-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EYMl2Ks5k7luYGSK06tEvGrwBVPe+Zcpgk+RbYMGrDgUBLohcpsncTmE9yIae3Xl 4n61osDol2Rx3QH1ZhpNKw== 0000903423-06-001199.txt : 20061106 0000903423-06-001199.hdr.sgml : 20061106 20061106150108 ACCESSION NUMBER: 0000903423-06-001199 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20061106 DATE AS OF CHANGE: 20061106 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FOUR SEASONS HOTELS INC CENTRAL INDEX KEY: 0001030555 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 980087570 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-52609 FILM NUMBER: 061189979 BUSINESS ADDRESS: STREET 1: 1165 LESLIE ST STREET 2: TORONTO CITY: ONTARIO CANADA STATE: A6 ZIP: M3C 2K8 BUSINESS PHONE: 4164491750 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CASCADE INVESTMENT LLC CENTRAL INDEX KEY: 0001052192 IRS NUMBER: 911680459 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2365 CARILLON POINT CITY: KIRKLAND STATE: WA ZIP: 98033 BUSINESS PHONE: 4258030720 MAIL ADDRESS: STREET 1: 2365 CARILLON POINT CITY: KIRKLAND STATE: WA ZIP: 98033 SC 13D 1 cascade-13d_1106.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.__)*

Four Seasons Hotels Inc.

(Name of Issuer)

Limited Voting Shares

(Title of Class of Securities)

35100E104

(CUSIP Number)

Christopher E. Austin, Esq.

Michael A. Gerstenzang, Esq.

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

(212) 225-2000

Laurie Smiley, Esq.

Irene Song, Esq.

Cascade Investment, L.L.C.

2365 Carillon Point

Kirkland, WA 98033

(425) 889-7900

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

November 3, 2006

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. x

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 35100E104

13D

1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) William H. Gates III
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION State of Washington
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 715,850*
		8	SHARED VOTING POWER 1,984,150*
		9	SOLE DISPOSITIVE POWER 715,850*
		10	SHARED DISPOSITIVE POWER 1,984,150*
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,700,000*
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 8.2 %
14	TYPE OF REPORTING PERSON IN

* All Limited Voting Shares held by Cascade Investment, L.L.C. (“Cascade”) may be deemed to be beneficially owned by William H. Gates III as the sole member of Cascade. For purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, all Limited Voting Shares held by the Bill & Melinda Gates Foundation (the “Foundation”) may be deemed to be beneficially owned by William H. Gates III and Melinda French Gates as Co-Trustees of the Foundation. Michael Larson, the Business Manager of Cascade, has voting and investment power with respect to the Limited Voting Shares held by Cascade. In addition, Mr. Larson acts with investment discretion for Mr. and Mrs. Gates, as Co-Trustees of the Foundation, in respect of the Limited Voting Shares owned by the Foundation. Mr. Larson disclaims any beneficial ownership of the Limited Voting Shares beneficially owned by Cascade, the Foundation or Mr. and Mrs. Gates .

CUSIP No. 35100E104

13D

1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Melinda French Gates
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION State of Washington
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,984,150*
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 1,984,150*
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,984,150*
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.0 %
14	TYPE OF REPORTING PERSON IN

* For purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, all Limited Voting Shares held by the Bill & Melinda Gates Foundation (the “Foundation”) may be deemed to be beneficially owned by William H. Gates III and Melinda French Gates as Co-Trustees of the Foundation. Michael Larson acts with investment discretion for Mr. and Mrs. Gates, as Co-Trustees of the Foundation, in respect of the Limited Voting Shares owned by the Foundation. Mr. Larson disclaims any beneficial ownership of the Limited Voting Shares beneficially owned by the Foundation or Mr. and Mrs. Gates.

CUSIP No. 35100E104

13D

1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Bill & Melinda Gates Foundation
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) o (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS OO
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION State of Washington
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER -0-
		8	SHARED VOTING POWER 1,984,150*
		9	SOLE DISPOSITIVE POWER -0-
		10	SHARED DISPOSITIVE POWER 1,984,150*
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,984,150*
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.0 %
14	TYPE OF REPORTING PERSON OO

CUSIP No. 35100E104

13D

1	NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Cascade Investment, L.L.C.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) o
6	CITIZENSHIP OR PLACE OF ORGANIZATION State of Washington
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 715,850
		8	SHARED VOTING POWER -0-
		9	SOLE DISPOSITIVE POWER 715,850
		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 715,850
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.2 %
14	TYPE OF REPORTING PERSON OO

Item 1.

Security and Issuer.

This statement on Schedule 13D (this “Statement”) relates to the Limited Voting Shares of Four Seasons Hotels Inc. (the “Issuer”), a Canadian corporation. The principal executive offices of the Issuer are located at 1165 Leslie Street, Toronto, Ontario, Canada A6 M3C 2K8.

Item 2.

Identity and Background.

(a) This Statement is being filed jointly by William H. Gates III, Melinda French Gates, Bill & Melinda Gates Foundation (the “Foundation”) and Cascade Investment, L.L.C. (“Cascade”). The foregoing persons are hereinafter sometimes referred to collectively as the “Reporting Persons.” Neither the present filing nor anything contained herein shall be construed as an admission that Cascade, the Foundation or Mr. and Mrs. Gates constitute a “person” for any purpose other than Section 13(d) of the Securities Exchange Act of 1934, or that Cascade, the Foundation and Mr. and Mrs. Gates constitute a “group” for any purpose.

(b)-(c) William H. Gates III, a natural person, is Chairman of the Board of Microsoft Corporation. Mr. Gates is the sole member of Cascade and a Co-Trustee of the Foundation. The address of his principal office and principal place of business is One Microsoft Way, Redmond, WA 98052.

Melinda French Gates, a natural person, is Co-Trustee of the Foundation. The address of her principal office and principal place of business as a Co-Trustee of the Foundation is 1551 Eastlake Avenue E., Seattle, WA 98102.

The Foundation is a charitable trust under the laws of the State of Washington. The Foundation’s mission is to reduce inequities and improve lives around the world. In developing countries, it focuses on improving health, reducing extreme poverty, and increasing access to technology in public libraries. In the United States, the Foundation seeks to ensure that all people have access to a great education and to technology in public libraries. In its local region, the Foundation focuses on improving the lives of low-income families. The address of the Foundation’s principal place of business and principal office is 1551 Eastlake Avenue E., Seattle, WA 98102.

The trustees of the Foundation are set forth in Exhibit 99.1, which is attached hereto and incorporated herein by reference.

Cascade is a limited liability company organized under the laws of the State of Washington. Cascade is a private investment entity that seeks appreciation of its assets for the benefit of its owner. The address of Cascade’s principal place of business and principal office is 2365 Carillon Point, Kirkland, WA 98033.

The executive officers and persons controlling Cascade are set forth in Exhibit 99.2, which is attached hereto and incorporated herein by reference.

(d)-(e) During the last five years, neither the Reporting Persons nor any person named in Exhibits 99.1 or 99.2 has been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Mr. and Mrs. Gates are citizens of the United States of America.

Item 3.

Source and Amounts of Funds.

Mr. Gates holds 715,850 Limited Voting Shares of the Issuer through Cascade. These Limited Voting Shares were purchased using the personal funds of Mr. Gates. Neither Mr. Gates nor Cascade purchased any of the Shares with borrowed funds.

The Foundation holds 1,984,150 Limited Voting Shares of the Issuer. These Limited Voting Shares were purchased using the assets of the Foundation and no borrowed funds.

It is anticipated that the funding for the Proposal (as defined in Item 4 below) will be in the form of cash contributed by Cascade and Kingdom Hotels International (“Kingdom”) and a US$750 million loan to be obtained in connection with the proposed transaction discussed below. Cascade’s cash contribution, which is expected to be approximately US$1.2 billion, will be provided from the personal funds of Mr. Gates.

Item 4.

Purpose of Transaction.

On November 3, 2006, Cascade, Kingdom, Mr. Isadore Sharp and Triples Holdings, Ltd. (“Triples” and, together with Cascade, Kingdom and Mr. Sharp, the “Investors”) delivered a letter (the “Proposal Letter,” and the proposal set forth therein, the “Proposal”) to the Board of Directors of the Issuer in which the Investors offered to acquire all outstanding Limited Voting Shares of the Issuer (other than shares owned by Kingdom and Cascade) for a cash purchase price of US$82.00 per share. Under the terms of the Proposal Letter, the acquisition would be implemented through a shareholder approved corporate transaction. Under the Proposal, Mr. Sharp would continue to direct all aspects of the day-to-day operations and strategic direction of the Issuer as Chairman of the Board and Chief Executive Officer. Each of Kingdom, Triples and Cascade would reinvest their existing equit y in the Issuer, representing a total rollover of approximately US$970 million based on the proposed transaction price. In addition to this equity rollover, the transaction would be financed through a combination of (i) US$750 million new debt financing, which would be used in part to repay the existing convertible debt of the Issuer and (ii) approximately US$1.87 billion of equity (after taking into account available cash of the Issuer) that would be provided by Kingdom and Cascade (either directly or through affiliated entities). The Proposal Letter is non-binding and the transaction would be subject to customary conditions, including shareholder approval, and filings under Canadian, U.S. and other competition and other laws. The description of the terms of the Proposal Letter contained herein is a summary only and is qualified in its entirety by the terms of the Proposal Letter, which is filed as Exhibit 99.3 to this Schedule 13D and is incorporated herein by reference.

