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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Starwood Hotels & Resorts
(Exact Name of Registrant as Specified in Governing Instruments)
Maryland 52-0901263
(State or Other Jurisdiction of Organization) (IRS Employer
Identification no.)
777 Westchester Avenue, White Plains, New York 10604
(Address of Principal Executive Offices) (Zip Code)
If this form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant
to General Instruction A.(c), please check the following box. [X]
If this form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective pursuant
to General Instruction A.(d), please check the following box. [ ]
Securities Act registration statement file number to which this form relates:
None.
(if applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
Class B shares of beneficial interest, par New York Stock Exchange
value $.01 per share
Securities to be registered pursuant to Section 12(g) of the Act: none.
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Item 1. Description of Registrant's Securities to be Registered.
DESCRIPTION OF CLASS B SHARES
The statements under this caption relating to the Class B shares of
beneficial interest, par value $.01 per share (the "Class B Shares"), of
Starwood Hotels & Resorts, a Maryland real estate investment trust (the
"Trust"), are a summary of the provisions for the Class B Shares (the "Class B
Provisions") set forth in the amendment and restatement of the Trust Declaration
proposed to be adopted at the 1998 Annual Meeting of Shareholders of the Trust,
to be held on January 6, 1999 (the "Trust Declaration Amendment and
Restatement") and the Pairing Agreement between the Trust and Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation (the "Corporation" and, together
with the Trust, "Starwood Hotels"), as it is proposed to be amended and restated
(the "Pairing Agreement").
When issued as contemplated in the Agreement and Plan of Restructuring,
as amended (the "Restructuring Agreement"), dated as of September 16, 1998 and
amended as of November 30, 1998, among the Corporation, ST Acquisition Trust, a
Maryland real estate investment trust and a wholly owned subsidiary of the
Corporation, and the Trust, the Class B Shares required to be issued thereunder
will be validly issued, fully paid and nonassessable. The holders of Class B
Shares will not have any preemptive rights with respect to the issuance of any
shares of beneficial interest in the Trust or any securities convertible into,
exchangeable for or carrying rights or options to purchase any such shares.
There is no provision for any sinking fund with respect to the Class B Shares.
The Class B Shares will be attached to and trade with the shares of common
stock, par value $.01 per share, of the Corporation (the "Corporation Shares")
for the purposes of the Pairing Agreement.
The transfer agent, registrar and distribution disbursement agent for
the Class B Shares will initially be ChaseMellon Shareholder Services, LLC.
The Trust Declaration Amendment and Restatement will authorize one
billion Class B Shares (the number of common shares of beneficial interest, par
value $.01 per share, of the Trust ("Trust Shares") currently authorized by the
Trust Declaration). It is expected that approximately 180 million Class B Shares
will be issued in the restructuring (the "Restructuring") of the Corporation and
the Trust pursuant to the Restructuring Agreement. The Class B Shares will have
a par value of $.01 per share and will have the following rights, designations,
preferences, participations and other limitations and restrictions.
DIVIDEND RIGHTS
Subject to certain conditions and to the prior rights of the holders of
Class A Exchangeable Preferred Shares, par value $.01 per share, of the Trust
("Class A EPS"), and Class B Exchangeable Preferred Shares, par value $.01 per
share, of the Trust ("Class B EPS"), the holders of Class B Shares will be
entitled to receive a non-cumulative annual dividend (the "Class B Dividend") in
an amount per share equal to the Class B Dividend Amount (as defined below) as,
if and when declared by the Trust Board out of assets of the Trust available for
payment.
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So long as any Class B Shares are outstanding, no dividends may be
declared or paid or set apart for payment on the Class A shares of beneficial
interest, par value $.01 per share, of the Trust ("Class A Shares"), with
respect to any fiscal quarter unless all accrued dividends on the Class B Shares
with respect to such quarter have been or are concurrently declared and paid;
provided, however, that this restriction on the payment of dividends on the
Class A Shares shall not apply to the extent (x) that the Trust is restricted,
under the terms of any bona fide loan or credit agreement or indenture relating
to a borrowing by the Trust or the Corporation or any of their respective
subsidiaries, from declaring or paying, with respect to any fiscal quarter, any
dividend on the Class B Shares but not on the Class A Shares, (y) the Trust
makes an election pursuant to Section 858 of the Code with respect to any such
dividend or (z) necessary, in the good faith judgment of the Board of Trustees
of the Trust (the "Trust Board"), to permit the Trust to continue to qualify for
taxation as a REIT. One loan agreement to which the Trust and the Corporation
are parties restricts the dividends that the Trust may pay to its shareholders
(other than the Corporation) for any twelve-month period to an aggregate amount
not to exceed the lesser of $150 million (such amount to be increased, for
periods ending after such increase, by 20% on each anniversary of the
Restructuring) or 15% of adjusted funds from operation for such period. There
can be no assurance that loan or credit agreements relating to future borrowings
by the Trust, the Corporation or any of their respective subsidiaries will not
contain similar restrictions.
The Class B Dividend will rank junior to the Class A EPS Preferred
Dividend (as defined below under the caption "Trust Preferred Shares -- Class A
EPS -- Dividend Rights") and the Class B EPS Preferred Dividend (as defined
below under the caption "Trust Preferred Shares -Class B EPS -- Dividend
Rights"), and holders of Class A EPS and Class B EPS have the right to
participate in dividends declared on the Class B Shares. See "Trust Preferred
Shares -- Class A EPS -- Dividend Rights" and "-- Class B EPS -- Dividend
Rights."
The following definitions apply for the purposes hereof:
"Class B Dividend Amount" shall mean an amount equal to $.60 per Class
B Share per annum; provided that such amount shall increase by 15% per annum
commencing January 1, 2000 (rounded to the nearest $.01); provided further that
if the Dividend Amount for any calendar year would (without giving effect to
this proviso) exceed 25% (but be less than or equal to 35%) of FFO Per Share (as
defined below) for the prior calendar year, then the Dividend Amount shall
increase by 5% for such year (so rounded); provided further that if the Dividend
Amount for such calendar year would (without giving effect to the preceding
proviso) exceed 35% of FFO Per Share for such prior calendar year, then the
Dividend Amount for such calendar year shall equal the Dividend Amount for such
prior calendar year; and provided further that in no calendar year shall the
Dividend Amount exceed an amount equal to 49% of the Taxable Income Per Share
for the prior calendar year (so rounded).
"Common Shares and Equivalents" shall mean the Class A Shares, the
Class B Shares, the Class A EPS Underlying Class B Shares (as defined under
"Trust Preferred Shares -- Class A EPS -- Exchange Rights"), which shares shall
be deemed outstanding to the extent the corresponding Class A EPS is
outstanding, the Class B EPS Underlying Class B Shares (as
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defined under "Trust Preferred Shares -- Class B EPS -- Exchange and Redemption
Rights"), which shares shall be deemed outstanding to the extent the
corresponding Class B EPS is outstanding, and any other shares of beneficial
interest in the Trust that do not entitle the holders thereof to a liquidation
preference with respect to the Class A Shares and the Class B Shares, but shall
not include the Class A EPS or the Class B EPS.
"FFO Per Share" for any calendar year shall mean "funds from
operations" of the Trust for such year, as such amount is calculated and
publicly disclosed by the Trust from time to time, divided by the average number
of Common Shares and Equivalents outstanding during such calendar year.
"Taxable Income Per Share" for any calendar year shall mean the taxable
income of the Trust under the Internal Revenue Code of 1986, as amended (the
"Code"), as reported by the Trust to the Internal Revenue Service (the "IRS")
for such calendar year, divided by the average number of Common Shares and
Equivalents outstanding during such calendar year.
LIQUIDATION RIGHTS
Upon the occurrence of any liquidation, dissolution or winding up of
the affairs of the Trust, whether voluntary or involuntary, the holders of Class
B Shares (and of any shares of beneficial interest in the Trust entitled to
participate in such distributions received by the holders of the Class B Shares,
including the Class A EPS (to the extent of the Class A EPS Liquidation
Participation Right (as defined below under the caption "Trust Preferred Shares
- -- Class A EPS -- Liquidation Rights")) and the Class B EPS (to the extent of
the Class B EPS Liquidation Participation Right (as defined below under the
caption "Trust Preferred Shares -- Class B EPS -- Liquidation Rights"))) will be
entitled to receive out of the assets of the Trust legally available for
liquidating distributions to holders of shares of beneficial interest in the
Trust, after the payment in full of any liquidation preference of any
outstanding shares of beneficial interest in the Trust (other than Junior Shares
(as defined below )), including the Class A EPS (to the extent of the Class A
EPS Liquidation Preference ( as defined below under the caption "Trust Preferred
Shares --Class A EPS -- Liquidation Rights")) and Class B EPS (to the extent of
the Class B EPS Liquidation Preference (as defined below under the caption
"Trust Preferred Shares -Class B EPS -- Liquidation Rights")), and after payment
in full of the Class A Liquidating Distribution (as defined below), a
liquidating distribution in an amount equal to 10% of such assets, with the
remaining 90% of such assets to be distributed concurrently to the holders of
the Class A Shares (and of any shares of beneficial interest in the Trust
entitled to participate in such distributions received by the holders of Class A
Shares). See "Description of Class A Shares -Liquidation Rights," "Trust
Preferred Shares -- Class A EPS -- Liquidation Rights" and "-Class B EPS --
Liquidation Rights." For such purposes, the consolidation or merger of the Trust
with one or more entities, a statutory share exchange, or the sale or transfer
of all or substantially all the Trust's assets, shall be deemed not to be a
liquidation, dissolution or winding up of the Trust.
The following definitions apply for the purposes hereof:
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The "Class A Liquidating Distribution" shall mean the payment to the
holders of the Class A Shares (and of any shares of beneficial interest in the
Trust entitled to participate in such distributions received by the holders of
Class A Shares) of a liquidating distribution, out of the assets of the Trust
legally available for liquidating distributions to holders of shares of
beneficial interests in the Trust, in the amount of the aggregate book value of
the total equity of the Trust on December 31, 1998, as shown on the balance
sheet of the Trust filed with the Securities and Exchange Commission (the
"SEC"), less the amount of such book value represented by the Class A EPS and
the Class B EPS. At September 30, 1998, such amount approximately $7.0 billion.
"Junior Shares" shall mean the Class A Shares, the Class B Shares and
any other shares of beneficial interest in the Trust that do not entitle the
holders thereof to a liquidation preference with respect to the Class A Shares
and the Class B Shares, but shall not include the Class A EPS or the Class B
EPS.
VOTING RIGHTS
Except as described below, the holders of Class B Shares shall not be
entitled to vote upon any matter regardless of whether holders of Class A Shares
have the right to vote on such matter.
So long as any Class B Shares are outstanding, in addition to any other
vote or consent of holders of such shares required by the Trust Declaration
Amendment and Restatement, the affirmative vote of at least a majority of the
votes entitled to be cast by the holders of all outstanding Class B Shares,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for that purpose, shall be necessary for effecting or
validating any amendment, alteration or repeal of any of the provisions of the
Trust Declaration Amendment and Restatement that materially and adversely
affects the rights of the holders of the Class B Shares disproportionately to
the effect of such amendment, alteration or repeal on the holders of Class A
Shares; provided, however, that (i) any amendment of the provisions of the Trust
Declaration Amendment and Restatement so as to authorize or classify, or to
increase the authorized amount of, any class or series of shares of beneficial
interest in the Trust, whether ranking prior to, on a parity with or junior to
the Class B Shares shall be deemed not to materially and adversely affect the
rights of the holders of Class B Shares and (ii) no filing with the State
Department of Assessments and Taxation of Maryland or otherwise in connection
with a merger, consolidation or sale of all or substantially all the assets of
the Trust shall be deemed to be an amendment, alteration or repeal of any of the
provisions of the Declaration unless such filing expressly purports to amend,
alter or repeal the Class B Provisions. For these purposes, each Class B Share
will have one vote per share.
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REDEMPTION RIGHTS
Except as described below, the Trust will not have the right to, and
the holders of the Class B Shares will not have the right to require the Trust
to, redeem any or all of the Class B Shares at any time.
EXCHANGE RIGHTS
If a Tax Event, a Creditor Event or any Other Event (each as defined
below) shall occur and be continuing, or at any time after the date that is five
years after the effective time (the "Effective Time") of the Restructuring, the
Corporation, at its sole option upon written notice (an "Exchange Notice"), will
have the right (the "Exchange Right") to exchange for all or any portion of the
Class B Shares cash, Corporation Shares, or other property with a fair market
value, in the good faith judgment of the Trust Board, at least equal to the fair
market value of the Class B Shares being exchanged (the "Exchange Amount").
Such exchange shall be deemed to have been made as of the close of
business on the applicable date fixed by the Corporation for such exchange (the
"Exchange Date") and after such Exchange Date, provided that the Exchange Amount
has been duly paid or set apart for payment in full, dividends shall cease to
accrue on the Class B Shares called for exchange, such shares shall be deemed to
be no longer outstanding and all rights of the holders of such shares as
shareholders of the Trust shall cease, except the right to receive the Exchange
Amount, without interest thereon, upon surrender of the certificates evidencing
such Class B Shares.
The Exchange Notice shall be given by the Corporation to the Trust not
less than ten nor more than sixty days prior to the Exchange Date. Each Exchange
Notice shall concurrently be given by the Corporation by first class mail to
each holder of shares to be exchanged at such holder's address as shown on the
sharebooks of the Trust and shall specify (i) the Exchange Date, (ii) the number
of Class B Shares to be exchanged in the aggregate and from such holder, (iii)
the Exchange Amount, specifying whether the Exchange Amount will be paid in
cash, Corporation Shares or other property (and identifying such other property,
if other property is to be exchanged), (iv) the place or places where
certificates for the Class B Shares to be exchanged are to be surrendered for
payment of the Exchange Amount and (v) that dividends will cease to accrue on
the Class B Shares to be exchanged on the Exchange Date. If less than all
outstanding Class B Shares are to be exchanged, the shares to be exchanged shall
be selected pro rata, by lot or in such other manner as the Trust deems
appropriate.
Upon receipt of an Exchange Notice, each holder of Class B Shares being
exchanged shall surrender to the Transfer Agent a certificate or certificates
evidencing such shares. As soon as practicable, and in any event within five
business days, after such surrender, the Trust shall cause the Corporation to
pay the applicable Exchange Amount to such holder and, if less than the full
number of shares represented by the certificate or certificates so surrendered
are to be exchanged, the Trust shall promptly deliver to such holder a
certificate or certificates evidencing the excess Class B Shares not being
exchanged. The Trust shall cause the Corporation to deliver promptly to such
holder a certificate or certificates evidencing the Corporation Shares
previously evidenced
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by the certificate or certificates surrendered. The Exchange Amount, if payable
in cash, shall be payable at the election of the Corporation by check or by wire
transfer to an account designated in writing by the holder at least two (2)
Business Days prior to the applicable Exchange Date, if one has been so
designated; if the Exchange Amount is not payable in cash, then the Exchange
Amount shall be payable in such manner as may be determined by the Corporation
and set forth in the Exchange Notice.
With respect to any Corporation Shares or other securities to be issued
pursuant to such exchange, the Trust shall cause the Corporation or the issuer
of such other securities to issue and deliver, at the office of the Transfer
Agent to the exchanging holder, a certificate or certificates for the number of
full Corporation Shares or other securities deliverable in accordance with the
Class B Provisions, and cash shall be paid in lieu of any fractional Corporation
Shares (the date of delivery of such certificate or certificates being sometimes
referred to herein as the "Exchange Issuance Date"). Any such Corporation Shares
or other securities issued upon such exchange shall be deemed to have been
issued immediately prior to the close of business on the Exchange Issuance Date,
and the person or persons in whose name or names any certificate or certificates
for Corporation Shares or other securities shall be issuable pursuant to such
exchange shall be deemed to have become the holder or holders of record of the
Corporation Shares or other securities represented thereby at such time on such
date unless the share transfer records for the Corporation Shares or other
securities shall be closed on such date, in which event such person or persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such share transfer books are open.
