LONG-TERM INCENTIVE PLAN
THIS AGREEMENT made the 11th day of January, 1990
B E T W E E N:
FOUR SEASONS HOTELS INC., a corporation incorporated
under the laws of the Province of Ontario
(hereinafter called the "Corporation")
OF THE FIRST PART;
- and -
FOUR SEASONS HOTELS LIMITED, a corporation
incorporated under the laws of the Province of
Ontario
(hereinafter called "FSHL")
OF THE SECOND PART;
- and -
XXXXXXX XXXXX
(hereinafter called "Sharp")
OF THE THIRD PART.
WHEREAS pursuant to a share option agreement (the "Share Option Agreement")
between the Corporation and Sharp dated December 6, 1985, the Corporation has
granted to Sharp an option (the "Option") to acquire 500,000 Subordinate Voting
Shares at a price of Twelve Dollars and Sixty Cents ($12.60) per share
exercisable at any time prior to December 6, 1995;
AND WHEREAS Xxxxx is the President and Chief Executive Officer of FSHL;
AND WHEREAS the parties hereto wish to terminate the Option and create the
Long-Term Incentive Plan, as herein provided;
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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements which it contains and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged), it
is agreed that:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. In this agreement, the following words or expressions shall
have the following meanings:
(a) the "Act" means the SECURITIES ACT (Ontario) as amended from time to
time;
(b) "acting jointly or in concert" has the meaning ascribed thereto in the
Act;
(c) "affiliate" has the meaning ascribed thereto in the Act;
(d) "arm's length" has the meaning ascribed thereto in the INCOME TAX ACT
(Canada) as amended from time to time;
(e) "Arm's Length Purchaser" means a person or entity or a group of
persons and/or entities acting jointly or in concert in connection
with a Sale Transaction and dealing at arm's length to the Sharp
Family;
(f) "Base Price" means $12.60 as adjusted from time to time in accordance
with Article V;
(g) "Controlling Interest" means, with respect to a corporation, that
number of securities carrying in the aggregate more than 50% of the
votes attaching to all outstanding securities of the corporation;
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(h) "Current Market Price" of securities at any date means the weighted
average trading price of the security in board lots traded on The
Toronto Stock Exchange during the preceding five trading days, or, if
such securities are not then listed on the Toronto Stock Exchange, on
such stock exchange on which such securities are listed as may be
selected by the directors of the Corporation for such purpose or, if
not listed on any stock exchange, in the over-the-counter market;
(i) "Payment Date" has the meaning ascribed thereto in section 4.01;
(j) "Per Share Consideration" means:
(i) with respect to a Sale Transaction in which cash is received by
holders of Subordinate Voting Shares, the amount of cash received
per Subordinate Voting Share;
(ii) with respect to a Sale Transaction in which publicly-traded
securities are received by holders of Subordinate Voting Shares,
the product of:
(A) the number of such securities which a holder of Subordinate
Voting Shares is entitled to receive for each Subordinate
Voting Share; and
(B) the Current Market Price of such securities at the Payment
Date;
(iii) with respect to a Sale Transaction in which securities which are
not publicly-traded or any other property is received, the fair
market value on the Payment Date of the securities or property
received per Subordinate Voting Share;
(iv) with respect to a Sale Transaction in which holders of
Subordinate Voting Shares receive a combination of cash,
securities and/or
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other property, the aggregate amount calculated under (i), (ii)
and/or (iii), as applicable;
(k) "Sale Transaction" means:
(i) a sale, arrangement, amalgamation, merger or other transaction or
series of transactions after giving effect to which an Arm's
Length Purchaser holds, directly or indirectly, a Controlling
Interest in the Corporation or any corporation into which the
Corporation has been arranged, amalgamated, merged or otherwise
combined or any corporation which has acquired all or
substantially all of the assets of the Corporation and its
subsidiaries (including FSHL); or
(ii) (A) a direct or indirect sale by the Corporation or its
subsidiaries of all or substantially all the assets of the
Corporation or of FSHL and its subsidiaries, on a
consolidated basis; and
(B) the distribution to holders of Subordinate Voting Shares of
their pro rata share of the net proceeds of any such sale;
(l) "Sharp Family" means Xxxxx, his spouse, any of his issue and the
spouses of any of them, his or their legal representatives, any
corporation of which all the voting shares are beneficially owned,
directly or indirectly, by any one or more of the foregoing persons,
and any trust the only beneficiaries of which are any one or more of
the foregoing persons;
(m) "SVS Market Price" means, with respect to a Sale Transaction, the
weighted average trading price of all board lot trades in Subordinate
Voting Shares on The Toronto Stock Exchange during the period
commencing six months and ending one month prior to the first public
announcement of the Sale Transaction or, if the Subordinate Voting
Shares are not
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then listed on The Toronto Stock Exchange, on such stock exchange on
which such securities are listed as may be selected by the directors
of the Corporation for such purpose or, if not listed on any stock
exchanges, in the over-the-counter market;
(n) "Valuation" means a valuation prepared by a qualified and independent
valuer based upon techniques that are appropriate in the
circumstances, after considering going concern or liquidation
assumptions or both, together with other relevant assumptions, that
arrives at an opinion as to a value or range of values for the
property or securities in question; and
(o) "Vested Percentage" means 20% at any time on or after December 19,
1989, increasing by an additional 20% so long as Xxxxx is alive upon
each of the four succeeding anniversaries thereof.
