents and representatives such access as the Purchaser may
reasonably require at all reasonable times, including for the purpose of
facilitating the ability to grant the collateral package required by the Lender
in connection with the financing contemplated by the Commitment Letter and the
definitive agreements contemplated therein, and facilitating integration
business planning, to their officers, employees, agents, properties, books,
records and Contracts, and shall make available to the Purchaser all data and
information as the Purchaser may reasonably request. Without limiting the
foregoing, the Purchaser and its representatives (including its financing
sources) shall, upon reasonable prior notice, have the
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right to conduct appraisal and environmental and engineering inspections of each
of the Owned Properties; PROVIDED, THAT no such inspections shall be conducted
in a manner which disrupts in any material respect the normal course of business
of Four Seasons at the applicable Property. The Purchaser and Four Seasons
acknowledge and agree that information furnished pursuant to this Section shall
be subject to the terms and conditions of the Confidentiality Agreements.
7.7 INSURANCE AND INDEMNIFICATION
(1) The Purchaser will, or will cause Four Seasons and its subsidiaries
to, maintain in effect without any reduction in amount or scope for
six years from the Effective Time customary policies of directors' and
officers' liability insurance providing protection comparable to the
protection provided by the policies maintained by Four Seasons and its
subsidiaries which are in effect immediately prior to the Effective
Time and providing protection in respect of claims arising from facts
or events which occurred on or prior to the Effective Time; PROVIDED,
HOWEVER, that Four Seasons will not be required, in order to maintain
such directors' and officers' liability insurance policy, to pay an
annual premium in excess of 250% of the cost of the existing policies;
and provided further that, if equivalent coverage cannot be obtained
or can only be obtained by paying an annual premium in excess of 250%
of such amount, Four Seasons shall only be required to obtain as much
coverage as can be obtained by paying an annual premium equal to 250%
of such amount. Furthermore, prior to the Effective Time Four Seasons
may, in the alternative, purchase run off directors' and officers'
liability insurance for a period of up to six years from the Effective
Time provided that the premiums will not exceed 250% of the premiums
currently charged to Four Seasons for directors' and officer's
liability insurance, and in such event none of the Purchaser, Four
Seasons or any of its subsidiaries will have any further obligation
under this Section 7.7(1).
(2) The Purchaser agrees that it shall directly honour all rights to
indemnification or exculpation now existing in favour of present and
former officers and directors of Four Seasons and its subsidiaries,
which shall survive the completion of the Arrangement and the
provisions of this Section 7.7 shall be binding, jointly and
severally, on all successors of the Purchaser.
(3) The provisions of this Section 7.7 are intended for the benefit of,
and shall be enforceable by, each insured or indemnified person, his
or her heirs and his or her legal representatives and, for such
purpose, Four Seasons hereby confirms that it is acting as agent and
trustee on their behalf.
7.8 EXCHANGE DE-LISTING
Subject to applicable Laws, Purchaser and Four Seasons shall use their
commercially reasonable efforts to cause the Four Seasons Shares to be de-listed
from the Exchanges and de-registered under the EXCHANGE ACT promptly, with
effect immediately following the acquisition by the Purchaser of the Four
Seasons Shares pursuant to the Plan of Arrangement.
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7.9 TAKE-OVER STATUTES
If any take-over statute is or becomes applicable to this Agreement, the
Arrangement or the other transactions contemplated by this Agreement, each of
the Purchaser and Four Seasons and their respective boards of directors shall
(a) take all necessary action to ensure that such transactions may be
consummated as promptly as practicable upon the terms and subject to the
conditions set forth in this Agreement and (b) otherwise act to eliminate or
minimize the effects of such takeover statute.
7.10 TAX MATTERS
During the period from the date of this Agreement to the Effective Time,
Four Seasons and its subsidiaries shall:
(1) prepare and timely file all material Returns required to be filed by
them on or before the Effective Time ("POST-SIGNING RETURNS") in a
manner consistent, in all material respects, with past practice,
except as otherwise required by applicable Laws;
(2) fully and timely pay all Taxes due and payable in respect of such
Post-Signing Returns that are so filed; and
(3) properly reserve (and reflect such reserve in their books and records
and financial statements) for all Taxes payable by them for which no
Post-Signing Return is due prior to the Effective Time in a manner
consistent with past practice.
7.11 DEBT FINANCING
(1) The Purchaser shall use its commercially reasonable efforts to arrange
the Debt Financing as promptly as practicable after the date hereof,
including using commercially reasonable efforts to (i) negotiate
definitive agreements with respect thereto on terms and conditions
contained therein and (ii) to satisfy all conditions applicable to the
Purchaser in such definitive agreements that are within its control.
In the event any portion of the Debt Financing becomes unavailable,
the Purchaser shall use its commercially reasonable efforts to arrange
to obtain any such portion from alternative sources as promptly as
practicable. The Purchaser shall give Four Seasons prompt notice of
any material breach by any party of the Commitment Letter or any
termination of the Commitment Letter. The Purchaser shall keep Four
Seasons informed on a reasonably current basis in reasonable detail of
the status of its efforts to arrange the Debt Financing. For the
avoidance of doubt, if the Debt Financing has not been obtained, the
Purchaser shall continue to be obligated to consummate the Arrangement
on the terms contemplated by this Agreement and subject only to the
satisfaction or waiver of the conditions set forth in Sections 6.1 and
6.2 of this Agreement and to the Purchaser's rights under Sections
8.2(2) and 8.2(3).
(2) Four Seasons agrees to provide, shall cause its subsidiaries to
provide and shall use its commercially reasonable efforts to have its
and their representatives
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(including counsel, financial advisors and auditors) provide, all
commercially reasonable cooperation in connection with the arrangement
of the Debt Financing or any other financing transactions contemplated
by the Purchaser in connection with the consummation of the
transaction contemplated hereby, as may be reasonably requested by the
Purchaser (and, without limitation, such requested cooperation shall
not unreasonably interfere with the ongoing operations of Four Seasons
and its subsidiaries), including (i) participation in meetings,
drafting sessions and due diligence sessions, (ii) making available to
the Purchaser and its financing sources financial and other pertinent
information regarding Four Seasons as may be reasonably requested by
the Purchaser, (iii) assisting the Purchaser and its financing sources
in the preparation of (A) an offering document of the Purchaser for
any debt raised to complete the Arrangement and (B) materials for
rating agency presentations by the Purchaser, (iv) assisting the
Purchaser and its financing sources attending to matters relating to
title, (v) reasonably cooperating with the marketing efforts of
Purchaser and its financing sources for any debt raised by Purchaser
to complete the Arrangement, (vi) forming new direct or indirect
subsidiaries, and (vii) having officers execute, without personal
liability, any reasonably necessary officers' certificates or
management representation letters to Four Seasons' accountants to
issue unqualified reports with respect to the financial statements to
be included in any offering documents; provided that none of Four
Seasons or any subsidiary shall be required to pay any commitment or
other similar fee or incur any other liability in connection with the
Debt Financing prior to the Effective Time. The Purchaser shall,
promptly upon request by Four Seasons, reimburse Four Seasons for all
reasonable out-of-pocket costs (including legal fees) incurred by Four
Seasons or its subsidiaries and their respective advisers, agents and
representatives in connection with such cooperation.
(3) All non-public or otherwise confidential information regarding Four
Seasons obtained by Purchaser or its representatives pursuant to
paragraph (2) above shall be kept confidential in accordance with the
Confidentiality Agreements.
7.12 RESIGNATIONS
Subject to confirmation that insurance coverage is maintained as
contemplated by Section 7.7, and delivery by each of Kingdom and Triples of
releases from all claims and potential claims in respect of the period prior to
the Effective Time in favour of each of the directors of Four Seasons (other
than claims or potential claims in respect of which Four Seasons is precluded by
applicable Law from indemnifying a director), Four Seasons shall obtain and
deliver to the Purchaser at the Effective Time evidence reasonably satisfactory
to Purchaser of the resignation effective as of the Effective Time, of those
directors of Four Seasons designated by the Purchaser to Four Seasons in writing
at least five calendar days prior to the Effective Time.
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7.13 CONVERTIBLE NOTES TENDER OFFER
The Purchaser currently expects to commence an offer to purchase and
related consent solicitation with respect to all of the outstanding Four Seasons
Convertible Notes on such terms and conditions as determined by the Purchaser
(including the related consent solicitation, the "CONVERTIBLE NOTES TENDER
OFFER"). Four Seasons shall, at the expense of Purchaser, provide all
cooperation reasonably requested by the Purchaser in connection with the
Convertible Notes Tender Offer. The closing of the Convertible Notes Tender
Offer shall be conditioned on the occurrence of the Effective Time, and, unless
otherwise specified by the Purchaser, the Parties shall use their commercially
reasonable efforts to cause the Convertible Notes Tender Offer to close
immediately prior to the Effective Time. The Convertible Notes Tender Offer and
other actions taken in connection therewith shall be conducted in accordance
with all applicable rules and resolutions of the Securities Authorities and
other applicable Laws.
ARTICLE VIII
TERM, TERMINATION, AMENDMENT AND WAIVER
8.1 TERM
This Agreement shall be effective from the date hereof until the earlier
of the Effective Time and the termination of this Agreement in accordance with
its terms.
8.2 TERMINATION
(1) TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at any
time prior to the Effective Time by mutual written consent of
Purchaser and Four Seasons.
(2) TERMINATION BY EITHER PURCHASER OR FOUR SEASONS. This Agreement may be
terminated by either Purchaser or Four Seasons at any time prior to
the Effective Time:
(a) if the Effective Time has not occurred on or prior to the Outside
Date, except that the right to terminate this Agreement under
this clause (a) shall not be available to any party to this
Agreement whose failure to fulfill any of its obligations has
been a principal cause of, or resulted in, the failure of the
Effective Time to occur by such date; or
(b) if the Required Vote is not obtained at the Four Seasons Meeting
(or any adjournment or postponement thereof); or
(c) if any Law makes the consummation of the Arrangement or the
transactions contemplated by this Agreement illegal or otherwise
prohibited, and such Law has become final and nonappealable.