The following definitions apply for the purposes hereof:
"Creditor Event" means the occurrence of one or more material defaults
(whether or not any applicable cure period has expired), as determined in good
faith by the Board of Directors of the Corporation (the "Corporation Board") or
the Trust Board, under any agreement or instrument governing a material amount
of indebtedness of the Trust, the Corporation or any of their subsidiaries,
including, without limitation, the Credit Agreement, dated as of February 23,
1998, among the Corporation, the Trust, SLT Realty Limited Partnership, a
Delaware limited partnership, and ITT Corporation, a Nevada corporation and a
wholly owned subsidiary of the Corporation, certain additional borrowers,
various lenders and Lehman Brothers Commercial Paper Inc., as Syndication Agent,
and Bankers Trust Company and The Chase Manhattan Bank, as Administrative
Agents, together with the related documents thereto (including any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented,
replaced, refinanced or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder or adding or deleting subsidiaries of the Corporation or the Trust as
additional borrowers or guarantors thereunder) all or any portion of the
indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
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"Other Event" means any of the following: (i) the consummation of any
public offering or distribution of equity securities of the Trust (other than as
units consisting of one Class B Share and one Corporation Share ("Units")), (ii)
the consummation of any transaction or series of transactions that results in
the Corporation beneficially owning securities carrying less than 50% of the
aggregate voting power of all the outstanding voting securities of the Trust,
(iii) consummation by the Corporation of any transaction or series of related
transactions in which stock of the Corporation or securities convertible into or
exchangeable or exercisable for stock of the Corporation is issued, if the stock
of the Corporation has or will have upon issuance voting power or value equal to
or in excess of 20% of the voting power or value, respectively, of the stock of
the Corporation outstanding before the issuance of such stock of the Corporation
or securities convertible into or exchangeable or exercisable for stock of the
Corporation or (iv) any change (including any prospective change) after the
Effective Time in the accounting principles applicable to the preparation of the
financial statements filed by the Trust or the Corporation with the SEC that, in
the good faith determination of the Trust Board or the Corporation Board,
respectively, has or would have a material adverse effect on the Trust or the
Corporation in the event the Exchange Right were not exercised, but which effect
would be mitigated by such exercise.
"Tax Event" means (i) the good faith determination by the Trust Board,
after consultation with counsel experienced in such matters, that, as a result
of any amendment to, or change (including any enacted prospective amendment or
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the Effective Time,
there is a substantially increased likelihood that (A) dividends payable by the
Trust are not, or within 90 days after the date of such determination, will not
be, deductible by the Trust, in whole or in part, for United States federal
income tax purposes, or (B) the Trust is not, or within 180 days after the date
of such determination will not be, taxable as a REIT or (ii) the Trust revokes
or terminates or states its intention to revoke or terminate its election to be
taxed as a REIT.
OWNERSHIP LIMITS; RESTRICTIONS ON TRANSFER; REPURCHASE AND REDEMPTION OF CLASS B
SHARES
The charter of the Corporation (the "Corporation Charter") provides,
and the Trust Declaration Amendment and Restatement will provide, that, subject
to certain exceptions specified in the Corporation Charter and the Trust
Declaration Amendment and Restatement, no one person or group of related persons
may own, or be deemed to own by virtue of the attribution provisions of the
Code, more than 8.0% of the shares of beneficial interest in the Trust or stock
of the Corporation, respectively, whether measured by vote, value or number of
shares outstanding (other than for shareholders who owned in excess of 8.0% as
of January 31, 1995, who may not so own or be deemed to own more than the lesser
of 9.9% or the percentage of shares in the Trust or stock of the Corporation
they held on such date) (the "Ownership Limit"). The Trust Board and the
Corporation Board may, but are not required to, waive the Ownership Limit if
evidence satisfactory to the Trust Board and the Corporation Board and the tax
counsel to the
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Trust and the Corporation is presented that such ownership will not jeopardize
the Trust's status as a REIT. As a condition of such waiver, each of the Trust
Board and the Corporation Board may require opinions of counsel satisfactory to
it and/or an undertaking from the applicant with respect to preserving the REIT
status of the Trust. If shares which would cause the Trust to be beneficially
owned by fewer than 100 persons are issued or transferred to any person, such
issuance or transfer shall be null and void and the intended transferee will
acquire no rights to the stock. Any acquisition of shares in the Trust or stock
of the Corporation and continued holding or ownership of shares in the Trust or
stock of the Corporation constitutes, under the Trust Declaration Amendment and
Restatement and the Corporation Charter, a continuous representation of
compliance with the Ownership Limit.
In the event of a purported transfer or other event that would, if
effective, result in the ownership of shares in the Trust or stock of the
Corporation in violation of the Ownership Limit, such transfer with respect to
that number of shares that would be owned by the transferee in excess of the
Ownership Limit would be deemed void ab initio and such shares in the Trust or
stock of the Corporation would automatically be exchanged for Excess Shares or
Excess Stock, as applicable (collectively, "Excess Stock"), authorized by the
Trust Declaration Amendment and Restatement and the Corporation Charter,
according to rules set forth in the Trust Declaration Amendment and Restatement
and the Corporation Charter, to the extent necessary to ensure that the
purported transfer or other event does not result in ownership of shares in the
Trust or stock of the Corporation in violation of the Ownership Limit. Any
purported transferee or other purported holder of Excess Stock is required to
give written notice immediately to the Trust and the Corporation of a purported
transfer or other event that would result in the issuance of Excess Stock.
Any Excess Shares and Excess Stock which may be issued in exchange for
Units will be attached in the same manner that the Class B Shares and the
Corporation Shares comprising such Units were attached prior to such exchange.
Excess Stock will not be Treasury stock but rather will continue as issued and
outstanding shares in the Trust and stock of the Corporation. While outstanding,
Excess Stock will be held in trust. The trustees of such trusts shall be
appointed by the Trust and the Corporation and shall be independent of the
Trust, the Corporation and the holder of Excess Stock. The beneficiary of such
trust shall be one or more charitable organizations selected by the trustee. If,
after the purported transfer or other event resulting in an exchange of shares
in the Trust or stock of the Corporation for Excess Stock and prior to the
discovery by the Trust and the Corporation of such exchange, dividends or
distributions are paid with respect to the shares in the Trust or the stock of
the Corporation that were exchanged for Excess Stock, then such dividends or
distributions are to be repaid to the trustee upon demand for payment to the
charitable beneficiary. The trustee shall vote the Excess Stock, which shall
have the same voting rights as the shares in the Trust or the stock of the
Corporation exchanged for such Excess Stock. Any vote cast by the purported
transferee or purported record transferee will, at the election of the trustee,
be void ab initio. While Excess Stock is held in trust, an interest in that
trust may be transferred by the trustee only to a person whose ownership of
shares in the Trust or stock of the Corporation will not violate the Ownership
Limit, at which time the Excess Stock will be automatically exchanged for the
same number of shares in the Trust or stock of the Corporation of the same type
and class as the shares in the Trust or stock of the Corporation for
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which the Excess Stock was originally exchanged. The Corporation Charter
contains, and the Trust Declaration Amendment and Restatement will contain,
provisions that are designed to ensure that the purported transferee or other
purported holder of the Excess Stock may not receive in return for such a
transfer an amount that reflects any appreciation in the shares in the Trust or
stock of the Corporation for which such Excess Stock was exchanged during the
period that such Excess Stock was outstanding. Any amount received by a
purported transferee or other purported holder in excess of the amount permitted
to be received must be turned over to the charitable beneficiary of the trust.
If the foregoing restrictions are determined to be void or invalid by virtue of
any legal decision, statute, rule or regulation, then the intended transferee or
holder of any Excess Stock may be deemed, at the option of the Trust and the
Corporation, to have acted as an agent on behalf of the Trust and the
Corporation in acquiring or holding such Excess Stock and to hold such Excess
Stock on behalf of the Trust and the Corporation.
The Corporation Charter further provides, and the Trust Declaration
Amendment and Restatement will further provide, that the Trust and the
Corporation may purchase, for a period of 90 days during the time the Excess
Stock is held in trust, all or any portion of the Excess Stock from the original
transferee-shareholder at the lesser of the price paid for the shares in the
Trust or the stock of the Corporation by the purported transferee (or if no
notice of such purchase price is given, at a price to be determined by the Trust
Board and the Corporation Board, in their sole discretion, but no lower than the
lowest market price of such stock (based on the market price of the Units or
other shares in the Trust or stock of the Corporation) at any time during the
period in which the Excess Stock is held in trust) and the closing market price
for the Units or other shares in the Trust or stock of the Corporation on the
date the Trust and the Corporation exercise their option to purchase. The 90-day
period begins on the date of the violative transfer if the original
transferee-shareholder gives notice to the Trust and the Corporation of the
transfer or (if no notice is given) the date the Trust Board and the Corporation
Board determine that a violative transfer has been made.
The Ownership Limit will not be removed automatically even if the REIT
provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Except as otherwise described above, any change in the Ownership
Limit would require an amendment to the Trust Declaration Amendment and
Restatement and the Corporation Charter. Amendments to the Trust Declaration
Amendment and Restatement will generally require the affirmative vote of holders
owning a majority of the outstanding Class A Shares and amendments to the
Corporation Charter generally require the affirmative vote of holders owning a
majority of the outstanding Corporation Shares, except that changes to the
Ownership Limit require two-thirds approval. In addition to preserving the
Trust's status as a REIT, the Ownership Limit may have the effect of delaying,
deferring, or preventing a change in control of the Trust and the Corporation
without the approval of the Trust Board and the Corporation Board.
All persons who own, directly or by virtue of the attribution
provisions of the Code, 5% or more (or such other percentage as may be required
by the Code or regulations promulgated thereunder) of the outstanding shares in
the Trust or stock of the Corporation must file an affidavit with the Trust and
the Corporation containing the information specified in the Trust
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Declaration Amendment and Restatement and the Corporation Charter before January
30 of each year. In addition, each shareholder and stockholder shall upon demand
be required to disclose to the Trust and the Corporation in writing such
information with respect to the direct, indirect and constructive ownership of
shares as the Trust Board or the Corporation Board deems necessary to comply
with the provisions of the Trust Declaration Amendment and Restatement and the
Corporation Charter or the Code applicable to a REIT or to comply with the
requirements of any taxing authority or governmental agency.
All certificates representing shares in the Trust (including the Class
B Shares) or stock of the Corporation will bear a legend referring to the
restrictions described above.
In addition, the Corporation Charter provides that (i) all Starwood
Hotels' securities are subject to redemption to the extent necessary to prevent
the loss, or to secure the reinstatement, of any casino gaming license held by
any of Starwood Hotels' subsidiaries in any jurisdiction within or without the
United States; (ii) all Starwood Hotels' securities are held subject to the
condition that if a holder is found by a gaming authority in any jurisdiction to
be disqualified or unsuitable pursuant to any gaming law, such holder will be
required to dispose of all such securities, and failing such disposition, the
Corporation may redeem the securities at the lesser of their market price or the
disqualified holder's original purchase price; and (iii) it is unlawful for any
such disqualified person to (a) receive payments of interest or dividends on any
such securities; (b) exercise, directly or indirectly, any rights conferred by
any such securities; or (c) receive any remuneration in any form, for services
rendered or otherwise, from the subsidiary that holds the gaming license in the
applicable jurisdiction.
DESCRIPTION OF CLASS A SHARES
The statements under this caption relating to the Class A Shares are a
summary of certain provisions of the Trust Declaration Amendment and
Restatement. Except for liquidation rights, the Class A Shares will have rights
identical to those of the Trust Shares, as follows.
When issued as contemplated in the Restructuring Agreement, the Class A
Shares required to be issued thereunder will be validly issued, fully paid and
nonassessable. The holders of Class A Shares will not have any preemptive rights
with respect to the issuance of any shares of beneficial interest in the Trust
or any securities convertible into, exchangeable for or carrying rights or
options to purchase any such shares. There is no provision for any sinking fund
with respect to the Class A Shares. The Class A Shares will not be attached to
any shares of stock of the Corporation for purposes of the Pairing Agreement.
The Class A Shares will have a par value of $.01 per share and will
have the following rights, designations, preferences, participation and other
limitations and restrictions.
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<PAGE> 12
DIVIDEND RIGHTS
Subject to the prior rights of the holders of the Class B Shares,
Class A EPS and Class B EPS (and any other class or series of shares of
beneficial interest that may from time to time be issued), the holders of Class
A Shares shall be entitled to receive, when, as and if declared by the Trustees,
out of assets of the Trust available for payment, dividends payable in cash or
other form.
LIQUIDATION RIGHTS
Upon the occurrence of any liquidation, dissolution or winding up of
the affairs of the Trust, whether voluntary or involuntary, the holders of Class
A Shares (and of any shares of beneficial interest in the Trust entitled to
participate in such distributions received by the holders of Class A Shares)
will be entitled to receive out of the assets of the Trust legally available for
liquidating distributions to holders of shares of beneficial interest in the
Trust, (i) after the payment in full of any liquidation preference of any
outstanding shares of beneficial interest in the Trust (other than Junior
Shares), including the Class A EPS (to the extent of the Class A EPS Liquidation
Preference) and Class B EPS (to the extent of the Class B EPS Liquidation
Preference), the Class A Liquidating Distribution, and (ii) after the payment in
full of the Class A Liquidating Distribution, a liquidating distribution in an
amount equal to 90% of such assets with the remaining 10% of such assets to be
distributed concurrently to the holders of the Class B Shares (and of any shares
of beneficial interest in the Trust entitled to participate in such
distributions received by the holders of the Class B Shares, including the Class
A EPS (to the extent of the Class A EPS Liquidation Preference) and the Class B
EPS (to the extent of the Class B EPS Liquidation Preference)). See "Description
of Class B Shares -- Liquidation Rights," "Trust Preferred Shares -- Class A EPS
- -- Liquidation Rights" and " -- Class B EPS -Liquidation Rights." For such
purposes, the consolidation or merger of the Trust with one or more entities, a
statutory share exchange or the sale or transfer of all or substantially all the
Trust's assets, shall be deemed not to be a liquidation, dissolution or winding
up of the Trust.
As described under "Description of Class B Shares -- Liquidation
Rights," the amount of the Class A Liquidation Distribution is the aggregate
book value of the total equity of the Trust on December 31, 1998, as shown on
the balance sheet of the Trust filed with the SEC, less the amount of such book
value represented by the Class A EPS and the Class B EPS. At September 30, 1998,
such amount was approximately $7.0 billion.
VOTING RIGHTS
The holders of Class A Shares shall be entitled to one vote per share
upon all matters submitted to the vote of holders of shares of beneficial
interest in the Trust at any meeting of shareholders of the Trust. Accordingly,
immediately after the Restructuring, the Corporation, as the sole holder of the
Class A Shares, will be the only person entitled to vote in the election of
Trustees of the Trust.
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<PAGE> 13
REDEMPTION RIGHTS
The Trust will not have the right to, and the holders of the Class A
Shares will not have the right to require the Trust to, redeem any or all of the
Class A Shares at any time except in the event of a violation of the Ownership
Limit or to the extent necessary to prevent the loss, or to secure the
reinstatement, of any casino gaming license held by any of Starwood Hotels'
subsidiaries. See "Description of Class B Shares -- Ownership Limits;
Restrictions on Transfer, Repurchase and Redemption of Class B Shares."
TRUST PREFERRED SHARES
In connection with the Westin Acquisition, the Trust Board adopted
Articles Supplementary designating two new classes of the Trust Preferred Shares
- -- Class A EPS and Class B EPS.
CLASS A EPS
Under the Articles Supplementary creating the Class A EPS, shares of
Class A EPS have a par value of $.01 per share and, after the Restructuring,
will have the following rights, designations, preferences, participation and
other limitations and restrictions.
Dividend Rights. The holders of Class A EPS will be entitled (i) to
receive as described below a preferred dividend (a "Class A EPS Preferred
Dividend") based on the payment of any dividend on the Corporation Shares (other
than a dividend or distribution constituting a Class A EPS Adjustment Event as
described below) or any liquidating distribution in respect of the Corporation
Shares and (ii) to participate on the basis described below in any dividend
(other than a dividend or distribution constituting a Class A EPS Adjustment
Event) paid on the Class B Shares, when and if declared by the Trustees out of
assets of the Trust available for payment (a "Class A EPS Participation
Dividend").
Upon the payment of any dividend on the Corporation Shares (other than
a dividend or distribution that constitutes a Class A EPS Adjustment Event) or
any liquidating distribution in respect of the Corporation Shares, a Class A EPS
Preferred Dividend in a corresponding amount will automatically accrue with
respect to the Class A EPS based on the number of Class A EPS Underlying
Corporation Shares (as defined below) for which each share of Class A EPS is
then exchangeable upon exercise of the Class A EPS Exchange Right described
below. Each Class A EPS Preferred Dividend will be cumulative from the date on
which it accrues.
No Class B Dividend may be authorized unless the Trust Board
concurrently authorizes a Class A EPS Participation Dividend entitling each
share of Class A EPS to receive a dividend equal to the amount of the Class B
Dividend authorized on each Class B Share multiplied by the number of Class A
EPS Underlying Class B Shares into which each share of Class A EPS is then
convertible upon exercise of the Class A EPS Exchange Right.
Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Trust, the holders of Class A
EPS will be entitled (i) to receive out of the
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<PAGE> 14
assets of the Trust legally available for liquidating distributions to holders
of shares of beneficial interests in the Trust, prior to any distribution or
payment to holders of Class B Shares or any other class or series of shares of
beneficial interest in the Trust ranking junior to the Class A EPS (including
the Class A Shares), a liquidating distribution in an amount equal to the Class
A EPS Liquidation Preference described below and (ii) to participate on the
basis described below in any liquidating distribution to holders of Class B
Shares (the "Class A EPS Liquidation Participation Right"). For such purposes,
the consolidation or merger of the Trust with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all of
the property or business of the Trust, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Trust.