The Proposal could result in one or more of the actions specified in clauses (a)-(j) of Item 4 of Schedule 13D, including the acquisition or disposition of additional securities of the Issuer, a merger or other extraordinary transaction involving the Issuer, a change to the present board of directors of the Issuer, a change to the present capitalization or dividend policy of the Issuer, the delisting of the Issuer’s securities from the Toronto Stock Exchange and New York Stock Exchange, and the causing of a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). One or more of the Reporting Persons are expected to take actions in furtherance of the Proposal or any amendment thereof.

The Reporting Persons (other than the Foundation and Mrs. Gates) may at any time, or from time to time, acquire additional Limited Voting Shares or dispose of their Limited Voting Shares, pursue, or choose not to pursue, the Proposal; change the terms of the Proposal Letter, including the price, conditions, or scope of the proposed transaction;

otherwise seek control or seek to influence the management and policies of the Issuer; or change their intentions with respect to any such matters.

The Foundation and Mrs. Gates are not parties to the Proposal Letter and are not otherwise participating in the Proposal. The Foundation currently expects to sell its Limited Voting Shares prior to, or in connection with, completion of the Proposal. The timing of any such sales will be based, among other things, on the Foundation's views of market conditions from time to time.

Item 5.

Interest in Securities of the Issuer.

(a) As of the date hereof, the Reporting Persons may be deemed to beneficially own an aggregate of 2,700,000 Limited Voting Shares. Cascade directly holds 715,850 Limited Voting Shares. The Foundation directly holds 1,984,150 Limited Voting Shares. Mr. Gates and Mrs. Gates directly own no Limited Voting Shares but are deemed to have beneficial ownership of 1,984,150 Limited Voting Shares by virtue of their position as Co-Trustees of the Foundation, as explained in items 7 through 10 of the Foundation cover page. In addition, Mr. Gates is deemed to have beneficial ownership over an additional 715,850 Limited Voting Shares, by virtue of his sole ownership of Cascade.

Accordingly, the Reporting Persons may be deemed to beneficially own 8.2% of the outstanding Limited Voting Shares.

As a result of the matters described in Item 4 above, the Reporting Persons (other than the Foundation or Mrs. Gates) may be deemed to constitute a “group,” within the meaning of Section 13(d)(3) of the Exchange Act, with, among others, Mr. Sharp, Triples and Kingdom.

Mr. Sharp has advised the Reporting Persons that Triples is the beneficial owner of 3,725,698 Variable Multiple Voting Shares of the Issuer, which represents 100% of the outstanding Variable Multiple Voting Shares.

Kingdom has advised the Reporting Persons that Kingdom is the beneficial owner of 7,568,504 Limited Voting Shares, which represents approximately 23% of the outstanding Limited Voting Shares.

Each Limited Voting Share entitles the holder to one vote. Each Variable Multiple Voting Share currently entitles the holder to that number of votes that results in the aggregate votes attaching to the Variable Multiple Voting Shares representing approximately 64.55% of the votes attaching to the Variable Multiple Voting Shares and the Limited Voting Shares, in the aggregate.

Accordingly, in the aggregate, the Reporting Persons (other than the Foundation and Mrs. Gates), Mr. Sharp, Triples and Kingdom beneficially own (i) 8,284,354 Limited Voting Shares, which represents approximately 25% of the outstanding Limited Voting Shares and (ii) 3,725,698 Variable Multiple Voting Shares. The aggregate voting power of the Limited Voting Shares and Variable Multiple Voting Shares beneficially owned by the Reporting Persons, Mr. Sharp and Kingdom is approximately 73% of the combined voting power of the Limited Voting Shares and Variable Multiple Voting Shares.

Each Reporting Person hereby disclaims beneficial ownership of any securities of the Issuer that may be or are beneficially owned by, among others, Mr. Sharp, Triples or Kingdom.

(b) The description set forth in Item 5(a) above is incorporated by reference in its entirety into this Item 5(b). See also items 7 through 10 of the cover pages to this Schedule 13D for the number of Limited Voting Shares beneficially owned by each of the Reporting Persons as to which there is sole power to vote or to direct to vote, shared power to vote or to direct the vote and sole or shared power to dispose or to direct the disposition.

(d) Except as set forth in this Schedule 13D, to the knowledge of the Reporting Persons, no person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, securities covered by this Schedule 13D.

(e) Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

The description of the Proposal and the Proposal Letter set forth in Item 4 above is incorporated herein by reference in its entirety.

On November 3, 2006, the Investors entered into a Funding and Cooperation Agreement, pursuant to which (i) the Investors agreed to submit and cooperate with respect to the Proposal, (ii) the Investors agreed to contribute a total of 8,105,032 Limited Voting Shares and 3,725,698 Variable Multiple Voting Shares of the Issuer to the acquiring entity, (iii) Cascade and Kingdom agreed to provide funds for the Proposal, (iv) the Investors agreed that all decisions regarding the Proposal shall be made jointly by Cascade and Kingdom, (v) the Investors agreed to certain governance arrangements if the transactions contemplated by the Proposal are completed, (vi) the Investors agreed to share certain expenses incurred in connection with the Proposal and (vii) the Investors agreed to not pursue an acquisition of the Issuer, other than pursuant to the Funding and Cooperation Agreement, during the term of the Funding and Cooperation Agreement and for a period of 12 months thereafter. The Funding and Cooperation Agreement is terminable on the earliest of December 31, 2006 (unless an acquisition agreement is executed and delivered on or before such date), termination of the acquisition agreement, completion of the transactions contemplated by the Proposal and notice by either Kingdom or Cascade before execution and delivery of the acquisition agreement. The description of the terms of the Funding and Cooperation Agreement contained herein is a summary only and is qualified in its entirety by the terms of the Funding and Cooperation Agreement, which is filed as Exhibit 99.4 to this Schedule 13D and is incorporated herein by reference.

Cascade entered into a letter agreement, dated June 2, 2006 (the “Confidentiality Letter Agreement”) pursuant to which Cascade agreed to certain confidentiality and related undertakings with respect to confidential information provided by the Issuer to Cascade. A copy of such letter agreement is filed as Exhibit 99.5 to this Schedule and is incorporated herein by reference.

Item 7.

Material to be filed as Exhibits.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: November 6, 2006

	CASCADE INVESTMENT, L.L.C.
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Business Manager

	BILL & MELINDA GATES FOUNDATION
	By: /s/ Michael Larson
	Name: Michael Larson
	Title:	Attorney-in-fact for each of the Co-Trustees, William H. Gates III and Melinda French Gates

	WILLIAM H. GATES III
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Attorney-in-fact

	MELINDA FRENCH GATES
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Attorney-in-fact

JOINT FILING AGREEMENT

We, the signatories of the statement to which this Joint Filing Agreement is attached, hereby agree that such statement is filed, and any amendments thereto filed by any or all of us will be filed, on behalf of each of us.

Date: November 6, 2006

	CASCADE INVESTMENT, L.L.C.
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Business Manager

	BILL & MELINDA GATES FOUNDATION
	By: /s/ Michael Larson
	Name: Michael Larson
	Title:	Attorney-in-fact for each of the Co-Trustees, William H. Gates III and Melinda French Gates

	WILLIAM H. GATES III
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Attorney-in-fact

	MELINDA FRENCH GATES
	By: /s/ Michael Larson
	Name: Michael Larson
	Title: Attorney-in-fact

EX-99.1 2 cascade-13dex991_1106.htm

EXHIBIT 99.1

CO-TRUSTEES OF THE BILL & MELINDA GATES FOUNDATION

Exhibit 99.1 sets forth the following information with respect to each Trustee of the Bill & Melinda Gates Foundation: (i) name, (ii) business address; (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and (iv) citizenship.

Name

Business Address

Present Principal Occupation

Citizenship

William H. Gates III

Bill & Melinda Gates Foundation

1551 Eastlake Avenue E.

Seattle, WA 98102

USA

Chairman of the Board

Microsoft Corporation

One Microsoft Way

Redmond, WA 98052

USA

United States

Melinda French Gates

Bill & Melinda Gates Foundation

1551 Eastlake Avenue E.

Seattle, WA 98102

USA

Co-Trustee

Bill & Melinda Gates Foundation

1551 Eastlake Avenue E.

Seattle, WA 98102

USA

United States

EX-99.2 3 cascade-13dex992_1106.htm

EXHIBIT 99.2

EXECUTIVE OFFICERS OF CASCADE INVESTMENT, L.L.C.

Exhibit 99.2 sets forth the following information with respect to each executive officer of Cascade Investment, L.L.C. (“Cascade”): (i) name, (ii) business address; (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and (iv) citizenship. The address of Cascade’s principal place of business is 2365 Carillon Point, Kirkland, Washington 98033.

Name

Business Address

Present Principal Occupation

Citizenship

Michael Larson

Business Manager

Cascade Investment, L.L.C.

2365 Carillon Point

Kirkland, WA 98033

USA

Business Manager

Cascade Investment, L.L.C.

2365 Carillon Point

Kirkland, WA 98033

USA

United States

William H. Gates III

Member

Cascade Investment, L.L.C.