(3) TERMINATION BY PURCHASER. This Agreement may be terminated by
Purchaser at any time prior to the Effective Time:
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(a) if (i) the Board shall have failed to publicly recommend this
Agreement or the Arrangement, (ii) the Board or any committee
thereof (including the Special Committee) shall have withdrawn or
qualified, amended or modified in a manner adverse to the
Purchaser its approval or recommendation of the Arrangement,
(iii) Four Seasons or the Board or any committee thereof
(including the Special Committee) publicly announces its
intention to do, or that it has done, any of the foregoing, (iv)
the Board fails to publicly reaffirm its recommendation of this
Agreement and the Arrangement after the announcement or
commencement of any Acquisition Proposal or within a reasonable
period of time after having been requested to do so by the
Purchaser, or (v) any person (other than Purchaser or any of its
affiliates or Triples) shall have become the beneficial owner of
33-1/3% or more of the outstanding Limited Voting Shares (either
on a primary or diluted basis) and such person has indicated
publicly an intention to influence control of Four Seasons or to
make an Acquisition Proposal;
(b) subject to Section 7.1, if the Purchaser is not in material
breach of its obligations under this Agreement and Four Seasons
breaches any of its representations, warranties, covenants or
agreements contained in this Agreement, which breach would give
rise to the failure of a condition set forth in Section 6.2(a) or
Section 6.2(b);
(c) if Four Seasons breaches its covenants or agreements in Section
2.1(c) or Section 5.3(b); or
(d) if Four Seasons breaches its covenants or agreements in Section
7.2(1).
(4) TERMINATION BY FOUR SEASONS. Subject to Section 7.1, this Agreement
may be terminated by Four Seasons at any time prior to the Effective
Time, if Four Seasons is not in material breach of its obligations
under this Agreement and Purchaser breaches any of its
representations, warranties, covenants or agreements contained in this
Agreement, which breach would give rise to the failure of a condition
set forth in Section 6.3(a) or Section 6.3(b).
(5) EFFECT OF TERMINATION. If this Agreement is terminated in accordance
with the foregoing provisions of this Section, this Agreement shall
forthwith become void and of no further force or effect and no Party
shall have any further obligations or liability hereunder except as
provided in Sections 5.7, 7.3, 7.4, 7.5, the last sentence of Section
7.6, Sections 9.1, 9.2, 9.5, 9.6, 9.7 and 9.8 and this Section 8.2(5)
and the Confidentiality Agreements and as otherwise expressly
contemplated hereby.
(6) Notwithstanding anything else contained herein, this Agreement may not
be terminated by the Purchaser, if the Purchaser, the Purchaser
Parties or any of their respective affiliates have failed to vote in
favour of the Arrangement Resolution at the Four Seasons Meeting or
indicated an intention to do so.
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8.3 AMENDMENT
This Agreement and the Plan of Arrangement may, at any time and from time
to time before or after the holding of the Four Seasons Meeting but not later
than the Effective Time, be amended by mutual written agreement of the Parties,
and any such amendment may, subject to the Interim Order and Final Order and
applicable Laws, without limitation:
(a) change the time for performance of any of the obligations or acts
of the Parties;
(b) waive any inaccuracies or modify any representation or warranty
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein
contained and waive or modify performance of any of the
obligations of the Parties; and/or
(d) waive compliance with or modify any conditions precedent herein
contained.
8.4 WAIVER
Any Party may (i) extend the time for the performance of any of the
obligations or acts of the other Party, (ii) waive compliance with any of the
other Party's agreements or the fulfillment of any conditions to its own
obligations contained herein, or (iii) waive inaccuracies in any of the other
Party's representations or warranties contained herein or in any document
delivered by the other Party; PROVIDED, HOWEVER, that any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party and, unless otherwise provided in the written waiver, will
be limited to the specific breach or condition waived.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES
All notices and other communications given or made pursuant hereto shall
be in writing and shall be deemed to have been duly given or made as of the date
delivered or sent if delivered personally or sent by facsimile or e-mail
transmission, or as of the following business day if sent by prepaid overnight
courier, to the Parties at the following addresses (or at such other addresses
as shall be specified by either Party by notice to the other given in accordance
with these provisions):
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if to the PURCHASER:
c/o FS Washington Acquisition Corp.
2365 Carillon Point
Kirkland, Washington, U.S.A.
98033
Attention: General Counsel
Facsimile: (425) 576-8078
and to:
c/o Kingdom Hotels International
P.O. Box 309GT
George Town, Grand Cayman
Cayman Islands
Attention: President
Facsimile: (345) 949-8080
with a copy (which shall not constitute notice) to:
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Attention: Christopher Austin
Facsimile: (212) 225-3999
E-mail: caustin@cgsh.com
and to:
Isadore Sharp
c/o Ogilvy Renault LLP
Suite 3800
Royal Bank Plaza, South Tower
200 Bay Street
P.O. Box 84 Toronto, Ontario, Canada
Attention: Norman Steinberg/Ava Yaskiel
Telephone: (416) 216-4000
Facsimile: (416) 216-3930
E-mail: nsteinberg@ogilvyrenault.com
ayaskiel@ogilvyrenault.com
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and to:
Hogan & Hartson LLP
555 13th Street, N.W.
Washington, D.C. 20004
USA
Attention: Bruce W. Gilchrist
Telephone: (202) 637-5686
Facsimile: (866) 692-1475
E-mail: BWGilchrist@HHLaw.com
and to:
Stikeman Elliott LLP
Barristers & Solicitors
1155 Rene-Levesque Boulevard
Suite 4000
Montreal, Quebec, Canada H3B 3V2
Attention: Pierre A. Raymond and Marc B. Barbeau
Telephone: (514) 397-3000
Facsimile: (514) 397-3222
E-mail: praymond@stikeman.com
mbarbeau@stikeman.com
and to:
McCarthy Tetrault LLP
Suite 4700
Toronto Dominion Bank Tower
Toronto, Ontario, Canada M5K 1E6
Attention: Garth Girvan
Telephone: (416) 362-1812
Facsimile: (416) 868-0673
E-mail: ggirvan@mccarthy.ca
and to:
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Michael R. Jensen
16 Quai General-Guisan, P.O. Box 3946
CH-1211
Geneva 3, Switzerland
Facsimile: +41-22-317-5571
and to:
PJ Shoucair
Kingdom Holding Company
Kingdom Center -- Floor # 66
P.O. Box 2 Riyadh 11321
Kingdom of Saudi Arabia
Facsimile: +966 (1) 211-1208
if to FOUR SEASONS:
Four Seasons Hotels Inc.
1165 Leslie Street
Toronto, Ontario M3C 2K8
Attention: Randolph Weisz
Executive Vice President, Business Administration,
General Counsel and Secretary
Facsimile: (416) 441-4349
E-mail: randolph.weisz@fourseasons.com
with a copy to (which shall not constitute notice):
Goodmans LLP
Suite 2400
250 Yonge Street
Toronto, Ontario, Canada M5B 2M6
Attention: Jonathan Lampe/Sheldon Freeman
Facsimile: (416) 979-2211
E-Mail: jlampe@goodmans.ca
sfreeman@goodmans.ca
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and to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019-6150
Attention: David A. Katz
Facsimile: (212) 403-1000
E-Mail: dakatz@wlrk.com
and to:
Osler, Hoskin & Harcourt LLP
100 King Street West, Suite 6100
Toronto, Ontario, Canada M5X 1B8
Attention: Jean M. Fraser
Facsimile: (416) 862-6666
E-Mail: jfraser@osler.com
9.2 GOVERNING LAW; WAIVER OF JURY TRIAL
This Agreement shall be governed, including as to validity, interpretation
and effect, by the laws of the Province of Ontario and the laws of Canada
applicable therein, and shall be construed and treated in all respects as an
Ontario contract. Each of the Parties hereby irrevocably attorns to the
non-exclusive jurisdiction of the Courts of the Province of Ontario in respect
of all matters arising under and in relation to this Agreement and the
Arrangement. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
9.3 INJUNCTIVE RELIEF
The Parties agree that irreparable harm would occur for which money
damages would not be an adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Parties shall be entitled to an injunction or injunctions and other equitable
relief to prevent breaches of this Agreement, any requirement for the securing
or posting of any bond in connection with the obtaining of any such injunctive
or other equitable relief hereby being waived.
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9.4 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
9.5 ENTIRE AGREEMENT, BINDING EFFECT AND ASSIGNMENT
(1) The Purchaser may assign all or any part of its rights under this
Agreement to, and its obligations under this Agreement may be assumed
by, an affiliate of the shareholders of the Purchaser, provided that
if such assignment and/or assumption takes place, the Purchaser shall
continue to be liable jointly and severally with such subsidiary or
affiliate, as the case may be, for all of its obligations hereunder.
This Agreement shall be binding on and shall enure to the benefit of
the Parties and their respective successors and permitted assigns.
(2) This Agreement (including the exhibits and schedules hereto), the
Disclosure Letter, the Voting Agreement, the Sponsor Guarantee and the
Confidentiality Agreements constitute the entire agreement, and
supersede all other prior agreements and understandings, both written
and oral, between the Parties with respect to the subject matter
hereof and thereof. Except as expressly permitted by the terms hereof,
neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by either of the Parties without the prior
written consent of the other Party.
9.6 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule or Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the fullest extent possible.
9.7 NO THIRD PARTY BENEFICIARIES
Except as provided in Sections 7.3(1) and 7.7, and except for the rights
of the Four Seasons Shareholders to receive the consideration for their Limited
Voting Shares following the Effective Time pursuant to the Arrangement, which
rights are hereby acknowledged and agreed by the Purchaser, this Agreement is
not intended to confer any rights or remedies upon any person other than the
Parties to this Agreement. Four Seasons appoints the Purchaser as the trustee
for the Purchaser Payment Parties of the covenants of Four Seasons with respect
to such Purchaser Payment Parties as specified in Section 7.3(1) of this
Agreement and the Purchaser accepts such appointment. The Purchaser appoints
Four Seasons as the trustee for the directors and officers of Four Seasons and
its subsidiaries of the covenants of the Purchaser with respect to those
individuals as specified in Section 7.7 of this Agreement and Four Seasons
accepts such appointment.
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9.8 RULES OF CONSTRUCTION
The Parties to this Agreement have been represented by counsel during the
negotiation and execution of this Agreement and waive the application of any
Laws or rule of construction providing that ambiguities in any agreement or
other document shall be construed against the party drafting such agreement or
other document.
9.9 COUNTERPARTS, EXECUTION
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument. The Parties shall be entitled to rely upon delivery of
an executed facsimile or similar executed electronic copy of this Agreement, and
such facsimile or similar executed electronic copy shall be legally effective to
create a valid and binding agreement between the Parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF Purchaser and Four Seasons have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
FS ACQUISITION CORP.
