<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Starwood Lodging Trust
Starwood Lodging Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
[STARWOOD LODGING LOGO]
STARWOOD LODGING TRUST
--------------------------------
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Starwood Lodging Trust:
Notice is hereby given that the 1995 Annual Meeting of Shareholders of
Starwood Lodging Trust, a Maryland real estate investment trust (the "Trust"),
will be held at the Doral Inn, 541 Lexington Avenue, New York, New York, on
December 7, 1995 at 10:00, a.m. local time, for the following purposes:
1. To elect two Trustees to the Board of Trustees of the Trust.
2. To consider and vote upon the approval of the 1995 Share Option Plan of
the Trust.
3. To transact such other business as may properly come before the meeting.
Only holders of record of Trust Shares at the close of business on October
30, 1995 are entitled to receive notice of, and to vote at, the 1995 Annual
Meeting or at any adjournment or postponement thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND, YOU ARE URGED TO READ THE
ACCOMPANYING JOINT PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, AND YOUR PROMPTNESS
WILL ASSIST US IN AVOIDING ADDITIONAL SOLICITATION COSTS. IF YOU RECEIVE MORE
THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR AT
DIFFERENT ADDRESSES, EACH CARD SHOULD BE SIGNED AND RETURNED.
By Order of the Board of Trustees
Sherwin L. Samuels
Secretary
November , 1995
Los Angeles, California
<PAGE> 3
[STARWOOD LODGING LOGO]
STARWOOD LODGING CORPORATION
------------------------
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Starwood Lodging Corporation:
Notice is hereby given that the 1995 Annual Meeting of Stockholders of
Starwood Lodging Corporation, a Maryland corporation (the "Corporation"), will
be held at the Doral Inn, 541 Lexington Avenue, New York, New York, on December
7, 1995 at 10:30 a.m., local time, for the following purposes:
1. To elect four directors to the Board of Directors of the Corporation.
2. To consider and vote upon the approval of the 1995 Share Option Plan of
the Corporation.
3. To transact such other business as may properly come before the meeting.
Only holders of record of Corporation Shares at the close of business on
October 30, 1995 are entitled to receive notice of, and to vote at, the 1995
Annual Meeting or at any adjournment or postponement thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND, YOU ARE URGED TO READ THE
ACCOMPANYING JOINT PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, AND YOUR PROMPTNESS
WILL ASSIST US IN AVOIDING ADDITIONAL SOLICITATION COSTS. IF YOU RECEIVE MORE
THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR AT
DIFFERENT ADDRESSES, EACH CARD SHOULD BE SIGNED AND RETURNED.
By Order of the Board of Directors
Kevin E. Mallory
Executive Vice President
November , 1995
Los Angeles, California
<PAGE> 4
STARWOOD LODGING TRUST STARWOOD LODGING CORPORATION
11845 WEST OLYMPIC BOULEVARD 11845 WEST OLYMPIC BOULEVARD
SUITE 550 SUITE 550
LOS ANGELES, CALIFORNIA 90064 LOS ANGELES, CALIFORNIA 90064
------------------------
JOINT PROXY STATEMENT
------------------------
ANNUAL MEETINGS OF SHAREHOLDERS AND STOCKHOLDERS
TO BE HELD ON DECEMBER 7, 1995
This Joint Proxy Statement is being furnished to shareholders of Starwood
Lodging Trust, a Maryland real estate investment trust (the "Trust"), and
stockholders of Starwood Lodging Corporation, a Maryland corporation (the
"Corporation"), in connection with the solicitation of proxies by the Trust's
Board of Trustees (the "Board of Trustees") and the Corporation's Board of
Directors (the "Board of Directors") for use at the Trust's 1995 Annual Meeting
of Shareholders and at any and all adjournments or postponements thereof (the
"Trust Meeting") and the Corporation's 1995 Annual Meeting of Stockholders and
at any and all adjournments or postponements thereof (the "Corporation Meeting"
and, together with the Trust Meeting, the "Annual Meetings"), respectively, to
be held on December 7, 1995, at the times and place and for the purposes
specified in the accompanying Notices.
The shares of Beneficial Interest, par value $.01 per share, of the Trust
("Trust Shares") and the shares of Common Stock, par value $.01 per share, of
the Corporation ("Corporation Shares") are "paired" and may only be held and
transferred in units consisting of one Trust Share and one Corporation Share (a
"Paired Share").
This Joint Proxy Statement and the related form of proxy are first being
mailed to shareholders of the Trust and stockholders of the Corporation on or
about November , 1995.
THE DATE OF THIS JOINT PROXY STATEMENT IS NOVEMBER , 1995.
<PAGE> 5
INTRODUCTION AND VOTING RIGHTS
MATTERS TO BE CONSIDERED
The Trust Meeting. At the Trust Meeting, the shareholders of the Trust will
consider and vote upon (i) the election of two Trustees to the Board of
Trustees, (ii) the approval of the 1995 Share Option Plan of the Trust (the
"Trust Option Plan") and (iii) such other business as may properly come before
the Trust Meeting.
The Board of Trustees is not aware of any matter that will be presented at
the Trust Meeting other than as described above. If any other matter is
presented at the Trust Meeting, the persons named as proxies on the enclosed
proxy card will, in the absence of shareholder instructions to the contrary,
vote the Trust Shares for which such persons have voting authority in accordance
with their best judgment on such matter.
The Corporation Meeting. At the Corporation Meeting, the stockholders of
the Corporation will consider and vote upon (i) the election of four Directors
to the Board of Directors, (ii) the approval of the 1995 Share Option Plan of
the Corporation (the "Corporation Option Plan") and (iii) such other business as
may properly come before the Corporation Meeting.
The Board of Directors is not aware of any matter that will be presented at
the Corporation Meeting other than as described above. If any other matter is
presented at the Corporation Meeting the persons named as proxies on the
enclosed proxy card will, in the absence of stockholder instructions to the
contrary, vote the Corporation Shares for which such persons have voting
authority in accordance with their best judgment on such matter.
VOTING RIGHTS
The Trust. The Board of Trustees has fixed the close of business on October
30, 1995 as the record date (the "Trust Record Date") for determining the
shareholders entitled to notice of, and to vote at, the Trust Meeting. On the
Trust Record Date there were outstanding and entitled to vote Trust
Shares held of record by approximately persons. The Trust Shares are the only
outstanding class of voting securities of the Trust and each shareholder of the
Trust will be entitled to one vote for each Trust Share held of record by such
shareholder on the Trust Record Date on each matter that may be properly
submitted to a vote at the Trust Meeting. Shareholders of the Trust do not have
the right to cumulate votes in the election of Trustees.
A majority of the outstanding Trust Shares entitled to vote must be
present, either in person or by duly executed proxy, at the Trust Meeting in
order to constitute a quorum for the transaction of business. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum at the Trust Meeting.
As of the Trust Record Date, Trustees and officers of the Trust as a group
had the right to vote an aggregate of Trust Shares, representing
approximately % of the Trust Shares outstanding on such date. All such
Trustees and officers have indicated that they intend to vote all such shares
held by them in favor of the election of the nominees for Trustee named herein
and the approval of the Trust Option Plan.
The Corporation. The Board of Directors has fixed the close of business on
October 30, 1995 as the record date (the "Corporation Record Date") for
determining the stockholders entitled to notice of, and to vote at, the
Corporation Meeting. On the Corporation Record Date there were outstanding and
entitled to vote Corporation Shares held of record by approximately
persons. The Corporation Shares are the only outstanding class of voting
securities of the Corporation and each stockholder of the Corporation will be
entitled to one vote for each Corporation Share held of record by such
stockholder on the Corporation Record Date on each matter that may be properly
submitted to a vote at the Corporation Meeting. Stockholders of the Corporation
do not have the right to cumulate votes in the election of Directors.
A majority of the outstanding Corporation Shares entitled to vote must be
present, either in person or by duly executed proxy, at the Corporation Meeting
in order to constitute a quorum for the transaction of
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<PAGE> 6
business. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum at the Corporation Meeting.
As of the Corporation Record Date, Directors and officers of the
Corporation as a group had the right to vote an aggregate of
Corporation Shares, representing approximately % of the Corporation Shares
outstanding on such date. All such Directors and officers have indicated that
they intend to vote all such shares held by them in favor of the election of the
nominees for Director named herein and the approval of the Corporation Option
Plan.
PROXIES
The Trust. Each Trust Share represented at the Trust Meeting by a duly
executed proxy solicited by the Board of Trustees will, unless such proxy
previously has been revoked, be voted at the Trust Meeting in accordance with
the shareholder instructions specified thereon. If no instructions are
specified, such Trust Shares will be voted FOR the election of the nominees for
Trustee named herein and FOR the approval of the Trust Option Plan.
If a quorum is not present at the time the Trust Meeting is convened, or if
for any other reason the Board of Trustees believes that the Trust Meeting
should be adjourned or postponed, the Trust Meeting may be adjourned or
postponed with or without a vote of the shareholders. If the Board of Trustees
proposes to adjourn or postpone the Trust Meeting by a vote of the shareholders,
the persons named as proxies on the enclosed proxy card will vote all Trust
Shares for which such persons have voting authority in favor of such adjournment
or postponement.
A shareholder of the Trust may revoke a proxy at any time prior to exercise
of such proxy by (i) filing with the Secretary of the Trust an instrument of
revocation bearing a date later than the date of the proxy, (ii) duly executing
a subsequent proxy relating to the same Trust Shares and delivering such proxy
to the Secretary of the Trust, or (iii) attending the Trust Meeting and voting
in person (although attendance at the Trust Meeting will not in and of itself
constitute a revocation of a proxy). Any instrument of revocation should be sent
to Starwood Lodging Trust, 11845 West Olympic Blvd., Suite 550, Los Angeles,
California 90064.
The Corporation. Each Corporation Share represented by a duly executed
proxy solicited by the Board of Directors will, unless such proxy previously has
been revoked, be voted at the Corporation Meeting in accordance with the
stockholder instructions specified thereon. If no instructions are specified,
such Corporation Shares will be voted FOR the election of the nominees for
Director named herein and FOR the approval of the Corporation Option Plan.
If a quorum is not present at the time the Corporation Meeting is convened,
or if for any other reason the Board of Directors believes that the Corporation
Meeting should be adjourned or postponed, the Corporation Meeting may be
adjourned or postponed with or without a vote of the stockholders. If the Board
of Directors proposes to adjourn or postpone the Corporation Meeting by a vote
of the stockholders, the persons named as proxies on the enclosed proxy card
will vote all Corporation Shares for which those persons have voting authority
in favor of such adjournment or postponement.
A stockholder of the Corporation may revoke a proxy at any time prior to
exercise of such proxy by (i) filing with the Secretary of the Corporation an
instrument of revocation bearing a date later than the date of the proxy, (ii)
duly executing a subsequent proxy relating to the same Corporation Shares and
delivering such proxy to the Secretary of the Corporation, or (iii) attending
the Corporation Meeting and voting in person (although attendance at the
Corporation Meeting will not in and of itself constitute a revocation of a
proxy). Any instrument of revocation should be sent to: Starwood Lodging
Corporation, 11845 West Olympic Blvd., Suite 560, Los Angeles, California 90064.
SOLICITATION OF PROXIES
The expenses of this solicitation of proxies by the Board of Trustees and
the Board of Directors, including the costs of preparing and mailing this Joint
Proxy Statement, will be borne by the Trust and the Corporation.
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<PAGE> 7
In addition to solicitation by use of the mails, proxies may be solicited in
person or by telephone, telegram or other appropriate means of communication by
Trustees, Directors, officers and employees of the Trust or the Corporation.
Such individuals will receive no additional compensation for, but may be
reimbursed for their out-of-pocket expenses incurred in connection with, such
solicitation. The Trust and the Corporation have engaged the services of D.F.
King & Co., Inc. to solicit proxies and to assist in the distribution of proxy
materials for a fee of $6,000, plus reimbursement of reasonable out-of-pocket
expenses. The Trust and the Corporation will reimburse persons holding Paired
Shares in their names or the names of their nominees but not owning such shares
beneficially (such as brokerage houses, banks and other fiduciaries) for
out-of-pocket expenses incurred in forwarding soliciting materials to the
beneficial owners of such shares. All of the foregoing fees and expenses will be
paid or reimbursed in equal parts by the Trust and the Corporation.
ELECTION OF TRUSTEES OF THE TRUST
The Board of Trustees is divided into three classes. The terms of two
Trustees expire at the Trust Meeting, the terms of two Trustees expire at the
1996 Annual Meeting and the terms of three Trustees expire at the 1997 Annual
Meeting. At the Trust Meeting, two Trustees will be elected to the Board of
Trustees for a term expiring at the 1998 Annual Meeting.
NOMINEES FOR TRUSTEES
The following sets forth information as to each of the Board's nominees for
election as Trustee at the Trust Meeting. If, for any reason, any of the Board's
nominees listed below should cease to be a candidate for election, it is
intended that all properly signed proxies in the form enclosed will be voted for
a substitute nominee designated by the Board of Trustees. Each of the nominees
listed below has consented to serve as a Trustee, and the Board of Trustees has
no reason to believe that any nominee will be unwilling or unable to serve, if
elected.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE TRUSTEE SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Madison F. Grose (42) Executive Vice President and General Counsel of December 1994
Starwood Capital Group, L.P. (and its
predecessor entity) since July 1992. From
November 1983 through June 1992, he was a
partner in the law firm of Pircher, Nichols &
Meeks.
William E. Simms (51) President of the Reinsurance Division of August 1995
Transamerica Occidental Life Insurance Company
and a member of its board of directors. Over the
past 24 years, he has held various other
management positions with that company. He is
active in civic organizations, such as the
Charlotte Urban League, the Charlotte
Mecklenburg Hospital Authority, Queens College,
the Mint Museum, the Museum of the New South and
the Arts and Science Council, and is a part
owner of the new Carolina Panthers National
Football League team. Mr. Simms is a director of
Nations Bank of North and South Carolina.
</TABLE>
The Board of Trustees of the Trust recommends that shareholders of the
Trust vote FOR the election of such nominees.
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<PAGE> 8
TRUSTEES CONTINUING IN OFFICE
The following sets forth information as to each of the incumbent Trustees
on the Board of Trustees with terms expiring at either the 1996 Annual Meeting
or the 1997 Annual Meeting.
TRUSTEES WHOSE TERMS EXPIRE AT THE 1996 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE TRUSTEE SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Jeffrey C. Lapin (38) President and Chief Operating Officer of the September 1992
Trust. Mr. Lapin was the President and Chief
Executive Officer of the Trust from May 1991 to
December 1994 and has been a Trustee since
September 1992. Prior to that time, he was Vice
President (from January 1988) and Secretary
(from September 1986) of the Trust. Prior to
1986 Mr. Lapin was a real estate attorney at
Mitchell, Silberberg & Knupp in Los Angeles. Mr.
Lapin is a director of THQ, Inc., a licensee of
Nintendo products. Mr. Lapin has over ten years
of experience in the hotel REIT industry.
Stephen R. Quazzo (35) President since April 1991 of Equity August 1995
Institutional Investors, Inc. a subsidiary of
Equity Group Investments, Inc., a Chicago based
holding company controlled by Samuel Zell. Prior
to that time, Mr. Quazzo was a Vice President of
Goldman, Sachs & Co., responsible for the firm's
real estate investment banking activities in the
Midwest. Mr. Quazzo is a member of the Urban
Land Institute.
</TABLE>
TRUSTEES WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE TRUSTEE SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Bruce W. Duncan (44) President since October, 1994 of Blakely August 1995
Capital, Inc., a private firm focusing on
investments in real estate and
telecommunications. From 1992 to October 1994,
Mr. Duncan was President and Co-Chief Executive
Officer of JMB Institutional Realty Corporation
and from 1984 to 1991 Executive Vice President
of JMB Realty Corporation. Mr. Duncan holds an
MBA from the University of Chicago. Mr. Duncan
is on the Board of Directors of Cousins
Properties Inc., is on the Board of Directors
Northwestern Memorial Management Corp., a for
profit subsidiary of Northwestern Memorial
Hospital and is on the Board of Trustees of
Kenyon College.
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE TRUSTEE SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Daniel H. Stern (34) Co-founder and President of Ziff Brothers August 1995
Investments, L.L.C., a diversified New York
based investment management firm. Prior to
co-founding Ziff Brothers Investments in
December 1992, Mr. Stern was the Co- Managing
Director of William A.M. Burden & Co., a private
investment management firm where he was re-
sponsible for asset allocation and investment
policy. Mr. Stern is a member of the Board of
Directors of Commodore Media, Inc.