2365 Carillon Point

Kirkland, WA 98033

USA

Chairman of the Board

Microsoft Corporation

One Microsoft Way

Redmond, WA 98052

USA

United States

EX-99.3 4 cascade-13dex993_1106.htm Untitled Document

EXHIBIT 99.3

PROPOSAL LETTER

Confidential

November 3, 2006

Board of Directors

Four Seasons Hotels Inc.

1165 Leslie Street

Toronto, Ontario

Canada M3C 2K8

Ladies and Gentlemen:

Kingdom Hotels International and Cascade Investment, L.L.C., together with Isadore Sharp and Triples Holdings Limited, are pleased to offer to acquire all of the outstanding Limited Voting Shares of Four Seasons Hotels Inc. (the “Company”) at a cash purchase price of US$82.00 per share on the terms set forth in this letter.

As you know, Kingdom and its affiliates have had a long-term strategic relationship with Four Seasons, both as a significant shareholder in the Company and as the owner of 10 hotels managed by the Company. Cascade, which is a private investment vehicle owned by William H. Gates III, also is a substantial investor in the Company. Through its ownership of the Company’s Variable Multiple Voting Shares, Triples, which is Mr. Sharp’s family holding company, is the controlling shareholder of the Company.

We believe that our offer is fair to and in the best interests of the Company and its public shareholders and that the shareholders will find our proposal attractive. Our offer represents a premium of 28.4% over the closing price of the shares on November 3, 2006 and a 29.3% premium over the average closing price over the past 30 trading days.

Under our proposal, Mr. Sharp would continue to direct all aspects of the day-to-day operations and strategic direction of the Company as Chairman and CEO following the transaction. We also expect that the Company’s senior management team would remain in place. We believe that this will preserve the business in a manner that will preserve and expand the long-term strategy, vision and core values of Four Seasons.

Each of Kingdom, Cascade and Triples would reinvest their existing equity in the Company, representing a total rollover of approximately US$970 million based on the proposed transaction price. In addition to this equity rollover, the transaction would be financed through a combination of (x) US$750 million of new debt financing, which is expected to be used in part to repay the existing convertible debt of the Company, and (y) approximately US$1.87 billion of equity (after taking into account available cash of the Company) that would be provided by Kingdom and Cascade (either directly or through affiliated entities). The undersigned have entered into an agreement among themselves with respect to certain matters related to the proposal. We have provided a copy of this agreement for your information.

Because of our extensive familiarity with the Company, we expect to be able to negotiate and complete the transaction in an expedited manner. The acquisition is expected to be structured as a plan of arrangement or as an amalgamation. The transaction would be subject to customary conditions, including shareholder approval, filings under Canadian, US and other competition laws, and Investment Canada approval. We are comfortable with our ability to arrange the necessary debt financing, and there would be no financing condition.

We expect that you will establish a special committee of independent directors to consider our proposal and to recommend to the full Board whether to approve the proposal.

Of course, no binding obligation on the part of the Company or any of the undersigned will arise with respect to the proposal or any acquisition transaction, unless and until such time as definitive documentation satisfactory to us and recommended by the special committee and approved by the Board is executed and delivered.

All of the undersigned look forward to working with the special committee and its legal and financial advisors to negotiate an acquisition agreement and complete a transaction that is attractive to the public shareholders. If you have any questions, please contact a representative of Kingdom or Cascade.

Sincerely,

Kingdom Hotels International

By: /s/ HRH Prince Alwaleed Bin Talal

Bin Abdulaziz Alsaud

Cascade Investment, L.L.C.

By: /s/ Michael Larson

Triples Holdings Limited

By: /s/ Isadore Sharp

/s/ Isadore Sharp

Isadore Sharp

Attachment

EX-99.4 5 cascade-13dex994_1106.htm Untitled Document

EXHIBIT 99.4

FUNDING AND COOPERATION AGREEMENT

FUNDING AND COOPERATION AGREEMENT (this “Agreement”), dated as of November 3, 2006, by and among Kingdom Hotels International, a Cayman Islands company (“Kingdom”), Cascade Investment, L.L.C., a Washington limited liability company (“Cascade” and, together with Kingdom, the “Lead Investors”), Triples Holdings Limited, an Ontario corporation (“Triples” and, together with the Lead Investors, the “Investors”), and Isadore Sharp (“Sharp” and, together with Triples, the “Sharp Parties” the Sharp Parties and the Lead Investors are referred to herein as the “Parties”).

R E C I T A L S:

WHEREAS, the Lead Investors (or their affiliates) and Triples currently are shareholders of Four Seasons Hotels Inc. (the “Company”) and Sharp is Chairman and CEO of the Company;

WHEREAS, the Lead Investors have proposed to the Sharp Parties that the Parties make a joint proposal to acquire all of the outstanding capital stock of the Company, other than shares held by the Parties and certain of their respective affiliates (the “Acquisition”), and the Sharp Parties have informed the Lead Investors that they are willing to join in such proposal;

WHEREAS, the Parties wish to agree to certain terms and conditions relating to the funding of the Acquisition and their relationship in connection with their joint pursuit of the Acquisition;

NOW, THEREFORE, in consideration of the premises and the mutual promises set forth herein, the Parties agree as follows:

1. Proposal. The Parties hereby agree, on the terms and subject to the conditions contained herein, to jointly pursue the Acquisition of the Company. The Parties agree that the Lead Investors shall submit a proposal letter on behalf of all of the Parties relating to the Acquisition in the form approved by each of the Parties (the “Proposal”). In connection with the Proposal, the Lead Investors shall cause a Canadian entity (the “Acquiror”) to be formed as the acquisition vehicle.

2. Cooperation in Completing Proposal and Acquisition. If the Board of Directors of the Company approves the Proposal, the Parties agree to cooperate to negotiate and finalize an acquisition or similar agreement with the Company (the “Acquisition Agreement”), the Shareholders’ Agreement (as defined below), the Acquisition Credit Facility (as defined below) and all of the other agreements and arrangements among the Parties required to be finalized prior to the closing (the “Closing”) under the Acquisition Agreement (collectively, the “Transaction Agreements”), each of which shall reflect the terms set forth herein and in the Proposal and otherwise be in a form acceptable to each of the Parties. Subject to Paragraph 6 below, (i) each Party shall take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things reasonably necessary, proper or advisable to cause Acquiror to perform and comply with all agreements and covenants required to be performed by Acquiror under the Transaction Agreements and to cause Acquiror to consummate the Acquisition and other transactions contemplated by the Transaction Agreements and (ii) none of the Parties shall take any action that results in a breach or violation by Acquiror of the Transaction Agreements.

3. Source of Funds. The Parties contemplate that the cash required to complete the Acquisition and other transactions contemplated by the Transaction Agreements and to pay related expenses will be funded by the proceeds of borrowings to be made under a US$750.0 million credit facility that the Acquiror will enter into at Closing (the “Acquisition Credit Facility”), which will be assumed by the Company upon completion of the Acquisition, and by cash equity contributions by the Lead Investors, as provided in Paragraph 4 below.

4. Equity Contributions. Each of the Lead Investors and Triples hereby agrees to contribute to Acquiror, concurrently with the Closing and subject to satisfaction or waiver of the conditions to closing to be set forth in the Acquisition Agreement, all of the shares of capital stock in the Company owned by such Party, free and clear of all liens and encumbrances, and cash, in each case as set forth below.

(a) Kingdom shall contribute (or cause a wholly owned subsidiary to contribute) 50% of the Required Common Equity (as defined below), consisting of the 7,389,182 Limited Voting Shares of the Company currently held by Kingdom Investments, Inc., valued at the price paid to public shareholders pursuant to the Acquisition Agreement (the “Acquisition Price”), plus an amount of cash equal to 50% of the Required Common Equity less the value of such contributed Limited Voting Shares, in exchange for 50% of the Series A Limited Voting Shares of Acquiror.

(b) Cascade shall contribute 50% of the Required Common Equity, consisting of 715,850 Limited Voting Shares of the Company, valued at the Acquisition Price, plus an amount of cash equal to 50% of the Required Common Equity less the value of such contributed Limited Voting Shares, in exchange for 50% of the Series A Limited Voting Shares of Acquiror.

(c) Triples shall contribute 3,725,698 Variable Multiple Voting Shares of the Company, valued at the Acquisition Price, in exchange for 3,725,698 Variable Multiple Voting Shares of Acquiror. The Variable Multiple Voting Shares of Acquiror shall be in two series and shall have the conversion, dividend, redemption, voting, and other rights described in the term sheet attached as Annex A hereto (the “Term Sheet”).

As used herein, the term “Required Common Equity” shall mean a dollar amount equal to (i) the total amounts required (A) to acquire all outstanding capital stock of the Company, (B) to pay the principal, all accrued interest and premium and any other amounts incurred to redeem, repurchase or otherwise retire the convertible debt of the Company, (C) to make all payments due to Sharp under the Sale of Control Agreement between the Company and Sharp, and (D) to pay all expenses paid by the Company in connection with the Acquisition, less (ii) the Company’s available cash at the time of Closing, less (iii) the proceeds available at Closing under the Acquisition Credit Facility and less (iv) the value (based on the Acquisition Price) of the number of Variable Multiple Voting Shares contributed to Acquiror by Triples as described above.

Guaranty of Acquisition Agreement.