The "Class A EPS Liquidation Preference" of a share of Class A EPS as
of any date shall mean the sum of (x) the fair market value as of such date of
the number of Class A EPS Underlying Corporation Shares for which each Class A
EPS is exchangeable as of such date upon exercise of the Class A EPS Exchange
Right plus (y) the amount of any accrued but unpaid Class A EPS Preferred
Dividends in respect of each share of Class A EPS as of such date.
In addition to being entitled to receive the Class A EPS Liquidation
Preference upon any liquidation, dissolution or winding up of the Trust, the
holders of Class A EPS will be entitled to participate, pursuant to the Class A
EPS Liquidation Participation Right, ratably with the holders of Class B Shares
in any liquidating distributions to such holders. For such purpose, each share
of Class A EPS shall be deemed to represent a number of Class B Shares equal to
the number of Class A EPS Underlying Class B Shares (as defined below) for which
each share of Class A EPS is then exchangeable upon exercise of the Class A EPS
Exchange Right.
Exchange Rights. Shares of Class A EPS will be exchangeable at any time
at the option of the holder for Units based on a one-to-one exchange ratio
(subject to adjustment as described below) (the "Class A EPS Exchange Right");
provided that the Trust may instead, at its option, deliver to the holder upon
exercise of the Class A EPS Exchange Right the cash equivalent of some or all of
such Units based on the average closing price of the Units on The New York Stock
Exchange, Inc. (the "NYSE") during the preceding five trading days (the "Cash
Equivalent"). In addition, in the event that the delivery by the Trust to the
exchanging holder of the full number of Units requested to be delivered by such
holder (the "Requested Shares") would result in a violation of the Ownership
Limit, the Trust may either (x) deliver to such holder the maximum number of
Units that may be delivered without causing such a violation (the "Delivered
Shares", with the number of Requested Shares in excess of the Delivered Shares
being referred to herein as the "Excess Shares"), together with either the Cash
Equivalent of the Excess Shares or an Exchange Promissory Note (as defined
below) in a principal amount equal to such Cash Equivalent of the Excess Shares
or (y) deliver to such holder the Cash Equivalent of the Requested Shares. If
the delivery of the full number of Requested Shares would violate either the
Ownership Limit or the REIT Provisions because the exchanging holder, together
with its affiliates, beneficially owns Units other than through the ownership of
securities directly or indirectly issued pursuant to the Transaction Agreement
dated as of September 8, 1997 pursuant to which Starwood Hotels acquired Westin
(the "Westin Transaction Agreement"), the Trust will have the option (the
"Registered Sale Option"), in lieu of delivering an Exchange Promissory
- 14 -
<PAGE> 15
Note in a principal amount equal to the Cash Equivalent of the Excess Shares, to
procure the filing of a registration statement under the Securities Act, and to
publicly offer and sell pursuant to such registration statement a number of
Units equal to the number of such Excess Shares, the net proceeds of which sale
(after deducting any applicable underwriting discounts or commissions and the
expenses of such offering) shall be paid to such holder. If the Trust elects to
substitute an Exchange Promissory Note for the Excess Shares or elects the
Registered Sale Option, the exchanging holder will have the right to withdraw
its exchange request. For the purposes of the foregoing, an "Exchange Promissory
Note" means an unsecured promissory note of the Trust with a maturity date 90
days after the date of issuance and bearing interest in an amount equal to the
amount of any dividends paid during the period that such note remains
outstanding on a number of Units equal to the Excess Shares, which interest
shall be payable on the dates of payment of the corresponding dividends.
The exchange ratio of shares of Class A EPS for Units will be subject
to adjustment from time to time based on the occurrence of stock dividends,
stock splits, reverse stock splits and other similar events in respect of the
Units ("Class A EPS Adjustment Events"). The number of Units for which each
share of Class A EPS is exchangeable at any given time is referred to as the
"Class A EPS Underlying Units", with the Corporation Shares component of such
Class A EPS Underlying Units being referred to as the "Class A EPS Underlying
Corporation Shares" and the Class B Shares component of such Class A EPS
Underlying Units being referred to as the "Class A EPS Underlying Class B
Shares". In addition, in the event any capital reorganization or
reclassification of the Class B Shares or the Corporation Shares, or
consolidation or merger of the Trust or the Corporation with another
corporation, trust or other entity, or the sale, transfer, or lease of all or
substantially all of the assets of the Trust or the Corporation to another
person, is effected in such a way that holders of Class B Shares or Corporation
Shares will be entitled to receive stock, securities or other assets with
respect to or in exchange for Class B Shares or Corporation Shares, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or lease, the Class A EPS Exchange Right shall become exercisable, to
the extent provided above, for the kind and amount of stock, securities or other
assets which such holders would have owned or been entitled to receive
immediately after the transaction if such holders had exchanged their Class A
EPS for the Class A EPS Underlying Units immediately prior to the effective date
of such transaction.
If there are any accrued but undeclared Class A EPS Preferred Dividends
on any Class A EPS being exchanged pursuant to any exercise of the Class A EPS
Exchange Right, the number of Units to be delivered pursuant to such exercise
shall be increased by a number of Units equal to the amount of such accrued but
undeclared Class A EPS Preferred Dividends divided by the average closing price
of the Units on the NYSE during the five trading days preceding the date of
delivery of the applicable Class A EPS Exchange Notice.
Voting Rights. Except as required by law, the holders of Class A EPS
will be entitled to vote on any matter on which the holders of Class B Shares
will be entitled to vote. Each share of Class A EPS held of record on the record
date for the determination of holders of Class B Shares entitled to vote on such
matter (or, if no record date is established, on the date such vote is taken)
shall entitle the holder thereof to cast a number of votes equal to the largest
whole number of
- 15 -
<PAGE> 16
Class A EPS Underlying Class B Shares for which such shares of Class A EPS could
be exchanged at such time.
CLASS B EPS
Under the Articles Supplementary classifying the Class B EPS, shares of
Class B EPS have a par value of $.01 per share and, after the Restructuring,
will have the following rights, designations, preferences, participations and
other limitations and restrictions:
Dividend Rights. The holders of Class B EPS will be entitled (i) to
receive as described below a preferred dividend (a "Class B EPS Preferred
Dividend") based on the payment of any dividend on the Corporation Shares (other
than a dividend or distribution constituting a Class A EPS Adjustment Event) or
any liquidating distribution in respect of the Corporation Shares and (ii) to
participate on the basis described below in any dividend (other than a dividend
or distribution constituting a Class A EPS Adjustment Event) paid on the Class B
Shares, when and if authorized by the Trustees out of assets of the Trust
available for payment (a "Class B EPS Participation Dividend").
Upon the payment of any dividend on the Corporation Shares (other than
a dividend or distribution that constitutes a Class A EPS Adjustment Event) or
any liquidating distribution in respect of the Corporation Shares, a Class B EPS
Preferred Dividend will automatically accrue with respect to the Class B EPS
based on the number of Class B EPS Underlying Corporation Shares (as defined
below) for which each share of Class B EPS is then indirectly exchangeable. Each
Class B EPS Preferred Dividend will be cumulative from the date on which it
accrues.
No Class B Dividend may be authorized unless the Trust Board
concurrently authorizes a Class B EPS Participation Dividend entitling each
share of Class B EPS to receive a dividend equal to the amount of the Class B
Dividend authorized on each Class B Share multiplied by the number of Class B
EPS Underlying Class B Shares (as defined below) for which each share of Class B
EPS is then indirectly exchangeable.
Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Trust, the holders of Class B
EPS will be entitled (i) to receive out of the assets of the Trust legally
available for liquidating distributions to holders of shares of beneficial
interest in the Trust, prior to any distribution or payment to holders of Class
B Shares or any other class or series of shares of beneficial interest in the
Trust ranking junior to the Class B EPS (including the Class A Shares), a
liquidating distribution in an amount equal to the Class B EPS Liquidation
Preference described below and (ii) to participate on the basis described below
in any liquidating distribution to holders of Class B Shares (the "Class B EPS
Liquidation Participation Right").
The "Class B EPS Liquidation Preference" of a share of Class B EPS as
of any date shall mean the sum of (x) $38.50 plus (y) the amount of any accrued
but unpaid Class B EPS Preferred Dividends in respect of each share of Class B
EPS as of such date.
- 16 -
<PAGE> 17
In addition to being entitled to receive the Class B EPS Liquidation
Preference upon any liquidation, dissolution or winding up of the Trust, the
holders of Class B EPS will be entitled to participate, pursuant to the Class B
EPS Liquidation Participation Right, ratably with the holders of Class B Shares
in any liquidating distributions to such holders. For such purpose, each share
of Class B EPS shall be deemed to represent a number of Class B Shares equal to
the number of Class B EPS Underlying Class B Shares for which each share of
Class B EPS is then indirectly exchangeable.
Exchange and Redemption Rights. Each share of Class B EPS will be
exchangeable at any time from and after the first anniversary of the date of
issuance of the Class B EPS through the date that is two business days after the
Cross-Over Date (as defined below), at the option of the holder, for one share
of Class A EPS, subject to adjustment in the event of a Class B EPS Adjustment
Event or as otherwise set forth below (the "Class B EPS Exchange Right").
At any time and from time to time beginning on the Cross-Over Date, a
holder of Class B EPS may require that the Trust either (x) redeem such shares
of Class B EPS for a cash redemption price equal to the Class B EPS Liquidation
Preference as of the date notice of such exchange is made or (y) convert each
such share of Class B EPS into a number of shares of Class A EPS (the
"Redemption Number of Shares") equal to the quotient obtained by dividing (i)
the Class B EPS Liquidation Preference as of the date notice of such exchange is
made by (ii) the Underlying Unit Value (as defined below) of one share of Class
A EPS (the "Class B EPS Redemption Right"). Prior to the first anniversary of
the Cross-Over Date, an exchanging holder may elect whether to receive the cash
redemption price specified above or the Redemption Number of Shares, whereas
with respect to an exchange notice given on or after the first anniversary of
the Cross-Over Date, the Trust will have the right to elect whether to deliver
the cash redemption price or the Redemption Number of Shares.
At any time and from time to time after the Cross-Over Date, the Trust,
at its option, will have the right (the "Trust Redemption Right") to (i) redeem
the Class B EPS, in whole or in part, for cash at a redemption price equal to
the Class B EPS Liquidation Preference as of the date of such Trust Redemption
Notice or (ii) exchange the Class B EPS, in whole or in part, for a number of
shares of Class A EPS equal to the Redemption Number of Shares; provided,
however, that prior to the first anniversary of the Cross-Over Date, the Trust
must redeem such shares of Class B EPS for the cash redemption price rather than
exchanging such shares for shares of Class A EPS.
The following definitions apply for the purposes hereof:
"Cross-Over Date" means the fifth anniversary of the Westin
Acquisition, subject to extension as described below under the caption "Special
Default Rights".
"Underlying Unit Value" as of a given date means the product of (A) the
average closing price of the Units on the NYSE during the five trading days
preceding such date multiplied by (B) the number of Units for which each share
of Class A EPS is then exchangeable upon exercise of the Class A EPS Exchange
Right.
- 17 -
<PAGE> 18
On or prior to the Cross-Over Date, the exchange ratio of shares of
Class B EPS for shares of Class A EPS shall be subject to adjustment from time
to time based on the occurrence of stock dividends, stock splits, reverse stock
splits and other similar events in respect of the Class A EPS ("Class B EPS
Adjustment Events"). The Units for which each share of Class B EPS will be
indirectly exchangeable at any given time (assuming both (i) the exercise of the
Class B EPS Exchange Right and (ii) the concurrent exercise of the Class A EPS
Exchange Right in respect of the shares of Class A EPS issuable upon exercise of
such Class B EPS Exchange Right) are referred to as the "Class B EPS Underlying
Units", with the Corporation Shares component of such Class B EPS Underlying
Units being referred to as the "Class B EPS Underlying Corporation Shares" and
the Class B Shares component of such Class B EPS Underlying Units being referred
to as the "Class B EPS Underlying Class B Shares". In addition, in the event of
the occurrence of any capital reorganization or reclassification of the Class A
EPS, or consolidation or merger of the Trust with another corporation, trust or
other entity, or the sale, transfer or lease of all or substantially all of the
assets of the Trust to another person, that is effected in such a way that
holders of Class A EPS will be entitled to receive stock, securities or other
assets with respect to or in exchange for Class A EPS, then, as a condition of
such reorganization, reclassification, consolidation, merger, sale, transfer or
lease, the Class B EPS Exchange Right and the Trust Redemption Right shall be
modified so that, upon exercise thereof, the Class B EPS will be exchanged for
the kind and amount of stock, securities or other assets which the holders of
such Class B EPS would have owned or been entitled to receive immediately after
the transaction if such holders had exchanged their Class B EPS into the shares
of Class A EPS immediately prior to the effective date of such transaction,
subject to further adjustment upon the occurrence of the events described above.
If there are any accrued but undeclared Class B EPS Preferred Dividends
in respect of the shares of Class B EPS subject to an exchange request, the
number of shares of Class A EPS issuable pursuant to such exchange shall be
increased by a number of shares equal to (i) the amount of such accrued but
undeclared dividends divided by (ii) the product of (A) the average closing
price of the Units on the NYSE during the five trading days preceding the date
of delivery of such Class A EPS Exchange Notice multiplied by (B) the number of
Units for which each share of Class A EPS is then exchangeable upon exercise of
the Class A EPS Exchange Right.
Special Default Rights. In the event that the Trust defaults in its
obligations with respect to any valid exercise of the Class B EPS Exchange
Right, the Class B EPS Redemption Right or the Trust Redemption Right and such
default is not cured within 30 days (an "Uncured Default"), then: (i) the
holders of the Class B EPS will have the right to designate two additional
Trustees for the Trust (such persons to be designated by the holders of a
majority of the outstanding shares of Class B EPS), (ii) the dividend rate on
the Class B EPS will be increased as described below, (iii) the holders of Class
B EPS will have registration rights similar to those set forth in the
Registration Rights Agreement entered into pursuant to the Westin Transaction
Agreement and (iv) the Cross-Over Date will be extended by a number of days
equal to the number of days during which such Uncured Default remains uncured.
Upon the occurrence and during the continuation of any Uncured Default,
cumulative dividends ("Default Rate Dividends") shall accrue on the $38.50
stated value of the Class B EPS at a rate per annum equal to LIBOR plus 4% and
will be payable quarterly; provided that if at any time when there are accrued
but unpaid Default Rate
- 18 -
<PAGE> 19
Dividends, a Class B EPS Preferred Dividend or Class B EPS Participation
Dividend would have become payable pursuant to the normal dividend rights of the
Class B EPS described above that would exceed the amount of such accrued but
unpaid Default Rate Dividends, the holders of the Class B EPS shall be entitled
to receive such Class B EPS Preferred Dividend or Class B EPS Participation
Dividend in lieu of such Default Rate Dividends, and the accrued amount of such
Default Rate Dividends shall be reset to zero.
Voting Rights. Except as required by law, the holders of Class B EPS
will be entitled to vote on any matter on which the holders of Class B Shares
are entitled to vote. Each share of Class B EPS held of record on the record
date for the determination of holders of Class B Shares entitled to vote on such
matter (or, if no record date is established, on the date such vote is taken)
shall entitle the holder thereof to cast a number of votes equal to the largest
whole number of Class B EPS Underlying Class B Shares for which such shares of
Class B EPS could be indirectly exchanged at such time (assuming the exercise of
the Class B EPS Conversion Right and the concurrent exercise of the Class A EPS
Exchange Right with respect to the shares of Class A EPS issuable upon exercise
of such Class B EPS Conversion Right).
OWNERSHIP LIMITS; RESTRICTIONS ON TRANSFER; REPURCHASE AND REDEMPTION OF TRUST
PREFERRED SHARES
Ownership of Class A EPS and Class B EPS is, and will continue to be,
subject to the Ownership Limit and the restrictions on transfer, repurchase and
redemption rights described above under the caption "Description of Class B
Shares -- Ownership Limits; Restrictions on Transfer; Repurchase and Redemption
of Class B Shares." All certificates representing Class A EPS or Class B EPS
will bear a legend referring to these restrictions.
- 19 -
<PAGE> 20
Item 2. Exhibits
Exhibit 1* Form of Amended and Restated Declaration of Trust
of Starwood Hotels & Resorts, as proposed to be
amended pursuant to the Restructuring Agreement.
Exhibit 2* Trustees' Regulations of the Trust, as amended.
Exhibit 3* Form of Amended and Restated Intercompany
Agreement, as proposed to be amended pursuant to the
Restructuring Agreement.
* filed herewith
-20-
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized.
STARWOOD HOTELS & RESORTS
By: /s/ Barry Sternlicht
--------------------------------
Name: Barry Sternlicht
Title: Chairman and Chief Executive Officer
Dated: December 21, 1998
<PAGE> 22
LIST OF EXHIBITS
Exhibit No. Description
Exhibit 1* Form of Amended and Restated Declaration of Trust of
Starwood Hotels & Resorts, as proposed to be amended pursuant
to the Restructuring Agreement.
Exhibit 2* Trustees' Regulations of the Trust, as amended.