By: /S/"MICHAEL LARSON"
--------------------------------
Director
--------------------------------
By: /S/"CHARLES S. HENRY"
--------------------------------
Director
--------------------------------
FOUR SEASONS HOTELS INC.
By: /S/"KATHLEEN TAYLOR"
--------------------------------
President & Chief Operating
Officer
--------------------------------
By: /S/"RANDOLPH WEISZ"
--------------------------------
Executive Vice President,
General Counsel & Secretary
--------------------------------
[Signature Page to Acquisition Agreement]
SCHEDULE A
TO THE ACQUISITION AGREEMENT
PLAN OF ARRANGEMENT
PLAN OF ARRANGEMENT
UNDER SECTION 182
OF THE BUSINESS CORPORATIONS ACT (ONTARIO)
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"ACQUISITION AGREEMENT" means the acquisition agreement dated February 9,
2007, between Purchaser and Four Seasons and any amendment thereto made in
accordance with such agreement;
"aFFILIATE" has the meaning ascribed thereto in the SECURITIES ACT
(Ontario) and, for purposes of this Plan of Arrangement, the Foundation shall
not be considered an affiliate of FS Washington or of the Purchaser;
"ARRANGEMENT" means an arrangement under Section 182 of the OBCA on the
terms and subject to the conditions set out in this Plan of Arrangement, subject
to any amendments or variations thereto made in accordance with Section 8.3 of
the Acquisition Agreement or Article 6 hereof or made at the direction of the
Court in the Final Order;
"ARRANGEMENT RESOLUTION" means the special resolution of the shareholders
of Four Seasons substantially in the form and content of Schedule B to the
Acquisition Agreement;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of Four Seasons
in respect of the Arrangement, to be sent to the Director after the Final Order
is made, subject to the terms of the Acquisition Agreement;
"BUSINESS DAY" means any day, other than a Saturday, a Sunday and a
statutory holiday in Toronto, Canada, Seattle, Washington, United States of
America, or New York, New York, United States of America;
"CERTIFICATE" means the certificate of arrangement giving effect to the
Arrangement, issued pursuant to Subsection 183(2) of the OBCA after the Articles
of Arrangement have been filed;
"COURT" means the Ontario Superior Court of Justice;
"DEPOSITARY" means Computershare Investor Services Inc. or such other
person as is appointed to act as depositary for the purposes of the Arrangement
by Four Seasons, acting reasonably;
"DIRECTOR" means the Director appointed pursuant to Section 278 of the
OBCA;
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"DISSENT RIGHTS" means the rights of dissent in respect of the Arrangement
described in Article 4;
"DISSENTING SHAREHOLDER" means a holder of Limited Voting Shares who
properly dissents in respect of the Arrangement in strict compliance with the
procedures for exercising Dissent Rights and does not withdraw such dissent
prior to the Effective Time;
"EFFECTIVE DATE" means the date shown on the Certificate, provided that
such date occurs on or prior to the Outside Date;
"EFFECTIVE TIME" means the time on the Effective Date as specified in
writing by Four Seasons;
"EXCHANGE RATE" means the Bank of Canada's published rate of exchange of
Canadian dollars for United States dollars at noon on the day prior to the
Effective Date;
"FINAL ORDER" means the final order of the Court approving the Arrangement
as such order may be amended or varied by the Court at any time prior to the
Effective Date or, if appealed, then, unless such appeal is withdrawn or denied,
as affirmed or as amended on appeal;
"FOUNDATION" means the Bill and Melinda Gates Foundation Trust;
"FOUR SEASONS" means Four Seasons Hotels Inc., a corporation existing under
the laws of Ontario, Canada and any corporation formed on the amalgamation of
Four Seasons with one or more of its wholly-owned subsidiaries;
"FOUR SEASONS CIRCULAR" means the notice of the Four Seasons Meeting and
accompanying Four Seasons management information circular, including all
schedules, appendices and exhibits thereto, to be sent to shareholders of Four
Seasons in connection with the Four Seasons Meeting, as amended, supplemented or
otherwise modified;
"FOUR SEASONS CONVERTIBLE NOTE INDENTURE" means the indenture dated as of
June 18, 2004 between Four Seasons and The Bank of Nova Scotia Trust Company of
New York, as supplemented by the first supplemental indenture dated as of June
18, 2004 between those same parties;
"FOUR SEASONS CONVERTIBLE NOTES" means the U.S.$250,000,000 aggregate
principal amount of 1.875% convertible senior notes of Four Seasons maturing
July 30, 2024 issued pursuant to the Four Seasons Convertible Note Indenture;
"FOUR SEASONS MEETING" means the special meeting of holders of Limited
Voting Shares, including any adjournment or postponement thereof, to be called
and held in accordance with the Interim Order to consider the Arrangement;
"FOUR SEASONS OPTION" means an option to purchase Limited Voting Shares
granted under the Four Seasons Stock Option Plan;
"FOUR SEASONS STOCK OPTION PLAN" means the Four Seasons Restated Director,
Executive and Employee Stock Option Plan, as amended through February 26, 2004;
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"FSHL" means Four Seasons Hotels Limited, a corporation existing under the
laws of Ontario, Canada, a subsidiary of Four Seasons;
"FS WASHINGTON" means FS Washington Acquisition Corp, a corporation
organized under the laws of the state of Washington;
"GOVERNMENTAL ENTITY" means any (a) multinational, federal, provincial,
state, regional, municipal, local or other government, governmental or public
department, ministry, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign, (b) any subdivision, agent or
authority of any of the foregoing, or (c) any quasi-governmental or private
body, including any tribunal, commission, commissioner, regulatory agency or
self-regulatory organization, exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;
"HOLDERS" means, (a) when used with reference to the Limited Voting Shares,
the holders of Limited Voting Shares shown from time to time in the register
maintained by or on behalf of Four Seasons in respect of the Limited Voting
Shares and (b) when used with reference to the Four Seasons Options, the holders
of Four Seasons Options shown from time to time in the register maintained by or
on behalf of Four Seasons in respect of the Four Seasons Options;
"INTERIM ORDER" means the interim order of the Court, as the same may be
amended in respect of the Arrangement, as contemplated by Section 2.2 of the
Acquisition Agreement;
"KINGDOM" means Kingdom Investments I (TSF) Sarl, a company organized under
the laws of Luxembourg;
"LETTER OF TRANSMITTAL" means the letter of transmittal to be sent by Four
Seasons to holders of Limited Voting Shares for use in connection with the
Arrangement;
"LIENS" means any hypothecations, mortgages, liens, charges, security
interests, pledges, claims, encumbrances and adverse rights or claims;
"LIMITED VOTING SHARES" means the limited voting shares in the capital of
Four Seasons;
"MEETING DATE" means the date of the Four Seasons Meeting;
"OBCA" means the BUSINESS CORPORATIONS ACT (Ontario) and the regulations
made thereunder, as now in effect and as they may be promulgated or amended from
time to time;
"OUTSIDE DATE" means June 30, 2007, subject to the right of any Party to
postpone the Outside Date for up to an additional 90 days (in 30-day increments)
if the Regulatory Approvals have not been obtained and have not been denied by a
non-appealable decision of a Governmental Entity, by giving written notice to
the other Party to such effect no later than 5:00 p.m. (Eastern time) on the
date that is 15 days prior to the original Outside Date (and any subsequent
Outside Date), or such later date as may be agreed to in writing by the Parties;
provided that notwithstanding the foregoing, a Party shall not be permitted to
postpone the Outside Date if the failure to obtain a Regulatory Approval is
materially the result of such Party's failure to cooperate in accordance with
Section 5.5(a) of the Acquisition Agreement in obtaining such Regulatory
Approval;
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"PARTIES" means the Purchaser and Four Seasons, and "PARTY" means either of
them;
"PERSON" includes an individual, limited or general partnership, limited
liability company, limited liability partnership, trust, joint venture,
association, body corporate, unincorporated organization, trustee, executor,
administrator, legal representative, government (including any Governmental
Entity) or any other entity, whether or not having legal status;
"PURCHASER" means FS Acquisition Corp., a company existing under the laws
of British Columbia, Canada and any successor corporation thereto;
"PURCHASER CLASS A NON-VOTING SHARES" means the first class of Purchaser
Non-Voting Shares;
"PURCHASER CLASS B NON-VOTING SHARES" means the second class of Purchaser
Non-Voting Shares;
"PURCHASER CLASS C NON-VOTING SHARES" means the third class of Purchaser
Non-Voting Shares;
"PURCHASER CLASS D NON-VOTING SHARES" means the fourth class of Purchaser
Non-Voting Shares;
"PURCHASER NON-VOTING SHARES" means the four classes of non-voting shares
in the capital of the Purchaser;
"SALE OF CONTROL AGREEMENT" means the agreement entitled Long-Term
Incentive Plan made January 11, 1990 among Four Seasons, FSHL and Sharp ;
"SHARE ACQUISITION AGREEMENT" means the agreement dated February 9, 2007
between Foundation and Four Seasons and any amendment thereto made in accordance
with such agreement;
"SHARP" means Mr. Isadore Sharp;
"TAX ACT" means the INCOME TAX ACT (Canada) and the regulations made
thereunder, as now in effect and as they may be promulgated or amended from time
to time;
"TRIPLES" means Triples Holdings Limited, a corporation existing under the
laws of Ontario, Canada; and
"VARIABLE MULTIPLE VOTING SHARES" means the variable multiple voting shares
in the capital of Four Seasons.
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into articles and sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or the interpretation of this Plan of Arrangement. Unless
otherwise indicated, any reference in this Plan of
-5-
Arrangement to articles or sections refers to the specified articles or sections
of this Plan of Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and VICE VERSA and words
importing any gender include all genders.
1.4 DATE OF ANY ACTION
In the event that any date on which any action is required to be taken
under this Plan of Arrangement is not a business day, such action shall be
required to be taken on the next succeeding day which is a business day.
1.5 TIME
Time shall be of the essence in this Plan of Arrangement.
ARTICLE 2
BINDING EFFECT
2.1 BINDING EFFECT
This Plan of Arrangement, within the meaning of Section 182 of the OBCA,
will become effective on, and be binding on and after, the Effective Date on (i)
Four Seasons, (ii) Purchaser, (iii) all holders and all beneficial owners of
Limited Voting Shares, (iv) all holders of Four Seasons Options, and (v) all
holders and beneficial owners of Variable Multiple Voting Shares.