Barry S. Sternlicht (34) Chairman and Chief Executive Officer of the December 1994
Trust. He was founder of Starwood Capital Group,
L.P. (and co-founder of its predecessor entity
in September 1991) and has been the President
and CEO of Starwood Capital Group, L.P. since
its formation. Prior to forming Starwood
Capital, he was Vice President and then Senior
Vice President (from 1989 to 1991) of JMB Realty
Corporation, a real estate investment firm. Mr.
Sternlicht is currently a director of the
Corporation and a Trustee of each of Equity
Residential Properties Trust, a multi-family
REIT, and Angeles Participating Mortgage Trust,
a REIT.
</TABLE>
VOTES REQUIRED
Each shareholder of the Trust (or such shareholder's proxy) entitled to
vote upon the election of Trustees shall be entitled to cast one vote for each
Trust Share held of record on the Trust Record Date and Trustees shall be
elected by a plurality of the votes cast. Consequently, votes that are withheld
in the election of Trustees and broker non-votes will not affect the outcome of
the election of Trustees of the Trust.
ELECTION OF DIRECTORS OF THE CORPORATION
The Board is Directors is divided into three classes. The terms of four
Directors expire at the Corporation Meeting, the terms of three Directors expire
at the 1996 Annual Meeting and the terms of two Directors expire at the 1997
Annual Meeting. At the Corporation Meeting, four Directors will be elected to
the Board of Directors for a term expiring at the 1998 Annual Meeting. As
described below, because three of the nominees named herein have received Gaming
Approval, they would, if elected, continue to serve as Directors. The fourth
nominee named herein would take office upon receipt of Gaming Approval.
Because a subsidiary of the Corporation operates gaming assets and
operations in the State of Nevada ("Gaming Assets"), Directors of the
Corporation must be licensed by and receive regulatory approvals of Nevada state
and county liquor and gaming regulatory authorities ("Gaming Approvals") prior
to taking office as Directors. The Directors of the Corporation who have
received Gaming Approval (currently Messrs. Earle F. Jones, Bruce M. Ford and
Graeme W. Henderson) currently constitute the Board of Directors. Six additional
persons named below have been elected to the Board of Directors to take office
upon receipt of Gaming Approval. Pending receipt of Gaming Approval, SLC
Operating Limited Partnership (the "Operating Partnership") is being managed by
a management committee (the "Management Committee") consisting of such Directors
who have received Gaming Approval and such persons who have been elected to the
Board to take office upon receipt of Gaming Approval. While awaiting Gaming
Approval, the Corporation's existing management and Board of Directors will be
responsible for the operation and control of the Gaming Assets, and the
Management Committee will be prohibited from any influence or control of the
Gaming Assets.
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<PAGE> 10
NOMINEES FOR DIRECTOR
The following sets forth information as to each of the Board's nominees for
election as Director at the Corporation Meeting. If, for any reason, any of the
Board's nominees listed below should cease to be a candidate for election, it is
intended that all properly signed proxies in the form enclosed will be voted for
a substitute nominee designated by the Board of Directors. Each of the nominees
listed below has consented to serve as a Director, and the Board of Directors
has no reason to believe that any nominee will be unwilling or unable to serve,
if elected.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Bruce M. Ford (56) President and Managing Partner of F.K.B. 19
Management Corporation, a restaurant management
company, since 1988 and President of Ford
Management Corporation, a hotel/motel management
and development company, since June 1988. Prior
to that time, Mr. Ford was Senior Vice President
of Operations of Ramada Inns.
Earle F. Jones (68) Director since 1985 and Chairman of the Board of 1985
Directors of the Corporation since February
1989. Co-Chairman of MMI Hotel Group, a hotel
company since 1988. From 1967 to 1968, Mr. Jones
was President of the International Association
of Holiday Inns and served two terms as a
director. Mr. Jones is a Trustee and Chairman of
Communications Improvement Trust, whose benefi-
ciaries are public broadcasting and Tougaloo
College Trust, a member of the Board of Trustees
for Millsaps College and the Catholic Foundation
and Co-Chairman of the Mississippi Olympic
Committee.
Graeme W. Henderson (62) Chairman of the Trust from July 1989 to Decem- 19
ber 1994 and Trustee of the Trust from September
1986 to December 1994. He has been an
independent financial consultant since January
1990. Prior to January 1990, Mr. Henderson has
been President of Henderson Consulting, Inc., a
private financial consulting firm. Mr. Henderson
has been a President of Capstan, Inc. (formerly
Seymour, Inc.), a manufacturer of machine tool
controls, since 1982. Mr. Henderson is currently
a director of Capital Southwest Corporation.
Daniel W. Yih (37) Chief Financial Officer of Midway Airlines August 1995
Corporation and a general partner of Chilmark
Partners, L.P. since June 1995. Mr. Yih had
served as President of Merco-Savory, Inc., a
manufacturer of food preparation equipment (from
March 1995 to June 1995) and as a senior
executive of Welbilt Corporation (from September
1993 to March 1995). Prior to that time, Mr. Yih
served as an associate of Kohlberg & Co. Mr. Yih
is also a member of the Board of Directors of
Scott Sports Group, Inc.
</TABLE>
The Board of Directors of the Corporation recommends that stockholders of
the Corporation vote FOR the election of such nominees.
As described above, Messrs. Jones, Ford and Henderson have received Gaming
approval and, if elected to the Board at the Corporation Meeting, will continue
as Directors of the Corporation. Mr. Yih has not received Gaming Approval.
Messrs. Ford and Henderson have indicated that upon the receipt of Gaming
Approval by
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<PAGE> 11
the six Directors who have not yet received Gaming Approval, they intend to
resign as Directors. At such time the Board of Directors intends to fix the size
of the Board at seven.
DIRECTORS CONTINUING IN OFFICE
The following sets forth information as to each of the persons who have
been elected to the Board of Directors (each of whom serves on the Management
Committee of the Operating Partnership) for terms expiring at either the 1996
Annual Meeting or the 1997 Annual Meeting, each such person to take office as a
Director upon receipt of Gaming Approval.
DIRECTORS WHOSE TERMS EXPIRE AT THE 1996 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Jean-Marc Chapus (36) Managing Director since January 1994 and August 1995
Principal since December 1991 of Crescent
Capital Company and has primary responsibility
for the firm's private lending and private
placement activities. He is also a Managing
Director of the High Yield Bond Group of Trust
Company of the West since March 1995. From 1986
to 1991, Mr. Chapus served as First Vice
President at Drexel Burnham Lambert
Incorporated. From 1982 to 1984, Mr. Chapus was
a member of the mergers and acquisitions
department at Lehman Brothers Kuhn Loeb Incor-
porated.
Steven R. Goldman (33) Senior Vice President the Corporation since December 1994
March 1995. Mr. Goldman was a Vice President of
Starwood Capital Group, L.P., specializing in
hotel acquisitions and hotel asset management,
from August 1993 to February 1995. From 1990 to
1993, he was Senior Development Manager of
Disney Development Company, the real estate
investment development and management division
of the Walt Disney Company. From 1986 to 1990,
Mr. Goldman was Director of Development of The
Hyatt Development Corporation.
Michael A. Leven (57) President and Chief Operating Officer of Holiday August 1995
Inn Worldwide since November 1990. Prior to that
time he was President of Days Inn (from 1985 to
1990), a senior executive, including President
and Chief Operating Officer, of Americana hotels
(from 1976 to 1985) and an executive at Dunfey
Family Hotels (1973 to 1976) and Sonesta hotels
(1961 to 1973). Mr. Leven is also a member of
the Board of Advisors of the American Red Cross.
</TABLE>
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<PAGE> 12
DIRECTORS WHOSE TERMS EXPIRE AT THE 1997 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DIRECTOR SINCE
- ------------------------- ------------------------------------------------ ---------------
<S> <C> <C>
Jonathan Eilian (27) Vice President and then Senior Vice President of August 1995
Starwood Capital Group, L.P. (and its
predecessor entity) since its formation in
September, 1991. Prior to that time he was
Acquisitions Associate for JMB Realty
Corporation, a real estate investment firm, and
for The Palmer Group, L.P., a private investment
firm specializing in corporate acquisitions. Mr.
Eilian received an MBA from the Wharton Graduate
School of Business in 1991.
Barry S. Sternlicht (34) Chairman and Chief Executive Officer of the December 1994
Trust. He was founder of Starwood Capital Group,
L.P. (and co- founder of its predecessor entity
in September 1991) and has been the President
and CEO of Starwood Capital Group, L.P. since
its formation. Prior to forming Starwood
Capital, he was Vice President and then Senior
Vice President (from 1989 to 1991) of JMB Realty
Corporation, a real estate investment firm. Mr.
Sternlicht is currently a Trustee of the Trust
and a Trustee of each of Equity Residential
Properties Trust, a multi-family REIT, and
Angeles Participating Mortgage Trust, a REIT.
</TABLE>
VOTES REQUIRED
Each stockholder of the Corporation (or such stockholder's proxy) entitled
to vote upon the election of Directors is entitled to cast one vote for each
Corporation Share held of record on the Corporation Record Date and Directors
shall be elected by a plurality of votes cast. Consequently, votes that are
withheld in the election of Directors and broker non-votes will not affect the
outcome of the election of Directors of the Corporation.
BOARD COMMITTEES
The Board of Trustees and the Board of Directors has each established
Executive, Audit, Compensation and Option Committees, the principal functions of
which are described below.
To the extent permitted by law, the Executive Committee is authorized to
exercise the power of the applicable Board with respect to the management of the
business and affairs of the Trust and the Corporation, as the case may be,
between meetings of the Board, except that the Executive Committee of the
Corporation may not declare dividends or distributions on stock, issue stock,
recommend to the stockholders any action which requires stockholder approval,
adopt, amend or repeal the Corporation's By-laws, or approve any merger or share
exchange which does not require shareholder approval. The Executive Committee of
the Board of Trustees is currently comprised of Messrs. Sternlicht, Lapin and
Grose and the Executive Committee of the Management Committee is currently
comprised of Messrs. Sternlicht, Goldman and Eilian.
The Audit Committee has the following powers, duties and functions: (i) to
select the firm of independent public accountants to audit the consolidated
financial statements of the Trust and of the Corporation and its subsidiaries,
subject to the approval of the applicable Board, (ii) to discuss with such
independent accountants the scope and results of their audit, (iii) to discuss
with such independent public accountants, and with management, the financial
accounting and reporting principles, policies and practices and the adequacy of
the accounting, financial and operating controls and (iv) to report to the
applicable Board with respect to the foregoing, at such times and in such manner
as such Board shall determine. The Audit
9
<PAGE> 13
Committee of the Board of Trustees is currently comprised of Messrs. Duncan,
Simms and Stern and the Audit Committee of the Board of Directors is currently
comprised of Messrs. Sternlicht, Jones and Chapus.
The Compensation Committee has the authority to make recommendations to the
applicable Board with respect to the salaries and other compensation to be paid
to the executive officers and administers the employee benefit plans. The
Compensation Committee of the Board of Trustees is currently comprised of
Messrs. Sternlicht, Grose and Simms and the Compensation Committee of the
Management Committee is currently comprised of Messrs. Sternlicht, Jones and
Chapus.
The Option Committee administers the option plans of the Trust or the
Corporation, as the case may be, and, if the Trust Option Plan and the
Corporation Option Plan are approved by shareholders of the Trust and
stockholders of the Corporation, the respective Option Committees of the Boards
of the Trust and the Corporation would administer those Plans. See "Approval of
Option Plans." The Option Committee of the Board of Trustees is currently
comprised of Messrs. Duncan, Quazzo and Stern and the Option Committee of the
Board of Directors is currently comprised of Messrs. Chapus, Jones and
Sternlicht.
During 1994, the Board of Trustees held meetings and the Board of
Directors held meetings. Because the Boards met frequently during 1994, the
Board Committees did not meet and the functions that would have been performed
by such Committees were performed by the entire Boards.
COMPENSATION OF TRUSTEES AND DIRECTORS
Each Trustee or Director who is not also an officer of the Trust or the
Corporation receives annual trustee's or director's fees of $6,000 (other than
directors of the Corporation who serve as such until Gaming Approval is
received, who will continue to receive annual director's fees of $12,000) and is
reimbursed for any out-of-pocket expenses incurred in attending meetings of the
Board of Trustees or the Board of Directors. Each Trustee and Director has
received options to purchase 6,000 Paired Shares and Trustees and Directors will
receive additional options to purchase 6,000 Paired Shares on June 30 of each
year, beginning June 30, 1996. See "Approval of Option Plans." The Chairman of
each Board receives an additional fee of $2,500 per year. In addition, each
non-officer Trustee or Director receives a fee of $750 for each meeting in which
he participates (or, in the case of telephonic meetings, $500) and a fee of $500
for each committee meeting in which he participates ($1,000 per meeting for
committee chairman).
APPROVAL OF OPTION PLANS
GENERAL
The Board of Trustees is proposing for approval by shareholders of the
Trust the Trust Option Plan and the Board of Directors is proposing for approval
by the stockholders of the Corporation the Corporation Option Plan. The Trust
Option Plan and the Corporation Option Plan (the "Option Plans") are separate
plans under which separate grants of options to purchase Paired Shares ("Paired
Options") may be granted. Reference is made to Exhibits A and B to this Joint
Proxy Statement for the complete text of each of the Option Plans, which are
summarized below.
The purposes of each Option Plan are (i) to align the interests of the
shareholders of the Trust or the stockholders of the Corporation, as the case
may be, and recipients of options under such Option Plan by increasing the
proprietary interest of such recipients in the growth and success of the Trust
and the Corporation and (ii) to advance the interests of the Trust and the
Corporation by attracting and retaining officers, key employees, consultants and
advisors, as well as qualified persons for service as Trustees or Directors, as
the case may be. Under each Option Plan, non-qualified stock options and
"incentive stock options" (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code")) may be granted.
Non-qualified Paired Options to purchase 6,000 Paired Shares were granted
to each Trustee and each Director on June 29, 1995 (subject to approval of the
Option Plans by the shareholders of the Trust and the stockholders of the
Corporation) and additional non-qualified Paired Options to purchase 6,000
Paired Shares will also be granted automatically to each Trustee or Director on
June 30 of each year (commencing in 1996)
10
<PAGE> 14
and on the date a person first becomes a Trustee or Director. In addition, on
June 29, 1995 additional non-qualified Paired Options to purchase Paired
Shares were granted to Trustees, Directors and officers and key employees of the
Trust and the Corporation. See "-- Paired Options Granted Under the Option
Plans." Trustees and approximately officers and other key employees of the
Trust are eligible to participate in the Trust Option Plan and
Directors and approximately officers and other key employees of the
Corporation are eligible to participate in the Corporation Option Plan.
The Board of Trustees recommends a vote FOR approval of the Trust Option
Plan and the Board of Directors recommends a vote FOR approval of the
Corporation Option Plan.
DESCRIPTION OF THE PLANS
Administration. Each Option Plan will be administered by a committee of the
applicable Board (the "Committee") consisting of two or more trustees or
directors who are not eligible to receive discretionary awards of options under
such Option Plan or any other plan of the Trust or the Corporation, as the case
may be, or any of its affiliates, and who are "outside directors" within the
meaning of Section 162(m) of the Code. The Committee for the Trust is currently
comprised of Messrs. Duncan, Quazzo and Stern and the Committee for the
Corporation is currently comprised of Messrs. Chapus, Jones and Sternlicht.
Section 162(m) of the Code generally limits to $1 million the amount that a
publicly held corporation is allowed each year to deduct for the compensation
paid to each of the corporation's chief executive officer and the corporation's
four most highly compensated executive officers other than the chief executive
officer. However, "qualified performance-based compensation" is not subject to
the $1 million deduction limit. To qualify as performance-based compensation,
the following requirements must be satisfied: (i) the performance goals are
determined by a committee consisting solely of two or more "outside directors",
(ii) the material terms under which the compensation is to be paid, including
the performance goals, are approved by a majority of the corporation's
stockholders, and (iii) the committee certifies that the applicable performance
goals were satisfied before payment of any performance-based compensation is
made. Each Committee consists solely of "outside directors" as defined for
purposes of section 162(m) of the Code. As a result, and based on certain
proposed regulations issued by the United States Department of the Treasury,
certain compensation under each Option Plan, such as that payable with respect
to options, is not expected to be subject to the $1 million deduction limit
under Section 162(m) of the Code.