Exhibit 3* Form of Amended and Restated Intercompany Agreement, as
proposed to be amended pursuant to the Restructuring
Agreement.
* filed herewith
<PAGE> 1
EXHIBIT 1
AMENDED AND RESTATED DECLARATION OF TRUST
OF
STARWOOD HOTELS & RESORTS
<PAGE> 2
AMENDED AND RESTATED DECLARATION OF TRUST
OF
STARWOOD HOTELS & RESORTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. The Trust; Definitions..........................................................................1
1.1 Name............................................................................................1
1.2 Place of Business...............................................................................1
1.3 Nature of Trust.................................................................................1
1.4 Definitions.....................................................................................1
ARTICLE II. Trustees........................................................................................6
2.1 Number, Term of Office, Qualifications of Trustees..............................................6
2.2 Compensation and Other Remuneration.............................................................7
2.3 Resignation, Removal and Death of Trustees......................................................7
2.4 Vacancies.......................................................................................7
2.5 Successor and Additional Trustees...............................................................8
2.6 Actions by Trustees.............................................................................8
2.7 Executive Committee.............................................................................8
2.8 Names and Addresses of Trustees.................................................................8
2.9 Non-Affiliated Trustees.........................................................................8
ARTICLE III. Trustees' Powers................................................................................9
3.1 Power and Authority of Trustees.................................................................9
3.2 Specific Powers and Authorities.................................................................9
3.3 Bylaws.........................................................................................13
3.4 Additional Powers..............................................................................13
3.5 Incorporation..................................................................................13
ARTICLE IV. Advisor; Limitation on Operating Expenses......................................................14
4.1 Employment of Advisor..........................................................................14
4.2 Term...........................................................................................14
4.3 Restrictions on Advisor........................................................................14
4.4 Limitation on Operating Expenses...............................................................15
4.5 Sale of Shares of the Advisor..................................................................17
ARTICLE V. Investment Policy..............................................................................18
5.1 General Statement of Policy....................................................................18
5.2 Obligor's Default..............................................................................18
5.3 Changes Investment Policies and Restrictions...................................................18
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. The Shares and Shareholders....................................................................19
6.1 Shares.........................................................................................19
6.2 Legal Ownership of Trust Estate................................................................20
6.3 Shares Deemed Personal Property................................................................20
6.4 Share Record: Issuance and Transferability Shares..............................................20
6.5 Dividends or Distributions to Shareholders.....................................................21
6.6 Transfer Agent, Dividend Distributing Agent and Registrar......................................21
6.7 Shareholders' Meeting..........................................................................21
6.8 Proxies........................................................................................22
6.9 Reports to Shareholders........................................................................22
6.10 Fixing Record Date.............................................................................22
6.11 Notice to Shareholders.........................................................................22
6.12 Restrictions on Transfer.......................................................................23
6.13 Excess Shares..................................................................................28
6.14 Intercompany Agreement.........................................................................31
6.15 Class A Exchangeable Preferred Shares..........................................................31
6.16 Class B Exchangeable Preferred Shares..........................................................50
6.17 Redemption.....................................................................................75
6.18 Class A Shares.................................................................................75
6.19 Class B Shares.................................................................................78
ARTICLE VII. Liability of Trustees, Shareholders and Officers, and Other Matters............................86
7.1 Exculpation of Trustee and Officers............................................................86
7.2 Limitation of Liability of Shareholders, Trustees and Officers.................................86
7.3 Express Exculpatory Clauses and Instruments....................................................87
7.4 Indemnification of Trustees, Officers, Employees and Other Agents..............................87
7.5 Right of Trustees and officers to Own Shares or Other Property and
to Engage in Other Business....................................................................88
7.6 Transactions Between the Trustees and the Trust................................................88
7.7 Restriction of Duties and Liabilities..........................................................90
7.8 Persons Dealing with Trustees or Officers......................................................90
7.9 Reliance.......................................................................................90
7.10 Income Tax Status..............................................................................90
ARTICLE VIII. Duration, Amendment, Termination and Qualification of Trust....................................91
8.1 Duration of Trust..............................................................................91
8.2 Termination of Trust...........................................................................91
8.3 Amendment Procedure............................................................................92
8.4 Qualification Under the REIT Provisions of the Internal Revenue Code...........................92
ARTICLE IX. Miscellaneous..................................................................................92
9.1 Applicable Law.................................................................................92
9.2 Index and Headings for Reference Only..........................................................93
9.3 Successors in Interest.........................................................................93
9.4 Inspection of Records..........................................................................93
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
9.5 Counterparts...................................................................................93
9.6 Provisions of the Trust in Conflict with Law or Regulations....................................93
9.7 Certifications.................................................................................94
9.8 Recording and Filing...........................................................................94
9.9 Resident Agent.................................................................................94
</TABLE>
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<PAGE> 5
AMENDED AND RESTATED DECLARATION OF TRUST
ARTICLE I.
The Trust; Definitions
1.1 Name. The name of the Trust shall be "Starwood Hotels & Resorts."
As far as practicable and except as otherwise provided in this Declaration, the
Trustees shall conduct the Trust's activities, execute all documents, and sue or
be sued in the name of Starwood Hotels & Resorts, or in their names as Trustees
of Starwood Hotels & Resorts.
1.2 Place of Business. The principal office of the Trust shall be in
the State of New York. However, the Trustees may, from time to time, change such
location and maintain other offices or places of business.
1.3 Nature of Trust. The Trust is a real estate investment trust
organized under Title 8 of the Corporations and Associations Article of the
Annotated Code of the State of Maryland. It is intended that the Trust shall
carry on business as a "real estate investment trust" (hereinafter called "REIT"
or "Real Estate Investment Trust") as described in the REIT Provisions of the
Internal Revenue Code. The Trust is not a general partnership, limited
partnership, limited liability company, joint venture, corporation or joint
stock company or association (but nothing herein shall preclude the Trust from
being taxed as an association under the REIT Provisions of the Internal Revenue
Code) nor shall the Trustees or Shareholders or any of them for any purpose be,
or be deemed to be treated in any way whatsoever to be, liable or responsible
hereunder as partners or joint venturers. The relationship of the Shareholders
to the Trustees shall be solely that of beneficiaries of the Trust and their
rights shall be limited to those conferred upon them by this Declaration.
1.4 Definitions. The terms defined in this Section 1.4 whenever used in
this Declaration shall, unless the context otherwise requires, have the
respective meanings hereinafter specified in this Section 1.4. In this
Declaration, words in the singular number include the plural and in the plural
number include the singular.
(a) Accommodations Field. "Accommodations Field" shall mean the hotel,
motel, motor inn, restaurant, and lodgings field generally, and shall also be
deemed to include activities, undertakings and businesses directly allied or
connected with, or directly related to, hotels, motels, motor inns, restaurants
or lodgings.
(b) Advisor. "Advisor" shall mean the Person, if any, employed by the
Trustees under the provisions of Article IV.
(c) Affiliate. "Affiliate" shall mean (i) with respect to any Person,
any other Person (A) which such Person directly or indirectly controls, is
controlled by, or is under common control
<PAGE> 6
with or (B) of which such Person is a director, officer, employee, partner or
trustee or (C) of which such Person directly or indirectly owns, controls or
holds with power to vote five percent (5%) or more of the outstanding voting
securities or (D) which directly or indirectly owns, controls or holds with
power to vote five percent (5%) or more of the outstanding voting securities of
such Person and (ii) with respect to the Trust, the Advisor and any other
investment adviser, manager or independent contractor (as that term is defined
in Section 856(d)(3) of the Internal Revenue Code) of the Trust.
(d) Annual Meeting of Shareholders. "Annual Meeting of Shareholders"
shall have the meaning set forth in the first sentence of Section 6.7.
(e) Annual Report. "Annual Report" shall have the meaning set forth in
Section 6.9.
(f) Appraisal. "Appraisal" shall mean the fair market value, as of the
date of the appraisal, of Real Property in its existing state or in a state as
to be created or improved, as determined by the Trustees or as determined by any
bank, insurance company or other Person which makes appraisals in connection
with its lending or services activities or as determined by a disinterested
Person having no interest in the Real Property, provided, however, that any such
Person is, in the sole judgment of the Trustees, properly qualified to make a
determination; provided further, that an appraisal shall be included within the
meaning of the term Appraisal as used herein upon which the Trustees may in good
faith rely if it is made on behalf of a Person or Persons other than the Trust
at or prior to the time of the investment by the Trust if the Trust is acquiring
an interest (either in whole or in part) in the investment with respect to which
such appraisal is or has been made.
(g) Bylaws. "Bylaws" shall have the meaning set forth in Section 3.3.
(h) Construction Loans. "Construction Loans" shall mean Mortgage Loans
incurred to finance all or part of the cost of acquiring and improving land
(including leaseholds therein) and the construction or improvement of buildings
and other improvements thereon.
(i) Declaration. "Declaration" shall mean this Declaration of Trust and
all amendments or modifications thereof. References in this Declaration to
"herein" and "hereunder" shall be deemed to refer to this Declaration and shall
not be limited to the particular text, article or section in which such words
appear.
(j) Development Loans. "Development Loans" shall mean Mortgage Loans
incurred to finance all or part of the cost of acquiring and improving vacant
land and developing it into a site or sites suitable for the construction of
buildings thereon or suitable for other residential, commercial, industrial or
public uses.
(k) Equity Investments. "Equity Investments" shall mean investments in
Real Property (other than Mortgage Loans), or in borrowing or leasing entities
or other organizations owning, operating or managing Real Property.
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<PAGE> 7
(l) Equity Participations. "Equity Participations" shall mean
participations acquired in connection with making any Real Property Investment,
including, but not limited to, participations in contingent interests based upon
operating revenues, participations in the ownership of Real Property,
participations in rental based upon operating revenues or based upon a
percentage of sales or room rents, or participations in the ownership of
borrowing or leasing entities or other organizations owning, operating or
managing Real Property.
(m) First Mortgage. "First Mortgage" shall mean a Mortgage which takes
priority or precedence over all other charges or liens upon the Real Property
and which must be satisfied before such other charges are entitled to
participate in the proceeds of any sale. Such priority shall not be deemed as
abrogated by liens for taxes, or assessments which are not delinquent or remain
payable without penalty, contracts (other than contracts for repayment of
borrowed moneys), or leases, mechanic's and materialman's liens for work
performed and materials furnished which are not in default or are in good faith
being contested and other claims normally deemed in the same local jurisdiction
not to abrogate the priority of a first mortgage.
(n) First Mortgage Loans. "First Mortgage Loans" shall mean Mortgage
Loans secured or collateralized at the time of acquisition thereof by the Trust
by First Mortgages.
(o) Interim Loans. "Interim Loans" shall mean Mortgage Loans secured or
collateralized by Mortgages made on improved properties and having a maturity of
three years or less.
(p) Internal Revenue Code. "Internal Revenue Code" shall mean the
Internal Revenue Code of 1986, as amended from time to time.
(q) Junior Mortgage. "Junior Mortgage" shall mean any Mortgage (other
than a Mortgage securing a Wrap-Around Mortgage Loan or a Mortgage securing the
junior portion of a Mortgage Loan with respect to which a Senior Participation
has been issued) which has the same priority or precedence over all charges or
encumbrances on Real Property as is required for a First Mortgage, except that
it is subject to the priority of one or more Mortgages which must be satisfied
before such Junior Mortgage is entitled to participate in the proceeds of any
sale or other disposition of such Real Property.
(r) Junior Mortgage Loans. "Junior Mortgage Loans" shall mean Mortgage
Loans (other than Wrap-Around Mortgage Loans and the junior portion of Mortgage
Loans with respect to which a Senior Participation has been sold) secured or
collateralized by Junior Mortgages.
(s) Long Term. "Long Term" shall mean, when used with respect to a
Mortgage Loan, a Mortgage Loan other than an Interim Loan or a Construction Loan
and, when used with respect to any other Real Property Investment, shall mean
such an investment which is not expected to be amortized in full within a period
of three years from the date on which such investment is made.
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<PAGE> 8
(t) Mortgage Loans. "Mortgage Loans" shall mean notes, debentures,
bonds and other evidence of indebtedness or obligation which are negotiable or
non-negotiable and which are secured or collateralized by Mortgages.
(u) Mortgages. "Mortgages" shall mean mortgages, deeds of trust or
other security deeds on Real Property or rights or interests in Real Property.
(v) National Hotel Companies. "National Hotel Companies" shall mean
Hilton Hotels Corporation, Marriott Corporation, Holiday Inns, Inc., TraveLodge
International, Inc. and any other nationally known hotel companies which are
engaged in operations in the Accommodations Field or the granting of franchises
to other Persons with respect to such operations and the Affiliates of any of
them.
(w) Net Assets. "Net Assets" shall mean the "Total Assets of the
Trust", after deducting therefrom all liabilities of the Trust; provided,
however, that depreciable assets shall be included in such Assets at the lesser
of either:
(i) the cost of such Assets on the books of the Trust less
depreciation thereof on a straight-line basis over the useful life of
such Assets in accordance with generally accepted accounting
principles, and in making such calculation the useful life of such
Assets shall correspond to the useful life used as the basis of
depreciation on the Trust's federal income tax returns; or
(ii) fair market value of such Assets, in the judgment of the
Trustees.
(x) Person. "Person" shall mean and include individuals, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies or associations, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, real estate investment trusts,
business trusts, or other entities and governments and agencies and political
subdivisions thereof.
(y) Real Property. "Real Property" shall mean and include land, rights
in land, leasehold interests (including but not limited to interests of a lessor
or lessee therein), and any building, structures, improvements, fixtures and
equipment located on or used in connection with land, leasehold interests and
rights in land or interest therein, but does not include Mortgages, Mortgage
Loans or interests therein.
(z) Real Property Investments. "Real Property Investments" shall mean
and include investments in Real Property or in obligations secured, directly or
indirectly, by liens on Real Property, including, but not limited to, Long-Term
Mortgage Loans (with or without Equity Participations), Interim Loans,
Development Loans, Construction Loans, First Mortgage Loans, Junior Mortgage
Loans, Wrap-Around Mortgage Loans and Equity Investments in Real Property
(including, but not limited to, land leaseback and leasehold mortgage loans, net
lease financings and sale and leaseback transactions).
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<PAGE> 9
(aa) REIT Provisions of the Internal Revenue Code. "REIT Provisions of
the Internal Revenue Code" shall mean Part II, Subchapter M of Chapter 1, of the
Internal Revenue Code of 1986, as now enacted or hereafter amended, or successor
statutes and regulations promulgated thereunder.
(bb) Securities. "Securities" shall mean any stock, shares, voting
trust certificates, bonds, debentures, notes, or other evidences of
indebtedness, or in general any instruments commonly known as "securities" or
any certificates of interest, shares or participations in temporary or interim
certificates for, receipts for, guarantees of, or warrants, options or rights to
subscribe to, purchase or acquire any of the foregoing.
(cc) Senior Participation. "Senior Participation" shall mean a
participation or interest which shall have been sold by the Trust in a Mortgage
Loan, on terms and conditions satisfactory to the Trustees, pursuant to which
the participation sold takes priority or precedence as to charges and liens upon
the mortgaged property and satisfaction out of the proceeds of any sale over the
junior portion of the Mortgage Loan retained by the Trust; provided, however,
that a participation sold in a Mortgage Loan shall not be deemed to be a Senior
Participation as such term is used in this Declaration unless such Mortgage
Loan, considered as a single Mortgage Loan including the junior portion retained
by the Trust, would satisfy all of the requirements relating to the investment
by the Trust in a First Mortgage Loan.
(dd) Shares. "Shares" shall mean the shares of beneficial interest of
the Trust as described in Section 6.1.
(ee) Shareholders. "Shareholders" shall mean, as of any particular
time, holders of record of outstanding Shares at such time.
(ff) Total Assets of the Trust. "Total Assets of the Trust" shall mean
the value of all the assets of the Trust Estate as such value appears on the
most recent quarterly balance sheet of the Trust available to the Trustees.
(gg) Trust. "Trust" shall mean the Trust created by this Declaration.
(hh) Trustees. "Trustees" shall mean, as of any particular time
Trustees holding office under this Declaration at such time, whether they be the
Trustees named herein or additional or successor Trustees, and shall not include
the officers, representatives or agents of the Trust, or the Shareholders, but
nothing herein shall be deemed to preclude the Trustees from also serving as
officers, representatives, or agents of the Trust, or owning Shares.
(ii) Trust Estate. "Trust Estate" shall mean, as of any particular
time, any and all property, real, personal, or otherwise, tangible or
intangible, which is owned or held by the Trust or the Trustees, including, but
not limited to, property which is transferred, conveyed or paid to the Trust or
Trustees, and all rents, income, profits and gains therefrom.