ARTICLE II
INTENTION
2.01 INTENTION. The intention of this Agreement is to ensure that on a Sale
Transaction, Xxxxx will receive the payment provided for herein in order to
compensate him for services to be rendered by him to FSHL as President and Chief
Executive Officer of FSHL.
ARTICLE III
TERMINATION OF OPTION AND SHARE OPTION PLAN
3.01 TERMINATION OF OPTION AND SHARE OPTION PLAN. The Option and the Share
Option Agreement are hereby terminated and Sharp hereby ceases to have any
rights and the Corporation ceases to have any obligations in respect of the
Option and the Share Option Agreement.
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ARTICLE IV
PAYMENT
4.01 PAYMENT. In consideration for the services to be rendered by Sharp to FSHL,
on the proposed date of consummation of a Sale Transaction (the "Payment Date"),
the Corporation and FSHL jointly and severally covenant and agree that FSHL will
pay into an escrow account with a Canadian chartered bank in cash or by
certified cheque an aggregate amount equal to the sum of:
(a) Component 1, being the product of:
(i) the Per Share consideration in respect of such Sale Transaction
less the Base Price in effect on the Payment Date; and
(ii) 5% of the aggregate number of Multiple Voting Shares and
Subordinate Voting Shares issued and outstanding on the Payment
Date; and
(b) Component 2, being the product of:
(i) the Per Share Consideration with respect to such Sale Transaction
less the Current Market Price for the Subordinate Voting Shares
as at December 19, 1989;
(ii) the Vested Percentage; and
(iii) 5% of the aggregate number of Multiple Voting Shares and
Subordinate Voting Shares issued and outstanding on the Payment
Date,
provided that Component 2 of such payment will only be payable to the extent
vested where the Per Share Consideration with respect to such Sale Transaction
is equal to or greater than 125% of the SVS Market Price.
4.02 RELEASE FROM ESCROW. If the Sale Transaction is consummated substantially
in accordance with its terms within 30 days of the Payment Date (or
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such longer period as the parties hereto may agree to), such amount, with
interest earned thereon, shall be paid by the escrow agent to Sharp within one
business day of such consummation. If the Sale Transaction is not consummated
substantially in accordance with its terms within 30 days of the Payment Date
(or such longer period as the parties hereto may agree to), such amount, with
interest earned thereon, shall be paid to the Corporation.
4.03 ONE PAYMENT ONLY. For greater certainty, the payment provided for in
Section 4.01 shall be payable only in respect of the first Sale Transaction
which is consummated substantially in accordance with its terms within 30 days
of its Payment Date (or such longer period as the parties hereto may agree to);
provided that only a payment which is actually received by Sharp in accordance
with this Agreement shall constitute a payment for purposes of this Section.
4.04 MULTIPLE PAYEES. If, on the Payment Date, the rights under this Agreement
are held by more than one person, the payment provided for in Section 4.01 shall
be paid to them pro rata in accordance with their interests.
4.05 WITHHOLDING TAX. FSHL shall withhold from the payment herein provided for
the amount of any tax liability under the INCOME TAX ACT (CANADA) which FSHL is
required by law or the administration thereof to withhold and shall remit such
amount to the Receiver General of Canada on behalf of Sharp within the required
time limits.
ARTICLE V
ADJUSTMENT TO BASE PRICE
5.01 ADJUSTMENT TO BASE PRICE. If the Corporation takes any action affecting the
Subordinate Voting Shares and/or the Multiple Voting Shares, including without
limitation: (i) a distribution on its outstanding Subordinate Voting Shares
other than as a dividend paid in the ordinary course; (ii) the subdivision or
consolidation of its outstanding Multiple Voting Shares and Subordinate Voting
Shares; or (iii) a rights offering pursuant to which holders of Subordinate
Voting Shares are entitled to purchase Subordinate Voting Shares and/or Multiple
Voting
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Shares at a substantial discount, which in the opinion of the directors of the
Corporation would materially affect the rights of Sharp under this Agreement,
the Base Price shall be adjusted in such manner, if any, and at such time by the
directors of the Corporation in their sole discretion as they may determine to
be equitable in the circumstances.