(a) To the extent required in connection with negotiation of the Acquisition Agreement, each Lead Investor shall provide a several guaranty (each a “Guaranty”) directly to the Company of 50% of Acquiror’s obligations under the Acquisition Agreement. The liability of each Lead Investor under such Guaranty shall be capped at an amount acceptable to the Lead Investors.

(b) The Parties shall cooperate in defending any claim that the Lead Investors are, or any one of them is, liable to make payments under the Guaranties. Each Investor agrees to contribute to the amount paid or payable by the Lead Investors in respect of the Guaranties so that each Party shall have paid an amount equal to the product of the aggregate amount paid under all of the Guaranties multiplied by the following percentages: Kingdom, 47.5%; Cascade, 47.5%; and Triples, 5%; provided that no Lead Investor shall be entitled to receive any contribution payments if such Lead Investor’s liability under its Guaranty arose by reason of a breach by such Lead Investor of its obligations hereunder or under any Transaction Agreement.

6. Decisions Relating to Proposal and Acquisition Agreement. All decisions with respect to the Proposal, the Acquisition Agreement and the Acquisition Credit Facility shall be made jointly by the Lead Investors, including any decision (i) to modify the Proposal, (ii) to enter into the Acquisition Agreement or the Acquisition Credit Facility, (iii) to amend, modify or waive any term or condition of the Acquisition Agreement or the Acquisition Credit Facility, (iv) to terminate the Acquisition Agreement or the Acquisition Credit Facility in accordance with its terms (except as provided in the following sentence) and (v) as to whether the conditions in the Acquisition Agreement or the Acquisition Credit Facility have been satisfied. If either Lead Investor determ ines that there is a right to terminate the Acquisition Agreement pursuant to the terms thereof (including because of a failure of a condition), and if such Lead Investor desires to terminate the Acquisition Agreement as a result thereof, such Lead Investor may notify the other of such desire and the Lead Investors shall take all necessary action to terminate the Acquisition Agreement; provided, however, that if the other Lead Investor (the “continuing Lead Investor”) desires to consummate the Acquisition Agreement without any involvement by the Lead Investor desiring to terminate the Acquisition Agreement (the “withdrawing Lead Investor”), and the Sharp Parties agree to proceed with the Proposal on such basis, then the continuing Lead Investor and the withdrawing Lead Investor shall cooperate in such re asonable arrangements requested by the other to permit the continuing Lead Investor to proceed with the Acquisition and to terminate any liability or obligation of the withdrawing Lead Investor. Without limiting the generality of the foregoing, the continuing Lead Investor shall be required to assume the withdrawing Lead Investor’s obligations under its Guaranty referred to in Paragraph 5 above.

7. Post-Closing Governance Arrangements. Prior to or concurrently with the Closing, (i) each of the Parties shall enter into a shareholders agreement containing provisions for the post-closing governance of the Company and other arrangements regarding their ownership of shares of the Company after completion of the Acquisition (the “Shareholders Agreement”) and (ii) Sharp shall enter into, and the Lead Investors shall cause the Company to enter into, an employment agreement between Sharp and the Company, in each case on substantially the terms set forth in the Term Sheet and as otherwise agreed by the Parties.

8. Exclusivity. During the term of this Agreement and for twelve months thereafter if this Agreement terminates other than pursuant to clause (ii) of Paragraph 11, no Party shall, directly or indirectly, through any officer, director, employee, affiliate, attorney, financial advisor or other person, agent or representative, seek to acquire or acquire, or encourage or participate in any other acquisition of or proposal to acquire, capital stock of the Company that would result in such person or Party (together with any other person or Party participating in such offer or acquisition) holding more than 40% of the capital stock of the Company or all or any substantial portion of the assets of the Company, except as

contemplated hereby (including Paragraph 6) or with the consent of both Lead Investors, such consent not to be unreasonably withheld; provided that the foregoing shall not restrict any person who is a director of the Company from complying with the fiduciary duties owed by such person to the Company.

9. Regulatory Matters. Each Party shall use commercially reasonable efforts to supply and provide information that is accurate in all material respects to any governmental authority requesting such information in connection with filings or notifications under, or relating to, Antitrust and Investment Laws (as defined below). If any governmental authority asserts any objections under any applicable antitrust, competition, foreign investment or fair trade laws (collectively, the “Antitrust and Investment Laws”) with respect to the Acquisition and such objections relate to the activities or investments of a Party or such Party’s affiliates, such Party shall attempt to resolve such objections; provided no Party or any affiliate of a Party shall be required to dispose of any assets or enter into any agreements that materially restrict the activities of such Party or its affiliates as a condition of resolving any such objections under the Antitrust and Investment Laws; provided, further if any Party is unable to resolve the objections of any governmental authority related to the activities or investments of a Party or such Party’s affiliates under the Antitrust and Investment Laws, then such Party shall be responsible for all Pursuit Costs (as defined below).

10.

Sharing of Expenses; Other Matters.

(a) Except as provided in Paragraph 9, if the Acquisition is not consummated for any reason, all reasonable out-of-pocket expenses (including legal fees and expenses) incurred after the date of this Agreement by any Party (other than a Party that has committed a material breach of its obligations hereunder) or any such non-breaching Party’s affiliates (including any Acquiror) in connection with the Proposal, the Acquisition and the related transactions (“Pursuit Costs”) shall be shared among the Parties as follows: Kingdom, 47.5%; Cascade, 47.5%; and the Sharp Parties, 5%. Each Party shall make such payments to the others as shall be necessary to implement such sharing of expenses. Any “break up fees” or other amounts received from the Company and any amounts received from the Company as a result of a breach of the Acquisition Agreement by the Company shall be shared among the Lead Investors and Triples according to the following percentages: Kingdom, 47.5%; Cascade, 47.5%; and the Sharp Parties, 5%.

(b) If the Closing occurs, then the Acquiror shall reimburse the Parties and their respective affiliates for all Pursuit Costs incurred by each of them.

11. Termination. This Agreement shall become effective on the date hereof and shall terminate (except with respect to Paragraphs 8, 10(a) (but only with respect to Pursuit Costs incurred prior to termination) and 12 through 23 and this Paragraph 11, each of which shall survive any such termination) upon the earliest of (i) December 31, 2006, unless the Acquisition Agreement shall have been executed and delivered on or before such date, (ii) the Closing, (iii) the termination of the Acquisition Agreement and (iv) notice delivered by either Lead Investor to the other Parties prior to execution and delivery of an Acquisition Agreement. Termination of this Agreement shall not relieve any Party of any liability for breach of this Agreement prior to such ter mination.

12. Entire Agreement. This Agreement constitutes the entire agreement, and supersedes all prior agreements, understandings, negotiations and statements, both

written and oral, among the Parties or any of their affiliates with respect to the subject matter contained herein.

13. Confidentiality. Each Party agrees to, and shall cause its affiliates (other than the Company), directors, officers, employees, agents, advisors and representatives (“Representatives”) to, keep any information supplied by or on behalf of any of the other Parties to this Agreement in connection with the transactions contemplated hereby confidential (“Confidential Information”) and to use, and cause its Representatives to use, the Confidential Information only in connection with the Proposal, the Acquisition, and the other transactions contemplated hereby; provided that the term “Confidential Information 48; does not include information that (a) is already in such Party’s possession, provided that such information is not subject to another confidentiality agreement with or other obligation of secrecy to any person, (b) is or becomes generally available to the public other than as a result of a disclosure, directly or indirectly, by such Party or such Party’s Representatives in breach of this Agreement, or (c) is or becomes available to such Party on a non-confidential basis from a source other than any of the Parties hereto or any of their respective Representatives, provided that such source is not known by such Party to be bound by a confidentiality agreement with or other obligation of secrecy to any person; provided further that that nothing herein shall prevent any Party from disclosing Confidential Information (i) upon the order of an y court or administrative agency, (ii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Party, (iii) to the extent required by law or regulation, (iv) to the extent necessary in connection with the exercise of any remedy, hereunder, and (v) to such Party’s Representatives that need to know such information (it being understood and agreed that, in the case of clause (i), (ii) or (iii), such Party shall notify the other Parties hereto of the proposed disclosure as far in advance of such disclosure as practicable and use reasonable efforts to ensure that any information so disclosed is accorded confidential treatment, when and if available). Notwithstanding anything to the contrary, nothing in this Agreement shall impose on any Party or any other Person a limitation on the disclosure of the tax treatment or tax structure of any transaction set forth herein.

14. Public Announcements. Each Party shall coordinate in good faith any and all press releases and other public announcements with respect to the Proposal, the Acquisition, and the other transactions contemplated hereby; provided that, without the consent of all of the Parties, no such press releases or public announcements shall contain information materially different from information contained in press releases or other public announcements previously made by the Company. This provision shall not apply, however, to any public announcement or written statement required to be made by law or the regulations of any governmental authority or any stock exchange, except that the Party required to make such announcement shall, whenever practicable, consult with the other Parti es concerning the content and timing of such announcement before such announcement is made.

15. Third Party Beneficiaries. No person (including the Company) other than the Parties and their respective successors and permitted assigns shall have any rights hereunder.

16. Remedies. The Parties hereto agree that, except as provided herein, this Agreement shall be enforceable by all available remedies at law or in equity (including specific performance).