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<PAGE> 10
(jj) Wrap-Around Mortgage Loans. "Wrap-Around Mortgage Loans" shall
mean Mortgage Loans which are subject to prior First Mortgages (which have been
created prior to or simultaneously with the creation of the Wrap-Around Mortgage
Loan) and are made on the basis of the current values of the mortgaged
properties without regard to and without discharging the prior First Mortgages;
provided, however, that a Mortgage Loan shall not be included in the term
Wrap-Around Mortgage Loan for purposes of this Declaration unless the
indebtedness evidenced by the Wrap-Around Mortgage Loan when added to the
indebtedness evidenced by the prior First Mortgage and considered as a single
First Mortgage Loan would comply in all respects with the requirements relating
to an investment by the Trust in such a First Mortgage Loan.
ARTICLE II.
Trustees
2.1 Number, Term of Office, Qualifications of Trustees. There shall be
no less than three (3) nor more than fifteen (15) Trustees. The initial Trustees
shall be the signatories to this Declaration as originally executed. Within the
limits set forth in this Section 2.1, the number of Trustees may be fixed,
increased or decreased from time to time by the Trustees or by the Shareholders
at any particular time; provided, however, that, subject to the provisions of
section 2.3, each Trustee shall hold office until the expiration of his term and
until the election and qualification of his successor. Trustees may be
re-elected. The Trustee shall be an individual at least twenty-one (21) years of
age who is not under legal disability. Unless otherwise required by law, no
Trustee shall be required to give bond, surety or security in any jurisdiction
for the performance of any duties or obligations hereunder. The Trustees, in
their capacity as trustees, shall not be required to devote their entire time to
the business and affairs of the Trust.
The Trustees shall be divided, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
reasonably possible, with the term of office of the first class to expire at the
1999 Annual Meeting of Shareholders, the term of office of the second class to
expire at the 2000 Annual Meeting of Shareholders and the term of office of the
third class to expire at the 2001 Annual Meeting of Shareholders, with each
Trustee to hold office until his or her successor shall have been duly elected
and qualified. At each Annual Meeting of Shareholders, commencing with the 1999
Annual Meeting, (i) Trustees elected to succeed those Trustees whose terms then
expire shall be elected for a term of office to expire at the third succeeding
Annual Meeting of Shareholders after their election, with each Trustee to hold
office until his or her successor shall have been duly elected and qualified,
and (ii) if authorized by a resolution of the Board of Trustees, Trustees may be
elected to fill any vacancy on the Board of Trustees, regardless of how such
vacancy shall have been created.
2.2 Compensation and Other Remuneration. The Trustees shall be entitled
to receive such reasonable compensation for their services as Trustees as they
may determine from time to time. The Trustees, either directly or indirectly,
shall also be entitled to receive remuneration for services rendered to the
Trust in any other capacity. Such services may include, without limitation,
services as an officer of the Trust, legal, accounting or other professional
services, or services as a broker, transfer agent or underwriter, whether
performed by a Trustee or any person
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<PAGE> 11
affiliated with a Trustee. Notwithstanding the foregoing, except as provided in
Section 7.6, no Trustee shall receive any fee or other remuneration, directly or
indirectly, as a result of any sale of property to or purchase of property from
the Trust.
2.3 Resignation, Removal and Death of Trustees. A Trustee may resign at
any time by giving written notice in recordable form to the remaining Trustees
at the principal office of the Trust. Such resignation shall take effect on the
date such notice is given, or at any later time specified in the notice, without
need for prior accounting. A Trustee may be removed at any time, with or without
cause, by vote or written consent of holders of two-thirds (2/3rds) of the
outstanding Shares entitled to vote thereon, or with cause by all remaining
Trustees. A Trustee judged incompetent, or for whom a guardian or conservator
has been appointed, shall be deemed to have resigned as of the date of such
adjudication or appointment. Upon the resignation or removal of any Trustee, or
his otherwise ceasing to be a Trustee, he shall execute and deliver such
documents as the remaining Trustees shall require for the conveyance of any
Trust property held in his name, and shall account to the remaining Trustee or
Trustees, as they require, for all property which he holds as Trustee, and shall
thereupon be discharged as Trustee. Upon the incapacity or death of any Trustee,
his legal representative shall perform the acts set forth in the preceding
sentence and the discharge mentioned therein shall run to such legal
representative and to the incapacitated Trustee or the estate of the deceased
Trustee, as the case may be.
2.4 Vacancies. If any or all of the Trustees cease to be Trustees
hereunder, whether by reason of resignation, removal, incapacity, death or
otherwise, such event shall not terminate the Trust or affect its continuity.
Until vacancies are filled, the remaining Trustee or Trustees, if any (even
though less than three (3)), may exercise the powers of the Trustees hereunder.
Vacancies occurring among the Trustees (including vacancies created by increases
in number) may be filled by a majority of the remaining Trustees, though less
than a quorum, or by a sole remaining Trustee, and the person so appointed shall
hold office for a term expiring at the Annual Meeting of Shareholders at which
the term of office of the class to which they have been appointed expires and
until his successor is elected and qualified. If at any time there shall be no
Trustees in office, successor Trustees shall be elected by the Shareholders as
provided in Section 6.7.
2.5 Successor and Additional Trustees. Any right, title and interest of
the Trustees in and to the Trust Estate shall also vest in successor and
additional Trustees upon their qualification, and they shall thereupon have all
the rights and obligations of Trustees hereunder. Any such right, title and
interest shall vest in the Trustees, whether or not conveyance documents have
been executed and delivered pursuant to Section 2.3, or otherwise.
2.6 Actions by Trustees. A quorum for all meetings of the Trustees
shall be a majority of the Trustees. Common or interested Trustees may be
counted in determining the presence of a quorum at a meeting of the Trustees.
Unless specifically provided otherwise in this Declaration, the Trustees may act
by a vote or resolution at a meeting at which a quorum is present, or without a
meeting by a written vote, resolution, or other writing consenting to said
action, signed by the Trustees. Any agreement, deed, mortgage, lease or other
instrument or writing executed by one
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<PAGE> 12
or more of the Trustees, or by any authorized person, shall be valid and binding
upon the Trustees and upon the Trust when ratified by action of the Trustees.
2.7 Executive Committee. The Trustees may appoint from among their own
number an executive committee of two or more Trustees to whom they may delegate
from time to time such of the powers of the Trustees as they may deem advisable.
2.8 Names of Trustees. The names of the Trustees of the Trust on the
date hereof are as follows:
Jean-Marc Chapus Stephen R. Quazzo
Bruce W. Duncan Stuart M. Rothenberg
Madison F. Grose Barry S. Sternlicht
George J. Mitchell Raymond S. Troubh
Roger S. Pratt
2.9 Non-Affiliated Trustees. Affiliates of the Advisor and of any
National Hotel Company may be Trustees; however, there shall at all times be at
least a majority of the Trustees who are not Affiliates of the Advisor or of any
National Hotel Company or Affiliates of such Affiliates. If at any time, by
reason of one or more vacancies, there shall not be at least a majority of such
Trustees who are not such Affiliates, then within sixty (60) days after such
vacancy occurs, the continuing Trustee or Trustees then in office shall elect,
pursuant to Section 2.4, a sufficient number of other Persons who are not such
Affiliates so that there shall be at least a majority of such Trustees in
office.
ARTICLE III.
Trustees' Powers
3.1 Power and Authority of Trustees. The Trustees, subject only to the
specific limitations contained in this Declaration, shall have without further
or other authorization, and free from any power or control on the part of the
Shareholders, full, absolute and exclusive power, control and authority over the
Trust Estate and over the business and affairs of the Trust to the same extent
as if the Trustees were the sole owners thereof in their own right, and to do
all such acts and things as in their sole judgment and discretion are necessary
or incidental to, or desirable, for the carrying out of any of the purposes of
the Trust or conducting the business of the Trust. Any determination made in
good faith by the Trustees of the purposes of the Trust or the existence of any
power or authority hereunder shall be conclusive. In construing the provisions
of this Declaration, presumption shall be in favor of the grant of powers and
authority to the Trustees. The enumeration of any specific power or authority
herein shall not be construed as limiting the general powers or authority or any
other specified power or authority conferred herein upon the Trustees.
3.2 Specific Powers and Authorities. Subject only to the express
limitations contained in this Declaration and in addition to any powers and
authorities conferred by this Declaration or which the Trustees may have by
virtue of any present or future statute or rule or law, the Trustees
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<PAGE> 13
without any action or consent by the Shareholders shall have and may exercise at
any time and from time to time the following powers and authorities which may or
may not be exercised by them in their sole judgment and discretion and in such
manner and upon such terms and conditions as they may from time to time deem
proper:
(a) To retain, invest and reinvest the capital or other funds of the
Trust in real or personal property of any kind, all without regard to whether
any such property is authorized by law for the investment of trust funds and to
possess and exercise all the rights, powers and privileges appertaining to the
ownership of the Trust Estate and to increase the capital of the Trust at any
time by the issuance of additional Shares for such consideration as they deem
appropriate.
(b) For such consideration as they deem proper, to invest in, purchase
or otherwise acquire for cash or other property or through the issuance of
Shares or through the issuance of notes, debentures, bonds or other obligations
of the Trust and hold for investment the entirety of any participating interest
in notes, bonds, or other obligations which are secured by Mortgages. In
connection with any such investment, purchase or acquisition, the Trustees shall
have the power to acquire a share of rents, lease payments or other gross income
from or a share of the profits from or a share in the equity or ownership of
Real Property, either directly or through joint venture, general or limited
partnership, or other lawful combinations or associations; to invest in loans
secured by the pledge or transfer of mortgage obligations; to develop, operate,
pool, utilize, grant production payments out of or lease or otherwise dispose of
mineral, oil and gas properties and rights.
(c) To sell, rent, lease, hire, exchange, release, partition, assign,
mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate,
convey, transfer or otherwise dispose of any and all of the Trust Estate by
deeds, trust deeds, assignments, bills of sale, transfers, leases, mortgages,
financing statements, security agreements and other instruments for any of such
purposes executed and delivered for and on behalf of the Trust or the Trustees
by one or more of the Trustees or by a duly authorized officer, employee, agent
or any nominee of the Trust.
(d) To issue Shares, bonds, debentures, notes or other evidences of
indebtedness which may be secured or unsecured and may be subordinated to any
indebtedness of the Trust and may be convertible into Shares and which may
include options, warrants and rights to subscribe to, purchase or acquire any of
the foregoing, all without vote of or other action by the Shareholders to such
Persons for such cash, property or other consideration (including Securities
issued or created by, or interest in any Person) at such time or times and on
such terms as the Trustees may deem advisable and to list any of the foregoing
Securities issued by the Trust on any securities exchange and to purchase or
otherwise acquire, hold, cancel, reissue, sell and transfer any of such
Securities.
(e) To enter into leases, contracts, obligations, and other agreements
for a term extending beyond the term of office of the Trustees and beyond the
possible termination of the Trust or for a lesser term.
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<PAGE> 14
(f) To borrow money and give negotiable or non-negotiable instruments
therefor; to guarantee, indemnify or act as surety with respect to payment or
performance of obligations of third parties; to enter into other obligations on
behalf of the Trust; and to assign, convey, transfer, mortgage, subordinate,
pledge, grant security interests in, encumber or hypothecate the Trust Estate to
secure any of the foregoing.
(g) To lend money, whether secured or unsecured.
(h) To create reserve funds for any purpose.
(i) To incur and pay out of the Trust Estate any charges or expenses,
and disburse any funds of the Trust, which charges, expenses or disbursements
are, in the opinion of the Trustees, necessary or incidental to or desirable for
the carrying out of any of the purposes of the Trust or conducting the business
of the Trust, including, without limitation, taxes and other governmental
levies, charges and assessments, of whatever kind or nature, imposed upon or
against the Trustees in connection with the Trust or the Trust Estate or upon or
against the Trust Estate or any part thereof, and for any of the purposes
herein.
(j) To deposit funds of the Trust in banks, trust companies, savings
and loan associations and other depositories, whether or not such deposits will
draw interest, the same to be subject to withdrawal on such terms and in such
manner and by such Person or Persons (including any one or more Trustees, or
officers, agents or representatives) as the Trustees may determine.
(k) To possess and exercise all the rights, powers and privileges
appertaining to the ownership of all or any Mortgages or Securities issued or
created by, or interests in, any Person, forming part of the Trust Estate, to
the same extent that an individual might, and, without limiting the generality
of the foregoing, to vote or give any consent, request or notice, or waive any
notice, either in person or by proxy or power of attorney, with or without power
of substitution, to one or more Persons, which proxies and powers of attorney
may be for meetings or action generally or for any particular meeting or action,
and may include the exercise of discretionary powers.
(l) To cause to be organized or assist in organizing any Person under
the laws of any jurisdiction to acquire the Trust Estate or any part or parts
thereof or to carry on any business in which the Trust shall directly or
indirectly have any interest, and to sell, rent, lease, hire, convey, negotiate,
assign, exchange or transfer the Trust Estate or any part or parts thereof to or
with any such Person in exchange for the Securities thereof or otherwise, and to
lend money to, subscribe for the Securities of, and enter into any contracts
with, any such Person in which the Trust holds or is about to acquire Securities
or any other interest.
(m) To enter into joint ventures, general or limited partnerships and
any other lawful combinations or associations.
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<PAGE> 15
(n) To elect, appoint, engage or employ officers for the Trust
(including a President, Secretary, Treasurer and such Vice Presidents and other
officers as the Trustees may determine), who may be removed or discharged at the
discretion of the Trustees, such officers to have such powers and duties, and to
serve such terms, as may be prescribed by the Trustees or by the Bylaws; to
engage or employ any Persons (including, subject to the provisions of Sections
7.5 and 7.6, any Trustee or officer and any Person in which any Trustee or
officer is directly or indirectly interested or with which he is directly or
indirectly connected) as agents, representatives, employees, or independent
contractors (including, without limitation, real estate advisors, investment
advisors, transfer agents, registrars, underwriters, accountants, attorneys at
law, real estate agents, managers, appraisers, brokers, architects, engineers,
construction managers, general contractors or otherwise) in one or more
capacities, and to pay compensation from the Trust for services in as many
capacities as such Person may be so engaged or employed; and, except as
prohibited by law, to delegate any of the powers and duties of the Trustees to
any one or more Trustees, agents, representatives, officers, employees,
independent contractors or other Persons. The Trustees may elect one of the
Trustees as Chairman, to preside at meetings of the Trustees and exercise such
other powers and duties as the Trustees may from time to time assign to him;
provided that the Chairman shall not be or act as an officer of the Trust.
(o) To determine whether moneys, Securities or other assets received by
the Trust shall be charged or credited to income or capital or allocated between
income and capital, including the power to amortize or fail to amortize any part
or all of any premium or discount, to treat any part or all of the profit
resulting from the maturity or sale of any asset, whether purchased at a premium
or at a discount, as income or capital, or apportion the same between income and
capital, to apportion the sales price of any asset between income and capital,
and to determine in what manner any expenses or disbursements are to be borne as
between income and capital, whether or not in the absence of the power and
authority conferred by this subsection such moneys, Securities or other assets
would be regarded as income or as capital or such expense or disbursement would
be charged to income or to capital; to treat any dividend or other distribution
on any investment as income or capital or apportion the same between income and
capital; to provide or fail to provide reserves for depreciation, amortization
or obsolescence in respect of all or any part of the Trust Estate subject to
depreciation, amortization or obsolescence in such amounts and by such methods
as they shall determine; and to determine the method or form in which the
accounts and records of the Trust shall be kept and to change from time to time
such method or form.
(p) To determine from time to time the value of all or any part of the
Trust Estate and of any services, Securities, property or other consideration to
be furnished to or acquired by the Trust, and from time to time to revalue all
or any part of the Trust Estate in accordance with such appraisals or other
information as are, in the Trustees' sole judgment, necessary and/or
satisfactory.
(q) To collect, sue for, and receive all sums of money coming due to
the Trust, and to engage in, intervene in, prosecute, join, defend, compound,
compromise, abandon or adjust, by arbitration or otherwise, any actions, suits,
proceeding, disputes, claims, controversies, demands or other litigation
relating to the Trust, the Trust Estate or the Trust's business and affairs, to
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enter into agreements therefor, whether or not any suit is commenced or claim
accrued or asserted and, in advance of any controversy, to enter into agreements
regarding arbitration, adjudication or settlement thereof.
(r) To renew, modify, release, compromise, extend, consolidate, or
cancel, in whole or in part, any obligation to or of the Trust.
(s) To purchase and pay for out of the Trust Estate insurance contracts
and policies insuring the Trust Estate against any and all risks and insuring
the Trust and/or any or all of the Trustees, the Shareholders or officers
against any and all claims and liabilities of every nature asserted by any
Person arising by reason of any action alleged to have been taken or omitted by
the Trust or by the Trustees, Shareholders, or officers.
(t) To cause legal title to any of the Trust Estate to be held by
and/or in the name of the Trustees, or except as prohibited by law, by and/or in
the name of the Trust or one or more of the Trustees or any other Person, on
such terms, in such manner, with such powers in such Person as the Trustees may
determine, and with or without disclosure that the Trust or Trustees are
interested therein.
(u) To adopt a fiscal year for the Trust, and from time to time to
change such fiscal year.
(v) To adopt and use a seal (but the use of a seal shall not be
required for the execution of instruments or obligations of the Trust).