Subject to the express provisions of the Option Plans, and except for
Paired Options automatically granted to Trustees or Directors, each respective
Committee will have the authority to select eligible officers, key employees,
consultants, advisers and Trustees or Directors (as the case may be) who will
receive Paired Options and determine all of the terms and conditions of each
grant. All grants will be evidenced by a written agreement containing such
provisions not inconsistent with the applicable Option Plan as the applicable
Committee shall approve. Each Committee will also have authority to establish
rules and regulations for administering the applicable Option Plan and to decide
questions of interpretation or application of any provision of such Option Plan.
Except with respect to grants to executive officers and persons whose
compensation is likely to be subject to the $1 million deduction limit under
Section 162(m) of the Code, each Committee may delegate some or all of its power
and authority to administer the applicable Option Plan to the Chief Executive
Officer, Chief Operating Officer or other executive officer of the Trust or the
Corporation, as the case may be.
Available Shares. Under each Option Plan, the number of Paired Shares
available for grants of Paired Options (other than incentive Paired Options)
shall (subject to adjustment in the event of a stock split, stock dividend,
recapitalization, reorganization, merger, spin-off or other similar event or
change in capitalization) be 1,573,000 plus eight percent (8%) of the sum of (i)
the number of Paired Shares which may be issued upon the exchange of limited
partnership units ("Units") of the Realty Partnership and the Operating
Partnership, to the extent such Units first become outstanding after August 17,
1995 and (ii) the number of Paired Shares which first become outstanding after
August 17, 1995 (other than by reason of (A) such exchange of Units, (B) the
issuance or delivery of Paired Shares pursuant to any employee benefit plan of
the Trust or the Corporation or (C) the issuance of Paired Shares which were
acquired and held by the Trust or
11
<PAGE> 15
the Corporation prior to their issuance), reduced by the aggregate number of
Paired Shares which become subject to outstanding Paired Options under the
Corporation Option Plan or under the Trust Option Plan.
Under each Option Plan, the number of Paired Shares available for grants of
incentive Paired Options shall be 1,573,000, reduced by the aggregate number of
Paired Shares which become subject to outstanding Paired Options under the
Corporation Option Plan or the Trust Option Plan, such number of Paired Shares
so available to be subject to adjustment in the event of a stock split, stock
dividend, recapitalization, reorganization, merger, spin-off or other similar
event or change in capitalization. To the extent required by Section 162(m) of
the Code and the rules and regulations thereunder, the maximum number of Paired
Shares with respect to which Paired Options may be granted during any calendar
year during any calendar year to any person is 500,000, subject to adjustment as
described above.
Effective Date, Termination and Amendment. If approved by shareholders of
the Trust, the Trust Option Plan will become effective as of June 29, 1995 and
if approved by stockholders of the Corporation, the Corporation Option Plan will
become effective as of June 29, 1995. Each Option Plan will terminate ten years
thereafter, unless terminated earlier by the applicable Board. The applicable
Board may amend the Option Plan at any time, subject to any requirement of
stockholder approval required by applicable law, rule or regulation and provided
that no amendment may be made without stockholder approval if such amendment
would, among other things, (i) increase the maximum number of Paired Shares
available under such Option Plan, (ii) reduce the minimum purchase price of a
Paired Share subject to a Paired Option granted under such Option Plan or (iii)
extend the term of such Option Plan.
Stock Options -- General. Each Committee will determine the conditions to
the exercisability of a Paired Option granted under the Option Plan which such
Committee administers. Upon exercise of a Paired Option, including an incentive
Paired Option, the purchase price may be paid in cash or by delivery of
previously owned Paired Shares. Certain terms of a Paired Option (including
certain terms relating to the exercisability of a Paired Option described below
under "Non-Qualified Paired Options" and "Incentive Paired Options") may be
modified in the agreement entered into in connection with the grant of such
Paired Options.
Non-Qualified Paired Options. The period for the exercise of a
non-qualified Paired Option will be determined by the applicable Committee. The
exercise price of a non-qualified Paired Option will not be less than the fair
market value of a Paired Share on the date of grant of such Paired Option.
In the event of termination of employment or service by reason of death or
disability, each non-qualified Paired Option will become fully exercisable for a
period of no more than one year after the date of such termination, but in no
event after the expiration of such Paired Option. In the event of a termination
of employment or service for "cause" (which is defined as embezzlement or
misappropriation of funds or other assets, other acts of dishonesty, significant
activities harmful to the reputation of the Corporation or the Trust, willful
refusal to perform or substantial disregard of the duties properly assigned to
the holder (other than as a result of disability), significant violation of any
statutory or common law duty of loyalty to the Corporation or the Trust or a
material breach by the holder of the holder's employment agreement, if any) each
non-qualified Paired Option will terminate on the date of such termination. In
the event of termination of employment for any other reason, each non-qualified
Paired Option will be exercisable to the extent that such Paired Option was
exercisable on the date of termination, and may thereafter be exercised for a
period of three months after the date of such termination but in no event after
the expiration of such Paired Option. If a holder dies during the one-year
period following termination of employment or service by reason of disability,
or if a holder dies during the three-month period following termination of
employment or service for any other reason other than disability or "cause",
each non-qualified Paired Option will be exercisable to the extent that such
Paired Option was exercisable on the date of the holder's death, and may
thereafter be exercised for a period of three months from the date of death, but
in no event after the expiration of such Paired Option.
Incentive Paired Options. No incentive Paired Option will be exercisable
more than ten years after its date of grant, unless the recipient of the
incentive Paired Option owns greater than ten percent of the voting power of all
shares of capital stock of the Trust and the Corporation, as the case may be (a
"ten percent holder"), in which case the Paired Option will be exercisable for
no more than five years after its date of grant.
12
<PAGE> 16
The exercise price of an incentive Paired Option will not be less than the fair
market value of the Paired Shares on the date of grant of such Paired Option,
unless the recipient of the incentive Paired Option is a ten percent holder, in
which case the exercise price will be the price required by the Code, currently
110% of fair market value.
In the event of a termination of employment by reason of death or permanent
and total disability (as defined in Section 22(e)(3) of the Code), incentive
Paired Options will become fully exercisable for a period of no more than one
year after such termination, but in no event after the expiration of the
incentive Paired Option. In the event of a termination of employment for
"cause", each incentive Paired Option will terminate on the date of such
termination. In the event of a termination of employment for any other reason,
each incentive Paired Option will be exercisable to the extent that such
incentive Paired Option was exercisable on the date of termination, and may
thereafter be exercised for a period of three months after such termination, but
in no event after the expiration of such incentive Paired Option. If the holder
of an incentive Paired Option dies during the one-year period following
termination of employment by reason of permanent and total disability, or during
the three-month period following termination of employment for any other reason
other than permanent and total disability or "cause", each incentive Paired
Option will be exercisable to the extent that such incentive Paired Option was
exercisable on the date of the holder's death, and may thereafter be exercised
for a period of three months from the date of death, but in no event after the
expiration of such incentive Paired Option.
Trustee and Director Options. On June 29, 1995 (the date of the
effectiveness of the Trust's and the Corporation's public offering of Paired
Shares) and on June 30 of each year beginning in 1996, each Trustee and each
Director will automatically be granted non-qualified Paired Options to purchase
6,000 Paired Shares at an exercise price per Paired Share equal to the fair
market value of a Paired Share on the date of grant. Such Paired Options will be
fully exercisable on the date of grant and will expire ten years after the date
of grant (notwithstanding termination of service as a Trustee or Director, as
the case may be, for any reason prior to ten years after the date of grant). If
a Trustee or Director dies while a Paired Option granted to such Trustee or
Director is outstanding, such Paired Option may be exercised until and including
the expiration of the Paired Option.
FEDERAL INCOME TAX CONSEQUENCES
Federal Income Tax Consequences. The following is a brief summary of
certain U.S. federal income tax consequences generally arising with respect to
grants under the Option Plans.
A participant will not recognize any income upon the grant of a Paired
Option. A participant will recognize compensation taxable as ordinary income
(and subject to income tax withholding) upon exercise of a non-qualified Paired
Option equal to the excess of the fair market value of the Paired Shares
purchased over their exercise price, and the Trust or the Corporation, as the
case may be, will be entitled to a corresponding deduction. A participant will
not recognize income (except for purposes of the alternative minimum tax) upon
exercise of an incentive Paired Option. If the Paired Shares acquired by
exercise of an incentive Paired Option are held for the longer of two years from
the date the Paired Option was granted and one year from the date it was
exercised, any gain or loss arising from a subsequent disposition of such Paired
Shares will be taxed as long-term capital gain or loss, and the Trust or the
Corporation, as the case may be, will not be entitled to any deduction. If,
however, such Paired Shares are disposed of within the above-described period,
then in the year of such disposition the participant will recognize compensation
taxable as ordinary income equal to the excess of the lesser of (i) the amount
realized upon such disposition and (ii) the fair market value of such Paired
Shares on the date of exercise over the exercise price, and the Trust or the
Corporation, as the case may be, will be entitled to a corresponding deduction.
13
<PAGE> 17
PAIRED OPTIONS GRANTED UNDER THE OPTIONS PLANS
The following table sets forth the number of Paired Shares underlying
Paired Options which have been granted under the Option Plans to Trustees,
Directors and executive officers of the Trust and the Corporation. Such Paired
Options were granted subject to the approval of the Trust Option Plan by the
shareholders of the Trust and the approval of the Corporation Option Plan by the
stockholders of the Corporation.
<TABLE>
<CAPTION>
NUMBER OF PAIRED
SHARES UNDERLYING
NAME AND POSITION PAIRED OPTIONS
- ----------------------------------------------------------------------------- -----------------
<S> <C>
PAIRED OPTIONS GRANTED
UNDER TRUST OPTION PLAN:
Jeffrey C. Lapin...........................................................
Michael W. Mooney..........................................................
All Current Executive Officers of the Trust, as a Group....................
All Current Trustees who are not Executive Officers of the Trust, as a
Group...................................................................
All Employees of the Trust including all Current Officers who are not
Executive Officers of the Trust, as a Group.............................
PAIRED OPTIONS GRANTED UNDER
CORPORATION OPTION PLAN:
Kevin E. Mallory...........................................................
All Current Executive Officers of the Corporation, as a Group..............
All Current Directors who are not Executive Officers of the Corporation, as
a Group.................................................................
All Employees of the Corporation including all Current Officers who are not
Executive Officers of the Corporation, as a Group.......................
</TABLE>
- ---------------
(1) Each Paired Option is exercisable as to all Paired Shares subject to the
Paired Option on the date of grant and will expire ten years after the date
of grant.
(2) Each Paired Option is exercisable .
14
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of October 30, 1995,
regarding the beneficial ownership of the Paired Shares by (i) each person known
by the Trust and the Corporation to be the beneficial owner of more than five
percent of the Paired Shares, (ii) each director and executive officer of the
Corporation and (iii) each trustee and executive officer of the Trust. Each
beneficial owner has sole voting and investment power with respect to all Paired
Shares beneficially owned, except as otherwise set forth in the notes to the
table.
<TABLE>
<CAPTION>
PAIRED SHARES
BENEFICIALLY OWNED
ASSUMING EXCHANGE BY
STARWOOD CAPITAL OF ALL
PAIRED SHARES OF ITS UNITS FOR PAIRED
BENEFICIALLY OWNED(1) SHARES(1)
------------------------ -----------------------
PERCENT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT CLASS AMOUNT CLASS
- ------------------------------------------------ ------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Starwood Capital and Barry S. Sternlicht(2)..... 69,933 (3)
Jeffrey C. Lapin................................ (4) (3) (3)
Ronald C. Brown................................. (5) (3) (3)
Kevin E. Mallory................................ (6) (3) (3)
Graeme W. Henderson............................. 7,974(7) (3) (3)
Bruce M. Ford................................... 694(8) (3) (3)
Earle F. Jones.................................. (9) (3) (3)
Bruce W. Duncan................................. 6,000 (3) (3)
Stephen R. Quazzo............................... 465(10) (3) (3)
Madison F. Grose................................ 1,200 (3) (3)
William E. Simms................................ -0- (3) (3)
Daniel H. Stern................................. -0- (3) (3)
Daniel W. Yih................................... 1,474 (3) (3)
Jean-Marc Chapus................................ -0- (3) (3)
Steven R. Goldman............................... (3) (3)
Michael A. Leven................................ -0- (3) (3)
Jonathan Eilian................................. (3) (3)
All Trustees, Directors and Officers as a
Group......................................... (11) (3) (3)
</TABLE>
- ---------------
(1) Does not include Paired Shares subject to Options granted
pursuant to the Option Plans. See "Approval of Option Plans."
(2) The business address for Starwood Capital and Mr. Sternlicht is c/o
Starwood Capital Group, L.P., Three Pickwick Plaza, Suite 250, Greenwich,
CT 06830. Based on information contained in a Schedule 13D dated January
31, 1995, filed by Starwood Capital, Barry S. Sternlicht and the following
Starwood Capital entities: Starwood Opportunity Fund II, L.P. ("SOF-II"),
Firebird Consolidated Partners, L.P., Woodstar Partners I, L.P.,
Starwood-Huntington Partners, L.P., Starwood/Wichita Investors, L.P.,
Starwood-Nomura Hotel Investors, L.P., Starwood-Apollo Hotel Partners IX,
L.P., Starwood Apollo Hotel Partners VIII. L.P. and Berl Holdings, L.P.
Such Schedule 13D reports that SOF-II owns 49,933 Paired Shares and that
SOF-II and Mr. Sternlicht have the power to vote and dispose of such shares
and that the Starwood Capital entities hold units in the Realty Partnership
and the Operating Partnership which are, subject to the 8.0% ownership
limit with respect to Paired Shares (the "8.0% Ownership Limit"),
exchangeable for an aggregate of 5,943,578 Paired Shares
(approximately % of the outstanding Paired Shares after such exchange).
In addition, Mr. Sternlicht owns 20,000 Paired Shares. Such Schedule 13D
reports that because of the 8.0% Ownership Limit, the Starwood Capital
entities cannot beneficially own more than 8.0% of the outstanding Paired
Shares. The amount beneficially owned and the percent of class assumes that
Starwood Capital entities exchange
15
<PAGE> 19
units for Paired Shares to the maximum extent permitted within the
ownership limit provisions. Does not include Paired Shares beneficially
owned by Mr. Ross. See Note (3) below.
(3) Less than 1%.
(4) Includes 27,889 shares subject to presently exercisable options and 833
shares owned in a pension plan of which Mr. Lapin is sole trustee and
beneficiary.
(5) Includes shares subject to presently exercisable options.
(6) Includes 4,667 shares subject to presently exercisable options.
(7) Includes 50 shares owned in a Keogh Plan and 2,667 shares subject to paired
warrants issued by the Trust and the Corporation.
(8) Includes 172 shares subject to paired warrants issued by the Trust and the
Corporation, of which are owned by Mr. Ford's wife. Includes shares
beneficially owned by Mr. Ford's wife.
(9) Includes 83 shares subject to paired warrants issued by the Trust and the
Corporation.
(10) Includes 265 shares which are owned by Mr. Quazzo's wife.
(11) Includes shares that may be acquired upon the exercise of
presently exercisable options, and shares subject to paired
warrants issued by the Trust and the Corporation.
16
<PAGE> 20
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Trust. The following table provides certain summary information
concerning the compensation paid to the Trust's President and Chief Executive
Officer and each other executive officer of the Trust whose total compensation
for 1994 exceeded $100,000 for services rendered in all capacities to the Trust
for the fiscal years ended December 31, 1994, 1993 and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
NAME AND ----------------------------- -------------------
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS (#) ALL OTHER
-------------------------- ---- -------- ------- ------------------- ---------
<S> <C> <C> <C> <C> <C>
Jeffrey C. Lapin 1994 $190,000 $75,000 2,000(2)
President and 1993 170,834 20,000
Chief Executive 1992 150,792 8,333(2) $ 23,545(3)
Officer(1)
Michael W. Mooney 1994 150,000 20,000 1,500(2)
Vice President 1993 140,416 11,667
Chief Financial 1992 61,026 4,167(2)
Officer
</TABLE>
- ---------------
(1) On January 31, 1995, Mr. Lapin became President and Chief Operating Officer
of the Trust and Barry S. Sternlicht became Chairman and Chief Executive
Officer of the Trust. As of that date, Mr. Sternlicht is paid compensation
at the rate of $100,000 per year.