ARTICLE 3
ARRANGEMENT
3.1 ARRANGEMENT
Commencing at the Effective Time, the following shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) at the Effective Time, Purchaser shall be deemed, subject to having
obtained any necessary regulatory relief, to have entered into an
agreement with Four Seasons pursuant to which Purchaser shall at such
time transfer or cause to be transferred to Four Seasons those Four
Seasons Convertible Notes then owned by it or any of its subsidiaries
and acquired pursuant to an offer made to all holders of Four Seasons
Convertible Notes at the same price per Four Seasons Convertible Note
as Purchaser or any of its subsidiaries paid for the Four Seasons
Convertible Notes (the "Purchase Amount"), and the Four Seasons
Convertible Notes that are thereby transferred to Four
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Seasons shall be immediately thereafter cancelled, in each case
without further act or formality. Four Seasons may, in full and
absolute satisfaction of the Purchase Amount, pay the Purchase Amount
in cash or through the issuance of a demand promissory note;
(b) five minutes following the step contemplated in Section 3.1(a),
pursuant to and in full satisfaction of the Share Acquisition
Agreement, the Limited Voting Shares held by Foundation immediately
before the Effective Time will be transferred (free and clear of
Liens) to Four Seasons without any further act or formality in
exchange for US$82.00 in cash per Limited Voting Share and the
Foundation shall cease to be a holder of such Limited Voting Shares
and such shares shall be cancelled;
(c) five minutes following the step contemplated in Section 3.1(b), the
voting rights attached to the Variable Multiple Voting Shares shall be
reduced to one vote per share but such shares shall remain designated
as Variable Multiple Voting Shares;
(d) five minutes following the step contemplated in Section 3.1(c), all of
the Four Seasons Options granted and outstanding immediately prior to
the Effective Time shall, without any further action on behalf of any
holder of Four Seasons Options, be transferred by each holder thereof
to Four Seasons without any further act or formality in exchange for a
cash amount equal to the excess, if any, of (i) the product of the
number of Limited Voting Shares underlying the Four Seasons Options
held by such holder and US$82.00 over (ii) the sum of the exercise
prices for each Limited Voting Share underlying the Four Seasons
Options held by such holder (converted at the Exchange Rate);
(e) with respect to each Four Seasons Option, the holder of such Four
Seasons Option shall cease to be the holder of such Four Seasons
Option and such holder's name shall be removed from the register of
Four Seasons Options as the holder of such Four Seasons Options
concurrently with the step contemplated in Section 3.1(d);
(f) the Four Seasons Stock Option Plan shall be cancelled concurrently
with the completion of the step contemplated in Section 3.1(d);
(g) five minutes following the step contemplated in Section 3.1(d), the
Limited Voting Shares held by Dissenting Shareholders shall be deemed
to have been transferred without any further act or formality to the
Purchaser (free and clear of any Liens) and such holders shall cease
to have any rights as shareholders other than the right to be paid the
fair value of their Limited Voting Shares as set out in Section 4.1;
(h) concurrently with the step contemplated in Section 3.1(g), all Limited
Voting Shares outstanding immediately prior to the Effective Time
other than Limited Voting Shares held by (i) Dissenting Shareholders;
or (ii) Kingdom and FS Washington, shall be transferred without any
further act or formality by the holder thereof to Purchaser (free and
clear of any Liens), for US$82.00 in cash per Limited Voting Share;
(i) with respect to each Limited Voting Share transferred to Purchaser
pursuant to Sections 3.1(g) or 3.1(h) and concurrently with the step
contemplated in Section 3.1(g):
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(i) the holder of each such Limited Voting Share shall cease to be
the holder of such Limited Voting Share and such holder's name
shall be removed as the holder of such Limited Voting Shares from
the register of Limited Voting Shares; and
(ii) Purchaser shall be deemed to be the transferee of such Limited
Voting Shares (free and clear of any Liens) and shall be entered
in the register of Limited Voting Shares as the holder thereof;
(j) concurrently with the step contemplated in Section 3.1(g), all
outstanding Limited Voting Shares held by Kingdom and FS Washington
shall be transferred without any further act or formality by the
holder thereof to Purchaser (free and clear of any Liens) in exchange
for Purchaser Class A Non-Voting Shares (in the case of Kingdom) and
Purchaser Class B Non-Voting Shares (in the case of FS Washington) on
a one-for-one basis;
(k) with respect to each Limited Voting Share transferred to Purchaser
pursuant to Section 3.1(j) and concurrently with the step contemplated
in Section 3.1(g):
(i) the holder of each such Limited Voting Share shall cease to be
the holder of such Limited Voting Share and such holder's name
shall be removed as the holder of such Limited Voting Shares from
the register of Limited Voting Shares; and
(ii) Purchaser shall be deemed to be the transferee of such Limited
Voting Shares (free and clear of any Liens) and shall be entered
in the register of Limited Voting Shares as the holder thereof;
(l) concurrently with the step contemplated in Section 3.1(g),
(i) a number of the outstanding Variable Multiple Voting Shares owned
by Triples shall be transferred without any further act or
formality by Triples to Purchaser (free and clear of any Liens)
on a one-for-one basis in exchange for a number of Class C
Non-Voting Shares of Purchaser equal to the difference between
(1) 1/19 multiplied by the sum of 900 plus the total number Class
A Non-Voting Shares and Class B Non-Voting Shares of Purchaser
issued on or prior to the Effective Date, and (2) 100; and
(ii) the remaining number of the outstanding Variable Multiple Voting
Shares owned by Triples shall be transferred without any further
act or formality by Triples to Purchaser (free and clear of any
Liens) in exchange for an equal number of Purchaser Class D
Non-Voting Shares; and
(m) with respect to the Variable Multiple Voting Shares transferred to
Purchaser pursuant to Section 3.1(l) and concurrently with the step
contemplated in Section 3.1(g):
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(i) Triples shall cease to be the holder of such Variable Multiple
Voting Shares and Triples' name shall be removed as the holder of
such Variable Multiple Voting Shares from the register of
Variable Multiple Voting Shares; and
(ii) Purchaser shall be deemed to be the transferee of such Variable
Multiple Voting Shares (free and clear of any Liens) and shall be
entered in the register of Variable Multiple Voting Shares as the
holder thereof; and
(n) FSHL shall pay the amount payable to Sharp calculated in accordance
with the Sale of Control Agreement in full satisfaction of all
obligations to Sharp under the Sale of Control Agreement.
3.2 ADJUSTMENTS TO CONSIDERATION
The consideration payable by Purchaser or Four Seasons with respect to each
Limited Voting Share transferred pursuant to Sections 3.1(b), 3.1(g), 3.1(h) or
3.1(j), each Four Seasons Option transferred pursuant to Section 3.1(d) and each
Variable Multiple Voting Share transferred pursuant to Section 3.1(l), shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Limited Voting Shares or Variable Multiple Voting Shares other than stock
dividends paid in lieu of ordinary course dividends), consolidation,
reorganization, recapitalization or other like change with respect to Limited
Voting Shares or Variable Multiple Voting Shares occurring after the date of the
Acquisition Agreement and prior to the Effective Time.
ARTICLE 4
RIGHTS OF DISSENT
4.1 RIGHTS OF DISSENT
Holders of Limited Voting Shares may exercise dissent rights ("Dissent
Rights") in connection with the Arrangement in accordance with Section 185 of
the OBCA, the Interim Order and this Section 4.1; provided that, notwithstanding
Subsection 185(6) of the OBCA, the written objection to the Arrangement
Resolution referred to in Subsection 185(6) of the OBCA must be received by Four
Seasons not later than 5:00 p.m. (Toronto time) on the Business Day immediately
preceding the date of the Four Seasons Meeting. Dissenting Shareholders shall be
deemed to have transferred Limited Voting Shares held by them to Purchaser, as
provided in Section 3.1(g), and if ultimately determined not to be entitled, for
any reason, to be paid fair value for their Limited Voting Shares shall be
deemed to have participated in the Arrangement on the same basis as a
non-dissenting holder of Limited Voting Shares. In no case shall Purchaser, Four
Seasons or any other person be required to recognize such holders as holders of
Limited Voting Shares after the completion of the step contemplated by Section
3.1(g).
ARTICLE 5
PAYMENT AND CERTIFICATES
5.1 PAYMENT OF CASH CONSIDERATION
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(a) At the Effective Time, Purchaser shall deposit with the Depositary,
for the benefit of the holders of Limited Voting Shares (other than
Kingdom, Foundation and FS Washington) and holders of Four Seasons
Options (on behalf of Four Seasons) cash in the aggregate amount equal
to the payments contemplated by Sections 3.1(d) and 3.1(h), as the
case may be, and Four Seasons shall deposit with the Depositary cash
in the aggregate amount equal to the payments contemplated by Section
3.1(b).
(b) Upon surrender to the Depositary for cancellation of a certificate
which immediately prior to the Effective Time represented Limited
Voting Shares that were transferred as provided in Sections 3.1(b) or
3.1(h), together with a duly completed Letter of Transmittal and with
such other documents and instruments as would have been required to
effect the transfer of the shares formerly represented by such
certificate under the OBCA and the by-laws of Four Seasons, and such
additional documents and instruments as the Depositary may reasonably
require, the holder of such surrendered certificate shall be entitled
to receive in exchange therefor the cash payment (net of amounts
required to be withheld pursuant to Section 5.4) which such holder is
entitled to receive pursuant to Sections 3.1(b) or 3.1(h), as
applicable, and the certificate so surrendered shall forthwith be
cancelled.
(c) Subject to Section 5.3, Purchaser shall cause the Depositary, as soon
as practicable and in any event within o days following the later of
the Effective Date and the date of deposit with the Depositary of the
documentation as provided in Section 5.1(b), to:
(i) forward or cause to be forwarded by first class mail (postage
paid) to the holder at the address specified in the Letter of
Transmittal; or
(ii) if requested by the holder in the Letter of Transmittal, make
available at the Depositary for pick-up by the holder; or
(iii) if the Letter of Transmittal neither specifies an address nor
contains a request as described in Section 5.1(c)(ii), forward or
cause to be forwarded by first class mail (postage paid) to the
holder at the address of such holder as shown on the share
register maintained by or on behalf of Four Seasons as at the
Effective Time;
a cheque representing the cash payment, if any, payable to such holder
of Limited Voting Shares in accordance with the provisions hereof (net
of amounts required to be withheld pursuant to Section 5.4).