(w) To make, perform, and carry out, or cancel and rescind, contracts
of every kind for any lawful purpose without limit as to amount, with any
person, firm, trust, association, corporation, municipality, county, parish,
state, territory, government or other municipal or governmental subdivision.
These contracts shall be for such duration and upon such terms as the Trustees
in their sole discretion shall determine.
(x) To do all other such acts and things as are incident to the
foregoing, and to exercise all powers which are necessary or useful to carry on
the business of the Trust, to promote any of the purposes for which the Trust is
formed, and to carry out the provisions of this Declaration.
3.3 Bylaws. The Trustees may make, adopt, amend or repeal regulations
(the "Bylaws") containing provisions relating to the business of the Trust, the
conduct of its business and affairs, its rights or powers and the rights or
powers of its Shareholders, Trustees or officers not inconsistent with law or
with this Declaration.
3.4 Additional Powers. The Trustees shall additionally have and may
exercise all the powers conferred by the laws of the State of Maryland upon real
estate investment trusts formed under such laws, insofar as such laws are not in
conflict with the provisions of this Declaration.
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3.5 Incorporation. With the approval of the holders of a majority of
the Shares entitled to vote in the matter, the Trustees may cause to be
organized or assist in organizing a corporation or corporations under the laws
of any jurisdiction or any other trust, partnership, association, or other
Person to take over the Trust property or any part or parts thereof or to carry
on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust property or any part or
parts thereof to any such corporation, trust, association, or other Person in
exchange for the shares or securities thereof or otherwise, and to lend money
to, subscribe for the shares or securities of, and enter into any contracts with
any such corporation, trust, association, or other Person, or any corporation,
trust, partnership, association, or other Person in which the Trust holds or is
about to acquire shares or any other interest. The Trustees may also cause a
merger or consolidation between the Trust or any successor thereto and any such
corporation, trust, association or other Person if and to the extent permitted
by law, provided that under the law then in effect, the federal income tax
benefits available to Real Estate Investment Trusts, or substantially similar
benefits, are also available to such corporation, trust, association or other
Person.
ARTICLE IV.
Advisor; Limitation on Operating Expenses
4.1 Employment of Advisor. The Trustees are responsible for the general
policies of the Trust and for such general supervision of the business and
affairs of the Trust conducted by all officers, agents, employees, advisors,
managers or independent contractors of the Trust as may be necessary to insure
that such business and affairs conform to this Declaration. However, the
Trustees shall not be required personally to conduct the business and affairs of
the Trust, and consistent with their ultimate responsibility as stated above,
the Trustees shall have the power to appoint, employ or contract with such
Person or Persons (including one or more of themselves or any corporation,
partnership, trust or other Person in which one or more of them may be
directors, officers, stockholders, partners or trustees) as the Trustees may
deem necessary or proper for the transaction of the business and affairs of the
Trust. The Trustees may therefor employ or contract with such Person (herein
referred to as the "Advisor") as an investment adviser and administrator of the
affairs of the Trust and may grant or delegate such authority to the Advisor as
the Trustees may in their sole discretion deem necessary or desirable without
regard to whether such authority is normally granted or delegated by Trustees.
The Trustees shall have the power to determine the terms and
compensation of the Advisor or any other Person whom they may employ or with
whom they may contract; provided, however, that any determination to employ or
contract with any Trustee or any Person in which a Trustee may be a director,
officer, stockholder, partner, employee or trustee shall be valid only if made,
approved or ratified by a majority of the other Trustees. The Trustees may
exercise broad discretion in allowing the Advisor to administer and regulate the
operations of the Trust, to act as agent for the Trust, to execute documents on
behalf of the Trustees, and to make executive decisions which conform to general
policies and general principles previously established by the Trustees.
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4.2 Term. The Trustees shall not enter into any contract with the
Advisor unless such contract has an initial term of one year and provides for
annual renewal or extension thereafter. The Trustees shall not enter into such a
contract with any Person unless such contract provides for renewal or extension
thereof only by the affirmative vote of a majority of the Trustees who are not
affiliated with the Advisor. Any such contract shall provide that it may be
terminated (a) by the Trust upon sixty (60) days' written notice by unanimous
vote of the Trustees who are not affiliated with the Advisor, (b) by the Advisor
upon one hundred twenty (120) days' written notice by unanimous vote of the
directors of the Advisor who are not Trustees or (c) by the holders of more than
a majority of the shares of the Trust entitled to vote on the matter.
4.3 Restrictions on Advisor. The Advisor may administer the Trust as
its sole and exclusive function or engage in other activities including the
rendering of advice to other investors and the management of other investments.
The Advisor shall not, however, without prior written consent of a majority of
the Trustees, render advice or service to any other Real Estate Investment
Trust, except that the Advisor may, with respect to any loan or other investment
in which the Trust may participate or allot a participation, render advice and
service, with or without remuneration, to each and every participant in such
loan or other investment.
4.4 Limitation on Operating Expenses. Each contract made with the
Advisor shall provide that, within 120 days after the end of any Fiscal Year
which begins on a date following the effective date of the Trust's first
Registration Statement filed under the Securities Act of 1933, the Advisor will
refund to the Trust (or, at the election of the Trustees, reduce its
compensation payable by) (A) the amount, if any, by which the Operating Expenses
of the Trust during such Fiscal Year exceed the lesser of (a) 1.2% of the
Average Value of Invested Assets for such Fiscal Year or (b) the greater of (i)
1.2% of the Month-end Average Net Assets of the Trust for such Fiscal Year or
(ii) 25% of the Net Income of the Trust for such Fiscal Year and (B) the amount,
if any, by which the aggregate of fees and expenses (including travel expenses
and other out-of-pocket expenses) paid to Trustees who are not affiliates of the
Advisor and expenses of the type referred to in clause (m) of the definition of
Operating Expenses contained in this Section 4.4 during such Fiscal Year
exceeded 0.3% of the Average Value of Invested Assets for such Fiscal Year.
For purposes of this Section 4.4 the following terms shall have the
meanings set forth below:
(a) "Average Value" for any period shall mean the arithmetic average of
the aggregate Value of the assets reflected in the computation at the close of
the last business day of each month during the period to which such computation
relates.
(b) "Average Value of Invested Assets" shall mean the Average Value of
the Trust's total assets (without deduction of any liabilities) plus the
undisbursed commitments of the Trust in respect of closed loans or other closed
investments, but excluding good will and other intangible assets, cash, cash
items and obligations of municipal, state and the federal governments and
governmental agencies (other than obligations secured by a lien on real property
owned, or to be acquired, by such governments or governmental agencies and
securities of the Federal Housing
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Administration, the Federal National Mortgage Administration, and other
governmental agencies issuing securities backed by a pool of mortgages).
(c) "Value" of an asset or assets shall mean the value of such asset or
assets on the books of the Trust, reduced by provision for amortization,
depreciation or depletion but before deducting any indebtedness or other
liability in respect thereof. Depreciable assets shall be valued at the lesser
of fair market value (in the judgment of the Trustees) or cost less straight
line depreciation.
(d) "Fiscal Year" shall mean any period for which an income tax return
is submitted to the Internal Revenue Service and which is treated by the
Internal Revenue Service as a reporting period.
(e) "Net Income" for any period shall mean the net income of the Trust
for such period computed on the basis of its results of operations for such
period, after deduction of all expenses other than the regular, incentive and
additional compensation payable to the Advisor or fees payable to any mortgage
service, and excluding extraordinary items and gains and losses from the
disposition of assets of the Trust.
(f) "Month-End Average Net Assets" shall mean the Average Value of all
the assets of the Trust minus all the liabilities of the Trust reflected in the
computation at the close of each month during the period to which such
computation relates.
(g) "Operating Expenses" during any Fiscal Year shall mean the
aggregate annual expenses of every character regarded as operating expenses in
accordance with generally accepted accounting principles, as determined by the
independent public or certified accountants who shall have reported on the
financial statements of the Trust at the end of and for such Fiscal Year but
excluding:
(1) interest, discount and other costs of borrowed money;
(2) taxes on income and taxes and assessments on real property
and all other taxes (including license fees) applicable to the Trust;
(3) legal, audit, accounting, underwriting, brokerage,
listing, registration and other fees, printing, engraving and other
expenses and taxes incurred in connection with the issuance,
distribution, transfer, registration and stock exchange listing of the
Trust's securities;
(4) fees and expenses (including travel expenses and other
out-of-pocket expenses) paid to Trustees (other than fees paid to
Trustees who are affiliates of the Advisor), independent contractors,
consultants, managers, closing and disbursement agents, and other
agents employed by or on behalf of the Trust (other than the Advisor);
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(5) expenses connected with the acquisition, disposition and
ownership of real estate interests or mortgage loans or other property
(including the costs of closing, foreclosure, insurance premiums, legal
services, brokerage and sales commissions, maintenance, repair and
improvement of property);
(6) expenses of maintenance, up-keep and management of real
estate equity interests and processing and servicing mortgage,
construction and other loans;
(7) insurance as required by the Trustees (including Trustees'
liability insurance);
(8) the expenses of organizing, revising, amending,
converting, modifying or terminating the Trust;
(9) expenses connected with payments of dividends or interest
or distributions in cash or any other form made or caused to be made by
the Trustees to holders of securities of the Trust;
(10) all expenses connected with communications to holders of
securities of the Trust and the other bookkeeping and clerical work
necessary in maintaining relations with holders of securities,
including the cost of printing and mailing certificates for securities
and proxy solicitation materials and reports to holders of the Trust's
securities;
(11) the cost of any accounting, statistical, or bookkeeping
equipment necessary for the maintenance of the books and records of the
Trust;
(12) transfer agent's, registrar's and indenture trustee's
fees and charges;
(13) legal, accounting and auditing fees and expenses incurred
in connection with the administration and operation of the business of
the Trust in the ordinary course of its business and not included in
clauses (1) through (12) of this definition; and
(14) depletion, depreciation, amortization and losses on
disposition of investments and reserves therefor.
All calculations made in accordance with this Section 4.4 shall be
based upon statements (which may be unaudited, except as provided herein)
prepared on an accrual basis consistent with generally accepted accounting
principles, regardless of whether the Trust may also prepare statements on a
different basis.
4.5 Sale of Shares of the Advisor. Any advisory agreement entered into
by the Trustees with an Advisor shall contain, among other provisions, a
provision permitting any transfer, directly or indirectly, of securities of the
Advisor without the consent of the Trust or its shareholders and a waiver to the
fullest extent permitted by law of any rights which the Trust or its
shareholders might have to any income or profits realized on any such direct or
indirect
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transfer by the transferor of such securities. By purchasing Shares of the
Trust, each shareholder shall be deemed to have consented to any such transfer
and to have expressly and irrevocably waived any interest in or rights to any
such income or profits. Such waiver shall not be effective as to any transfer of
a majority of the voting stock of the Advisor unless such transfer shall have
been consented to by the holders of a majority of the Shares of the Trust
entitled to vote on the matter.
ARTICLE V.
Investment Policy
5.1 General Statement of Policy. The Trust has been established to
provide investors with the opportunity to invest in a portfolio of Real Property
Investments consisting primarily of Long-Term Mortgage Loans with Equity
Participations and Equity Investments in Real Property made in transactions not
relating to the Trust's lending activities. The Trust may also make Construction
Loans primarily in connection with Long-Term Real Property Investments. It is
the policy of the Trust to concentrate its Real Property Investments in the
Accommodations Field; however, other types of income producing Real Property
Investments may be made by the Trust if, in the opinion of the Trustees, such
investments are more advantageous to the Trust than available Real Property
Investments in the Accommodations Field. In addition to the foregoing the Trust
is empowered to make any other investment or engage in any other activity which
does not adversely affect the Trust's status as a Real Estate Investment Trust
under the REIT Provisions of the Internal Revenue Code. In each case the
Trustees may make the Trust's investments or engage in an activity alone or in
participation with others, including the granting of Senior Participations to
other lenders.
5.2 Obligor's Default. Notwithstanding any provision of this
Declaration, when an obligor to the Trust is in default under the terms of any
obligation to the Trust, the Trustees shall have the power to pursue any
remedies permitted by law which in their sole judgment are in the interest of
the Trust, and the Trustees shall have the power to enter into any necessary
investment, commitment or obligation of the Trust which results from the pursuit
of such remedies or which is necessary or desirable to dispose of property
acquired in the pursuit of such remedies.
5.3 Changes Investment Policies and Restrictions. Notwithstanding the
foregoing provisions of this Article 5, the investment policies and the
restrictions thereon set forth in Sections 5.1 through 5.3 of this Declaration
may be altered or modified by the Trustees, or additional or substitute policies
or restrictions may be adopted by the Trustees if they shall determine, and so
specify in a duly adopted resolution, that the alteration or modification of
such policies or restrictions or the adoption of additional or substitute
policies or restrictions are in the best interests of the Trust and its
Shareholders and are not prohibited by the REIT Provisions of the Internal
Revenue Code and no consent or approval of, or other action by, Shareholders
shall be required for any such alteration, modification or adoption. Any policy
or restriction altered, modified, or adopted pursuant to this Section 5.3 shall
be subject to subsequent alteration or modification only with the consent of
Shareholders holding a majority of the outstanding Shares entitled to vote on
such alteration or modification if the Trustees shall so specify in the
resolution
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adopted with respect to such policy or restriction. Any resolution adopted by
the Trustees pursuant to this Section 5.3 shall be recorded within the State of
Maryland in such public offices as this Declaration and any amendments hereto
shall have been recorded in accordance with Section 9.8 of this Declaration.
ARTICLE VI.
The Shares and Shareholders
6.1 Shares. The beneficial interest in the Trust is divided into Shares
consisting only of (a) 5,000 Class A Shares with a par value of $0.01 per share
and having the rights provided in this Article VI, (b) 1,000,000,000 Class B
Shares with a par value of $0.01 per share and having the rights provided in
this Article VI, (c) 200,000,000 Excess Trust Shares with a par value of $0.01
per share and having the rights provided in this Article VI, (d) 30,000,000
Class A Exchangeable Preferred Shares with a par value of $0.01 per share and
having the rights provided in this Article VI, (e) 15,000,000 Class B
Exchangeable Preferred Shares with a par value of $0.01 per share and having the
rights provided in this Article VI, (f) 55,000,000 Trust Preferred Shares with a
par value of $0.01 per share and having such rights as are specified by the
Trustees pursuant to the proviso to this sentence and (g) 50,000,000 Excess
Preferred Shares with a par value of $0.01 per share and having the rights
provided in Article VI hereof; provided, however, that the Trustees may, in
their discretion, classify or reclassify any unissued Shares of one or more
classes, or one or more series within any class, by setting or changing the
preferences, conversion and other rights, voting powers, limitations as to
dividends or distributions, qualifications, or terms or conditions of
redemption, as shall not be prohibited by this Declaration or the REIT
Provisions of the Internal Revenue Code or the laws of the State of Maryland and
as shall be specified by the Board of Trustees in their discretion in articles
supplementary duly adopted by the Board of Trustees and filed and accepted for
record with the State Department of Assessments and Taxation of Maryland. As
used herein, the term "Shares" shall mean and include (i) the Class A Shares,
Class B Shares, Excess Trust Shares, Class A Exchangeable Preferred Shares,
Class B Exchangeable Preferred Shares, Trust Preferred Shares and Excess
Preferred Shares, and (ii) from and after the issuance of Shares of any other
and additional classes of Shares so created and authorized by the Trustees, such
Shares. The certificates evidencing the Shares shall be in such form and signed
(manually or by facsimile) on behalf of the Trust in such manner as the Trustees
may from time to time prescribe or as may be prescribed in the Bylaws. The
certificates shall be negotiable and title thereto and to the Shares evidenced
thereby shall be transferred by assignment and delivery thereof to the same
extent and in all respects as a share certificate of a Maryland corporation. The
Shares may be issued for such consideration as the Trustees shall determine or
by way of share dividend or share split in the discretion of the Trustees.
Shares reacquired by the Trust shall no longer be deemed outstanding and shall
have no voting or other rights unless and until reissued. Shares reacquired by
the Trust constitute authorized but unissued Shares unless otherwise provided by
action of the Trustees. All Shares shall be fully paid and non-assessable by or
on behalf of the Trust upon receipt of full consideration for which they have
been issued or without additional consideration if issued by way of share
dividend or share split. The Board of Trustees may authorize the issuance from
time to time of shares of beneficial interest of the Trust of any class or
series, whether now or hereafter authorized, or securities or rights convertible
into shares of beneficial interest of any class or series, whether now or
hereafter authorized, for such
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consideration (whether in cash, property, past or future services, obligation
for future payment or otherwise) as the Board of Trustees may deem advisable (or
without consideration in the case of a share split, share dividend or
contribution), subject to such restrictions or limitations, if any, as may be
set forth in this Declaration or the Bylaws.