(2) For information with respect to this option, see "Aggregated Option/SAR
Exercises in 1994 and December 31, 1994 Option Values" below.
(3) Amount shown reflects cash paid for unused vacation.
The Corporation. The following table provides certain summary information
concerning the compensation paid to each executive officer of the Corporation
whose total compensation for 1994 exceeded $100,000 for services rendered in all
capacities to the Corporation for the fiscal years ended December 31, 1994, 1993
and 1992.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
NAME AND ----------------------------- -------------------
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS (#)
---------------------------- ---- -------- ------- -------------------
<S> <C> <C> <C> <C>
Kevin E. Mallory 1994 $150,000 $37,500 1,500(1)
Executive Vice 1993 140,416 11,667
President 1992 63,718 4,167(1)
</TABLE>
- ---------------
(1) For information with respect to this option, see "Aggregated Option/SAR
Exercises in 1994 and December 31, 1994 Option Values" below.
STOCK OPTIONS
As of December 31, 1994, employee stock options issued by the Trust to
purchase 51,417 Paired Shares were outstanding and employee stock options issued
by the Corporation to purchase 51,417 Paired Shares were outstanding.
17
<PAGE> 21
The following table provides information with respect to the options held
as of December 31, 1994 by the executive officers of the Trust and the executive
officers of the Corporation named in the Summary Compensation Tables above. No
options were exercised by any of those executive officers during 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1994
AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END (#)(1) ($)(2)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jeffrey C. Lapin................... 13,333 2,000 $ 109,500 $ 2,280
Michael W. Mooney.................. 4,167 1,500 54,750 1,710
Kevin E. Mallory................... 4,167 1,500 54,750 1,710
</TABLE>
- ---------------
(1) Share amounts have been adjusted for the 1-for-6 Reverse Split effective
June 19, 1995.
(2) Value is defined as market price of the Paired Shares at December 31, 1994
less exercise price of the option. The average of the high and low market
prices of the Paired Shares at December 31, 1994 was $17.64 (as adjusted to
reflect the 1-for-6 Reverse Split effective June 19, 1995).
For information with respect to the Option Plans of the Trust and the
Corporation and options granted in 1995 thereunder, see "Approval of Option
Plans."
AGREEMENTS WITH EXECUTIVE OFFICERS
The Trust has an employment agreement with Mr. Lapin and the Corporation
has an employment agreement with Mr. Mallory which provide that they will
receive annual salaries in 1995 of $200,000 and $150,000, respectively, and such
annual bonuses, if any, as the Boards of the Trust and the Corporation,
respectively, may determine. Mr. Lapin's employment agreement expires on January
31, 1997 and Mr. Mallory's employment agreement expired June, 1995. Mr. Lapin is
entitled to an annual bonus of not less than $75,000 and was granted options to
purchase 41,667 Paired Shares at an exercise price equal to $16.50 per Paired
Share (the fair market value of the Paired Shares on the date of grant) which
will vest at a rate no longer than the most rapid rate of vesting of options
granted to any other executive during the term of his employment agreement. Mr.
Lapin's annual salary will increase to $225,000 in 1996. Each of Messrs. Lapin
and Mallory also is eligible to participate in all employee benefit plans and
fringe benefits, if any, the Trust or the Corporation, respectively, makes
available to its other executive officers. The employment of Mr. Mallory
pursuant to his employment agreement may be terminated by the Corporation at any
time; provided, however, that if his employment is terminated without cause (as
defined) he will be entitled to receive the lesser of (i) his salary for the
then-remaining term of the employment agreement or (ii) $75,000. Mr. Lapin may
terminate his employment for "Good Reason" as defined in his employment
agreement including an assignment of duties inconsistent with his position, a
substantial alteration of his responsibilities, a breach of the agreement by the
Trust, removal from office without cause (as defined), relocation of the Trust's
principal executive offices, a change in the composition of 51% of the Trustees,
a decision by the Board of Trustees that the Trust shall merge, sell or dispose
of all or substantially all of its assets, dissolve or liquidate, or the failure
of Mr. Lapin to be a member of the Board of Trustees other than for cause (as
defined). If Mr. Lapin so terminates his employment, he will be entitled to
receive a lump sum payment equal to the base salary and bonuses that would have
been payable had he continued to be employed for the remainder of the term of
the employment agreement, and all fringe benefits to which he would have been
entitled through the remainder of the term of the employment agreement (other
than stock options or stock loans not granted prior to the date of termination).
Pursuant to Mr. Lapin's employment agreement, the Trust loaned $250,000 to
Mr. Lapin. The loan has a term of 10 years, bears interest at the lowest
applicable rate prescribed by section 1274(d) of the Code and is unsecured. Mr.
Lapin will have the right at any time to repay up to 50% of the loan (plus 50%
of accrued
18
<PAGE> 22
interest and any collection costs) by delivering Paired Shares for credit at the
rate of $11.50 per Paired Share (which is one-half of the price to the public
per Paired Share in the recently completed public offering of Paired Shares by
the Trust and the Corporation).
Each of the Trust and the Corporation has entered into non-competition
agreements with its executive officers, which prohibits them from engaging
directly or indirectly in the hotel business during the period they are officers
of the Trust or the Corporation, respectively.
REPORT ON EXECUTIVE COMPENSATION
During 1994, the Board of Trustees of the Trust and the Board of Directors
of the Corporation made decisions with respect to executive compensation for
executive officers of the Trust and the Corporation, respectively, and have
furnished the following report on executive compensation. Although the Boards of
the Trust and the Corporation make independent compensation decisions with
respect to their respective executive officers, as described herein the Boards
follow similar compensation policies and typically measure the performance of
their respective executive officers based in large part on the performance of
Starwood Lodging as a whole.
In determining executive compensation, the Board of Trustees of the Trust
and the Board of Directors of the Corporation have attempted to align the
compensation received by executive officers to the performance and financial
condition of Starwood Lodging and to the achievement of individual performance
goals. The compensation decisions have also been designed to provide executive
compensation opportunities which will attract, motivate and retain qualified
executive officers.
In furtherance of these objectives, the Trust and the Corporation have in
the past entered into employment agreements with executive officers which
provide for executive compensation and compensation pursuant to related plans
which afford the executive compensation opportunities which are tied to the
attainment of performance goals and to appreciation of the market price of the
Paired Shares.
The primary components of executive compensation consist of annual
compensation, which includes base salaries and annual bonuses, and long-term
compensation through the grant of options to purchase Paired Shares. Through
these components the Trust and the Corporation attempt to provide for total
compensation that is competitive with other comparable positions. Individual
compensation is subject to variation based on financial, strategic and
individual performance. The respective Boards of the Trust and the Corporation
consider the total compensation (earned or potentially earned) in establishing
each element of compensation.
The base salary levels of executive officers are determined periodically by
evaluating the performance of the executive officers and their contributions to
the Trust and the Corporation, their responsibilities, experience and potential;
and compensation practices for comparable positions at other companies. The
annual bonuses are determined in the discretion of the respective Boards of the
Trust and the Corporation, based on individual financial performance.
The long-term incentive compensation of executive officers currently
consists exclusively of grants of options to purchase Paired Shares. The option
grants are designed to develop and encourage stock ownership by executive
officers, to reward long-term business success and to develop a parallel
interest between executive officers and holders of Paired Shares. Option grants
only have value if the market price of the Paired Shares increases from the date
of grant and, in general, vest and become exercisable over time, in order to
encourage retention of the executive officer. In determining the amounts and
terms of grants of options to individual officers, the respective Boards of the
Trust and the Corporation take into account the responsibilities,
19
<PAGE> 23
performance and anticipated contributions of the officers, as well as the
compensation practices for comparable positions at other companies.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OF BOARD OF TRUSTEES
THE CORPORATION OF THE TRUST
(AS OF DECEMBER 1993): (AS OF DECEMBER 1993):
<S> <C>
Bruce M. Ford Graeme W. Henderson
Graeme W. Henderson Jeffrey C. Lapin
Earle F. Jones Sherwin L. Samuels
</TABLE>
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
During 1994, the Board of Directors of the Corporation and the Board of
Trustees of the Trust made decisions with respect to executive compensation of
the executive officers of the Trust and the Corporation, respectively. Mr.
Lapin, who is an executive officer of the Trust and is on the Board of Trustees
of the Trust, participated in decisions related to the compensation of Mr.
Mooney; Sherwin L. Samuels, who is an officer of the Trust and who was on the
Board of Trustees of the Trust during 1994, participated in discussions related
to the compensation of Messrs. Lapin and Mooney.
SHAREHOLDER RETURN PERFORMANCE
Set forth below is a line graph comparing the cumulative total shareholder
return on the Paired Shares against the cumulative total return on the Standard
and Poor's Corporation Composite -- 500 Stock Index (the "S&P 500 Index") and
the Standard & Poor's Corporation Hotel/Motel Composite Index (the "S&P
Hotel/Motel Index") for the five fiscal years beginning January 1, 1990 and
ending December 31, 1994. The graph assumes that the value of the investments
was 100 on December 31, 1989 and that all dividends and other distributions were
reinvested.
<TABLE>
<CAPTION>
Measurement Period Starwood S&P 500 S&P Hotel/Motel
(Fiscal Year Covered) Lodging Index Index
<S> <C> <C> <C>
1989 100 100 100
1990 22 97 38
1991 16 126 50
1992 19 136 71
1993 48 149 131
1994 53 147 113
1995 86 187 132
</TABLE>
20
<PAGE> 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reorganization. Pursuant to a reorganization of the Trust and the
Corporation consummated as of January 1, 1995 (the "Reorganization") the Trust
contributed to the Realty Partnership all of the Trust's properties and assets,
subject to all of its liabilities, in exchange for a general partner interest in
the Realty Partnership and Starwood Capital contributed to the Realty
Partnership cash, certain hotel properties, first mortgage notes and senior debt
of the Realty Partnership in exchange for a limited partner interest in the
Realty Partnership. In addition, the Corporation and its subsidiaries
contributed to the Operating Partnership certain properties and operating
assets, subject to certain liabilities, in exchange for general partner
interests in the Operating Partnership and Starwood Capital contributed to the
Operating Partnership cash, furnishings, equipment and other hotel operating
assets in exchange for a limited partner interest in the Operating Partnership.
The Reorganization was approved by the shareholders of the Trust and the
stockholders of the Corporation at meetings held on December 15, 1994. The
limited partnership interest of the Realty Partnership and the Operating
Partnership held by Starwood Capital are exchangeable on a one-for-one basis for
Paired Shares. See "Security Ownership of Certain Beneficial Owners and
Management."
Barry S. Sternlicht, the President and Chief Executive Officer of the
general partners of Starwood Capital is also the Chairman and Chief Executive
Officer of the Trust and is a Trustee of the Trust, is a member of the
Management Committee of the Operating Partnership and has been elected as a
Director of the Corporation to take office upon the receipt of Gaming Approval.
In addition, Mr. Grose, a Trustee of the Trust, is Executive Vice President and
General Counsel of Starwood Capital and Mr. Eilian, who is a member of the
Management Committee of the Operating Partnership and has been elected as a
Director of the Corporation to take office upon the receipt of Gaming Approval,
is Senior Vice President of Starwood Capital.
Certain Reimbursements and Payments to Starwood Capital. As of June 30,
1995, the Trust and the Corporation have reimbursed Starwood Capital for
approximately $1.3 million of legal and other out-of-pocket expenses and other
costs incurred by Starwood Capital associated with the Reorganization. Starwood
Capital and the Trust and the Corporation have agreed that, subject to approval
by the independent Trustees or Directors, as appropriate, Starwood Capital will
be reimbursed for out-of-pocket costs and expenses for any services provided to
the Trust or the Corporation. Starwood Capital will also be reimbursed for its
internal cost (including allocation of overhead) for services provided to the
Trust or the Corporation, provided that, where such costs are currently expensed
by the Trust or the Corporation, such reimbursement will not exceed $250,000 in
the year ending June 30, 1996.
Starwood Capital provided to the Trust $9.6 million, all of which has been
repaid, of interim financing in order to enable the Trust to acquire the Omni
Chapel Hill Hotel in Chapel Hill, North Carolina.
The Trust also received a $5 million unsecured loan from Starwood Capital
to fund the deposit for the acquisition of the Sheraton Colony Square Hotel in
Atlanta, Georgia. This loan bore interest at 12% per annum and was repaid in
July, 1995.
As part of the consideration to Starwood Capital in connection with the
Reorganization (which was approved by the shareholders of the Trust and the
Corporation in December 1994), the Partnerships agreed to pay an amount to
Starwood Capital only if the Trust and the Corporation consummated a public
offering of Paired Shares prior to June 30, 1996, which offering results in the
receipt by the Trust and the Corporation of gross proceeds of not less than $150
million. Upon the consummation of the public offering of Paired Shares in July
1995, the Trust and the Corporation paid $3.7 million to Starwood Capital
pursuant to such agreement.
Ross Agreement. In November, 1994, Starwood Capital entered into an
agreement (the "Ross Agreement") with Leonard Ross and his affiliates ("Ross").
At that time, Ross held approximately 9.8% of the outstanding Paired Shares and
had opted out of the settlement by the Trust and the Corporation of certain
shareholder litigation unrelated to the Reorganization or Starwood Capital.
Virtually all other shareholders of the Trust and the Corporation were bound by
such settlement. In addition to preserving his rights to institute an action
against the Trust and the Corporation with respect to the matters covered by
such settlement, Ross had threatened to assert other alleged causes of action
against the Trust and the Corporation.
21
<PAGE> 25
The Ross Agreement was entered into in settlement of the threatened
litigation by Ross and provides for an assignment to Starwood Capital of Ross'
claims. Starwood Capital also received a proxy to vote Ross' Paired Shares and
Starwood Capital has agreed to purchase those Paired Shares, at Ross' election,
in a 60-day period beginning on December 15, 1995, at a price of $33.75 per
Paired Share. Starwood Capital may also elect to purchase such Paired Shares at
the same time and on the same terms. In December 1994, Ross sold 33,167 of the
Paired Shares, which remain subject to such purchase agreement. Ross has agreed
not to purchase or sell any Paired Shares during the period specified for the
purchase of his Paired Shares and not more than 4.9% thereafter.
The Trust and the Corporation agreed to indemnify and hold harmless
Starwood Capital (and its subsidiaries, affiliates and successors) against
liabilities, losses or damages and reasonable out-of-pocket expenses (i)
incurred in connection with any action, suit or proceeding brought by a holder
of Paired Shares against Starwood Capital relating to the Reorganization or (ii)
under or in respect of the Ross Agreement (other than, in each case, to the
extent such liabilities, losses, damages or expenses arose from a breach by
Starwood Capital of any agreement entered into in connection with the
Reorganization, or the Ross Agreement or a breach of any fiduciary duty by
Starwood Capital); provided that the aggregate indemnification obligation of the
Trust and the Corporation under the provisions described in clause (ii) is
limited to $1,800,000. The Partnerships have agreed to reimburse the Trust and
the Corporation for costs incurred pursuant to such indemnification obligation.
Senior Debt Related Transactions. In May 1994, Starwood Capital purchased
(at a discount) approximately $21 million of the Trust's senior debt at a public
auction by the institutional holder of such debt. In August 1994, an affiliate
of Merrill Lynch (the "New Lender") purchased $74 million of the Trust's senior
debt, including the senior debt previously held by Starwood Capital, pursuant to
a privately negotiated transaction and at a discount. In conjunction with such
purchase by the New Lender, it entered into an agreement (the "Swap Agreement")
providing that (i) Starwood Capital could acquire such senior debt within a
specified period at the New Lender's cost basis and (ii) the excess of debt
service payments made on such senior debt over the New Lender's cost basis,
together with a specified return thereon, would be payable to Starwood Capital.
In March 1995, the senior debt was refinanced by the New Lender and the Swap
Agreement was terminated, with Starwood Capital receiving (a) the return of
$13.1 million of cash collateral which it had deposited as security for its
obligations in respect of the Swap Agreement, (b) additional cash of $2.7
million, (c) $12 million of the senior debt and (d) certain warrants attendant
to the senior debt. Starwood Capital contributed such senior debt to the
Partnerships in exchange for 813,880 Units of the Partnerships. The Trust and
the Corporation paid $786,000 to Starwood Capital to cancel certain warrants
relating to the senior debt in accordance with the requirements of such senior
debt.