17. Exercise of Rights and Remedies. No delay of or omission in the exercise of any right, power or remedy accruing to any Party as a result of any breach or default by any other Party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any such delay, omission or waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

18. No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that certain of the Investors may be partnerships or limited liability companies, each Party covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any former, current or future directors, officers, agents, affiliates, general or limited partners, members, managers or stockholders of any Investor or any former, current or future directors, officers, agents, affiliates, employees, general or limited partners, members, managers or stockholders of any of the foregoing, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future director, officer, employee, general or limited partner or member or manager of any Investor or of any partner, member, manager or affiliate thereof, as such, for any obligation of any Investor under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

19. Governing Law; Jurisdiction. This Agreement shall be enforced, construed and interpreted in accordance with the laws of the State of New York. Each of the Parties (i) consents to submit itself to the personal jurisdiction of any state or federal court located in the Borough of Manhattan, State of New York with respect to any action arising from this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees not to commence any such action in any forum other than such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any such action in any such state or federal court, and hereby further irrevocably and unconditionall y waive and agree not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum. Each of the Parties, to the fullest extent permitted by applicable law, waives any right to a jury trial in any such action

20. No Assignment. This Agreement may not be assigned by any Party, nor shall any Party syndicate its contribution obligation, without the consent of the other Parties, other than to an affiliate of such Party, it being agreed that any such assignment shall not relieve the assigning Party from its obligations hereunder.

21. Amendments. This Agreement may not be amended or modified orally, but only by a written instrument signed by all of the Parties.

22. No Representations or Duty. (a) Each Party specifically understands and agrees that no other Party has made and will not make any representation or warranty with respect to the terms, value or any other aspect of the transactions contemplated hereby and each Party explicitly disclaims any warranty, express or implied, with respect to such matters. In addition, each Party specifically acknowledges, represents and warrants that it is

not relying on any other Party (i) for its due diligence concerning, or evaluation of, the Company or its assets or businesses, (ii) for its decision with respect to making any investment contemplated hereby or (iii) with respect to tax and other economic considerations involved in such investment.

(b) In making any determination contemplated by this Agreement, each Party may make such determination in its sole and absolute discretion, taking into account only such Party’s own views, self-interest, objectives and concerns. No Party shall have any fiduciary or other duty to any other Party except as expressly set forth in this Agreement.

23. Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. For purposes hereof, facsimile signatures shall be binding on the Parties to this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Funding and Cooperation Agreement by their duly authorized officers as of the date first written above.

	KINGDOM HOTELS INTERNATIONAL

	By:	/s/ HRH Prince Alwaleed Bin Talal
		Bin Abdulaziz Alsaud
	Name:	HRH Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud
	Title:	President

	CASCADE INVESTMENT, L.L.C.

	By:	/s/ Michael Larson
	Name:	Michael Larson
	Title:	Business Manager

	TRIPLES HOLDINGS LIMITED

	By:	/s/ Isadore Sharp
	Name:	Isadore Sharp
	Title:	President

	By:	/s/ Isadore Sharp
		Isadore Sharp

ANNEX A

Transaction Summary

A.	Transaction Overview

The following summarizes certain terms of the transaction (the “Transaction”) contemplated by the Funding and Cooperation Agreement to which this Transaction Summary is attached. Certain capitalized terms used in this Transaction Summary have the meanings ascribed to them in that Agreement.

1. Consideration per Share:	US$82.00 cash per share (the “Transaction Price”).

2. Triples/Sharp Interest:

(i) Mr. Sharp would be entitled to receive the proceeds due under the Sharp Sale of Control Agreement, estimated to be approximately US$288 million.

(ii) Triples would hold all of Acquiror’s Variable Multiple Voting Shares (“VMVS”) , as described below. (The terms “Acquiror” and “Four Seasons” are used interchangeably herein, unless the context requires otherwise.)

(iii) The terms of the VMVSwould be amended to provide that:

• Two Series: The VMVS would be issued in two series. The first series (“Series A VMVS”) would be convertible into Preferred Shares on the terms and conditions described below. The number of Series A VMVS would equal the total number of VMVS currently held by Triples less the number of Series B VMVS issued in the Transaction. The second series of VMVS (“Series B VMVS”) would be convertible into Series B Limited Voting Shares of Four Seasons on the terms and conditions described below. The number of Series B VMVS would be equal to 1/19th times the total number of Series A Limited Voting Shares of Four Seasons held by Kingdom and Cascade following the Transaction (i.e., such that upon conversion of the Series B VMVS into Series B Limited Voting Shares, Triples would hold 5% of the aggregate Series A and B Limited Voting Shares).

• Regular Voting: Except with respect to Special Matters¹, both series of VMVS would entitle the holder to one vote per share, voting together with the Limited Voting Shares as one class.

• Conversion of Series A VMVS to Preferred Shares: The Series A VMVS would be convertible, into preferred shares with the terms described below (“Preferred Shares”) on a 1:1 basis (i) at any time at the option of

_________________________

¹The Special Matters would be those Material Decisions identified in items 1, 3, 7, 13, 14 and 16 of Part C that would require the approval of Mr. Sharp/Triples so long as none of the Series B VMVS had been transferred outside the Sharp family and Mr. Sharp was either the Chief Executive Officer or the Chairman of the Company (and provided that he was not physically incapacitated or mentally incompetent).

the holder, (ii) at any time on or following the fifth anniversary date of closing of the Transaction at the option of Four Seasons, (iii) automatically upon Mr. Sharp dying, becoming physically incapacitated or mentally incompetent, or if he was neither the Chief Executive Officer nor the Chairman (other than as a result of a breach by a party other than Mr. Sharp of agreements relating to Mr. Sharp’s tenure in those positions), and (iv) automatically upon the completion of a public offering of voting or equity securities of Four Seasons that had been approved as a Material Decision and following which Four Seasons was listed on an internationally recognized stock exchange.²

• Conversion of Series B VMVS to Series B Limited Voting Shares by Holder or by Company: The Series B VMVS would be convertible into Series B Limited Voting Shares on a 1:1 basis (i) at any time at the option of the holder, (ii) automatically upon the transfer of any Series B VMVS outside the Sharp family, upon Mr. Sharp dying, becoming physically incapacitated or mentally incompetent, or if he was neither the Chief Executive Officer nor the Chairman (other than as a result of a breach by a party other than Mr. Sharp of agreements relating to Mr. Sharp’s tenure in those positions), and (iii) at the option of the Company upon the completion of a public offering of voting or equity securities of Four Season s that had been approved as a Material Decision and following which Four Seasons was listed on an internationally recognized stock exchange.³

• Voting on Special Matters: In respect of Special Matters only, the two series of VMVS would, as a single class, entitle the holder to the lesser of their then current multiple votes (as calculated on the basis of the currently authorized VMVS of Four Seasons) and that number of the votes that, in aggregate, is 25% of the votes attaching to all outstanding securities of Four Seasons, and would vote as a separate class from the Limited Voting Shares.

• Dividends: The Series B VMVS would entitle the holder to the same dividends as are paid on the Limited Voting Shares. No dividends would be paid on the Series A VMVS.

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2}Among other things, the terms of the Preferred Shares could permit Four Seasons to cause those shares to be purchased by a third party for the Redemption Price in place of their being redeemed by Four Seasons.

³ This conversion of the VMVS would result in the Special Matters requiring the approval of Mr. Sharp, as provided under “Material Decisions”.

(iv) The Preferred Shares would have a “face value” per share equal to the Transaction Price and would entitle the holder to cumulative, compound dividends (accruing from the date of closing of the Transaction) at a rate equal to 9.9% per annum. No dividends would be paid on the Preferred Shares until the end of the fifth year after the date of closing of the Transaction (or, if later, the issuance of the Preferred Shares upon conversion of the Series A VMVS), at which time dividends would begin to be paid on a current basis. One-third of the dividends accrued and compounded before the fifth anniversary of the date of closing of the Transaction would be paid at the end of each of the fifth, sixth and seventh years after the date of closing of the Transaction (with unpaid dividends continuing to compound to the date of such payment). The Preferred Shares would be redeemable for their face v alue and accrued but unpaid dividends to the date of redemption (i) at the option of the holder or Four Seasons at any times beginning on the fifth anniversary of the date of closing the Transaction, provided that at the end of the sixth and seventh years after the date of closing the Transaction, respectively, no more than one-third and two-thirds of the maximum number of Preferred Shares into which the Series A VMVS may be converted (regardless of the number of Preferred Shares actually issued) shall have been redeemed, (ii) at the option of the holder at any time if Mr. Sharp ceased to be either the Chief Executive Officer or the Chairman as a result of a breach by a party other than Mr. Sharp of agreements relating to Mr. Sharp’s tenure in those positions, and (iii) in whole at the option of Four Seasons if, beginning on the fifth anniversary of the date of closing of the Transaction, the holder did not consent to Four Seasons or its subsidiaries incurring indebtedness for borrowed money that had be en approved as a “Material Decision” (as provided in Part C, below).

While all or any portion of the Preferred Shares remain outstanding, no indebtedness for borrowed money that was not subordinated to the Preferred Shares could be incurred by Four Seasons or its subsidiaries without Mr. Sharp’s consent. (Mr. Sharp would pre-approve the debt associated with the implementation of the Transaction, up to US$750 million of acquisition financing and a US$200 million evergreen operating facility with one or more banks, as “permitted senior debt”.)