6.2 Legal Ownership of Trust Estate. The legal ownership of the Trust
Estate and the right to conduct the business and affairs of the Trust are vested
exclusively in the Trustees and the Shareholders shall have no interest therein
other than beneficial interest in the Trust conferred by their Shares issued
hereunder and they shall have no right to compel any partition, division,
dividend or distribution of the Trust or any of the Trust Estate.
6.3 Shares Deemed Personal Property. The Shares shall be personal
property and shall confer upon the holders thereof only the interest and rights
specifically set forth in this Declaration. The death, insolvency or incapacity
of a Shareholder shall not dissolve or terminate the Trust or affect its
continuity nor give his legal representative any rights whatsoever, whether
against or in respect of other Shareholders, the Trustees or the Trust Estate or
otherwise except the sole right to demand and, subject to the provisions of this
Declaration, the Bylaws and any requirements of law, to receive a new
certificate for Shares registered in the name of such legal representative, in
exchange for the certificate held by such Shareholder.
6.4 Share Record: Issuance and Transferability Shares. Records shall be
kept by or on behalf of and under the direction of the Trustees, which shall
contain the names and addresses of the Shareholders, the number of Shares held
by them respectively, and the numbers of the certificates representing the
Shares, and in which there shall be recorded all transfers of Shares.
Certificates shall be issued, listed and transferred in accordance with the
Bylaws. The Persons in whose names certificates are registered on the records of
the Trust shall be deemed the absolute owners of the Shares represented thereby
for all purposes of this Trust; but nothing herein shall be deemed to preclude
the Trustees or officers, or their agents or representatives, from inquiring as
to the actual ownership of Shares. Prior to due presentment for registration of
transfer, the Trustees shall not be affected by any notice of such transfer,
either actual or constructive. The receipt by the person in whose name any
Shares are registered on the records of the Trust or of the duly authorized
agent of such Person, or if such Shares are so registered in the names of more
than one Person, the receipt of any one of such Persons, or of the duly
authorized agent of such Person, shall be a sufficient discharge for all
dividends or distributions payable or deliverable in respect of such Shares and
from all liability to see to the application thereof.
Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing upon
delivery to the Trustees or a transfer agent of the certificate or certificates
therefor, properly endorsed or accompanied by duly executed instruments of
transfer and accompanied by all necessary documentary stamps together with such
evidence of the genuineness of each such endorsement, execution or authorization
and of other matters as may reasonably be required by the Trustees or such
transfer agent. Upon such delivery, the transfer shall be recorded in the
records of the Trust and a new certificate for the Shares so transferred shall
be issued to the transferee and in case of a transfer of only a part of the
Shares represented by any certificate, a new certificate for the balance shall
be issued to the
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transferor. Any Person becoming entitled to any Shares in consequence of the
death of a Shareholder or otherwise by operation of law shall be recorded as the
holder of such Shares and shall receive a new certificate therefor but only upon
delivery to the Trustees or a transfer agent of instruments and other evidence
required by the Trustees or the transfer agent to demonstrate such entitlement,
the existing certificate for such Shares and such necessary releases from
applicable governmental authorities. In case of the loss, mutilation or
destruction of any certificate for Shares, the Trustees may issue or cause to be
issued a replacement certificate on such terms and subject to such rules and
regulations as the Trustees may from time to time prescribe. Nothing in this
Declaration shall impose upon the Trustees or a transfer agent a duty or limit
their rights to inquire into adverse claims.
6.5 Dividends or Distributions to Shareholders. The Trustees may from
time to time authorize and the Trust may pay to Shareholders such dividends or
distributions in cash or other form, out of current or accumulated income,
capital, capital gains, principal, surplus, proceeds from the increase or
refinancing of Trust obligations, or from the sale of portions of the Trust
Estate or from any other source as the Trustees in their discretion shall
determine. Shareholders shall have no right to any dividend or distribution
unless and until authorized by the Trustees. The Trustees shall furnish the
Shareholders at the time of each such distribution with a statement in writing
advising as to the source of funds so distributed or, if the source thereon has
not then been determined, the communication shall so state and in such event the
statement as to such source shall be sent to the Shareholders not later than
sixty (60) days after the close of the fiscal year in which the distribution was
made.
6.6 Transfer Agent, Dividend Distributing Agent and Registrar. The
Trustees shall have power to employ one or more transfer agents, dividend
disbursing agents and registrars and to authorize them on behalf of the Trust to
keep records, to hold and disburse any dividends and distributions, and to have
and perform in respect of all original issues and transfers of Shares, dividends
and distributions and reports and communications to Shareholders, the powers and
duties usually had and performed by transfer agents, dividend disbursing agents
and registrars of a Maryland corporation.
6.7 Shareholders' Meeting. There shall be an annual meeting of the
Shareholders (the "Annual Meeting of Shareholders") which shall be held at the
principal office of the Trust, or at such other convenient location as may be
determined by the Trustees or by the written consent of all Shareholders
entitled to vote thereat, at such time as the Trustees shall determine, at which
the Trustees shall be elected and any other proper business may be conducted.
The Annual Meeting of Shareholders shall be held after delivery to the
Shareholders of the Annual Report. At least ten (10) days and not more than
forty (40) days notice shall be given of the time and place of the Annual
Meeting of Shareholders. Special meetings of Shareholders may be called by the
Trustees and shall be called upon the written request of Shareholders holding
not less than twenty-five percent (25%) of the outstanding Shares of the Trust
entitled to vote in the manner provided in the Bylaws. If there shall be no
Trustees, the officers of the Trust shall promptly call a special meeting of the
Shareholders for the election of successor Trustees. Notice of any special
meeting shall state the purposes of the meeting. Holders of a majority of the
outstanding Shares entitled to vote at any meeting represented in person or by
proxy shall constitute a quorum at any such
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meeting. Whenever any action is to be taken by the Shareholders, such action
shall, except as otherwise required by this Declaration or by law, be authorized
by a majority of the votes cast at a meeting of Shareholders by holders of
Shares entitled to vote thereon.
Notwithstanding anything in this Declaration to the contrary, the Trust
shall not consummate a merger, the shareholder approval of which is required by
the applicable laws, unless such transaction is approved by the shareholders by
the affirmative vote of a majority of all the votes entitled to be cast on the
matter.
The affirmative vote at a meeting of Shareholders of the holders of a
majority of all outstanding Shares entitled to vote on the matter shall be
required to approve the principal terms of the transaction and the nature and
amount of the consideration involving any sale, lease, exchange or other
disposition of more than 50% of the Trust Estate. Whenever Shareholders are
required or permitted to take any action, such action may be taken without a
meeting on written consent setting forth the action so taken, signed by the
holders of a majority of all outstanding Shares entitled to vote thereon, or
such larger proportion thereof as would be required for a vote of Shareholders
at a meeting. The vote or consent of Shareholders shall not be required for the
pledging, hypothecating, granting security interest in, mortgaging, or
encumbering of all or any of the Trust Estate, or for the sale, lease, exchange
or other disposition of less than 50% of the Trust Estate.
6.8 Proxies. Whenever the vote or consent of Shareholders is required
or permitted under this Declaration, such vote or consent may be given by the
Shareholder either directly or to a proxy in the form prescribed in the Bylaws.
The Trustees may solicit such proxies from the Shareholders or any of them in
any manner requiring or permitting the Shareholders' vote or consent.
6.9 Reports to Shareholders. Not later than ninety (90) days after the
close of each fiscal year of the Trust, the Trustees shall mail a report of the
business and operation of the Trust during such fiscal year to the Shareholders,
which report shall constitute the accounting of the Trustees for such fiscal
year. The report (herein "Annual Report") shall be in such form and have such
content as the Trustees deem proper. The Annual Report shall include a balance
sheet and a statement of income and surplus of the Trust. Such financial
statement shall be accompanied by a certificate of an independent certified
public accountant thereon, based on a full examination of the books and records
of the Trust and made in accordance with generally accepted auditing procedure.
A manually signed copy of the accountant's certificate shall be filed with the
Trustees. A signed copy of the Annual Report and accountant's certificate shall
be filed with the State Department of Assessments and Taxation of Maryland
within ninety (90) days after the close of each fiscal year.
6.10 Fixing Record Date. The Bylaws may provide for fixing or, in the
absence of such provision, the Trustees may fix, in advance, a date as the
record date for determining the Shareholders entitled to notice of or to vote at
any meeting of Shareholders or to express consent to any proposal without a
meeting, or for the purpose of determining Shareholders entitled to receive
payment of any dividend or distribution (whether before or after termination of
the Trust)
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or any Annual Report or other communication from the Trustees, or for any other
purpose. The record date so fixed shall be not less than five (5) days nor more
than fifty (50) days prior to the date of the meeting or event for the purposes
of which it is fixed.
6.11 Notice to Shareholders. Any notice of meeting or other notice,
communication or report to any Shareholder shall be deemed duly delivered to
such Shareholder when such notice, communication or report is deposited, with
postage thereon prepaid, in the United States mail, addressed to such
Shareholder at his address as it appears on the records of the Trust or is
delivered in person to such Shareholder.
6.12 Restrictions on Transfer.
(a) Definitions. The following terms shall have the following
meanings:
"Beneficial Ownership" shall mean ownership of Shares by a
Person who would be treated as an owner of such Shares directly,
indirectly or constructively through the application of Section 318(a)
of the Code, as modified by Section 856(d)(5) of the Code, or Section
544 of the Code, as modified by Section 856(h) of the Code. The terms
"Beneficial Owner", "Beneficially Owns" and "Beneficially Owned" shall
have correlative meanings.
"Charitable Beneficiary" shall mean the organization or
organizations described in Section 170(c)(2) and 501(c)(3) of the Code
selected by the Excess Share Trustee.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Excess Shares" shall mean the Excess Trust Shares and the
Excess Preferred Shares.
"Excess Share Trust" shall mean the trust created pursuant to
Section 6.13 hereof.
"Excess Share Trust Beneficiary" shall mean a beneficiary of
the Excess Share Trust as determined pursuant to Section 6.13 hereof.
"Excess Share Trustee" shall mean Nina Matis or any successor
appointed pursuant to Section 6.13 hereof.
"Market Price" of any class of Shares on any date shall mean
the average of the Closing Price for the five (5) consecutive trading
days ending on such date, or if such date is not a trading date, the
five consecutive trading days preceding such date. The "Closing Price"
on any date shall mean (i) the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange, or (ii)
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if such class of Shares is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such class of Shares is
listed or admitted to trading, or (iii) if such class of Shares is not
listed or admitted to trading on any national securities exchange, the
last quoted price, or if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use, or (iv) if such
class of Shares is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in such class of Shares selected by the Trustees.
"Ownership Limit" shall mean (i) in the case of a Person other
than an Existing Holder (as defined below) Beneficial Ownership of more
than eight percent (8.0%), by value, vote or number, of the Shares and
(ii) in the case of a Person who or which was the Beneficial Owner, as
of February 1, 1995 (the "Amendment Date"), of more than 8.0% (by vote,
value or number) of the Shares (any such Person being referred to as an
"Existing Holder"), a percentage (by vote, value or number) equal to
the lesser of (a) 9.9% and (b) the percentage of Shares Beneficially
Owned by such Existing Holder as of the Amendment Date; provided, that
if, at any time and from time to time after the Amendment Date, the
percentage of Shares Beneficially Owned by an Existing Holder shall
decrease (whether by reason of a disposition by such Existing Holder,
an increase in the number of outstanding Shares or otherwise), then
from and after the time of such decrease the Ownership Limit in the
case of such Existing Holder shall be a percentage (by vote, value or
number) equal to the greater of (x) 8.0% and (y) the percentage of
Shares Beneficially Owned by such Existing Holder after giving effect
to such decrease.
"Purported Beneficial Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Shares,
the Person for whom the Purported Record Holder held Shares that were,
pursuant to Section 6.12(c) hereof, automatically converted into Excess
Shares upon the occurrence of such event.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer which results in Excess Shares, the purported
beneficial transferee for whom the Purported Record Transferee would
have acquired Shares if such Transfer had been valid under Section
6.12(b) hereof.
"Purported Record Holder" shall mean, with respect to any
event (other than a purported Transfer) which results in Excess Shares,
the record holder of the Shares that were, pursuant to Section 6.12(c)
hereof, automatically converted into Excess Shares upon the occurrence
of such event.
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<PAGE> 28
"Purported Record Transferee" shall mean, with respect to any
purported Transfer which results in Excess Shares, the record holder of
the Shares if such Transfer had been valid under Section 6.12(b)
hereof.
"Restriction Termination Date" shall mean the first day of the
taxable year for which the Trustees have determined to terminate the
Trust's status as a REIT.
"Transfer" shall mean any sale, transfer, gift, hypothecation,
pledge, assignment, devise or other disposition of Shares (including
(i) the granting of any option or interest similar to an option
(including an option to acquire an option or any series of such
options) or entering into any agreement for the sale, transfer or other
disposition of Shares or (ii) the sale, transfer, assignment or other
disposition of any securities or rights convertible into or
exchangeable for Shares), whether voluntary or involuntary, whether of
record, constructively or beneficially and whether by operation of law
or otherwise. For purposes of this definition, whether securities or
rights are convertible or exchangeable for Shares shall be determined
in accordance with Sections 318 and 544 of the Code.
(b) Restrictions of Transfers and Other Events. On or after the
Restriction Termination Date, the provisions of Sections 6.12 and 6.13 hereof
shall be of no further force and effect. Prior to the Restriction Termination
Date and except as provided in Section 6.12(i) hereof:
(1) No Person shall Beneficially Own Shares in excess of the
Ownership Limit;
(2) Any Transfer that, if effective, would result in any
Person Beneficially Owning Shares in excess of the Ownership Limit
shall be void ab initio as to the Transfer of that number of Shares
which would be otherwise Beneficially Owned by such Person in excess of
the Ownership Limit and the intended transferee shall acquire no rights
in such Shares in excess of the Ownership Limit;
(3) Any Transfer that, if effective, would result in the
Shares being Beneficially Owned by fewer than one hundred (100) Persons
(determined without reference to any rules of attribution) shall be
void ab initio and the intended transferee shall acquire no rights in
such Shares; and
(4) Any Transfer of Shares that, if effective, would result in
the Trust being "closely held" within the meaning of Section 856(h) of
the Code shall be void ab initio as to the Transfer of that number of
Shares which would cause the Trust to be "closely held" within the
meaning of Section 856(h) of the Code and the intended transferee shall
acquire no rights in such Shares.
(c) Conversion into Excess Shares.
(1) If, notwithstanding the other provisions contained in this
Article VI, at any time prior to the Restriction Termination Date,
there is a purported Transfer or other
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event such that any Person would Beneficially Own Shares in excess of
the Ownership Limit, then, except as otherwise provided in Section
6.12(i) hereof, such Shares which would be in excess of the Ownership
Limit (rounded up to the nearest whole share), shall automatically be
converted into that number of shares of Excess Trust Shares or Excess
Preferred Shares, as appropriate, equal to the number of Shares being
converted, as further described in Section 6.12(c)(3) hereof. Such
conversion shall be effective as of the close of business on the
business day prior to the date of the Transfer or other event.
(2) If, notwithstanding the other provisions contained in this
Article VI, at any time prior to the Restriction Termination Date,
there is a purported Transfer or other event which, if effective, would
cause the Trust to become "closely held" within the meaning of Section
856(h) of the Code, then the Shares being Transferred or which are
otherwise affected by such event and which, in either case, would
cause, when taken together with all other Shares, the Trust to be
"closely held" within the meaning of Section 856(h) of the Code
(rounded up to the nearest whole share) shall automatically be
converted into that number of Excess Trust Shares or Excess Preferred
Shares, as appropriate, equal to the number of Shares being converted,
as further described in Section 6.12(c)(3) hereof. Such conversion
shall be effective as of the close of business on the business day
prior to the date of the Transfer or change in capital structure.
(3) Upon conversion of Trust Shares or Preferred Shares into
Excess Shares pursuant to this Section 6.12(c), Trust Shares shall be
converted into Excess Trust Shares and Preferred Shares shall be
converted in Excess Preferred Shares.
(d) Remedies for Breach. If the Trustees or their designees shall at
any time determine in good faith that a purported Transfer or other event has
taken place in violation of Section 6.12(b) hereof or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership of any Shares in
violation of Section 6.12(b) hereof, the Trustees or their designees may take
such action as they deem advisable to refuse to give effect to or to prevent
such Transfer or other event, including, but not limited to, refusing to give
effect to such Transfer or other event on the books of the Trust or instituting
proceedings to enjoin such Transfer or other event or transaction; provided,
however, that any Transfers or attempted Transfers (or, in the case of events
other than a Transfer, Beneficial Ownership) in violation of Section 6.12(b)
hereof shall be void ab initio and automatically result in the conversion
described in Section 6.12(c)(3) hereof, irrespective of any action (or
non-action) by the Trustees or their designees.
(e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire Shares in violation of Section 6.12(b) hereof, or any Person who is a
purported transferee such that Excess Shares result under Section 6.12(c)
hereof, shall immediately give written notice to the Trust of such Transfer,
attempted Transfer or other event and shall provide to the Trust such other
information as the Trust may request in order to determine the effect, if any,
of such Transfer or attempted Transfer or other event on the Trust's status as a
REIT.