(d) As soon as practicable and in any event within o days following the
Effective Date, Purchaser shall cause the Depositary to deliver, on
behalf of Four Seasons, to each holder of Four Seasons Options as
reflected on the register maintained by or on behalf of Four Seasons
in respect of Four Seasons Options, a cheque representing the cash
payment, if any, which such holder of Four Seasons Options is entitled
to receive pursuant to Section 3.1(d) (net of amounts required to be
withheld pursuant to Section 5.4).
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(e) No holder of Limited Voting Shares (other than Kingdom and FS
Washington) shall be entitled to receive any consideration with
respect to the Limited Voting Shares, other than the cash payment, if
any, which they are entitled to receive in accordance with Sections
3.1(b) and 3.1(h) (net of amounts required to be withheld pursuant to
Section 5.4) and, for greater certainty, no such holder will be
entitled to receive any interest, dividends, premium or other payment
in connection therewith.
(f) Until such time as a former holder of the Limited Voting Shares
complies with the provisions of Section 5.1(b), the cash payment, if
any, to which such holder is entitled (net of amounts required to be
withheld pursuant to Section 5.4) shall, subject to Section 5.3, be
paid to the Depositary to be held in trust for such holder for
delivery to the holder, without interest, upon deposit with the
Depositary of the documentation as provided in Section 5.1(b).
(g) Until surrendered as contemplated by this Section 5.1, each
certificate which immediately prior to the Effective Date represented
Limited Voting Shares that were cancelled or exchanged as provided in
Sections 3.1(b) and 3.1(h) shall be deemed at all times after the time
which is 5 minutes following the Effective Time or 20 minutes
following the Effective Time, respectively, to represent only the
right to receive upon such surrender (together with the documentation
set forth in Section 5.1(b)) the cash payment which such holder is
entitled to receive pursuant to the provisions hereof.
(h) On the Effective Date, Purchaser shall cause FSHL to pay Sharp the
amount payable pursuant to Section 3.1(n) and in accordance with the
Sale of Control Agreement (net of amounts required to be withheld
pursuant to Section 5.4).
5.2 LOST CERTIFICATES
In the event any certificate which immediately prior to the Effective Time
represented one or more outstanding Limited Voting Shares that were transferred
pursuant to Sections 3.1(b) or Section 3.1(h) shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such certificate to be lost, stolen or destroyed, the Depositary will pay in
exchange for such lost, stolen or destroyed certificate, the cash payment which
such holder is entitled to receive pursuant to Sections 3.1(b) or 3.1(h) (net of
amounts required to be withheld pursuant to Section 5.4). When authorizing such
payment in exchange for any lost, stolen or destroyed certificate, the person to
whom the payment is made shall, as a condition precedent to the delivery
thereof, give a bond satisfactory to Four Seasons, Purchaser and the Depositary
in such sum as Purchaser may direct or otherwise indemnify Purchaser in a manner
satisfactory to Purchaser against any claim that may be made against Purchaser
with respect to the certificate alleged to have been lost, stolen or destroyed.
5.3 EXTINCTION OF RIGHTS
If any holder of Limited Voting Shares fails for any reason to deliver to
the Depositary for cancellation the certificates formerly representing Limited
Voting Shares (or an affidavit of loss and bond or other indemnity pursuant to
Section 5.2), together with such other documents or instruments required for
such holder to receive payment for Limited Voting Shares, on or before the sixth
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anniversary of the Effective Date, such holder shall be deemed to have donated
and forfeited to Purchaser any cash (net of amounts required to be withheld
pursuant to Section 5.4) held by the Depositary in trust for such holder to
which such holder is entitled. At and after the Effective Time, any certificate
formerly representing Limited Voting Shares shall represent only the right to
receive the consideration provided in this Plan of Arrangement; provided that
such certificates shall, on the sixth anniversary of the Effective Date, cease
to represent a claim of any nature whatsoever and shall be deemed to have been
surrendered to Purchaser and shall be cancelled.
5.4 WITHHOLDING RIGHTS
Four Seasons, FSHL, Purchaser and the Depositary shall be entitled to
deduct and withhold from any consideration otherwise payable to any holder of
Limited Voting Shares, to any holder of Four Seasons Options or to Sharp under
this Plan of Arrangement, such amounts as Four Seasons, FSHL, Purchaser, or the
Depositary is required to deduct and withhold with respect to such payment under
the Tax Act, the UNITED STATES INTERNAL REVENUE CODE OF 1986 or any provision of
provincial, state, local or foreign tax law, in each case, as amended or
succeeded and subject to the provisions of any applicable income tax treaty
between Canada and the country where the holder is resident. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
as having been paid to the holder of the Limited Voting Shares or Four Seasons
Options, as the case may be, or to Sharp in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
in accordance with applicable law to the appropriate taxing authority.
ARTICLE 6
AMENDMENTS
6.1 AMENDMENTS TO PLAN OF ARRANGEMENT
(a) Four Seasons reserves the right to amend, modify and/or supplement
this Plan of Arrangement at any time and from time to time prior to
the Effective Date, provided that each such amendment, modification
and/or supplement must be (i) set out in writing, (ii) approved by
Purchaser, (iii) filed with the Court and, if made following the Four
Seasons Meeting, approved by the Court and (iv) communicated to
holders of Limited Voting Shares if and as required by the Court.
(b) Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Four Seasons at any time prior to the Four Seasons
Meeting (provided that Purchaser shall have consented thereto) with or
without any other prior notice or communication, and if so proposed
and approved by the persons voting at the Four Seasons Meeting (as may
be required under the Interim Order), shall become part of this Plan
of Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Four Seasons Meeting shall
be effective only if (i) it is consented to by each of Four Seasons
and the Purchaser and (ii) if required by the Court, it is approved by
holders of the Limited Voting Shares voting in the manner directed by
the Court.
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(d) Any amendment, modification or supplement to this Plan of Arrangement
may be made following the Effective Date unilaterally by Purchaser,
provided that it concerns a matter which, in the reasonable opinion of
Purchaser, is of an administrative nature required to better give
effect to the implementation of this Plan of Arrangement and is not
adverse to the financial or economic interests of any holder of
Limited Voting Shares.
(e) This Plan of Arrangement may be withdrawn prior to the Effective Time
in accordance with the terms of the Acquisition Agreement.
ARTICLE 7
FURTHER ASSURANCES
Notwithstanding that the transactions and events set out herein shall occur
and be deemed to occur in the order set out in this Plan of Arrangement, within
the meaning of Section 182 of the OBCA and, in particular, that the share
exchanges, within the meaning of Subsection 182(1)(f) of the OBCA, shall become
effective without any further act or formality, each of the Parties shall make,
do and execute, or cause to be made, done and executed, all such further acts,
deeds, agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order further to document or evidence
any of the transactions or events set out herein.
SCHEDULE B
TO THE ACQUISITION AGREEMENT
SPECIAL RESOLUTION OF THE FOUR SEASONS SHAREHOLDERS
BE IT RESOLVED THAT:
1. The arrangement (the "ARRANGEMENT") under Section 182 of the BUSINESS
CORPORATIONS ACT (Ontario) (the "OBCA") involving Four Seasons Hotels Inc.
("FOUR SEASONS"), as more particularly described and set forth in the
Management Information Circular (the "CIRCULAR") of Four Seasons
accompanying the notice of this meeting (as the Arrangement may be
modified or amended), is hereby authorized, approved and adopted.
2. The plan of arrangement, as it may be or have been amended, (the "PLAN OF
ARRANGEMENT") involving Four Seasons, the full text of which is set out in
Schedule A to the Acquisition Agreement dated as of February 9, 2007,
between Purchaser and Four Seasons (the "ACQUISITION AGREEMENT"), is
hereby approved and adopted.
3. The Acquisition Agreement, the actions of the directors of Four Seasons in
approving the Arrangement and the actions of the officers of Four Seasons
in executing and delivering the Acquisition Agreement and any amendments
thereto are hereby ratified and approved.
4. Notwithstanding that this resolution has been passed (and the
Arrangement adopted) by the shareholders of Four Seasons or that the
Arrangement has been approved by the Ontario Superior Court of Justice,
the directors of Four Seasons are hereby authorized and empowered, at
their discretion, without further notice to or approval of the
shareholders of Four Seasons (i) to amend the Acquisition Agreement, or
the Plan of Arrangement to the extent permitted by the Acquisition
Agreement, and (ii) subject to the terms of the Acquisition Agreement,
not to proceed with the Arrangement.
5. Any officer or director of Four Seasons is hereby authorized and directed
for and on behalf of Four Seasons to execute and deliver articles of
arrangement and such other documents as are necessary or desirable to the
Director under the OBCA in accordance with the Acquisition Agreement.
6. Any officer or director of Four Seasons is hereby authorized and
directed for and on behalf of Four Seasons to execute or cause to be
executed and to deliver or cause to be delivered, all such other
documents and instruments and to perform or cause to be performed all
such other acts and things as in such person's opinion may be necessary
or desirable to give full effect to the foregoing resolution and the
matters authorized thereby, such determination to be conclusively
evidenced by the execution and delivery of such document, agreement or
instrument or the doing of any such act or thing.
SCHEDULE C
TO THE ACQUISITION AGREEMENT
REGULATORY APPROVALS
PART A - CANADA
o Determination (or deemed determination) by the applicable minister(s)
designated for purposes of the INVESTMENT CANADA ACT that the
Arrangement is likely to be of "net benefit to Canada" for purposes of
such Act.
o Approvals of the Canadian Securities Administrators as required.
PART B - UNITED STATES
o Expiration of all applicable waiting periods under the HSR ACT or
earlier termination thereof, including any voluntary agreed
extensions.
o Compliance with any applicable requirements of United States federal
securities laws.