ARTICLE VI
DETERMINATION OF FAIR MARKET VALUE
6.01 DETERMINATION OF FAIR MARKET VALUE. The directors of the Corporation shall
determine the fair market value of property or securities exchangeable for
Subordinate Voting Shares on a Sale Transaction as follows:
(a) if a public disclosure document is distributed to holders of
Subordinate Voting Shares in connection with the Sale Transaction
which includes a Valuation of such securities or property, the fair
market value shall be the value specified in such Valuation or, in the
case of a range of values, the median of such range; or
(b) in all other cases, the fair market value of such property or
securities shall be determined by the directors of the Corporation in
their discretion.
6.02 SALE OF SUBSTANTIALLY ALL. The directors of the Corporation shall determine
whether any particular transaction constitutes a sale of substantially all the
assets of the Corporation or of FSHL and their respective subsidiaries, on a
consolidated basis, as contemplated by Sections 1.01(k)(i) and 1.01(k)(ii)(A);
6.03 PROFESSIONAL ADVISORS. In determining the fair market value of property or
securities pursuant to Section 6.01 or characterizing a sale under Section 6.02,
the directors of the Corporation may engage such qualified and independent
valuers, accountants or other professionals, at the expense of the Corporation,
as they may, in their discretion, consider appropriate.
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ARTICLE VII
ASSIGNMENT AND OTHER TRANSFERS
7.01 ASSIGNMENT. This Agreement, including the right to receive the Component 1
payment and the Component 2 payment (to the extent vested) may be assigned in
whole or in part by Xxxxx to any member or members of the Sharp Family and by
any such assignee to any other member or members of the Sharp Family, provided
such assignees are otherwise permitted holders of Multiple Voting Shares under
the articles of the Corporation (a "permitted assignee") but such assignment
shall not be effective until receipt by the Corporation of notice in writing of
such assignment and the name of each assignee and his or its respective
interest. This Agreement may not be assigned by the Corporation.
7.02 TRANSFER ON DEATH. On the death of Xxxxx or any individual permitted
assignee, such individual's interest in this Agreement, including the right to
receive the Component 1 payment and the Component 2 payment (to the extent
vested), shall enure to the benefit of his legal and personal representatives,
any permitted assignee or assignees designated to receive it in his will, or in
the absence of a valid will, to the benefit of his heirs, to the extent they are
permitted assignees.
ARTICLE VIII
GENERAL
8.01 VESTING. The rights granted hereunder to Xxxxx shall continue until the
21st anniversary of the death of the survivor of the descendants of Xxxxxxx
Xxxxx, living at the date hereof or such earlier date as the parties hereto may
agree.
8.20 NOTICE. Any notice or other instrument or mailing required or permitted to
be given to any party hereto under this Agreement shall be in writing and shall
be sufficiently given if delivered personally, telecopied or mailed by prepaid
registered mail addressed as follows:
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(a) If to Sharp: 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0XX
Telecopy Number: 441-4374
(b) If to the Corporation: 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Telecopy Number: 441-4374
(c) If to FSHL: 0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Telecopy Number: 441-4374
or at such other address as the party to whom such writing is to be given shall
have last notified the party giving the same in the manner provided in this
section. Any notice sent in accordance with this section shall be deemed to have
been given and received on the date it is so delivered or telecopied at such
address, if personally delivered or telecopied, or on the fourth day next
following the day on which it was mailed, if mailed. If such day is not a
business day, the notice shall be deemed to have been given and received on the
business day next following such day.
8.03 JURISDICTION. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
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8.04 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto relating to the subject matter hereof and supersedes all oral
statements and prior writings with respect thereto.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto on the date first indicated above.
FOUR SEASONS HOTELS INC.
Per: /S/ XXXXXXXX XXXXXX
------------------------
Corporate Counsel
Per: /S/ X. XXXXXX
------------------------
Secretary
FOUR SEASONS HOTELS LIMITED
Per: /S/ XXXXXXXX XXXXXX
------------------------
Corporate Counsel
Per: /S/ X. XXXXXX
------------------------
Secretary
/s/ Xxxxxxx Xxxxx
---------------------------
Xxxxxxx Xxxxx