Share Purchase Agreements. Prior to December 1989, the Trust and the
Corporation maintained share purchase plans pursuant to which Trustees,
Directors, officers and employees of the Trust and the Corporation were granted
rights to purchase Paired Shares from the Trust and the Corporation at prices
based upon the then fair market value of the Paired Shares. A purchaser of
Paired Shares under a share purchase plan made a cash down payment equal to 10%
of the purchase price and executed a promissory note in favor of the Trust and
the Corporation for the balance. Certificates evidencing Paired Shares purchased
under a share purchase plan were pledged to the Trust and the Corporation as
collateral to secure payment of the promissory note. Prior to the satisfaction
of the obligations represented by the note, the purchaser was entitled to vote
the Paired Shares held in pledge, but could not transfer the purchaser's
interest in those shares. During 1994, the share purchase agreements between the
Trust and the Corporation and each of Messrs. Henderson, Samuels and Ford were
terminated and the non-recourse indebtedness thereunder was cancelled (an
aggregate of $56,250 with respect to Mr. Henderson, $82,391 with respect to Mr.
Samuels, $108,784 with respect to Mr. Ford). In addition, the Paired Shares
pledged in respect of such indebtedness were either released from such pledge,
to the extent that such indebtedness had been repaid (an aggregate of 224 Paired
Shares for which $20,625 was paid with respect to Mr. Henderson, 357 Paired
Shares for which $39,922 was paid with respect to Mr. Samuels, and 466 Paired
Shares for which $45,279 was paid with respect to Mr. Ford) or were forfeited by
the individual, to the extent such indebtedness had not been repaid.
22
<PAGE> 26
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETINGS
Shareholder proposals to be considered for inclusion in the proxy
soliciting material for the 1996 Annual Meeting of Shareholders of the Trust or
the 1996 Annual Meeting of Stockholders of the Corporation must be received by
the Corporation not later than , 1996.
Pursuant to Section 4A of Article I and Section 13 of Article III of the
Trustees' Regulations and Section 7 of Article II and Section 1A of Article III
of the Corporation's Bylaws, a shareholder of the Trust or a stockholder of the
Corporation who intends at an annual meeting of shareholders or stockholders to
nominate one or more individuals for election at such meeting as a Trustee or
Director, or to present to a meeting of shareholders or stockholders one or more
other items of business, must notify the Trust or the Corporation of the same
not more than 75 days nor less than 50 days before the date of the meeting (or,
if less than 60 days' advance notice or prior public disclosure of the meeting
date is provided, within 10 days after such notice is mailed or such prior
public disclosure of the meeting date is provided, whichever occurs first). A
copy of the Trustees' Regulations or the Corporation's Bylaws, as the case may
be, which documents set forth the information that must be included in any such
notice, will be furnished without charge to any owner of Paired Shares upon
written or oral request made to Shareholder Relations, Starwood Lodging Trust,
11845 West Olympic Blvd., Suite 550, Los Angeles, California 90064, telephone
number: (310) 575-3900 or Shareholder Relations, Starwood Lodging Corporation,
11845 West Olympic Blvd., Suite 560, Los Angeles, California 90064, telephone
number: (310) 575-3900.
INDEPENDENT PUBLIC ACCOUNTANTS
A member of Deloitte & Touche, LLP, the independent public accountants for
1995 for the Trust and the Corporation, is expected to be present at the Trust
Meeting and the Corporation Meeting, will have an opportunity to make a
statement if so desired, and will be available to respond to appropriate
questions.
------------------------
The name "Starwood Lodging Trust" is the designation of Starwood Lodging
Trust and its Trustees (as Trustees but not personally) under a Declaration of
Trust dated August 25, 1969, as amended and restated, and all persons dealing
with Starwood Lodging Trust must look solely to Starwood Lodging Trust's
property for the enforcement of any claims against Starwood Lodging Trust, as
the Trustees, officers, agents and security holders of Starwood Lodging Trust
assume no personal obligations of Starwood Lodging Trust, and their respective
properties shall not be subject to claims of any person relating to such
obligation.
By Order of the Board of Trustees
STARWOOD LODGING TRUST
November , 1995 Sherwin L. Samuels
Secretary
By Order of the Board of Directors
STARWOOD LODGING CORPORATION
November , 1995 Kevin E. Mallory
Executive Vice President
No person is authorized to give any information or to make any
representations with respect to the matters described in this Joint Proxy
Statement other than those contained herein. Any information or representations
with respect to such matters not contained herein must not be relied upon as
having been authorized by the Trust or the Corporation. This Joint Proxy
Statement does not constitute the solicitation of a proxy in any jurisdiction to
or from any person to whom it is unlawful to make such solicitation in such
jurisdiction. The delivery of this Joint Proxy Statement shall not, under any
circumstances, create any implication that there has been no change in the
affairs of the Trust or the Corporation since the date hereof or that the
information in this Joint Proxy Statement is correct as of any time subsequent
to the date hereof.
23
<PAGE> 27
EXHIBIT A
STARWOOD LODGING TRUST
1995 SHARE OPTION PLAN
(AMENDED AND RESTATED AS OF AUGUST 17, 1995)
I. INTRODUCTION
1.1 PURPOSES AND GENERAL. The purposes of the 1995 Share Option Plan (the
"Plan") of Starwood Lodging Trust (the "Trust") are to align the interests of
the Trust's shareholders and the recipients of options under this Plan by
increasing the proprietary interest of such recipients in the Trust's growth and
success and to advance the interests of the Trust by attracting and retaining
officers, key employees, consultants and advisers, as well as qualified persons
for service as trustees of the Trust ("Trustees"). For purposes of this Plan,
references to employment by or service as a consultant, adviser or Trustee of
the Trust shall also mean employment by or service as a consultant, adviser or
Trustee of a subsidiary of the Trust.
This Plan seeks to accomplish the foregoing purposes by providing a means
whereby options to purchase from the Trust shares of beneficial interest, par
value $.01 per share, of the Trust ("Trust Shares") and options to purchase from
the Trust shares of the common stock, par value $.01 per share, of Starwood
Lodging Corporation ("Corporation Shares") may be granted, in accordance with
Section II, to eligible persons and shall be granted, in accordance with Section
III, to Trustees. Pursuant to an Agreement dated June 25, 1980, as amended,
between the Trust and Starwood Lodging Corporation (the "Corporation"), all
outstanding Trust Shares and Corporation Shares are paired on a one-for-one
basis and trade as units consisting of one Trust Share and one Corporation Share
("Paired Shares"). Accordingly, each option to purchase Trust Shares (a "Trust
Share Option") shall be paired with an option to purchase an equal number of
Corporation Shares (a "Corporation Share Option" and each such paired Trust
Share Option and Corporation Share Option is herein referred to as a "Paired
Option").
Each Paired Option may be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of only in units consisting of Paired Shares.
Accordingly, a Trust Share Option, or portion thereof, may be exercised,
terminated, cancelled, forfeited, transferred or otherwise disposed of only in
connection with, and to the same extent as, the exercise, termination,
cancellation, forfeiture, transfer or other disposition of a Corporation Share
Option. Each Trust Share Option constituting part of a Paired Option may be
either an incentive share option or a non-qualified share option. An incentive
share option shall mean a Trust Share Option that meets the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision, which is intended by the Committee (as defined below)
to constitute an incentive share option. Each Corporation Share Option
constituting part of a Paired Option shall be a non-qualified share option.
1.2 ADMINISTRATION. This Plan shall be administered by a committee (the
"Committee") designated by the Board of Trustees of the Trust (the "Board")
consisting of two or more members of the Board, each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and an "outside director"
within the meaning of Section 162(m) of the Code, subject to any transition
rules applicable to the definition of outside director.
The Committee may, subject to the terms of this Plan, select eligible
persons to be granted Paired Options in accordance with Section II and shall
determine the number of Paired Shares subject to each such Paired Option. The
Committee shall, subject to the terms of this Plan, determine the exercise price
of each Paired Option granted hereunder, including the portion of the exercise
price of such Paired Option which is attributable to the Trust Share Option and
the Corporation Share Option, respectively, the time and conditions of exercise
of such Paired Option and all other terms and conditions of such Paired Option,
including, without limitation, the form of the Agreement representing such
Paired Option. The Committee may, in its sole discretion and for any reason at
any time, accelerate the exercisability of any Paired Option. The Committee
shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may
A-1
<PAGE> 28
impose, incidental to the grant of a Paired Option, conditions with respect to
the grant, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties. Each Paired Option shall be evidenced by a written
Agreement (an "Agreement") between the Trust and the optionee setting forth the
terms and conditions applicable to such Paired Option.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or Chief Operating Officer or other executive
officer of the Trust as the Committee deems appropriate; provided, however, that
the Committee may not delegate its power and authority with regard to (i) the
grant of a Paired Option to any person who is a "covered employee" within the
meaning of Section 162(m) of the Code or who, in the Committee's judgment, is
likely to be a covered employee at any time during the period a Paired Option
granted to such employee would be outstanding or (ii) the selection for
participation in this Plan of an officer or other person subject to Section 16
of the Exchange Act or decisions concerning the timing, pricing or amount of a
grant of a Paired Option to such an officer or other person.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
1.3 ELIGIBILITY. Participants in this Plan shall consist of such officers,
key employees, consultants, advisers and Trustees of the Trust and its
subsidiaries as the Committee in its sole discretion may select from time to
time. The Committee's selection of a person to participate in this Plan at any
time shall not require the Committee to select such person to participate in
this Plan at any other time. Trustees shall also be eligible to participate in
this Plan in accordance with Section III.
1.4 SHARES AVAILABLE. The number of Paired Shares available for grants of
Paired Options under this Plan, other than a Paired Option that includes a Trust
Share Option that is designated as an incentive share option, shall be 1,573,000
(subject to adjustment as provided in Section 4.7) plus eight percent (8%) of
the sum of (i) the number of Paired Shares which may be issued upon the exchange
of limited partnership units ("Units") in SLT Realty Limited Partnership, a
Delaware limited partnership, and SLC Operating Limited Partnership, a Delaware
limited partnership to the extent such Units first become outstanding after
August 17, 1995 (without reduction for subsequent repurchases, redemptions or
similar events involving the Units), plus (ii) the number of Paired Shares which
first become outstanding (without reduction for subsequent repurchases,
redemptions or similar events involving Paired Shares) after August 17, 1995
(other than by reason of (A) such exchange of Units, (B) the issuance or
delivery of Paired Shares pursuant to any employee benefit plan of the Trust or
the Corporation or (C) the issuance of Paired Shares which were acquired and
held by the Trust or the Corporation prior to their issuance), reduced by (iii)
the aggregate number of Paired Shares which become subject to (A) outstanding
Paired Options under this Plan, including each Paired Option that includes a
Trust Share Option that is designated as an incentive share option, or (B)
outstanding options to purchase Paired Shares under the Corporation's 1995 Share
Option Plan (the "Corporation Plan"). Subject to adjustment as provided in
Section 4.7, the number of Paired Shares available for grants of Paired Options
that include Trust Share Options that are designated as incentive share options
shall be 1,573,000, reduced by the aggregate number of Paired Shares which
become subject to (X) outstanding Paired Options under this Plan, including each
Paired Option that does not include a Trust Share Option that is designated as
an incentive share option, or (Y) outstanding options to purchase Paired Shares
under the Corporation Plan. To the extent that Paired Shares subject to an
outstanding Paired Option or an outstanding option to purchase Paired Shares
under the Corporation Plan are not issued or delivered by reason of the
termination, cancellation or forfeiture of any such option or by reason of the
delivery of Paired Shares to pay all or a portion of the exercise price of any
such option, or to satisfy all or a portion of the tax withholding obligations
relating to any such option, then such Paired Shares shall again be available
under this Plan.
Paired Shares to be delivered under this Plan shall be made available (i)
(A) by the Trust from authorized and unissued Trust Shares issued by the Trust
directly to the optionee and (B) by the Corporation from authorized and unissued
Corporation Shares issued by the Corporation directly to the Trust for delivery
A-2
<PAGE> 29
to the optionee, (ii) from authorized and issued Paired Shares acquired and held
by the Trust or (iii) a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of Paired Shares with respect to
which Paired Options may be granted during any calendar year to any person shall
be 500,000, subject to adjustment as provided in Section 4.7.
II. PAIRED OPTIONS
2.1 GRANTS OF PAIRED OPTIONS. The Committee may, in its discretion, grant
Paired Options to such eligible persons as may be selected by the Committee.
Each Trust Share Option, or portion thereof, that is not an incentive share
option, shall be a non-qualified share option. Each Paired Option that includes
a Trust Share Option that is designated as an incentive share option shall be
granted within ten years of the effective date of this Plan. To the extent that
the aggregate fair market value (determined as of the date of grant) of Trust
Shares with respect to which Trust Share Options designated as incentive share
options are exercisable for the first time by a participant during any calendar
year (under this Plan or any other plan of the Trust, or any parent or
subsidiary) exceeds the amount (currently $100,000) established by the Code,
such Trust Share Options shall constitute non-qualified share options. The "fair
market value" of a Trust Share shall be that portion of the fair market value of
a Paired Share which the Committee determines to be attributable to the Trust
Share by applying in good faith a method of valuation permissible under Section
422 of the Code. The "fair market value" of a Paired Share shall mean the
closing transaction price of a Paired Share as reported in the New York Stock
Exchange Composite Transactions on the date as of which such value is being
determined or, if there shall be no reported transaction on such date, on the
next preceding date for which a transaction was reported; provided that if the
fair market value of a Paired Share for any date cannot be determined as above
provided, fair market value of a Paired Share shall be determined by the
Committee by whatever means or method as the Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
2.2 TERMS OF PAIRED OPTIONS. Paired Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) Number of Paired Shares and Purchase Price. The number of Paired
Shares subject to a Paired Option and the purchase price per Paired Share
purchasable upon exercise of the Paired Option, including the portions of
the purchase price of a Paired Share which are attributable to a Trust
Share and a Corporation Share, respectively, shall be determined by the
Committee; provided, however, that (i) the purchase price per Paired Share
shall not be less than 100% of the fair market value of a Paired Share on
the date of grant of such Paired Option, (ii) the portion of the purchase
price of a Paired Share which the Committee determines to be attributable
to a Trust Share shall not be less than 100% of the fair market value of a
Trust Share on the date of grant of such Paired Option and (iii) the
portion of the purchase price of a Paired Share which the Committee
determines to be attributable to a Corporation Share shall not be less than
100% of the fair market value of a Corporation Share on the date of grant
of such Paired Option; provided further, that if a Trust Share Option
designated as an incentive share option shall be granted to any person who,
at the time such incentive share option is granted, owns capital stock
possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Trust (or of any parent or subsidiary) (a
"Ten Percent Holder"), the purchase price per Trust Share shall be the
price (currently 110% of fair market value of a Trust Share) required by
the Code in order to constitute an incentive share option. The "fair market
value" of a Corporation Share shall be that portion of the fair market
value of a Paired Share which the Committee determines to be attributable
to the Corporation Share.
(b) Option Period and Exercisability. The period during which a Paired
Option may be exercised shall be determined by the Committee; provided,
however, that no Paired Option which includes a Trust Share Option
designated as an incentive share option shall be exercised later than ten
years after its date of grant; provided further, that if a Paired Option
which includes a Trust Share Option designated as an
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<PAGE> 30
incentive share option shall be granted to a Ten Percent Holder, such
Paired Option shall not be exercised later than five years after its date
of grant. The Committee shall determine whether a Paired Option shall
become exercisable in cumulative or non-cumulative installments and in part
or in full at any time. An exercisable Paired Option, or portion thereof,
may be exercised only with respect to whole Paired Shares.
(c) Method of Exercise. A Paired Option may be exercised (i) by giving
written notice to the Trust specifying the number of whole Paired Shares to
be purchased and accompanied by payment therefor in full (or arrangement
made for such payment to the Trust's satisfaction) either (A) in cash, (B)
by delivery of previously owned whole Paired Shares (which the optionee has
held for at least six months prior to the delivery of such Paired Shares or
which the optionee purchased on the open market and for which the optionee
has good title, free and clear of all liens and encumbrances) having a fair
market value, determined as of the date of exercise, equal to the aggregate
purchase price payable by reason of such exercise, (C) in cash by a
broker-dealer acceptable to the Trust to whom the optionee has submitted an
irrevocable notice of exercise or (D) a combination of (A) and (B), in each
case to the extent set forth in the Agreement relating to the Paired Option
and (ii) by executing such documents as the Trust may reasonably request.