TABLE OF CONTENTS
ARTICLE I INTERPRETATION.....................................................1
1.1 Definitions......................................................1
1.2 Interpretation Not Affected by Headings.........................12
1.3 Interpretation..................................................13
1.4 Date for Any Action.............................................13
1.5 Statutory References............................................13
1.6 Currency........................................................13
1.7 Accounting Principles...........................................13
1.8 Knowledge.......................................................13
1.9 Schedules.......................................................14
ARTICLE II THE ACQUISITION..................................................14
2.1 Implementation Steps by Four Seasons............................14
2.2 Interim Order...................................................14
2.3 Articles of Arrangement; Closing................................15
2.4 Circular........................................................15
2.5 Preparation of Filings..........................................16
2.6 Court Proceedings...............................................18
2.7 Public Communications...........................................18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FOUR SEASONS..................19
3.1 Representations and Warranties..................................19
3.2 Survival of Representations and Warranties......................39
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..................39
4.1 Representations and Warranties of the Purchaser.................39
4.2 Survival of Representations and Warranties......................41
ARTICLE V COVENANTS OF THE PARTIES..........................................41
5.1 Covenants of Four Seasons Regarding the Conduct of Business.....41
5.2 Pre-Acquisition Reorganizations.................................45
5.3 Covenants of Four Seasons Regarding the Arrangement.............46
5.4 Covenants of the Purchaser Regarding the Performance of
Obligations.....................................................48
5.5 Mutual Covenants................................................49
5.6 Stock Options...................................................49
5.7 Disclosure of Material Information upon Termination.............50
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ARTICLE VI CONDITIONS.......................................................50
6.1 Mutual Condition Precedents.....................................50
6.2 Additional Conditions Precedent to the Obligations of the
Purchaser.......................................................50
6.3 Additional Conditions Precedent to the Obligations of
Four Seasons....................................................52
ARTICLE VII ADDITIONAL AGREEMENTS...........................................52
7.1 Notice and Cure Provisions......................................52
7.2 Non-Solicitation................................................53
7.3 Agreement as to Damages.........................................55
7.4 Fees and Expenses...............................................57
7.5 Liquidated Damages, Injunctive Relief and No Liability
of Others.......................................................57
7.6 Access to Information; Confidentiality..........................57
7.7 Insurance and Indemnification...................................58
7.8 Exchange De-Listing.............................................58
7.9 Take-over Statutes..............................................59
7.10 Tax Matters.....................................................59
7.11 Debt Financing..................................................59
7.12 Resignations....................................................60
7.13 Convertible Notes Tender Offer..................................61
ARTICLE VIII TERM, TERMINATION, AMENDMENT AND WAIVER........................61
8.1 Term............................................................61
8.2 Termination.....................................................61
8.3 Amendment.......................................................63
8.4 Waiver..........................................................63
ARTICLE IX GENERAL PROVISIONS...............................................63
9.1 Notices.........................................................63
9.2 Governing Law; Waiver of Jury Trial.............................67
9.3 Injunctive Relief...............................................67
9.4 Time of Essence.................................................68
9.5 Entire Agreement, Binding Effect and Assignment.................68
9.6 Severability....................................................68
9.7 No Third Party Beneficiaries....................................68
9.8 Rules of Construction...........................................69
9.9 Counterparts, Execution.........................................69
SCHEDULE C
EXECUTION COPY
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "AGREEMENT"), dated as of February 9, 2007, is
made and entered into by and among FS Acquisition Corp., a British Columbia
corporation ("PURCHASER"), Kingdom Hotels International, a Cayman Islands
company ("KINGDOM"), Cascade Investment, L.L.C., a Washington limited liability
company ("CASCADE"), Triples Holdings Limited, an Ontario corporation
("TRIPLES"), and, other than for purposes of SECTION 3(B) hereof, Four Seasons
Hotels Inc., an Ontario corporation (the "COMPANY"). Kingdom, Cascade and
Triples are referred to herein collectively as the "SHAREHOLDERS" and each
individually as a "SHAREHOLDER."
WHEREAS, Purchaser has entered into an agreement with the Company pursuant
to which Purchaser has agreed to acquire all of the outstanding shares of
capital stock of the Company (other than certain shares held by the Shareholders
and the Bill and Melinda Gates Foundation Trust, which shares will be
contributed to the capital of Purchaser or which will be purchased by the
Company) (the "ARRANGEMENT"), on the terms and subject to the conditions set
forth in that certain Acquisition Agreement, dated of even date herewith between
the Purchaser and the Company (as the same may be amended or supplemented,
including the Plan of Arrangement, the "ACQUISITION AGREEMENT");
WHEREAS, Kingdom owns 7,389,132 Limited Voting Shares of the Company (such
shares, together with any other equity interests in the Company acquired by
Kingdom after the date hereof and during the term of this Agreement, the
"KINGDOM SUBJECT SHARES");
WHEREAS, Cascade owns 715,850 Limited Voting Shares of the Company (such
shares, together with any other equity interests in the Company acquired by
Cascade after the date hereof and during the term of this Agreement, the
"CASCADE SUBJECT SHARES");
WHEREAS, Triples owns 3,725,698 Variable Multiple Voting Shares of the
Company (such shares, together with any other equity interests in the Company
acquired by Triples after the date hereof and during the term of this Agreement,
the "TRIPLES SUBJECT SHARES," and together with the Kingdom Subject Shares and
the Cascade Subject Shares, the "SUBJECT SHARES," and when referred to
individually with respect to any Shareholder, such Shareholder's "SUBJECT
SHARES"); and
WHEREAS, as a condition to the willingness of Purchaser to enter into the
Acquisition Agreement and incur the obligations set forth therein, Purchaser has
required that the Shareholders agree and, in order to induce Purchaser to enter
into the Acquisition Agreement, the Shareholders have agreed, to enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. DEFINITIONS. Capitalized terms used herein and not defined shall
have the meanings specified in the Acquisition Agreement.
1
Section 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER. Each
Shareholder represents and warrants to Purchaser, the Company and the other
Shareholders as follows:
(a) ORGANIZATION; AUTHORIZATION; NO CONFLICTS. Shareholder is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Shareholder has all requisite power and
authority to enter into this Agreement, perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Shareholder, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary action on the
part of Shareholder. This Agreement has been duly authorized, executed and
delivered by Shareholder and constitutes a legal, valid and binding obligation
of Shareholder enforceable in accordance with its terms. Neither the execution
and delivery of this Agreement, nor the performance by such Shareholder of its
obligations hereunder or compliance with the terms hereof require the
authorization, consent, approval, license, exemption or other action by, or
filing with, any third party or Governmental Authority, do not violate
applicable law or conflict with or result in a breach of any of such
Shareholder's organizational documents or contractual obligations applicable to
such Shareholder or to such Shareholder's property or assets (except for any
agreements among any of the parties hereto); PROVIDED, HOWEVER, that the failure
of this representation to be true and correct in all respects shall not be a
breach of this Agreement if such failure does not, in any manner, impair or the
delay the ability of such Shareholder to perform its obligations under this
Agreement or invalidate (in whole or in part) any actions taken pursuant to this
Agreement.
(b) THE SUBJECT SHARES. Shareholder is the sole record and beneficial owner
of its Subject Shares. Shareholder does not own, of record or beneficially, any
shares or beneficial interest of the Company other than its Subject Shares.
Subject to the disclosure in Triples Form 13D filing with the SEC dated November
8, 2006 under the headings "1996 Trust Agreement" and "Pledge", Shareholder has
the sole right to vote, or to dispose of, its Subject Shares, and none of its
Subject Shares is subject to any agreement, arrangement or restriction with
respect to the voting of its Subject Shares, except as contemplated by this
Agreement or any other agreements among any of the parties hereto. Subject to
the disclosure in Triples Form 13D filing with the SEC dated November 8, 2006
under the headings "1996 Trust Agreement" and "Pledge" and except for any
agreements among any of the parties hereto, there are no agreements or
arrangements of any kind, contingent or otherwise, obligating Shareholder to
sell, transfer, assign, grant a participation interest in, option, pledge,
hypothecate or otherwise dispose or encumber (each, a "TRANSFER"), or cause to
be Transferred, any of its Subject Shares (other than as contemplated by the
Acquisition Agreement). No Person has any contractual or other right or
obligation to purchase or otherwise acquire any of such Shareholder's Subject
Shares, except as contemplated in any agreements among any of the parties
hereto.
(c) LITIGATION. There is no action, proceeding or investigation pending, or
to the knowledge of Shareholder threatened, against Shareholder that questions
or could impact the validity of this Agreement or any action taken or to be
taken by Shareholder in connection with this Agreement.
Section 3. AGREEMENT TO VOTE IN FAVOR AND AGAINST, RESTRICTIONS ON
TRANSFERS, IRREVOCABLE PROXY. Until the termination of this Agreement in
accordance with SECTION 4, each
2
Shareholder agrees, for the benefit of Purchaser, the Company (in respect of
Sections 3(a) and (c), but not Section 3(b)) and the other Shareholders, as
follows:
(a) AGREEMENT TO VOTE IN FAVOR. At any meeting of shareholders of the
Company called to vote upon the Arrangement and the Acquisition Agreement or at
any adjournment or postponement thereof or in any other circumstances upon which
a vote, consent or other approval (including by written consent in lieu of a
meeting) with respect to the Arrangement and the Acquisition Agreement is
sought, each Shareholder shall cause its Subject Shares to be counted as present
for purposes of establishing quorum and shall vote (or cause to be voted) its
Subject Shares (i) in favor of the approval of the Arrangement and the
Acquisition Agreement and each of the transactions contemplated by the
Acquisition Agreement, and (ii) in favor of any other matter necessary for the
consummation of the Arrangement.
(b) AGREEMENT TO VOTE AGAINST. At any meeting of shareholders of the
Company or at any adjournment or postponement thereof or in any other
circumstances upon which a vote, consent or other approval of all or some of the
shareholders of the Company is sought (including by written consent in lieu of a
meeting), each Shareholder shall cause its Subject Shares to be counted as
present for purposes of establishing quorum and shall vote (or cause to be
voted) its Subject Shares against (i) any merger agreement or merger (other than
the Acquisition Agreement and the Arrangement), consolidation, combination, sale
or transfer of a material amount of assets, amalgamation, plan of arrangement,
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any Acquisition Proposal, (ii) any amendment of the Company's
charter document or bylaws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner delay, impede, frustrate, prevent or nullify the
Arrangement, the Acquisition Agreement or any of the other transactions
contemplated by the Acquisition Agreement or change in any manner the voting
rights of the Limited Voting Shares or the Variable Multiple Voting Shares, and
(iii) any action, agreement, transaction or proposal that would result in a
breach of any representation, warranty, covenant, agreement or other obligation
of the Company in the Acquisition Agreement.