The final structure would address the commercial and tax efficiencies associated with achieving the overall economic objective of the Transaction.


3. Commitment of Chairman and Chief Executive Officer:	Mr. Sharp would agree to continue in his current capacity as Chief Executive Officer for at least three years. Thereafter, at his option, Mr. Sharp would advise the Board of Directors regarding further extensions of his service as Chief Executive Officer. Mr. Sharp would continue as the Chairman while he is Chief Executive Officer and, at his option, after he ceases to be Chief Executive Officer. Mr. Sharp would tender his resignation as Chief Executive Officer and Chairman if Mr. Sharp/Triples disposed of all or substantially all of their equity interest in Four Seasons (other than pursuant to a pro rata secondary public offering or private placement by Mr. Sharp/Triples and the Lead Investors participating in the offering). The continuing Chief Executive Officer and Chairman’s roles contemplated for Mr. Sharp are outlined in Part B, below.

4. Governance:	The governance structure for Four Seasons would be established pursuant to a shareholders agreement among Four Seasons, the Lead Investors, Mr. Sharp and Triples. The basic terms of the shareholders agreement are outlined in Part C, below.

5. Mechanism for Implementation:	It is contemplated that the Transaction would be implemented through a shareholder-approved corporate transaction, such as an amalgamation or a plan of arrangement approved by shareholders and the court.

B.	Position Description of Chief Executive Officer and Chairman of the Board

CHIEF EXECUTIVE OFFICER

General

As Chief Executive Officer, Mr. Sharp would continue to have responsibility for providing the strategic and aesthetic vision for Four Seasons and overseeing the day-to-day management of the business of the Company in accordance with its strategic plans and annual budgets as reviewed and, as necessary, approved by the Board.

Specific Responsibilities

Without limitation, as Chief Executive Officer, Mr. Sharp would have responsibility, as currently is the case, to:

•	lead the strategic planning process for Four Seasons,

•	subject to the Material Decisions list, lead succession planning and personnel related initiatives for Four Seasons,

•	with other members of senior management, advise the Board of the goals for Four Seasons’ business and, oversee the implementation of corresponding strategic, operational and profit plans,

•	advise on the development and implementation of the activities of Four Seasons to achieve agreed-upon targets,

•	report to, and meet periodically with, the Board to review material issues,

•	arrange for the provision to the Board of all information reasonably required by the Board, and

•	subject to the Material Decisions list, implement top-level organizational structure, staffing, compensation and succession in a manner consistent with current succession plans and recommend to the Board any changes thereto.

Management Style

Mr. Sharp would discharge his role as Chief Executive Officer in a manner consistent with past practice and, without limitation, would:

•	focus his time on significant business issues, partner relations, architectural and interior design, and corporate and hotel employee meetings and relations,

•	determine his work schedule,

•	determine the location from which he works, and

•	have a corporate plane and driver available.

CHAIRMAN OF THE BOARD

General

As Chairman, Mr. Sharp would have responsibility for overseeing the management, development and effective functioning of the Board of Directors and would provide the Board with overall leadership in its work.

Specific Responsibilities

In addition, as Chairman, Mr. Sharp would have responsibility to:

•	promote cohesiveness among members of the Board of Directors,

•	chair meetings of the Board of Directors and of the shareholders,

•	ensure that Board functions are effectively carried out, and, where functions have been delegated to Committees, that the results are reported to the Board,

•	oversee the Chief Executive Officer’s execution of his or her responsibilities,

•	encourage and promote a culture of ethical business conduct, and

•	perform such other functions as may be ancillary to the duties and responsibilities described above and as may reasonably be delegated to the Chairman by the Board of Directors from time to time.

Reporting

So long as Mr. Sharp was the Chief Executive Officer, the Chief Operating Officer would report directly to him and, so long as Mr. Sharp was the Chairman (but not the Chief Executive Officer), the Chief Executive Officer would report directly to him.

C.	Governance Terms of Unanimous Shareholders Agreement

Parties:	Four Seasons, the Lead Investors, Mr. Sharp and Triples.

Voting Arrangements:	The Board would be comprised of five members: two nominees of each of Kingdom and Cascade, and one nominee of Mr. Sharp/Triples. Each of the Lead Investors and Mr. Sharp/Triples would be entitled to vote in proportion to their equity interest through their nominees to the Board. So long as he is the Chief Executive Officer or Chairman, Mr. Sharp will be the nominee of Mr. Sharp/Triples to the Board. All meetings of the Board would be in Toronto. Participation in meetings of the Board may be by telephone.

Day-to-Day Governance:	All matters that are not Material Decisions (as that term is defined below) would fall under the exclusive authority of the Chairman (so long as Mr. Sharp is the Chairman), the Chief Executive Officer and the Management Committee of Four Seasons.

Reporting:

The Chief Executive Officer and representatives of the Management Committee would meet with the Board of Directors quarterly in Toronto (with participation by conference telephone being permitted).

So long as Mr. Sharp was either the Chief Executive Officer or Chairman (or would have been eligible to occupy one of those roles but for a breach by a party other than Mr. Sharp of agreements relating to Mr. Sharp’s tenure in those positions), at one of these meetings, the Chief Executive Officer would present the annual budget (a “Sharp Annual Budget”) for review and approval, provided that approval could not be withheld if the aggregate cash expenses, capital expenditures and investments in (or advances to) secure, maintain or enhance management agreements in that proposed budget was not materially inconsistent with the budget for the prior year, including future capital commitments outlined therein (for the purposes of determining consistency, material capital commitments expressly approved as Material Decisions,as provided below, in a preceding year would not be considered to be included in that year’s budget). Thereafter (i) at one of these meetings, the Chief Executive Officer would present to the Board for its approval an annual budget, which would become the approved annual budget for the year once it was approved, and (ii) pending approval of the proposed annual budget, management would have the authority to operate the business in accordance with the expense portion of the most recently approved budget (increased by a factor equal to any increase of the consumer price index for the City of Toronto).

In addition, the Chief Executive Officer would arrange to have a monthly operating report prepared for distribution to the Board.

Material Decisions:

For so long as Mr. Sharp was either Chief Executive Officer or Chairman (and thereafter if he ceased to hold either of those positions as a result of a breach by a party other than Mr. Sharp of agreements relating to Mr. Sharp’s tenure in those positions), and provided that he was not physically incapacitated or mentally incompetent, approval of the Material Decisions listed in items 1, 3, 7, 13, 14 and 16, below, would require approval by the holder of the VMVS (or by Mr. Sharp upon the conversion of the VMVS upon the completion of a public offering as described above, provided Mr. Sharp would not be entitled to exercise such approval rights after the completion of that public offering unless that public offering was completed before the fifth anniversary of the date of closing of the Transaction, in which event he would be entitled to exercise such approval rights until such fifth anniversary ), as well as requiring approval as a “Material Decision.”

The following would be material decisions (“Material Decisions”) that would require approval by the votes cast by directors nominated by shareholders holding at least 66 2/3% of the equity interests of Four Seasons:

1. material departures (including new lines of business) from Four Seasons’ previously approved long-term strategy,

2. amendment of articles or by-laws,

3. any matter that requires approval of shareholders by way of a "special resolution" under the Business Corporations Act (Ontario) (such as amalgamation, dissolution or continuance and the disposition of all or substantially all of the assets of the Company),

4. entering into management arrangements on terms materially different than those in Four Seasons’ existing arrangements,

5. investing more than US$25 million in connection with a single management, investment or real estate opportunity,

6. settling or compromising proceedings involving payments or receipts of more than US$1 million, in the aggregate each year, in addition to amounts contemplated in the approved annual budget,

7. corporate acquisitions,

8. issuance, redemption or purchase by the Company of securities (other than the redemption of the preferred shares held by Mr. Sharp/Triples),

9. payment of dividends or other distributions to shareholders,

10. approval of the strategic plans proposed by management from time to time,

11. incurring indebtedness for borrowed money in excess of amounts contemplated in the approved annual budget,

12. expenditures or capital or funding commitments in excess of an amount to be agreed that are not otherwise contemplated in the approved annual budget,

13. changing the approved succession plans for members of Management Committee, making appointments to those positions other than as contemplated in the approved succession plan, or hiring any external candidate into a Management Committee position,

14. the termination of the employment of Ms. Taylor, the appointment of a replacement for Ms. Taylor or change in the structure of senior management following the termination, resignation, retirement, physical incapacity, mental incompetence or death of Ms. Taylor,

15. a public offering or private placement of voting or equity securities of Four Seasons,

16. relocating Four Seasons’ worldwide head office from its current location in Toronto, Canada,

17. changing auditors,

18. making material tax elections or changing the method of tax accounting,

19. changing existing accounting practices, except as the auditors advise is required by law or generally accepted accounting principles, or writing up, down or off the book value of any assets that, in aggregate, exceed US$5 million per annum (except for depreciation and amortization in accordance with GAAP),

20. approval of a Sharp Annual Budget, subject to the requirement that such approval not be withheld in the circumstances described above under “Reporting”, and approval of any annual budget that is not a Sharp Annual Budget,

21. transactions or arrangements that would reasonably be expected to transfer value from Four Seasons to one or more of its shareholders or their affiliates (other than those transactions or arrangements described herein), and

22. canceling, terminating or materially amending insurance coverage.