The Committee shall have sole discretion to disapprove of an election
pursuant to either clause (B) or (C) and in the case of an optionee who is
subject to Section 16 of the Exchange Act, the Trust may require that the
method of making such payment be in compliance with Section 16 and the
rules and regulations thereunder. Any fraction of a Paired Share which
would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the optionee. No certificate
representing a Paired Share shall be delivered until the full purchase
price therefor has been paid.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE.
(a) Disability and Death. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates by reason of Disability or death, each Paired Option
held by such optionee shall be fully exercisable and may thereafter be
exercised by such optionee (or such optionee's executor, administrator,
legal representative, beneficiary or similar person, as the case may be)
until and including the earliest to occur of (i) the date which is one year
(or such other period as set forth in the Agreement relating to such Paired
Option) after the effective date of such optionee's termination of
employment or service or date of death, as the case may be, and (ii) the
expiration date of the term of such Paired Option. For purposes of this
Plan, "Disability" shall mean the inability of an optionee substantially to
perform such optionee's duties and responsibilities for a continuous period
of at least six months.
(b) Termination for Cause. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates for Cause, each Paired Option held by such optionee,
whether or not then exercisable, shall terminate automatically on the
effective date of such optionee's termination of employment or service. For
purposes of this Plan, "Cause" shall mean embezzlement or misappropriation
of funds or other assets, other act of dishonesty, significant activities
harmful to the reputation of the Trust or the Corporation, willful refusal
to perform or substantial disregard of the duties properly assigned to the
optionee (other than as a result of Disability), significant violation of
any statutory or common law duty of loyalty to the Trust or the Corporation
or a material breach by the optionee of the optionee's employment Agreement
with the Trust, if any.
(c) Other Termination. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Trust or service as a consultant, adviser or
Trustee terminates for any reason other than Disability, death or Cause,
each Paired Option held by such optionee shall be exercisable only to the
extent that such Paired Option is exercisable on the effective date of such
optionee's termination of employment or service and may thereafter be
exercised by such optionee (or such optionee's legal representative or
similar person) until
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<PAGE> 31
and including the earliest to occur of (i) the date which is three months
(or such other period as set forth in the Agreement relating to such Paired
Option) after the effective date of such optionee's termination of
employment or service and (ii) the expiration date of the term of such
Paired Option.
(d) Death Following Termination of Employment or Service. Subject to
paragraph (e) below and unless otherwise specified in the Agreement
relating to a Paired Option, if an optionee dies during the one-year period
following termination of employment or service by reason of Disability, or
if an optionee dies during the three-month period following termination of
employment or service for any other reason other than Disability or Cause
(or, in each case, such other period as the Committee may specify in the
Agreement relating to a Paired Option), each Paired Option held by such
optionee shall be exercisable only to the extent that such Paired Option is
exercisable on the date of such optionee's death and may thereafter be
exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is three months (or such other
period as set forth in the Agreement relating to such Paired Option) after
the date of death and (ii) the expiration date of the term of such Paired
Option.
(e) Termination of Employment--Incentive Share Options. Unless
otherwise specified in the Agreement relating to a Paired Option which
includes a Trust Share Option designated as an incentive share option, if
the employment with the Trust of a holder of such a Paired Option
terminates by reason of Permanent and Total Disability (as defined in
Section 22(e)(3) of the Code) or death, each such Paired Option shall be
fully exercisable and may thereafter be exercised by such optionee (or such
optionee's executor, administrator, legal representative, beneficiary or
similar person, as the case may be) until and including the earliest to
occur of (i) the date which is one year (or such shorter period as set
forth in the Agreement relating to such Paired Option) after the effective
date of such optionee's termination of employment by reason of Permanent
and Total Disability or date of death, as the case may be, and (ii) the
expiration date of the term of such Paired Option.
Unless otherwise specified in the Agreement relating to a Paired Option
which includes a Trust Share Option designated as an incentive share option, if
the employment with the Trust of a holder of such a Paired Option terminates for
Cause, each such Paired Option, whether or not then exercisable, shall terminate
automatically on the effective date of such optionee's termination of
employment.
If the employment with the Trust of a holder of a Paired Option which
includes a Trust Share Option designated as an incentive share option terminates
for any reason other than Permanent and Total Disability, death or Cause, each
such Paired Option shall be exercisable only to the extent such Paired Option is
exercisable on the effective date of such optionee's termination of employment
and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is three months after the effective date of such optionee's
termination of employment and (ii) the expiration date of the term of such
Paired Option.
If the holder of a Paired Option which includes a Trust Share Option
designated as an incentive share option dies during the one-year period
following termination of employment by reason of Permanent and Total Disability
(or such shorter period as set forth in the Agreement relating to such Paired
Option), or if the holder of such a Paired Option dies during the three-month
period following termination of employment for any reason other than Permanent
and Total Disability or Cause, each such Paired Option held by such optionee
shall be exercisable only to the extent such Paired Option is exercisable on the
date of the optionee's death and may thereafter be exercised by the optionee's
executor, administrator, legal representative, beneficiary or similar person
until and including the earliest to occur of (i) the date which is three months
after the date of death and (ii) the expiration date of the term of such Paired
Option.
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III. CERTAIN PROVISIONS RELATING TO TRUSTEES
3.1 ELIGIBILITY. Each Trustee shall be granted Paired Options in accordance
with this Section III. All Trust Share Options and Corporation Share Options
included in the Paired Options granted under this Section III shall constitute
non-qualified share options.
3.2 GRANTS OF PAIRED OPTIONS. Each Trustee shall be granted Paired Options
as follows:
(a) Time of Grant. On the date of the effectiveness of the Trust's
first public offering of Trust Shares which occurs subsequent to the
adoption of this Plan by the Board and prior to June 30, 1996, and on June
30 of each calendar year beginning in 1996 (or, if later, on the date on
which a person is first elected to serve as a Trustee), each person who is
a Trustee on such date, including each person who has been elected a
Trustee as of such date but who will not begin to serve as a Trustee until
a later date, shall be granted a Paired Option to purchase 6,000 Paired
Shares (which amount shall be pro-rated if such person is first elected to
serve as a Trustee on a date other than such effective date or June 30 of a
calendar year, as the case may be) at a purchase price per Paired Share
equal to 100% of the fair market value of a Paired Share on the date of
grant of such Paired Option; provided, however, that the portion of the
purchase price of a Paired Share which is attributable to a Trust Share
shall be 100% of the fair market value of a Trust Share on the date of
grant of such Paired Option and the portion of the purchase price of a
Paired Share which is attributable to a Corporation Share shall be 100% of
the fair market value of a Corporation Share on the date of grant of such
Paired Option.
(b) Option Period and Exercisability. Each Paired Option granted under
this Article III shall be fully exercisable on and after its date of grant,
shall expire ten years after its date of grant (notwithstanding termination
of service as a Trustee for any reason prior to such ten-year anniversary
date) and may be exercised in whole or in part only with respect to whole
Paired Shares. Paired Options granted under this Article III shall be
exercisable in accordance with Section 2.2(c).
(c) Death. If a Trustee dies while a Paired Option is outstanding,
such Paired Option may thereafter be exercised by such Trustee's executor,
administrator, legal representative, beneficiary or similar person, as the
case may be, until and including the expiration date of the term of such
Paired Option.
IV. GENERAL
4.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
shareholders of the Trust for approval within one year after the date of
approval by the Board and, if approved by a majority of all the votes cast at a
meeting of shareholders at which a quorum is present, shall become effective as
of the date of approval by the Board. No Paired Option may be exercised prior to
the date of such shareholder approval. This Plan shall terminate ten years after
its effective date unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any Paired Option granted prior
to termination.
Paired Options may be granted hereunder at any time prior to the
termination of this Plan, provided that no Paired Option may be granted later
than ten years after the effective date of this Plan. In the event that this
Plan is not approved by the shareholders of the Trust within one year after the
date of approval by the Board, this Plan and any Paired Options granted
hereunder shall be null and void.
4.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of shareholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act and Sections
162(m) and 422 of the Code; provided, however, that the number of Paired Shares
subject to a Paired Option granted to Trustees pursuant to Article III, the
purchase price therefor, the date of grant of any such Paired Option and the
category of persons eligible to be granted such Paired Options shall not be
amended more than once every six months, other than to comply with changes in
the Code and the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations thereunder; and provided further, that any amendment
with respect to the persons eligible to participate in this Plan or the number
of Paired Shares available for grants of Paired Options under this Plan shall
not be effective without
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shareholder approval of such amendment within 12 months before or after the date
such amendment is approved by the Board. No amendment may impair the rights of a
holder of an outstanding Paired Option without the consent of such holder.
4.3 AGREEMENT. No Paired Option may be exercised until an Agreement is
executed by the Trust and the optionee and, upon execution by the Trust and the
optionee and delivery of the Agreement to the Trust, such Paired Option shall be
effective as of the effective date set forth in the Agreement.
4.4 NON-TRANSFERABILITY. No Paired Option hereunder shall be transferable
other than (i) by will or the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Trust or (ii) in the case of
a Paired Option which does not include a Trust Share Option designated as an
incentive share option, as otherwise permitted under Rule 16b-3 under the
Exchange Act as set forth in the Agreement relating to such Paired Option.
Except to the extent permitted by the foregoing sentence, each Paired Option may
be exercised during the optionee's lifetime only by the optionee or the
optionee's legal representative or similar person. Except as permitted by the
second preceding sentence, no Paired Option shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any Paired Option such Paired Option and all
rights thereunder shall immediately become null and void.
4.5 TAX WITHHOLDING. The Trust shall have the right to require, prior to
the delivery of any Paired Shares, payment by the optionee of any Federal,
state, local or other taxes which may be required to be withheld or paid in
connection with a Paired Option hereunder. An Agreement may provide that the
optionee may satisfy any such obligation by any of the following means: (A) a
cash payment to the Trust, (B) delivery to the Trust of previously owned whole
Paired Shares (which the optionee has held for at least six months prior to the
delivery of such Paired Shares or which the optionee purchased on the open
market and for which the optionee has good title, free and clear of all liens
and encumbrances) having an aggregate fair market value, determined as of the
date the obligation to withhold or pay taxes arises in connection with the
Paired Option (the "Tax Date"), equal to the amount necessary to satisfy any
such obligation, (C) a cash payment by a broker-dealer acceptable to the Trust
to whom the optionee has submitted an irrevocable notice of exercise or (D) any
combination of (A) and (B), in each case to the extent set forth in the
Agreement relating to the Paired Option; provided, however, that the Committee
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(D) and that in the case of an optionee who is subject to Section 16
of the Exchange Act, the Trust may require that the method of satisfying any
such obligation be in compliance with Section 16 and the rules and regulations
thereunder. An Agreement may provide for Paired Shares to be delivered having a
fair market value in excess of the minimum amount required to be withheld, but
not in excess of the amount determined by applying the optionee's maximum
marginal tax rate. Any fraction of a Paired Share which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the optionee.
4.6 RESTRICTIONS ON PAIRED SHARES. Each Paired Option hereunder shall be
subject to the requirement that if at any time the Trust determines that the
listing, registration or qualification of the Paired Shares subject to such
Paired Option upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
Paired Shares thereunder, such Paired Shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the
Trust. The Trust may require that certificates evidencing Paired Shares
delivered pursuant to any Paired Option bear a legend indicating that the sale,
transfer or other disposition thereof by the holder is prohibited except in
compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Notwithstanding any other provision hereunder, no Paired Option hereunder
shall be exercisable if, as a result of either the ability to exercise or the
exercise of such Paired Option, the Trust would not satisfy the REIT
Requirements in any respect. For purposes of the preceding sentence, "REIT
Requirements" shall mean the requirements for the Trust to (i) qualify as a real
estate investment trust under the Code and the
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<PAGE> 34
rules and regulations promulgated thereunder, (ii) retain its status as
grandfathered pursuant to Section 132(c)(3) of the Deficit Reduction Act of 1984
and (iii) retain the benefits of that certain private letter ruling issued by
the Internal Revenue Service to the Trust dated as of January 4, 1980.
4.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Paired Shares other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding Paired Option, the
purchase price per security, and the number of securities subject to each Paired
Option to be granted to Trustees pursuant to Article III shall be appropriately
adjusted by the Committee, such adjustments to be made in the case of
outstanding Paired Options without an increase in the aggregate purchase price.
The decision of the Committee regarding any such adjustment shall be final,
binding and conclusive. If any adjustment would result in a fractional security
being (i) available under this Plan, such fractional security shall be
disregarded, or (ii) subject to a Paired Option under this Plan, the Company
shall pay the optionee, in connection with the first exercise of the Paired
Option in whole or in part, occurring after such adjustment, an amount in cash
determined by multiplying (A) the fraction of such security (rounded to the
nearest hundredth) by (B) the excess, if any, of (x) the fair market value of a
Paired Share on the exercise date over (y) the exercise price of the Paired
Option.
With respect to any optionee who is subject to Section 16 of the Exchange
Act and notwithstanding the exercise periods set forth in paragraphs (a), (c)
and (d) of Section 2.3, paragraph (b) of Section 3.2 or as set forth pursuant to
such paragraphs in any Agreement to which such optionee is a party (or as may be
set forth pursuant to paragraph (b) of Section 2.3), in the event (i) the Trust
is involved in a business combination which is intended to be treated as a
pooling of interests for financial accounting purposes (a "Pooling Transaction")
or pursuant to which such optionee receives a substitute option to purchase
securities of any entity, including any entity directly or indirectly acquiring
the Trust, and (ii) such optionee's employment with the Trust or service as a
Trustee is terminated during the nine-month period beginning three months prior
to the consummation of such business combination, then each Paired Option (or
option in substitution thereof) held by such optionee shall be exercisable to
the extent set forth in such paragraphs until and including the latest of (x)
the date set forth pursuant to the then applicable paragraph of Section 2.3 or
3.2, as the case may be, (y) the date which is six months and one day after the
consummation of such business combination and (z) the date which is ten business
days after the date of expiration of any period during which such optionee may
not dispose of a security issued in the Pooling Transaction in order for the
Pooling Transaction to be accounted for as a pooling of interests.
4.8 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right
to participate in this Plan. Neither this Plan nor any Paired Option granted
hereunder shall confer upon any person any right to continued employment by the
Trust, any subsidiary or any affiliate of the Trust or affect in any manner the
right of the Trust, any subsidiary or any affiliate of the Trust to terminate
the employment of any person at any time without liability hereunder.
4.9 RIGHTS AS SHAREHOLDER. No person shall have any rights as a shareholder
of the Trust with respect to any Trust Shares or Corporation Shares which are
subject to a Paired Option hereunder until such person becomes a shareholder of
record with respect to such Trust Shares and Corporation Shares.
4.10 DESIGNATION OF BENEFICIARY. If permitted by the Trust, an optionee may
file with the Committee a written designation of one or more persons as such
optionee's beneficiary or beneficiaries (both primary and contingent) in the
event of the optionee's death. To the extent an outstanding Paired Option
granted hereunder is exercisable, such beneficiary or beneficiaries shall be
entitled to exercise such Paired Option.
Each beneficiary designation shall become effective only when filed in
writing with the Committee during the optionee's lifetime on a form prescribed
by the Committee. The spouse of a married optionee domiciled in a community
property jurisdiction shall join in any designation of a beneficiary other than
such spouse. The filing with the Committee of a new beneficiary designation
shall cancel all previously filed beneficiary designations.
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<PAGE> 35
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
Paired Option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
4.11 GOVERNING LAW. This Plan, each Paired Option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of California and construed in
accordance therewith without giving effect to principles of conflicts of laws.
4.12 TERMINATION OF PAIRING AGREEMENT. Notwithstanding anything in this
Plan to the contrary, if at any time the Agreement dated June 25, 1980, by and
between the Trust and the Corporation, pursuant to which Trust Shares and
Corporation Shares are paired on a share-for-share basis, is terminated for any
reason and as a result of such termination Trust Shares and Corporation Shares
no longer are required to be transferred together, then concurrently with such
termination (i) Paired Options will no longer be granted hereunder; (ii) only
Trust Share Options may thereafter be granted hereunder; (iii) each then
outstanding Paired Option shall constitute a wholly separate and independent
Trust Share Option and Corporation Share Option and the Trust, in its
discretion, may require that each Agreement evidencing a Paired Option be
returned to the Trust for cancellation in exchange for separate agreements
evidencing the Trust Share Option and Corporation Share Option subject to such
Paired Option; (iv) Trust Share Options and Corporation Share Options shall no
longer be required to be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of together; and (v) the "fair market value"
and the "closing price" of the Trust Shares and Corporation Shares as used
herein shall thereafter be deemed to refer, respectively, to the fair market
value and the closing price of a Trust Share and a Corporation Share.