(c) RESTRICTIONS ON TRANSFER. Except for Transfers by any Shareholder to a
controlled Affiliate of such Shareholder that agrees to enter into a voting
agreement on terms and conditions that, prior to such Transfer, are
substantially identical to those contained in this Agreement, each Shareholder
agrees not to directly or indirectly, (i) Transfer, or enter into any agreement,
option or other arrangement (including any profit sharing arrangement) with
respect to the Transfer of, any of its Subject Shares to any Person, other than
pursuant to the Acquisition Agreement, or (ii) grant any proxies, deposit any of
its Subject Shares into any voting trust or enter into any voting arrangement,
whether by proxy, voting agreement or otherwise, with respect to its Subject
Shares, other than pursuant to this Agreement. For purposes of this paragraph
(c), "Affiliate" means, with respect to any Person, a Person that is controlled
by such Person (it being understood that a Person shall be deemed to "control"
another Person, for purposes of this definition, if such Person directly or
indirectly has the power to direct or cause the direction of the management and
policies of such other Person, whether through holding beneficial ownership
interest in such other Person, through contracts or otherwise).
3
(d) CERTAIN COVENANTS. From the date hereof until the termination of this
Agreement in accordance with SECTION 4 hereof:
(i) Each Shareholder agrees not to take any action, other than any
action permitted under SECTION 3(C) hereof, that would make any
representation or warranty of such Shareholder contained herein untrue or
incorrect or have the effect of preventing, impeding, interfering with or
adversely affecting the performance by such Shareholder of its obligations
under this Agreement.
(ii) Each Shareholder hereby waives any rights of appraisal or rights
of dissent from the Arrangement that such Shareholder may have.
(iii) Each Shareholder hereby agrees to promptly notify Purchaser and
the other Shareholders of the amount of any new equity interests in the
Company acquired by such Shareholder, if any, after the date hereof. Any
such equity interests shall be subject to the terms of this Agreement as
though owned by such Shareholder on the date hereof.
(iv) Each Shareholder shall, from time to time, execute and deliver,
or cause to be executed and delivered, such additional or further consents,
documents and other instruments and shall take all such other action
necessary or as Purchaser or any of the other Shareholders may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
Section 4. TERMINATION. This Agreement shall terminate upon the earlier of
(i) the Effective Time and (ii) the termination of the Acquisition Agreement in
accordance with the terms thereof. No party hereto shall be relieved from any
liability for breach of this Agreement by reason of any such termination.
Section 5. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This
Agreement shall be governed, including as to validity, interpretation and
effect, by the laws of the Province of Ontario and the laws of Canada applicable
therein, and shall be construed and treated in all respects as an Ontario
contract. Each of the parties hereby irrevocably attorns to the non-exclusive
jurisdiction of the Courts of the Province of Ontario in respect of all matters
arising under and in relation to this Agreement and the Arrangement. EACH PARTY
TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
Section 6. SPECIFIC PERFORMANCE. Each Shareholder acknowledges and agrees
that (i) the covenants, obligations and agreements of such Shareholder contained
in this Agreement relate to special, unique and extraordinary matters, and (ii)
a violation of any of the terms of such covenants, obligations or agreements
will cause Purchaser and the other Shareholders irreparable injury for which
adequate remedies are not available at law. Therefore, each Shareholder agrees
that Purchaser and each other Shareholder shall be entitled to an injunction,
restraining order or
4
such other equitable relief (without the requirement to post bond) as a court of
competent jurisdiction may deem necessary or appropriate to restrain such
Shareholder from committing any violation of such covenants, obligations or
agreements. These injunctive remedies are cumulative and in addition to any
other rights and remedies Purchaser and the other Shareholders may have.
Section 7. AMENDMENT, WAIVERS, ETC. Neither this Agreement nor any term
hereof may be amended or otherwise modified other than by an instrument in
writing signed by all of the parties hereto. No provision of this Agreement may
be waived, discharged or terminated other than by an instrument in writing
signed by the party against whom the enforcement of such waiver, discharge or
termination is sought.
Section 8. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement shall
not be assignable or otherwise transferable by a party without the prior consent
of the other parties, and any attempt to so assign or otherwise transfer this
Agreement without such consent shall be void and of no effect. This Agreement
shall be binding upon the respective heirs, successors, legal representatives
and permitted assigns of the parties hereto. Nothing in this Agreement shall be
construed as giving any Person, other than the parties hereto and their heirs,
successors, legal representatives and permitted assigns, any right, remedy or
claim under or in respect of this Agreement or any provision hereof.
Section 9. NOTICES. All notices, requests, claims, demands and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given by delivery in person, by prepaid overnight
courier (providing proof of delivery), by facsimile or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses or facsimile numbers set forth on the signature page
hereto or to such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. EST on a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed to have been received on the next succeeding
Business Day in the place of receipt.
Section 10. REMEDIES. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 11. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of
5
the parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
Section 12. ENTIRE AGREEMENT. This Agreement and the Acquisition Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
Section 13. SHAREHOLDER CAPACITY. Each Shareholder has executed this
Agreement solely in such Shareholder's capacity as a shareholder of the Company.
Without limiting the foregoing, nothing in this Agreement shall limit or affect
any actions taken by such Shareholder, or any representative of such
Shareholder, in his or her capacity as an officer, director, member, employee or
manager of the Company.
Section 14. SECTION HEADINGS. The article and section headings of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
Section 15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the parties hereto have executed this Voting Agreement
as of the date first above written.
PURCHASER:
FS ACQUISITION CORP.
By: /S/"MICHAEL LARSON"
-------------------
Name: MICHAEL LARSON
--------------
Title: DIRECTOR
--------
By: /S/"CHARLES S. HENRY"
---------------------
Name: CHARLES S. HENRY
----------------
Title: DIRECTOR
--------
KINGDOM:
KINGDOM HOTELS INTERNATIONAL
By: /S/"CHARLES S. HENRY"
---------------------
Name: CHARLES S. HENRY
----------------
Title: AUTHORIZED SIGNATORY
--------------------
[SIGNATURES CONTINUE ON FOLLOWING PAGE.]
7
[Signature Page to Voting Agreement]
CASCADE:
CASCADE INVESTMENT, L.L.C.
By: /S/"MICHAEL LARSON"
-------------------
Name: MICHAEL LARSON
--------------
Title: BUSINESS MANAGER
----------------
TRIPLES:
TRIPLES HOLDINGS LIMITED
By: /S/"ISADORE SHARP"
------------------
Name: ISADORE SHARP
-------------
Title: PRESIDENT
---------
COMPANY:
FOUR SEASONS HOTELS INC.
By: /S/"KATHLEEN TAYLOR"
--------------------
Name: KATHLEEN TAYLOR
---------------
Title: PRESIDENT & CHIEF OPERATING
OFFICER
----------------------------
By: /S/"RANDOLPH WEISZ"
-------------------
Name: RANDOLPH WEISZ
--------------
Title: EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL & SECRETARY
---------------------------
8
[Signature Page to Voting Agreement]
SCHEDULE D
EXECUTION VERSION
LIMITED GUARANTY
THIS LIMITED GUARANTY (this "GUARANTY") is made as of February 9, 2007, by
each of Kingdom Hotels International, a Cayman Islands company ("KINGDOM"), and
Cascade Investment, L.L.C., a Washington limited liability company ("CASCADE"),
in favor of Four Seasons Hotels Inc., a corporation incorporated under the laws
of the Province of Ontario (the "COMPANY"). Each of Kingdom and Cascade shall be
referred to herein individually as a "GUARANTOR," and, together, as the
"GUARANTORS." With respect to each Guarantor, the other Guarantor hereunder
shall be referred to as the "OTHER GUARANTOR."
For value received, and to induce the Company to enter into the Acquisition
Agreement, of even date herewith, between the Company and FS Acquisition Corp.
(the "PURCHASER") (together with any subsequent modification or supplement
thereto, the "ACQUISITION AGREEMENT"), each of the Guarantors, severally and not
jointly, hereby unconditionally and irrevocably guarantees, as primary obligor
and not merely as surety, the prompt and complete payment when due of the
payment obligations of Purchaser (if any), or any of its successors or assigns,
that arises under or in connection with Section 7.3(3) of the Acquisition
Agreement from time to time (the "OBLIGATIONS") less the amount of any
Obligations that the Company actually has recovered from the Purchaser, up to an
aggregate amount as follows: (i) with respect to Kingdom, US$50,000,000 (such
amount, the "KINGDOM CAP") and (ii) with respect to Cascade, US$50,000,000 (such
amount, the "CASCADE CAP").
This Guaranty is an absolute, unconditional, irrevocable and continuing
guarantee of the full and punctual payment of the Obligations, with respect to
Kingdom up to the Kingdom Cap, and with respect to Cascade up to the Cascade
Cap, and not of their collectibility only, and is in no way conditioned upon any
requirement that the Company first attempt to collect the Obligations from
Purchaser or the Other Guarantor or resort to any security or other means of
collecting payment. Should Purchaser not have made the payment of any
Obligations which may be due and owing under the Acquisition Agreement and the
Acquisition Agreement shall have been terminated, the Guarantors' obligations
hereunder, with respect to Kingdom up to the Kingdom Cap, and with respect to
Cascade up to the Cascade Cap, shall become immediately due and payable to the
Company. The failure by one or more Guarantors to satisfy its obligations
hereunder shall not relieve the Other Guarantor of its obligations hereunder.