Sale of Shares:	Approval of the Material Decision listed in item 21 (and if there is any ambiguity whether a particular transaction or arrangement falls within that item, the ambiguity shall be resolved in favor of it doing so) would require approval by the requisite majority disregarding votes cast by directors nominated by shareholders that have (or whose affiliates have) an interest in that transaction or arrangement. Any amendment or modification of the unanimous shareholders agreement would require approval by each of Kingdom, Cascade, and Sharp/Triples. None of the Lead Investors could dispose of any of its interest in Four Seasons, directly or indirectly, (other than to a person who controls, was controlled by, or was under common control and economic ownership with, the Lead Investor) until after the second anniversary of the closing of the Transaction. Any direct or indirect disposition of shares of Four Seasons by Mr. Sharp/Triples (other than to a person who controlled, was controlled by, or was under common control and economic ownership with, Mr. Sharp/Triples) would be subject to an equal right of first offer (which could be accepted only in respect of all of the shares offered) in favour of Kingdom and Cascade for a value determined by a valuator mutually agreed upon by Mr. Sharp/Triples, Kingdom and Cascade that reflected, among other things, the potential of the “Four Seasons” brand and the long-term prospects of the enterprise but without regard to any control premium that might be ascribed in relation to such purchase.⁴
	Any direct or indirect disposition of shares of Four Seasons by the Lead Investors (other than (a) to a person who controlled, was controlled by, or was under common control and economic ownership with, the Lead Investor, or (b) from a Kingdom Trust company to HRH or from HRH to a Kingdom Trust company) would be subject to a right of first offer in favour of the other Lead Investors and Mr. Sharp/Triple’s, pro rata in accordance with their equity interests. If the shares subject to the right of first offer were not all acquired by the other Lead Investors and Mr. Sharp/Triples, they could be sold (subject to “tag-along rights” if Kingdom or Cascade or a related entity had initiated the sale process) to a “Qualified Person”, being a person that (i) was not, and was not an affiliate of, a competitor of Four Seasons, (ii) had adequate financial capacity to perform the obligations of a shareholder under the unanimous shareholders agreeme nt and agreed to be bound by such agreement, (iii) was not of ill repute, and (iv) was not in any other manner a person with whom the other Lead Investors and Mr. Sharp/Triples, as reasonable and prudent business persons owning a significant investment in Four Seasons, would not wish to associate in that capacity.

Dispute Resolution:	Final arbitration under the Rules of Arbitration of the International Chamber of Commerce after a 60-day period of good faith negotiation.

_________________________

⁴ The process for selecting a valuator and the parameters to be taken into account by the valuator would be further refined in formal documentation.

EX-99.5 6 cascade-13dex995_1106.htm

EXHIBIT 99.5

CONFIDENTIALITY LETTER AGREEMENT

[CASCADE INVESTMENT L.L.C. LETTERHEAD]

June 2, 2006

Private & Confidential

Four Seasons Hotels Inc.

1165 Leslie Street

Toronto, Ontario

Canada M3C 2K8

Attention: Randolph Weisz, Executive Vice-President and General Counsel

Dear Sirs,

We have expressed to Four Seasons Hotels Inc. (“you” or the “Company”) an interest in exploring the possibility of pursuing a transaction acceptable to the Board of Directors of the Company (the “Transaction”) pursuant to which we, as well as a small number of other long-term investors, might acquire all of the outstanding Limited Voting Shares and Multiple Voting Shares of the Company to assist in the orderly transition of the long-term ownership of the Company and the realization by the shareholders of the Company of an appropriate value for their investments.

To assist us in evaluating, and possibly negotiating and pursuing, the Transaction (the “Specified Purpose”) we have requested that the Company provide us certain information that is not generally known to the public. Much of that information is commercially sensitive and proprietary, and improper use of that information could result in significant detriment to the Company.

In this context, and in consideration of the Company engaging in discussions concerning the Transaction and making information available to us (and other consideration, the receipt and sufficiency of which is acknowledged), we and the Company agree to be bound by the terms of this letter agreement.

1.	Information

For the purposes of this letter agreement,

•

all information concerning or relating to the Company, its affiliates and associates that is furnished to us or our directors, officers, employees, investment managers listed on the accompanying schedule, agents or advisors (collectively, “Representatives”) by or on behalf of the Company,

•

analyses, compilations, summaries or other documents prepared by us or our Representatives containing or based upon any such information (collectively, “Derivative Information”),

•

copies of any of the foregoing, and

•

the existence of this agreement and its contents, and the possibility of the Transaction, its terms and the content of all discussions, investigations and negotiations in connection with the Transaction (collectively, “Transaction Information”),

is referred to as the “Information”, regardless of its form or medium (oral, written, stored in computers, machine readable, electronic or other).

2.	Confidentiality and Non-Disclosure

Except to the extent expressly provided in any written agreement giving effect to the Transaction, the Information (other than analyses prepared by us and our Representatives, and only to the extent that those analyses do not contain Information provided by or on behalf of the Company) shall be, and shall remain at all times, the property of the Company.

Subject to Clause 3, the Information shall be kept confidential by us and our Representatives and shall not, without the prior written consent of the Company:

•

be disclosed by us or our Representatives in whole or in part, or

•

be used by us or our Representatives, directly or indirectly,

other than for the Specified Purpose (and then only to the extent necessary for that purpose).

We shall ensure that any other persons (which shall be given its broadest meaning) to whom the Information is disclosed by us or our Representatives as permitted by this letter agreement are aware of the confidentiality of the Information and are also bound by the same obligation of confidence as we are with respect to the Information for the benefit of the Company.

We will make Information available only to those of our Representatives who need to have access to the Information for the Specified Purpose. We acknowledge that, without limitation, we shall not make Information available to, or communicate about a Transaction with, any possible sources of financing for or other possible parties to a Transaction (including other possible long-term investors in a Transaction) without the prior written consent of the Company, in its sole discretion.

We shall:

•

maintain a list of our Representatives to whom the Information has been delivered or disclosed,

•

be responsible for any breach of these terms by any of our Representatives,

•

make all reasonable, necessary or appropriate efforts to safeguard the Information from disclosure other than as permitted by this letter agreement,

•

not copy or store any Information without the prior written consent of the Company (other than by standard electronic back-up system and except for such copies and storage as may reasonably be required internally by us or our Representatives in connection with our consideration and evaluation of a Transaction), and

•

in the event of any breach of this letter agreement or any disclosure of any Information by us or any of our Representatives other than as permitted by this letter agreement (accidentally, inadvertently or otherwise) notify the Company (first orally and then in writing) of the nature of the breach or disclosure promptly upon our discovery of the breach or disclosure.

We understand that only the directors and certain employees of the Company and certain of its Representatives currently are aware of this letter agreement or the possibility of a Transaction. Without the prior written consent of the Company which shall not be unreasonably withheld, neither we nor any of our Representatives will approach, correspond with, talk to or contact in any other manner any Representative, creditor, shareholder, customer or supplier of the Company or its affiliates (other than the Chairman and Chief Executive Officer, the President Worldwide Business Operations, the Executive Vice-President and General Counsel and the Executive Vice-President and Chief Financial Officer of the Company or Jonathan Lampe of Goodmans LLP, David Katz of Wachtel], Lipton, Rosen & Katz or Jack Curtin, Jack Levy or Richard Weissman of Goldman Sachs) concerning this agreement, any Transaction or the fact that this letter agreement exists or that a Transaction is being considered.

3.	Excluded Information

The terms of this letter agreement shall not apply to any Information that:

•

is or becomes generally available to the public other than as a result of a disclosure by us or our Representatives,

•

becomes available to us or our Representatives on a non-confidential basis from a source other than the Company or its Representatives, provided that such source is not known to us or our Representatives to be bound by a confidentiality agreement or to be otherwise prohibited from transmitting the Information by a contractual, legal or fiduciary obligation,

•

was known to us or our Representatives prior to disclosure to us by the Company or its Representatives and was not known to us or our Representatives to be subject to a contractual, legal or fiduciary obligation for the benefit of another party,

•

the Company has consented in writing to exclude from this letter agreement prior to such disclosure, or

•

is required to be disclosed by applicable law, regulation, judicial order, legal process or the by-laws, rules or published policies of any securities regulator or stock exchange having jurisdiction (collectively, “Applicable Disclosure Requirements”).

If we or any of our Representatives are required under Applicable Disclosure Requirements to disclose any of the Information, we will, so long as we are not legally prohibited from doing so, provide the Company with prompt written notice so that the Company may seek a protective order or other appropriate remedy. We will co-operate with the Company at the Company’s expense to obtain such a protective order or other remedy. If a protective order or other remedy is not or cannot be obtained, we and our Representatives will furnish only that portion of the Information we have been advised by our external counsel is required by the Applicable Disclosure Requirements and will exercise all commercially reasonable efforts to obtain reliable assurances that confidential treatment will be afforded the Information.

4.	Return or Destruction of Information

If either of us determines that it does not wish to pursue the Transaction, it will promptly notify the other. In those circumstances, or if the Transaction does not otherwise proceed and the Company (in its sole discretion) so requests in writing, we will promptly (and in any event within ten business days) deliver to the Company all Information (other than that in oral form) in our possession or that of our Representatives, or ensure that all such Information (other than that in oral form) and all electronic media through which the Information has been stored shall be permanently destroyed or erased. We shall confirm in a certificate delivered to the Company and signed by one of our senior officers (who confirms his or her authorization to do so) that all such Information has been so returned, destroyed or erased.