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<PAGE> 36
EXHIBIT B
STARWOOD LODGING CORPORATION
1995 SHARE OPTION PLAN
(AMENDED AND RESTATED AS OF AUGUST 17, 1995)
I. INTRODUCTION
1.1 PURPOSES AND GENERAL. The purposes of the 1995 Share Option Plan (the
"Plan") of Starwood Lodging Corporation (the "Corporation") are to align the
interests of the Corporation's shareholders and the recipients of options under
this Plan by increasing the proprietary interest of such recipients in the
Corporation's growth and success and to advance the interests of the Corporation
by attracting and retaining officers, key employees, consultants and advisers,
as well as qualified persons for service as directors of the Corporation
("Directors"). For purposes of this Plan, references to employment by or service
as a consultant, adviser or director of the Corporation shall also mean
employment by or service as a consultant, advisor or director of a subsidiary of
the Corporation.
This Plan seeks to accomplish the foregoing purposes by providing a means
whereby options to purchase from the Corporation shares of common stock, par
value $.01 per share, of the Corporation ("Corporation Shares") and options to
purchase from the Corporation shares of beneficial interest, par value $.01 per
share, of Starwood Lodging Trust ("Trust Shares") may be granted in accordance
with Section II to eligible persons and shall be granted, in accordance with
Section III, to Directors. Pursuant to an Agreement dated June 25, 1980, as
amended, between the Corporation and Starwood Lodging Trust (the "Trust"), all
outstanding Corporation Shares and Trust Shares are paired on a one-for-one
basis and trade as units consisting of one Corporation Share and one Trust Share
("Paired Shares"). Accordingly, each option to purchase Corporation Shares (a
"Corporation Share Option") shall be paired with an option to purchase an equal
number of Trust Shares (a "Trust Share Option" and each such paired Corporation
Share Option and Trust Share Option is herein referred to as a "Paired Option").
Each Paired Option may be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of only in units consisting of Paired Shares.
Accordingly, a Corporation Share Option, or portion thereof, may be exercised,
terminated, cancelled, forfeited, transferred or otherwise disposed of only in
connection with, and to the same extent as, the exercise, termination,
cancellation, forfeiture, transfer or other disposition of a Trust Share Option.
Each Corporation Share Option constituting part of a Paired Option may be either
an incentive share option or a non-qualified share option. An incentive share
option shall mean a Corporation Share Option that meets the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision, which is intended by the Committee (as defined below)
to constitute an incentive share option. Each Trust Share Option constituting
part of a Paired Option shall be a non-qualified share option.
1.2 ADMINISTRATION. This Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Corporation (the
"Board") consisting of two or more members of the Board, each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and an "outside director"
within the meaning of Section 162(m) of the Code, subject to any transition
rules applicable to the definition of outside director.
The Committee may, subject to the terms of this Plan, select eligible
persons to be granted Paired Options in accordance with Section II and shall
determine the number of Paired Shares subject to each such Paired Option. The
Committee shall, subject to the terms of this Plan, determine the exercise price
of each Paired Option granted hereunder, including the portion of the exercise
price of such Paired Option which is attributable to the Corporation Share
Option and the Trust Share Option, respectively, the time and conditions of
exercise of such Paired Option and all other terms and conditions of such Paired
Option, including, without limitation, the form of the Agreement representing
such Paired Option. The Committee may, in its sole discretion and for any reason
at any time, accelerate the exercisability of any Paired Option. The Committee
shall, subject to the terms of this Plan, interpret this Plan and the
application thereof,
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<PAGE> 37
establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of a Paired
Option, conditions with respect to the grant, such as limiting competitive
employment or other activities. All such interpretations, rules, regulations and
conditions shall be conclusive and binding on all parties. Each Paired Option
shall be evidenced by a written Agreement (an "Agreement") between the
Corporation and the optionee setting forth the terms and conditions applicable
to such Paired Option.
The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or Chief Operating Officer or other executive
officer of the Corporation as the Committee deems appropriate; provided,
however, that the Committee may not delegate its power and authority with regard
to (i) the grant of a Paired Option to any person who is a "covered employee"
within the meaning of Section 162(m) of the Code or who, in the Committee's
judgment, is likely to be a covered employee at any time during the period a
Paired Option granted to such employee would be outstanding or (ii) the
selection for participation in this Plan of an officer or other person subject
to Section 16 of the Exchange Act or decisions concerning the timing, pricing or
amount of a grant of a Paired Option to such an officer or other person.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
1.3 ELIGIBILITY. Participants in this Plan shall consist of such officers,
key employees, consultants, advisers and Directors of the Corporation and its
subsidiaries as the Committee in its sole discretion may select from time to
time. The Committee's selection of a person to participate in this Plan at any
time shall not require the Committee to select such person to participate in
this Plan at any other time. Directors shall be also eligible to participate in
this Plan in accordance with Section III.
1.4 SHARES AVAILABLE. The number of Paired Shares available for grants of
Paired Options under this Plan, other than a Paired Option that includes a
Corporation Share Option that is designated as an incentive share option, shall
be 1,573,000 (subject to adjustment as provided in Section 4.7) plus eight
percent (8%) of the sum of (i) the number of Paired Shares which may be issued
upon the exchange of limited partnership units ("Units") in SLT Realty Limited
Partnership, a Delaware limited partnership, and SLC Operating Limited
Partnership, a Delaware limited partnership to the extent such Units first
become outstanding after August 17, 1995 (without reduction for subsequent
repurchases, redemptions or similar events involving the Units), plus (ii) the
number of Paired Shares which first become outstanding (without reduction for
subsequent repurchases, redemptions or similar events involving Paired Shares)
after August 17, 1995 (other than by reason of (A) such exchange of Units, (B)
the issuance or delivery of Paired Shares pursuant to any employee benefit plan
of the Corporation or the Trust or (C) the issuance of Paired Shares which were
acquired and held by the Corporation or the Trust prior to their issuance),
reduced by (iii) the aggregate number of Paired Shares which become subject to
(A) outstanding Paired Options under this Plan, including each Paired Option
that includes a Corporation Share Option that is designated as an incentive
share option, or (B) outstanding options to purchase Paired Shares under the
Trust's 1995 Share Option Plan (the "Trust Plan"). Subject to adjustment as
provided in Section 4.7, the number of Paired Shares available for grants of
Paired Options that include Corporation Share Options that are designated as
incentive share options shall be 1,573,000, reduced by the aggregate number of
Paired Shares which become subject to (X) outstanding Paired Options under this
Plan, including each Paired Option that does not include a Corporation Share
Option that is designated as an incentive share option, or (Y) outstanding
options to purchase Paired Shares under the Trust Plan. To the extent that
Paired Shares subject to an outstanding Paired Option or an outstanding option
to purchase Paired Shares under the Trust Plan are not issued or delivered by
reason of the termination, cancellation or forfeiture of any such option or by
reason of the delivery of Paired Shares to pay all or a portion of the exercise
price of any such option, or to satisfy all or a portion of the tax withholding
obligations relating to any such option, then such Paired Shares shall again be
available under this Plan.
Paired Shares to be delivered under this Plan shall be made available (i)
(A) by the Corporation from authorized and unissued Corporation Shares issued by
the Corporation directly to the optionee and (B) by the Trust from authorized
and unissued Trust Shares issued by the Trust directly to the Corporation for
delivery to
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the optionee, (ii) from authorized and issued Paired Shares acquired and held by
the Corporation or (iii) a combination thereof.
To the extent required by Section 162(m) of the Code and the rules and
regulations thereunder, the maximum number of Paired Shares with respect to
which Paired Options may be granted during any calendar year to any person shall
be 500,000, subject to adjustment as provided in Section 4.7.
II. PAIRED OPTIONS
2.1 GRANTS OF PAIRED OPTIONS. The Committee may, in its discretion, grant
Paired Options to such eligible persons as may be selected by the Committee.
Each Corporation Share Option, or portion thereof, that is not an incentive
share option, shall be a non-qualified share option. Each Paired Option that
includes a Corporation Share Option that is designated as an incentive share
option shall be granted within ten years of the effective date of this Plan. To
the extent that the aggregate fair market value (determined as of the date of
grant) of Corporation Shares with respect to which Corporation Share Options
designated as incentive share options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Corporation, or any parent or subsidiary) exceeds the amount (currently
$100,000) established by the Code, such Corporation Share Options shall
constitute non-qualified share options. The "fair market value" of a Corporation
Share shall be that portion of the fair market value of a Paired Share which the
Committee determines to be attributable to the Corporation Share by applying in
good faith a method of valuation permissible under Section 422 of the Code. The
"fair market value" of a Paired Share shall mean the closing transaction price
of a Paired Share as reported in the New York Stock Exchange Composite
Transactions on the date as of which such value is being determined or, if there
shall be no reported transaction on such date, on the next preceding date for
which a transaction was reported; provided that if the fair market value of a
Paired Share for any date cannot be determined as above provided, fair market
value of a Paired Share shall be determined by the Committee by whatever means
or method as the Committee, in the good faith exercise of its discretion, shall
at such time deem appropriate.
2.2 TERMS OF PAIRED OPTIONS. Paired Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:
(a) Number of Paired Shares and Purchase Price. The number of Paired
Shares subject to a Paired Option and the purchase price per Paired Share
purchasable upon exercise of the Paired Option, including the portions of
the purchase price of a Paired Share which are attributable to a
Corporation Share and a Trust Share, respectively, shall be determined by
the Committee; provided, however, that (i) the purchase price per Paired
Share shall not be less than 100% of the fair market value of a Paired
Share on the date of grant of such Paired Option, (ii) the portion of the
purchase price of a Paired Share which the Committee determines to be
attributable to a Corporation Share shall not be less than 100% of the fair
market value of a Corporation Share on the date of grant of such Paired
Option and (iii) the portion of the purchase price of a Paired Share which
the Committee determines to be attributable to a Trust Share shall not be
less than 100% of the fair market value of a Trust Share on the date of
grant of such Paired Option; provided further, that if a Corporation Share
Option designated as an incentive share option shall be granted to any
person who, at the time such incentive share option is granted, owns
capital stock possessing more than ten percent of the total combined voting
power of all classes of capital stock of the Corporation (or of any parent
or subsidiary) (a "Ten Percent Holder"), the purchase price per Corporation
Share shall be the price (currently 110% of fair market value of a
Corporation Share) required by the Code in order to constitute an incentive
share option. The "fair market value" of a Trust Share shall be that
portion of the fair market value of a Paired Share which the Committee
determines to be attributable to the Trust Share.
(b) Option Period and Exercisability. The period during which a Paired
Option may be exercised shall be determined by the Committee; provided,
however, that no Paired Option which includes a Corporation Share Option
designated as an incentive share option shall be exercised later than ten
years after its date of grant; provided further, that if a Paired Option
which includes a Corporation Share
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Option designated as an incentive share option shall be granted to a Ten
Percent Holder, such Paired Option shall not be exercised later than five
years after its date of grant. The Committee shall determine whether a
Paired Option shall become exercisable in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable Paired
Option, or portion thereof, may be exercised only with respect to whole
Paired Shares.
(c) Method of Exercise. A Paired Option may be exercised (i) by giving
written notice to the Corporation specifying the number of whole Paired
Shares to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Corporation's satisfaction) either
(A) in cash, (B) by delivery of previously owned whole Paired Shares (which
the optionee has held for at least six months prior to the delivery of such
Paired Shares or which the optionee purchased on the open market and for
which the optionee has good title, free and clear of all liens and
encumbrances) having a fair market value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of such
exercise, (C) in cash by a broker-dealer acceptable to the Corporation to
whom the optionee has submitted an irrevocable notice of exercise or (D) a
combination of (A) and (B), in each case to the extent set forth in the
Agreement relating to the Paired Option and (ii) by executing such
documents as the Corporation may reasonably request. The Committee shall
have sole discretion to disapprove of an election pursuant to either clause
(B) or (C) and in the case of an optionee who is subject to Section 16 of
the Exchange Act, the Corporation may require that the method of making
such payment be in compliance with Section 16 and the rules and regulations
thereunder. Any fraction of a Paired Share which would be required to pay
such purchase price shall be disregarded and the remaining amount due shall
be paid in cash by the optionee. No certificate representing a Paired Share
shall be delivered until the full purchase price therefor has been paid.
2.3 TERMINATION OF EMPLOYMENT OR SERVICE.
(a) Disability and Death. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Corporation or service as a consultant,
adviser or Director terminates by reason of Disability or death, each
Paired Option held by such optionee shall be fully exercisable and may
thereafter be exercised by such optionee (or such optionee's executor,
administrator, legal representative, beneficiary or similar person, as the
case may be) until and including the earliest to occur of (i) the date
which is one year (or such other period as set forth in the Agreement
relating to such Paired Option) after the effective date of such optionee's
termination of employment or service or date of death, as the case may be,
and (ii) the expiration date of the term of such Paired Option. For
purposes of this Plan, "Disability" shall mean the inability of an optionee
substantially to perform such optionee's duties and responsibilities for a
continuous period of at least six months.
(b) Termination for Cause. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Corporation or service as a consultant,
adviser or Director terminates for Cause, each Paired Option held by such
optionee, whether or not then exercisable, shall terminate automatically on
the effective date of such optionee's termination of employment or service.
For purposes of this Plan, "Cause" shall mean embezzlement or
misappropriation of funds or other assets, other act of dishonesty,
significant activities harmful to the reputation of the Corporation or the
Trust, willful refusal to perform or substantial disregard of the duties
properly assigned to the optionee (other than as a result of Disability),
significant violation of any statutory or common law duty of loyalty to the
Corporation or the Trust or a material breach by the optionee of the
optionee's employment Agreement with the Corporation, if any.
(c) Other Termination. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to a Paired Option, if an
optionee's employment with the Corporation or service as a
consultant, adviser or Director terminates for any reason other than
Disability, death or Cause, each Paired Option held by such optionee shall
be exercisable only to the extent that such Paired Option is exercisable on
the effective date of such optionee's termination of employment or service
and may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until
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and including the earliest to occur of (i) the date which is three months
(or such other period as set forth in the Agreement relating to such Paired
Option) after the effective date of such optionee's termination of
employment or service and (ii) the expiration date of the term of such
Paired Option.
(d) Death Following Termination of Employment or Service. Subject to
paragraph (e) below and unless otherwise specified in the Agreement
relating to a Paired Option, if an optionee dies during the one-year period
following termination of employment or service by reason of Disability, or
if an optionee dies during the three-month period following termination of
employment or service for any other reason other than Disability or Cause
(or, in each case, such other period as the Committee may specify in the
Agreement relating to a Paired Option), each Paired Option held by such
optionee shall be exercisable only to the extent that such Paired Option is
exercisable on the date of such optionee's death and may thereafter be
exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is three months (or such other
period as set forth in the Agreement relating to such Paired Option) after
the date of death and (ii) the expiration date of the term of such Paired
Option.
(e) Termination of Employment -- Incentive Share Options. Unless
otherwise specified in the Agreement relating to a Paired Option which
includes a Corporation Share Option designated as an incentive share
option, if the employment with the Corporation of a holder of such a Paired
Option terminates by reason of Permanent and Total Disability (as defined
in Section 22(e)(3) of the Code) or death, each such Paired Option shall be
fully exercisable and may thereafter be exercised by such optionee (or such
optionee's executor, administrator, legal representative, beneficiary or
similar person, as the case may be) until and including the earliest to
occur of (i) the date which is one year (or such shorter period as set
forth in the Agreement relating to such Paired Option) after the effective
date of such optionee's termination of employment by reason of Permanent
and Total Disability or date of death, as the case may be, and (ii) the
expiration date of the term of such Paired Option.
Unless otherwise specified in the Agreement relating to a Paired Option
which includes a Corporation Share Option designated as an incentive share
option, if the employment with the Corporation of a holder of such a Paired
Option terminates for Cause, each such Paired Option, whether or not then
exercisable, shall terminate automatically on the effective date of such
optionee's termination of employment.