Each Guarantor hereby waives promptness, diligence, notice of acceptance of
this Guaranty and notice of the Obligations, and waives presentment, demand for
payment, protest, notice of dishonor or non-payment of the Obligations, notice
of acceleration or intent to accelerate the Obligations, and any other notice to
such Guarantor, and the Company is not obligated to file any suit or take any
action, or provide any notice to, Purchaser, the Guarantors, or others, except
as expressly provided in the Acquisition Agreement or in this Guaranty. Without
limiting the generality of the foregoing, each Guarantor agrees that the
obligation of such Guarantor hereunder shall not be released or discharged, in
whole or in part, or otherwise affected by: (i) the failure of the Company to
assert any claim or demand or to enforce any right or remedy against Purchaser
or the Other Guarantor or any other person or entity with respect to the
Obligations; (ii) any extensions or renewals of the Obligations; (iii) any
rescissions, waivers, supplements or modifications of the Acquisition Agreement;
(iv) the adequacy of any means available to the Company to claim payment of the
Obligations; (v) the existence of any claim, set-off or other right which the
Guarantors may have at any time against the Purchaser, the Other Guarantor or
the Company; (vi) any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Purchaser, the Other Guarantor or the Company or any other
person or entity; (vii) any change in the corporate existence, structure or
ownership of Purchaser, the Other Guarantor or the Company or any other person
or entity; (viii) any and all rights or defenses arising by reason of any law
which would otherwise require any election of remedies by the Company or (ix)
any other act or omission that might in any way or to any extent vary the risk
of a Guarantor or otherwise operate as a release or discharge or suretyship
defense of a Guarantor, all of which actions or omissions may be done without
notice
to the Guarantors. However, each Guarantor reserves the right to assert defenses
that Purchaser may have to payment of the Obligations arising under the
Acquisition Agreement, it being understood and agreed that all references to
defenses arising under the Acquisition Agreement shall exclude such defenses as
those arising from the bankruptcy, insolvency or similar rights of Purchaser, or
defenses related to Purchaser's capacity or ability to enter into or perform its
obligations under the Acquisition Agreement, or defenses related to the
enforceability of the Acquisition Agreement against Purchaser.
If Purchaser has not made payment of any Obligations which may be due and
owing, and the Acquisition Agreement has been terminated, the Guarantors shall
make such payment or otherwise cause such payment, with respect to Kingdom up to
the Kingdom Cap, and with respect to Cascade up to the Cascade Cap, to be made
within ten (10) business days after the receipt by the Guarantors of written
notice from the Company that such payment is due and owing under the Acquisition
Agreement (to the extent not previously paid under the Acquisition Agreement). A
payment demand shall be in writing and shall reasonably and briefly specify what
amount Purchaser has failed to pay, with a specific statement that the Company
is calling upon the Guarantors to pay under this Guaranty. No such notice,
demand or explanation shall be required as against a Guarantor which shall at
the time that any Obligations are due and owing under the Acquisition Agreement
be subject to bankruptcy or insolvency proceedings, and all of the obligations
of such Guarantor hereunder shall be immediately and automatically due and
payable without notice or demand of any kind at such time as any Obligations are
due and owing under the Acquisition Agreement.
The obligation of each Guarantor hereunder is limited to its guarantee of
the Obligations (if any) under the Acquisition Agreement and shall in no way
require the payment by a Guarantor of an amount in excess of the Kingdom Cap
(with respect to Kingdom), and the Cascade Cap (with respect to Cascade), as
provided above in the second paragraph of this Guaranty. All sums payable by the
Guarantors hereunder shall be made in immediately available funds. The Company
acknowledges that payment by the Guarantors of the amounts contemplated hereby
shall constitute satisfaction in full of each Guarantor's liability with respect
to the Obligations. Upon payment of the Obligations owing to the Company, each
Guarantor shall be subrogated to the rights of the Company against Purchaser in
respect of such payment. However, no Guarantor may exercise any right of
subrogation as to Purchaser until the Obligations have been satisfied in full or
seek any recovery from the Other Guarantor in respect of payments made hereunder
until the Obligations have been satisfied in full or have been paid up to the
Kingdom Cap and the Cascade Cap.
The Company's remedies against the undersigned hereunder shall be, and are
intended to be, the sole and exclusive direct or indirect remedies available to
the Company against the Guarantors and any former, current or future director,
officer, employee, agent, general or limited partner, manager, member,
stockholder or affiliate (other than Purchaser or the Other Guarantor) of the
Guarantors or their members or any former, current or future director, officer,
employee, agent, general or limited partner, manager, member, stockholder,
affiliate (other than Purchaser or the Other Guarantor) of any of the foregoing
(collectively, the "NON-RECOURSE PARTIES") in respect of any liabilities or
obligations arising under, or in connection with, the Acquisition Agreement, the
Equity Funding Letter (as defined in the Acquisition Agreement), the Voting
Agreement or the transactions contemplated thereby, including in the event
Purchaser breaches its obligations under the Acquisition Agreement or in the
event Guarantor breaches a representation or warranty hereunder. The obligations
of the Guarantors hereunder shall bind any successor and any transferee of any
material part of the assets of such Guarantor, but shall not be assignable or
delegable except with the prior written consent of the other parties, and the
original Guarantor shall in all events remain liable notwithstanding any merger,
consolidation or transfer of assets.
The Company covenants and agrees that it shall not institute, directly or
indirectly, and shall cause its subsidiaries and affiliates not to institute,
any proceeding or bring any other claim arising under, or in connection with,
the Acquisition Agreement, the Equity Funding Letter, the Voting Agreement or
the transactions contemplated thereby against the Guarantors or any Non-Recourse
Party, except for claims
2
against the Guarantors under this Guaranty (subject to the limitations described
herein). The Company acknowledges that the sole asset of the Purchaser is
US$1,000.00, and that no additional funds are expected to be contributed to the
Purchaser unless and until the Effective Time occurs. By its acceptance of the
benefits of this Limited Guaranty, the Company acknowledges and agrees that it
has no right of recovery against, and no personal liability shall attach to, any
Guarantor or any other Non-Recourse Party, through the Purchaser or otherwise,
whether by or through attempted piercing of the corporate veil, by or through a
claim by or on behalf of the Purchaser against any Guarantor or other
Non-Recourse Party, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or regulation or otherwise, in
each case in respect of any liabilities or obligations arising under, or in
connection with, the Acquisition Agreement, the Equity Funding Letter, the
Voting Agreement or the transactions contemplated thereby, except for the
Company's rights to recover from the Guarantors (but not any Non-Recourse Party)
under and to the extent provided in this Guaranty and subject to the limitations
described herein.
This Guaranty shall terminate and be of no further force and effect and the
Company may not attempt to enforce any rights hereunder upon and after the
earliest to occur of (i) the occurrence of the Effective Time (as such term is
defined in the Acquisition Agreement) and payment of all obligations due by
Purchaser under the Acquisition Agreement at such time; (ii) termination of the
Acquisition Agreement pursuant to Section 8.2 thereof under circumstances that
do not give rise to any payment obligation of the Purchaser pursuant to Section
7.3(3) thereof; provided, however, that this Guaranty shall not terminate under
this clause (ii) if the Company, acting reasonably, is contesting or disputing
such termination of the Acquisition Agreement in writing (or has asserted in
writing its intention to do so) and/or has made or has asserted in writing its
intention to make a claim against the Purchaser and/or one or both of the
Guarantors that would give rise to a claim against the Guarantors under this
Guaranty; (iii) 365 days after any other termination of the Acquisition
Agreement unless prior thereto the Company has made a claim against the
Purchaser and/or one or both of the Guarantors under this Guaranty and (iv)
receipt in full by the Company of all amounts due by the Purchaser under Section
7.3(3) of the Acquisition Agreement.
This Guaranty shall be binding in all respects on the successors of the
Guarantors and their permitted assigns and shall inure to the benefit of the
Company and its permitted assigns. Neither of the Guarantors nor the Company may
assign its respective rights or obligations hereunder without the prior written
consent of the other parties hereto, which consent, in the case of the proposed
assignment by a Guarantor, may be withheld by the Company in its sole
discretion.
Nothing set forth in this Guaranty shall confer or give or shall be
construed to confer or give to any person other than the Company (including any
person acting in a representative capacity) any rights or remedies against any
person including a Guarantor, except as expressly set forth herein.
The parties hereto agree that this Guaranty shall be governed by and
construed in accordance with the laws of the Province of Ontario and the laws of
Canada applicable thereto without giving effect to applicable principles of
conflicts of law to the extent that the application of another jurisdiction
would be required thereby.
Each of the parties hereby irrevocably attorns to the non-exclusive
jurisdiction of the Courts of the Province of Ontario in respect of all matters
arising under and in relation to this Guaranty. The Guarantors hereby appoint
Stikeman Elliott LLP (in the case of Kingdom) and McCarthy Tetrault LLP (in the
case of Cascade) as their agents for service of process or other purposes in
connection with any action or proceeding arising out of this Guaranty.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
3
CONNECTION WITH THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
Each Guarantor hereby represents and warrants, as to itself and not as to
the Other Guarantor, that:
(a) the execution, delivery and performance by such Guarantor of this
Guaranty have been duly authorized by all necessary action and do not
contravene any provision of the charter, partnership agreement,
operating agreement or similar organizational documents of such
Guarantor or any law, regulation, rule, decree, order, judgment or
contractual restriction binding on such Guarantor or its assets;
(b) such Guarantor has the financial capacity to pay and perform its
obligations under this Guaranty, and all funds necessary for such
Guarantor to fulfill its obligations under this Guaranty shall be
available to such Guarantor for so long as this Guaranty shall remain
in effect;
(c) this Guaranty constitutes a legal, valid and binding obligation of
such Guarantor enforceable against such Guarantor in accordance with
its terms; and
(d) all consents, approvals, authorizations, permits of, filings with and
notifications to any governmental authority necessary for the due
execution, delivery and performance of this Guaranty by such Guarantor
have been obtained or made and all conditions thereof have been duly
complied with, and no other action by, and no notice to or filing
with, any governmental authority or regulatory body is required in
connection with the execution, delivery or performance of this
Guaranty.
The Guaranty shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of the Obligations is rescinded or must
otherwise be returned by the Company.
No amendment or waiver of any provision of this Guaranty shall be effective
unless the same shall be in writing and signed by each Guarantor and the
Company. No failure on the part of the Company to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
This Guaranty contains the entire agreement of the Guarantors with respect
to the matters set forth herein.
[Signature page follows]
4
This Guaranty may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party. Facsimile transmission of any signed original document shall be
deemed the same as delivery of an original.
GUARANTORS:
KINGDOM HOTELS INTERNATIONAL, a Cayman CASCADE INVESTMENT, L.L.C., a
Islands company Washington limited liability company
By: /S/"CHARLES S. HENRY" By: /S/"MICHAEL LARSON"
--------------------------------- -------------------
Its: Authorized Signatory Its: Business Manager
ACCEPTED AND AGREED AS OF
FEBRUARY 9, 2007
Four Seasons Hotels Inc.
By: /S/"KATHLEEN TAYLOR"
--------------------
Its: President & Chief Operating
Officer
By: /S/"RANDOLPH WEISZ"
-------------------
Its: Executive Vice President, General
Counsel & Secretary
5