5.	Securities Legislation

As securities legislation generally prohibits any person who has received material non-public information about a public company from purchasing or selling securities of the company or communicating any nonpublic material information to another person, we will ensure that adequate precautions are taken to ensure that neither we nor our Representatives engage in such purchases or sales or such communication.

6.	No Representations and Warranties

Nothing in this letter agreement obligates the Company or any of its Representatives to make any particular disclosure, although we understand that the Company intends to use its reasonable efforts to provide Information to us for the appropriate consideration and evaluation of the Transaction. Although we understand that the Company will endeavour to include in the Information provided by it those materials that it believes to be reliable and

relevant, neither the Company nor any of its Representatives makes any representation or warranty as to the accuracy or ‘completeness of the Information provided by it, except as otherwise may be provided in specific representations and warranties in another definitive agreement entered into in connection with a Transaction. None of the Company or any of its Representatives shall have any liability to us, any of our Representatives or any other person as a result of the use of the Information, except to the extent provided in such a definitive agreement.

7.	Standstill

Unless expressly requested to do so in writing by the Board of Directors of the Company, during the period beginning on the date of this letter agreement and ending twelve (12) months after the date of this letter agreement (the “Restricted Period”), none of us or any of our subsidiaries (which shall include entities that we control, whether in corporate or non-corporate form) will (individually or with others, directly or indirectly):

•

acquire, offer to acquire or agree to acquire (other than pursuant to an agreement disclosed to the Company in writing before the date of this letter agreement) any securities or rights to acquire securities of the Company that would result in us (alone or together with any joint actors) beneficially owning and/or having the right to exercise direction or control over securities that, in the aggregate, represent 20% or more of the votes that may be cast by shareholders or the equity of the Company,

•

acquire, offer to acquire or agree to acquire any material portion of the assets of the Company or any of its subsidiaries,

•

make any solicitation of proxies to vote, or seek to advise or otherwise influence any person with respect to the voting of any securities of, the Company,

•

make any proposal for, or offer of, (with or without conditions) an extraordinary transaction involving the Company or any of its subsidiaries or their respective securities or assets,

•

engage in any discussions or enter into any agreements, commitments or understandings with any person (other than our Representatives and persons who, with the prior written consent of the Company, may also be long-term investors or may provide financing to us in connection with a Transaction and who have agreed to be bound by the provisions of this letter relating to the confidentiality and use of Information) related to any acquisition of securities or any material portion of the assets of the Company or any of its subsidiaries,

•

otherwise seek to influence or control the Board of Directors, management or policies of the Company or any of its subsidiaries ,

•

seek any modification to, or waiver of, section 7 of this letter agreement,

•

except as required by applicable law, make any public announcement or disclosure (except to our or its Representatives or otherwise as expressly permitted pursuant to this letter agreement) of any intention, plan or arrangement with respect to any of the foregoing,

•

take any initiative with respect to the Company or any of its subsidiaries that reasonably would be expected to require the Company or its subsidiaries to make a public announcement, or

•

assist, advise or encourage any person in doing any of the foregoing (including by providing or arranging any financing).

Notwithstanding anything to the contrary contained in this letter agreement, if at any time a third party that is at arm’s length to us and with whom we are not acting jointly or in concert: (a) commences (for the purposes of Rule 14d-2 under the Securities Exchange Act of 1934) a tender offer or exchange offer for at least 50% of the outstanding capital stock of the Company; (b) publicly announces the commencement of a proxy contest with respect to the election of any directors of the Company; or (c) enters into a definitive agreement with the Company contemplating the acquisition (by way of merger, tender offer or otherwise) of at least 50% of the outstanding capital stock of the Company or all or any material portion of the Company’s assets, then (in any of such cases) the restrictions set forth above shall immediately terminate and cease to be of any further force or effect. Additionally, nothing in section 7 of this l etter agreement shall preclude us from making a proposal to the Company relating to

our acquisition of (or of an interest in) a hotel or resort that is managed (or that we would propose be managed) by the Company or its subsidiaries or limit any rights that we may have in respect of any hotel or resort in which we have invested that is managed by the Company or its subsidiaries.

8.	Non-Solicitation

During the Restricted Period, none of us or our Representatives will (directly or indirectly) without the prior written authorization of the Company solicit the employment of or employ any individual who is employed or engaged by the Company or any of its affiliates and who is identified as a result of our evaluation of (or otherwise in connection with) the Transaction. This restriction shall not apply to the extent the employment of that individual was terminated before any solicitation by us or our Representatives or the solicitation or employment was the result of:

•

solicitation directed at the public in publications available to the public in general and without the objective of soliciting an individual identified as a result of access to Information or our participation in the Specified Purpose, or

•

a solicitation by one of our Representatives who did not become aware of the individual as a result of access to Information or our or their participation in the Specified Purpose.

9.	Indemnity

We shall indemnify and hold harmless the Company and its Representatives from any damages, loss, costs or liabilities (including reasonable legal fees and the costs of enforcing this indemnity) actually incurred by them or arising out of or resulting from any breach of this letter agreement by us or any of our Representatives.

10.

Remedies

We acknowledge that the Company would not have an adequate remedy at law and would be irreparably harmed if any of the terms of this letter agreement were not abided by. Accordingly, the Company shall be entitled to injunctive relief to prevent breaches of these terms and to specifically enforce these terms, in addition to any other remedy to which it may be entitled, and need not demonstrate irreparable harm, deposit any security or post any bond as a condition to any such remedy.

11.

Notices

Notices authorized or required by this agreement to be given to us shall be delivered or transmitted to Cascade Investment, L.L.C., Attn: Michael Larson. Notices authorized or required by this agreement to be given to the Company shall be delivered or transmitted to Four Seasons Hotels Inc., 1165 Leslie Street, Toronto, Ontario, M3C 2K8, attention: Executive Vice-President and General Counsel, with a copy to Goodmans LLP, 250 Yonge Street, Suite 2400, Toronto, Ontario, M5B 2M6, attention: Jonathan Lampe. Any such notice shall be deemed delivered and received on the day it is delivered or transmitted, provided that it is delivered or transmitted on a business day before 5:00 p.m. (local time in the place of delivery or receipt). If a notice is delivered after that time or on a day that is not a business day in the place of delivery or receipt, the notice shall be deemed to have been given and received on the next business day in the place in which it is delivered or received. We and the Company may, from time to time, change our respective addresses for notice by giving a notice to the other in accordance with the provisions of this clause.

12.

Privileged Information

Neither we nor the Company intends that the provision of any Information shall be deemed to waive or in any manner diminish any privilege or protection applicable to that Information. We shall not claim or contend that the Company has waived any privilege or other protection by providing Information pursuant to this letter agreement or any definitive agreement relating to a Transaction.

13.

General

This letter agreement constitutes the entire agreement between us with respect to its subject matter and supersedes any prior understandings or agreements with respect to that subject matter. There are no representations, warranties, terms, conditions, undertakings or collateral agreements (express, implied or statutory) between us, except as expressly provided in this letter agreement.

This letter agreement will enure to the benefit of, and be binding upon, our respective successors and assigns, provided that it may not be assigned by either of us without the prior written consent of the other.

Except as specifically provided in another definitive, written agreement, this letter agreement will survive its execution, the implementation of a Transaction and any termination of the process relating to a Transaction without completion of a Transaction until the second anniversary of the date of this letter agreement, at which time it shall terminate and be of no further force or effect.

Except as specifically provided in this letter agreement or another definitive, written agreement relating to the Transaction, neither of us will be under any legal obligation or have liability to the other with respect to a Transaction. Without limitation, the Company and its Representatives may conduct a process (which we understand will include the provision of Information to, and discussion with, other persons regarding a Transaction) that may or may not result in a Transaction with us in such a manner as the Company, in its sole discretion, may determine.

No failure or delay by the Company in exercising any right, power or privilege under this letter agreement will operate as a waiver thereof, and no single or partial exercise thereof will preclude any other or future exercise of any right, power or privilege under this letter agreement.

Each of us and the Company shall bear its own costs of and incidental to the consideration and documentation of a Transaction.

This letter agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware. Each of us and the Company irrevocably attorns and submits to the non-exclusive jurisdiction of the courts located in Toronto, Ontario with respect to any matter arising under this agreement.

This agreement may be executed by facsimile and/or in counterparts and any such execution shall be a valid and binding execution hereof.

* * *

Please confirm your agreement with the foregoing by signing and returning the attached acknowledgment copy of this letter. Delivery of an executed copy of this letter by electronic transmission will be as effective as the delivery of a manually executed copy of this letter by either of us.

Cascade Investment, L.L.C.

By:

Authorized Signatory

Confirmed and agreed effective June

, 2006.

FOUR SEASONS HOTELS INC.

By:

Authorized Signatory

By:

Authorized Signatory

-----END PRIVACY-ENHANCED MESSAGE-----

List of each Co-Trustee of the Bill & Melinda Gates Foundation.

List of each executive officer, director or person controlling Cascade Investment, L.L.C.

Proposal Letter

Funding and Cooperation Agreement

Confidentiality Letter Agreement