If the employment with the Corporation of a holder of a Paired Option which
includes a Corporation Share Option designated as an incentive share option
terminates for any reason other than Permanent and Total Disability, death or
Cause, each such Paired Option shall be exercisable only to the extent such
Paired Option is exercisable on the effective date of such optionee's
termination of employment and may thereafter be exercised by such holder (or
such holder's legal representative or similar person) until and including the
earliest to occur of (i) the date which is three months after the effective date
of such optionee's termination of employment and (ii) the expiration date of the
term of such Paired Option.
If the holder of a Paired Option which includes a Corporation Share Option
designated as an incentive share option dies during the one-year period
following termination of employment by reason of Permanent and Total Disability
(or such shorter period as set forth in the Agreement relating to such Paired
Option), or if the holder of such a Paired Option dies during the three-month
period following termination of employment for any reason other than Permanent
and Total Disability or Cause, each such Paired Option held by such optionee
shall be exercisable only to the extent such Paired Option is exercisable on the
date of the optionee's death and may thereafter be exercised by the optionee's
executor, administrator, legal representative, beneficiary or similar person
until and including the earliest to occur of (i) the date which is three months
after the date of death and (ii) the expiration date of the term of such Paired
Option.
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III. CERTAIN PROVISIONS RELATING TO DIRECTORS
3.1 ELIGIBILITY. Each Director shall be granted Paired Options in
accordance with this Section III. All Corporation Share Options and Trust Share
Options included in the Paired Options granted under this Section III shall
constitute non-qualified share options.
3.2 GRANTS OF PAIRED OPTIONS. Each Director shall be granted Paired Options
as follows:
(a) Time of Grant. On the date of the effectiveness of the
Corporation's first public offering of Corporation Shares which occurs
subsequent to the adoption of this Plan by the Board and prior to June 30,
1996, and on June 30 of each calendar year beginning in 1996 (or, if later,
on the date on which a person is first elected to serve as a Director),
each person who is a Director on such date, including each person who has
been elected a Director as of such date but who will not begin to serve as
a Director until a later date, shall be granted a Paired Option to purchase
6,000 Paired Shares (which amount shall be pro-rated if such person is
first elected to serve as a Director on a date other than such effective
date or June 30 of a calendar year, as the case may be) at a purchase price
per Paired Share equal to 100% of the fair market value of a Paired Share
on the date of grant of such Paired Option; provided, however, that the
portion of the purchase price of a Paired Share which is attributable to a
Corporation Share shall be 100% of the fair market value of a Corporation
Share on the date of grant of such Paired Option and the portion of the
purchase price of a Paired Share which is attributable to a Trust Share
shall be 100% of the fair market value of a Trust Share on the date of
grant of such Paired Option.
(b) Option Period and Exercisability. Each Paired Option granted under
this Article III shall be fully exercisable on and after its date of grant,
shall expire ten years after its date of grant (notwithstanding termination
of service as a Director for any reason prior to such ten-year anniversary
date) and may be exercised in whole or in part only with respect to whole
Paired Shares. Paired Options granted under this Article III shall be
exercisable in accordance with Section 2.2(c).
(c) Death. If a Director dies while a Paired Option is outstanding,
such Paired Option may thereafter be exercised by such Director's executor,
administrator, legal representative, beneficiary or similar person, as the
case may be, until and including the expiration date of the term of such
Paired Option.
IV. GENERAL
4.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
shareholders of the Corporation for approval within one year after the date of
approval by the Board and, if approved by a majority of all the votes cast at a
meeting of shareholders at which a quorum is present, shall become effective as
of the date of approval by the Board. No Paired Option may be exercised prior to
the date of such shareholder approval. This Plan shall terminate ten years after
its effective date unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any Paired Option granted prior
to termination.
Paired Options may be granted hereunder at any time prior to the
termination of this Plan, provided that no Paired Option may be granted later
than ten years after the effective date of this Plan. In the event that this
Plan is not approved by the shareholders of the Corporation within one year
after the date of approval by the Board, this Plan and any Paired Options
granted hereunder shall be null and void.
4.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of shareholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act and Sections
162(m) and 422 of the Code; provided, however, that the number of Paired Shares
subject to a Paired Option granted to Directors pursuant to Article III, the
purchase price therefor, the date of grant of any such Paired Option, and the
category of persons eligible to be granted such Paired Options shall not be
amended more than once every six months, other than to comply with changes in
the Code and the Employee Retirement Income Security Act of 1974, as amended, or
the rules and regulations thereunder; and provided further, that any amendment
with respect to the persons eligible to participate in this Plan or the
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number of Paired Shares available for grants of Paired Options under this Plan
shall not be effective without shareholder approval of such amendment within 12
months before or after the date such amendment is approved by the Board. No
amendment may impair the rights of a holder of an outstanding Paired Option
without the consent of such holder.
4.3 AGREEMENT. No Paired Option may be exercised until an Agreement is
executed by the Corporation and the optionee and, upon execution by the
Corporation and the optionee and delivery of the Agreement to the Corporation,
such Paired Option shall be effective as of the effective date set forth in the
Agreement.
4.4 NON-TRANSFERABILITY. No Paired Option hereunder shall be transferable
other than (i) by will or the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Corporation or (ii) in the
case of a Paired Option which does not include a Corporation Share Option
designated as an incentive share option, as otherwise permitted under Rule 16b-3
under the Exchange Act as set forth in the Agreement relating to such Paired
Option. Except to the extent permitted by the foregoing sentence, each Paired
Option may be exercised during the optionee's lifetime only by the optionee or
the optionee's legal representative or similar person. Except as permitted by
the second preceding sentence, no Paired Option shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any Paired Option such Paired Option and all
rights thereunder shall immediately become null and void.
4.5 TAX WITHHOLDING. The Corporation shall have the right to require, prior
to the delivery of any Paired Shares, payment by the optionee of any Federal,
state, local or other taxes which may be required to be withheld or paid in
connection with a Paired Option hereunder. An Agreement may provide that the
optionee may satisfy any such obligation by any of the following means: (A) a
cash payment to the Corporation, (B) delivery to the Corporation of previously
owned whole Paired Shares (which the optionee has held for at least six months
prior to the delivery of such Paired Shares or which the optionee purchased on
the open market and for which the optionee has good title, free and clear of all
liens and encumbrances) having an aggregate fair market value, determined as of
the date the obligation to withhold or pay taxes arises in connection with the
Paired Option (the "Tax Date"), equal to the amount necessary to satisfy any
such obligation, (C) a cash payment by a broker-dealer acceptable to the
Corporation to whom the optionee has submitted an irrevocable notice of exercise
or (D) any combination of (A) and (B), in each case to the extent set forth in
the Agreement relating to the Paired Option; provided, however, that the
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(D) and that in the case of an optionee who is subject to
Section 16 of the Exchange Act, the Corporation may require that the method of
satisfying any such obligation be in compliance with Section 16 and the rules
and regulations thereunder. An Agreement may provide for Paired Shares to be
delivered having a fair market value in excess of the minimum amount required to
be withheld, but not in excess of the amount determined by applying the
optionee's maximum marginal tax rate. Any fraction of a Paired Share which would
be required to satisfy such an obligation shall be disregarded and the remaining
amount due shall be paid in cash by the optionee.
4.6 RESTRICTIONS ON PAIRED SHARES. Each Paired Option hereunder shall be
subject to the requirement that if at any time the Corporation determines that
the listing, registration or qualification of the Paired Shares subject to such
Paired Option upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
Paired Shares thereunder, such Paired Shares shall not be delivered unless such
listing, registration, qualification, consent, approval or other action shall
have been effected or obtained, free of any conditions not acceptable to the
Corporation. The Corporation may require that certificates evidencing Paired
Shares delivered pursuant to any Paired Option bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Notwithstanding any other provision hereunder, no Paired Option hereunder
shall be exercisable if, as a result of either the ability to exercise or the
exercise of such Paired Option, the Trust would not satisfy the REIT
Requirements in any respect. For purposes of the preceding sentence, "REIT
Requirements" shall
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mean the requirements for the Trust to (i) qualify as a real estate investment
trust under the Code and the rules and regulations promulgated thereunder, (ii)
retain its status as grandfathered pursuant to Section 132(c)(3) of the Deficit
Reduction Act of 1984 and (iii) retain the benefits of that certain private
letter ruling issued by the Internal Revenue Service to the Trust dated as of
January 4, 1980.
4.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Paired Shares other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding Paired Option, the
purchase price per security, and the number of securities subject to each Paired
Option to be granted to Directors pursuant to Article III shall be appropriately
adjusted by the Committee, such adjustments to be made in the case of
outstanding Paired Options without an increase in the aggregate purchase price.
The decision of the Committee regarding any such adjustment shall be final,
binding and conclusive. If any adjustment would result in a fractional security
being (i) available under this Plan, such fractional security shall be
disregarded, or (ii) subject to a Paired Option under this Plan, the Company
shall pay the optionee, in connection with the first exercise of the Paired
Option in whole or in part, occurring after such adjustment, an amount in cash
determined by multiplying (A) the fraction of such security (rounded to the
nearest hundredth) by (B) the excess, if any, of (x) the fair market value of a
Paired Share on the exercise date over (y) the exercise price of the Paired
Option.
With respect to any optionee who is subject to Section 16 of the Exchange
Act and notwithstanding the exercise periods set forth in paragraphs (a), (c)
and (d) of Section 2.3, paragraph (b) of Section 3.2 or as set forth pursuant to
such paragraphs in any Agreement to which such optionee is a party (or as may be
set forth in any Agreement pursuant to paragraph (b) of Section 2.3), in the
event (i) the Corporation is involved in a business combination which is
intended to be treated as a pooling of interests for financial accounting
purposes (a "Pooling Transaction") or pursuant to which such optionee receives a
substitute option to purchase securities of any entity, including an entity
directly or indirectly acquiring the Corporation, and (ii) such optionee's
employment with the Corporation or service as a Director is terminated during
the nine-month period beginning three months prior to the consummation of such
business combination, then each Paired Option (or option in substitution
thereof) held by such optionee shall be exercisable to the extent set forth in
such paragraphs until and including the latest of (x) the date set forth
pursuant to the then applicable paragraph of Section 2.3 or 3.2, as the case may
be, (y) the date which is six months and one day after the consummation of such
business combination and (z) the date which is ten business days after the date
of expiration of any period during which such optionee may not dispose of a
security issued in the Pooling Transaction in order for the Pooling Transaction
to be accounted for as a pooling of interests.
4.8 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any right
to participate in this Plan. Neither this Plan nor any Paired Option granted
hereunder shall confer upon any person any right to continued employment by the
Corporation, any subsidiary or any affiliate of the Corporation or affect in any
manner the right of the Corporation, any subsidiary or any affiliate of the
Corporation to terminate the employment of any person at any time without
liability hereunder.
4.9 RIGHTS AS SHAREHOLDER. No person shall have any rights as a shareholder
of the Corporation with respect to any Corporation Shares or Trust Shares which
are subject to a Paired Option hereunder until such person becomes a shareholder
of record with respect to such Corporation Shares and Trust Shares.
4.10 DESIGNATION OF BENEFICIARY. If permitted by the Corporation, an
optionee may file with the Committee a written designation of one or more
persons as such optionee's beneficiary or beneficiaries (both primary and
contingent) in the event of the optionee's death. To the extent an outstanding
Paired Option granted hereunder is exercisable, such beneficiary or
beneficiaries shall be entitled to exercise such Paired Option.
Each beneficiary designation shall become effective only when filed in
writing with the Committee during the optionee's lifetime on a form prescribed
by the Committee. The spouse of a married optionee domiciled in a community
property jurisdiction shall join in any designation of a beneficiary other than
such spouse. The
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filing with the Committee of a new beneficiary designation shall cancel all
previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
Paired Option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
4.11 GOVERNING LAW. This Plan, each Paired Option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of California and construed in
accordance therewith without giving effect to principles of conflicts of laws.
4.12 TERMINATION OF PAIRING AGREEMENT. Notwithstanding anything in this
Plan to the contrary, if at any time the Agreement dated June 25, 1980, by and
between the Corporation and the Trust, pursuant to which Corporation Shares and
Trust Shares are paired on a share-for-share basis, is terminated for any reason
and as a result of such termination Corporation Shares and Trust Shares no
longer are required to be transferred together, then concurrently with such
termination (i) Paired Options will no longer be granted hereunder; (ii) only
Corporation Share Options may thereafter be granted hereunder; (iii) each then
outstanding Paired Option shall constitute a wholly separate and independent
Corporation Share Option and Trust Share Option and the Corporation, in its
discretion, may require that each Agreement evidencing a Paired Option be
returned to the Corporation for cancellation in exchange for separate agreements
evidencing the Corporation Share Option and Trust Share Option subject to such
Paired Option; (iv) Corporation Share Options and Trust Share Options shall no
longer be required to be exercised, terminated, cancelled, forfeited,
transferred or otherwise disposed of together; and (v) the "fair market value"
and the "closing price" of the Corporation Shares and Trust Shares as used
herein shall thereafter be deemed to refer, respectively, to the fair market
value and the closing price of a Corporation Share and a Trust Share.
B-9
<PAGE> 45
PROXY STARWOOD LODGING TRUST
STARWOOD LODGING CORPORATION
PROXY FOR ANNUAL MEETINGS OF SHAREHOLDERS AND STOCKHOLDERS
TO BE HELD DECEMBER 7, 1995
The undersigned shareholder of Starwood Lodging Trust (the "Trust") and
stockholder of Starwood Lodging Corporation (the "Corporation") hereby
acknowledges receipt of the Notice of 1995 Annual Meeting of Shareholders of the
Trust and the Notice of 1995 Annual Meeting of Stockholders of the Corporation
(the "Annual Meetings") and the accompanying Joint Proxy Statement relating to
the above-referenced Annual Meetings, and hereby appoints, with full power of
substitution in each, each of the following persons as attorneys and proxies of
the undersigned: (a) with respect to the undersigned's shares of the Trust,
and and (b) with respect to the undersigned's shares of the
Corporation, and .
Said proxies are hereby given authority, as appropriate, to represent and to
vote all shares of beneficial interest of the Trust and all shares of common
stock of the Corporation held of record by the undersigned and which the
undersigned may be entitled to vote at the Annual Meetings to be held on
December 7, 1995 at the Doral Inn, 541 Lexington Avenue, New York, New York, at
10:00 a.m. and 10:30 a.m., respectively, and at any and all adjournments or
postponements thereof, on behalf of the undersigned on the following matters and
in the manner designated below:
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
1. To elect each of the following nominees as Trustees of the Trust: Madison F.
Grose and William E. Simms
/ / FOR all of the nominees / / WITHHOLD
Instruction: To withhold authority to vote for any nominee, write that nominee's
name in the space provided:
- --------------------------------------------------------------------------------
2. Approval by shareholders of the Trust of the Trust Option Plan (as defined in
the Joint Proxy Statement).
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE "FOR" PROPOSALS 3
AND 4.
3. To elect each of the following nominees as Directors of the Corporation:
Bruce M. Ford, Earle F. Jones, Graeme W. Henderson and Daniel W. Yih.
/ / FOR all of the nominees / / WITHHOLD
Instruction: To withhold authority to vote for any nominee, write that nominee's
name in the space provided:
- --------------------------------------------------------------------------------
(Continued and To Be Signed on Other Side)
4. Approval by stockholders of the Corporation of the Corporation Option Plan
(as defined in the Joint Proxy Statement).
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the proxies are authorized to vote on such other matters
as may come before either of the Annual Meetings.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST AND THE BOARD
OF DIRECTORS OF THE CORPORATION AND WHEN PROPERLY EXECUTED, THE SHARES
REPRESENTED HEREBY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF ALL NOMINEES NAMED ABOVE AS TRUSTEES OF THE TRUST, FOR THE APPROVAL OF THE
TRUST OPTION PLAN, FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE AS DIRECTORS OF
THE CORPORATION AND FOR THE APPROVAL OF THE CORPORATION OPTION PLAN.
Dated: , 1995
--------------
--------------------------
(Signature)
--------------------------
(Signature if held
jointly)
Note: Please date and sign
exactly as your name(s)
appear on this proxy card.
If shares are registered
in more than one name, all
such persons should sign.
A corporation should sign
in its full corporate name
by a duly authorized
officer, stating his
title. When signing as
attorney, executor,
administrator, trustee or
guardian, please sign in
your official capacity and
give your full title as
such. If a partnership,
please sign in the
partnership name by an
authorized person.
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED SELF-ADDRESSED, POSTAGE PREPAID ENVELOPE