(f) Owners Required to Provide Information. Prior to the Restriction
Termination Date:
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(1) Every Beneficial Owner of five percent (5%) or more, by
vote, value or number, or such lower percentages as required pursuant
to regulations under the Code, of the outstanding Shares shall, before
January 30 of each year, give written notice to the Trust stating the
name and address of such Beneficial Owner, the general ownership
structure of such Beneficial Owner, the number of shares of each class
of Shares Beneficially Owned, and a description of how such Shares are
held.
(2) Each Person who is a Beneficial Owner of Shares and each
Person (including the shareholder of record) who is holding Shares for
a Beneficial Owner shall provide on demand to the Trust such
information as the Trust may request from time to time in order to
determine the Trust's status as a REIT and to ensure compliance with
the Ownership Limit and the REIT requirements of the Code and the
regulations published thereunder.
(g) Remedies Not Limited. Subject to Section 6.12(l) hereof, nothing
contained in this Article VI shall limit the authority of the Trustees to take
such other action as they deem necessary or advisable to protect the Trust and
the interests of its Shareholders by preservation of the Trust's status as a
REIT and to ensure compliance with the Ownership Limit.
(h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Section 6.12 or Section 6.13, including any definition
contained in Section 6.12(a) hereof, the Trustees shall have the power to
determine the application of the provisions of this Section 6.12 and Section
6.13 with respect to any situation based on the facts known to them.
(i) Exception. The Trustees upon receipt of a ruling from the Internal
Revenue Service or an opinion of tax counsel, satisfactory to them in their sole
and absolute discretion, in each case to the effect that the Trust's status as a
REIT will not be jeopardized, may exempt a Person from the Ownership Limit if
the Trustees obtain such representations and undertakings from such Person as
are reasonably necessary to ascertain that such Person's Beneficial Ownership of
Shares will not jeopardize the Trust's status as a REIT.
(j) Legend. Until the Restriction Termination Date, each certificate
for the respective class of Shares shall bear the following legend:
The Shares represented by this certificate are subject to
restrictions on transfer. Unless excepted by the Trustees, no Person
may (1) Beneficially Own Shares in excess of 8.0% of the outstanding
Shares, by value, vote or number, determined as provided in the Trust's
Declaration of Trust, as the same may be amended from time to time (the
"Declaration"), and computed with regard to all outstanding Shares and,
to the extent provided by the Code, all Shares issuable under existing
options and exchange rights that have not been exercised; or (2)
Beneficially Own Shares which would result in the Trust being "closely
held". Unless so excepted, any acquisition of Shares and continued
holding of ownership constitutes a continuous representation of
compliance with the above limitations, and any Person who attempts to
Beneficially Own Shares in excess of the above limitations has an
affirmative obligation to notify the Trust immediately upon such
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attempt. If the restrictions on transfer are violated, the transfer
will be void ab initio and the Shares represented hereby will be
automatically converted into Excess Shares that will be held in trust.
Excess Shares may not be transferred at a profit and may be purchased
by the Trust. In addition, certain Beneficial Owners must give written
notice as to certain information on demand and on an annual basis. All
terms not defined in this legend have the meanings provided in the
Declaration. The Trust will mail without charge to any requesting
shareholder a copy of the Declaration, including the express terms of
each class and series of the authorized Shares of the Trust, within
five (5) days after receipt of a written request therefor.
(k) Severability. If any provision of this Article VI or any
application of any such provision is determined to be invalid by any Federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected, and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
(l) New York Stock Exchange Transactions. Nothing in this Article VI
shall preclude the settlement of any transaction entered into through the
facilities of the New York Stock Exchange.
(m) Amendment of Sections 6.12 or 6.13
Notwithstanding any other provisions of this Declaration or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of Shares required by law or this Declaration, the affirmative vote of
the holders of at least two-thirds (2/3) of the voting power of all the then
outstanding Shares, voting together as a single class, shall be required to
alter, amend or repeal this Section 6.12 or Section 6.13.
6.13 Excess Shares.
(a) Ownership In Trust. Upon any purported Transfer or other event that
results in Excess Shares pursuant to Section 6.12(c) hereof, such Excess Shares
shall be deemed to have been transferred to Nina Matis (or any successor Excess
Share Trustee), as Excess Share Trustee of the Excess Share Trust for the
benefit of such Excess Share Trust Beneficiary or Beneficiaries and the
Charitable Beneficiary effective as of the close of business on the business day
prior to the date of the Transfer or other event. Excess Shares so held in trust
shall be issued and outstanding shares of the Trust. The Purported Record
Transferee or Purported Record Holder shall have no rights in such Excess
Shares. The Purported Beneficial Transferee or Purported Beneficial Holder shall
have no rights in such Excess Shares except as provided in Section 6.13(e). Nina
Matis, or any successor Excess Share Trustee, may resign by appointing a person
independent of the Trust, the Corporation (as defined in Section 6.14) or any
Excess Share Trust Beneficiary as the Excess Share Trustee. The Excess Share
Trustee shall, from time to time, designate one or more charitable organization
or organizations as the Charitable Beneficiary.
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(b) Dividend Rights. Excess Shares shall be entitled to the same
dividends determined as if no conversion into Excess Shares had occurred. Any
dividend or distribution paid prior to the discovery by the Trust that the
Shares have been converted into Excess Shares shall be repaid to the Excess
Share Trust upon demand. Any dividend or distribution declared but unpaid shall
be paid to the Excess Share Trust. All dividends received or other income earned
by the Excess Share Trust shall be paid over to the Charitable Beneficiary.
(c) Rights Upon Liquidation. Excess Shares shall not be entitled to
receive any portion of the assets of the Trust on the liquidation or dissolution
of the Trust. Upon conversion of Excess Shares into Shares pursuant to Section
6.13(e) hereof, such shares shall be entitled to receive their pro rata share of
the assets of the Trust as a result of the liquidation or dissolution of the
Trust.
(d) Voting Rights. The Excess Share Trustee shall vote the Excess
Shares which shall have the same voting rights as the Shares into which they are
to be converted pursuant to Section 6.13(e) hereof. Any vote cast by the
Purported Beneficial Transferee or Purported Record Transferee will, at the
election of the Excess Share Trustee, be void ab initio.
(e) Restrictions On Transfer; Designation of Excess Share Trust
Beneficiary.
(1) Excess Shares shall not be transferrable. The Excess Share
Trustee may freely designate an Excess Share Trust Beneficiary of all
or any portion of the beneficial interest in the Excess Share Trust
(representing the number of Excess Shares held by the Excess Share
Trust attributable to a purported Transfer or other event that results
in Excess Shares and designated as to number and class of shares
pursuant to the notice provision of this Section 6.13(e)(1)), if the
Excess Shares held in the Excess Share Trust would not be Excess Shares
in the hands of such Excess Share Trust Beneficiary. If the Excess
Shares resulted from a purported Transfer, the Purported Beneficial
Transferee shall receive a payment from the Excess Share Trustee that
reflects a price per share for such Excess Shares equal to the lesser
of (A) the price per share received by the Excess Share Trustee and (B)
(x) the price per share such Purported Beneficial Transferee paid for
the Share of Beneficial Interest in the purported Transfer that
resulted in the Excess Shares, or (y) if the Purported Beneficial
Transferee did not give value for such shares of Excess Shares (through
a gift, devise or other transaction) a price per share of Excess Shares
equal to the Market Price of the Shares on the date of the purported
Transfer that resulted in the Excess Shares. If the Excess Shares
resulted from an event other than a purported Transfer, the Purported
Beneficial Holder shall receive a payment from the Excess Share Trustee
that reflects a price per share of Excess Shares equal to the lesser of
(A) the price per share received by the Excess Share Trustee and (B)
the Market Price of the Shares on the date of the event that resulted
in Excess Shares. Upon such transfer of an interest in the Excess Share
Trust, the corresponding shares of Excess Shares in the Excess Share
Trust shall be automatically converted into such number of Shares (of
the same class as the shares that were converted into such Excess
Shares) as is equal to the number of shares of Excess Shares, and such
Shares shall be transferred of record to the Excess Share Trust
Beneficiary of the interest in the Excess Share Trust designated by the
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Excess Share Trustee as described above if such Shares would not be
Excess Shares in the hands of such Excess Share Trust Beneficiary.
Prior to any transfer of any interest in the Excess Share Trust, the
Trust must have waived in writing its purchase rights, if any, under
Section 6.13(f) hereof. Any funds received by the Excess Share Trustee
in excess of the funds payable to the Purported Beneficial Holder or
the Purported Beneficial Transferor shall be paid to the Charitable
Beneficiary. The Trust shall pay the costs and expenses of the Excess
Share Trustee.
(2) Notwithstanding the foregoing, if a Purported Beneficial
Transferee, Purported Beneficial Holder or Excess Share Trustee
receives a price for designating an Excess Share Trust Beneficiary of
an interest in the Excess Share Trust that exceeds the amounts
allowable under Section 6.13(e) (1) hereof, such Purported Beneficial
Transferee or Purported Beneficial Holder shall be personally liable
to, and shall pay, or cause the Excess Share Trust Beneficiary of the
interest in the Excess Share Trust to pay, such excess to the Excess
Share Trustee who shall pay over such excess to the Charitable
Beneficiary.
(3) Notwithstanding the foregoing, if the provisions of this
Section 6.13(e) are determined to be void or invalid by virtue of any
legal decision, statute, rule or regulation, then the Purported
Beneficial Transferee or Purported Beneficial Holder of any shares of
Excess Shares may be deemed, at the option of the Trust, to have acted
as an agent on behalf of the Trust, in acquiring or holding such Excess
Shares and to hold such Excess Shares on behalf of the Trust.
(f) Purchase Right in Excess Shares. Excess Shares shall be deemed to
have been offered for sale by the Excess Share Trustee to the Trust, or its
designee, at a price per Excess Share equal to (i) in the case of Excess Shares
resulting from a purported Transfer, the lesser of (A) the price per share of
the Shares in the transaction that created such Excess Shares (or, in the case
of devise or gift, the Market Price of the Shares at the time of such devise or
gift), or (B) the lowest Market Price of the class of Shares which resulted in
the Excess Shares at any time after the date such shares were converted into
Excess Shares and prior to the date the Trust, or its designee, accepts such
offer or (ii) in the case of Excess Shares resulting from an event other than a
purported Transfer, the lesser of (A) the Market Price of the Shares on the date
of such event or (B) the lowest Market Price for Shares which resulted in the
Excess Shares at any time from the date of the event resulting in such Excess
Shares and prior to the date the Trust, or its designee, accepts such offer. The
Trust shall have the right to accept such offer for a period of ninety (90) days
after the later of (i) the date of the Transfer which resulted in such Excess
Shares and (ii) the date the Trustees determine in good faith that a Transfer or
other event resulting in Excess Shares has occurred, if the Trust does not
receive a notice of such Transfer or other event pursuant to Section 6.12(e)
hereof.
6.14 Intercompany Agreement. Until the Amended and Restated
Intercompany Agreement dated as of ________ __, 1999 (as amended from time to
time, the "Intercompany Agreement"), between the Trust and Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation (the "Corporation"), is
terminated, the Trust shall comply in all material respects with
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the restrictions on transfer of its shares of beneficial interest and all other
provisions set forth in the Intercompany Agreement.
6.15 Class A Exchangeable Preferred Shares Articles Supplementary
6.15.1. NUMBER OF SHARES AND DESIGNATION.
The class of shares of beneficial interest in the Trust being
created by these Articles Supplementary shall be designated as "Class A
Exchangeable Preferred Shares", par value $.01 per share ("Class A EPS"), and
30,000,000 shall be the number of shares of Class A EPS constituting such class.
6.15.2. DEFINITIONS.
For purposes of the Class A EPS, the following terms have the
meanings indicated:
"Affiliate" shall mean with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
"Articles Supplementary" shall mean either this Article 6.15
or Article 6.16, as the case may be, of the Declaration.
"Board of Trustees" shall mean the Board of Trustees of the
Trust or any committee authorized by the Board of Trustees from time to
time to exercise any of its powers or perform any of its
responsibilities with respect to the Class A EPS.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Cash Equivalent" of Paired Shares or any other shares of
beneficial interest or other securities of the Trust or any other
issuer as of any date shall mean an amount of cash equal to (i) the
average of the daily Current Market Prices per unit of such Paired
Shares or other shares or securities during the five (5) consecutive
Trading Days immediately preceding such date or (ii) if the Paired
Shares or such other shares or securities are not publicly traded on
such date, the fair market value of such Paired Shares or other
securities as of such date as determined by the Board of Trustees in
good faith (subject to the rights of the holders of the Class A EPS to
request a valuation from a nationally recognized investment banking
firm as provided in paragraph (g)(v) of Article 6.15.5 hereof).
"Class A Articles Supplementary" shall mean this Article 6.15.
"Class A Dividend Replacement Shares" shall have the meaning
set forth in paragraph (d)(v) of Article 6.15.5 hereof.
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"Class A EPS" shall have the meaning set forth in Article
6.15.1 hereof.
"Class A Exchange Notice" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Class A Exchange Right" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Class A Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.15.4 hereof.
"Class A Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.15.4 hereof.
"Class A Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.15.3 hereof.
"Class A Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.15.3 hereof.
"Class A Underlying Corporation Shares" as of any time shall
mean the Corporation Shares component of the Class A Underlying Paired
Shares as of such time.
"Class A Underlying Paired Shares" as of any time shall mean
the Paired Shares (including, unless otherwise expressly provided
herein, fractional units of Paired Shares) for which each share of
Class A EPS is then exchangeable upon exercise of the Class A Exchange
Right but excluding (except for the purposes of an actual exercise of
the Class A Exchange Right) any Class A Dividend Replacement Shares.
"Class A Underlying Trust Shares" as of any time shall mean
the Trust Shares component of the Class A Underlying Paired Shares as
of such time.
"Class B Articles Supplementary" shall mean Article 6.16 of
the Declaration of Trust pursuant to which the Trust has classified and
designated 15,000,000 shares of beneficial interest in the Trust as
"Class B Exchangeable Preferred Shares".
"Class B EPS" shall mean the Class B Exchangeable Preferred
Shares, par value $0.01 per share, of the Trust created pursuant to the
Class B Articles Supplementary.
"Class B Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.16.4 hereof.
"Class B Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.16.4 hereof.
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"Class B Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.16.3 hereof.
"Class B Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.16.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Conditionally Declared Class A Dividend" shall have the
meaning set forth in paragraph (b)(i) of Article 6.15.3 hereof.
"Constituent Person" shall have the meaning set forth in
paragraph (e)(ii) of Article 6.15.5 hereof.
"Corporation" shall mean Starwood Lodging Corporation, a
Maryland corporation, and any successor.
"Corporation Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Corporation of a dividend on
the outstanding Corporation Shares that is payable in
additional Corporation Shares;
(ii) The subdivision of the outstanding Corporation
Shares into a greater number of shares (whether by share split
or otherwise);
(iii) The combination of the outstanding Corporation
Shares into a smaller number of shares (whether by reverse
share split or otherwise); or
(iv) The issuance of any shares of stock of the
Corporation by reclassification of the Corporation Shares.
"Corporation Common Distribution" shall mean any dividend or
distribution paid or made by the Corporation (including, without
limitation, any distribution of assets on any liquidation, dissolution
or winding up of the Corporation) in respect of the Corporation Shares,
other than a dividend or distribution that constitutes a Corporation
Common Adjustment Event. In addition, a distribution to the holders of
Corporation Shares of rights to subscribe for or purchase additional
Corporation Shares under a shareholders protective rights plan or
agreement shall not be deemed to constitute a Corporation Common
Distribution to the extent that the Corporation makes provision so that
such rights, to the extent still outstanding with respect to the
outstanding Corporation Shares, shall be issued to the holders of any
Corporation Shares issued upon exercise of the Class A Exchange Right
(and, to the extent applicable, shall attach to such Corporation
Shares) in an amount and manner and to the extent provided in such
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shareholders protective rights plans or agreements with respect to
already outstanding Corporation Shares.
"Corporation Shares" shall mean the shares of common stock,
par value $.01 per share, of the Corporation or any stock of the
Corporation into which such common stock may hereafter be changed.
"Current Market Price" of publicly traded Paired Shares or any
other shares of beneficial interest or other securities of the Trust or
any other issuer as of any Trading Day shall mean the last reported
sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the NYSE or, if
such shares or other securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which
such shares or other securities are listed or admitted for trading or,
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such shares or other
securities are not quoted on such NASDAQ National Market, the average
of the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such
shares or other securities on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such
shares or other securities selected for such purpose by the Chief
Executive Officer or Chief Financial Officer of the Trust or the Board
of Trustees.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of the Trust, as amended from time to time.
"Delivered Shares" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"Dividend Correspondence Ratio" shall have the meaning set
forth in paragraph (b)(i) of Article 6.15.3 hereof.
"Excess Shares" shall have the meaning set forth in paragraph
(a)(ii) of Article 6.15.5 hereof.
"Exchange Election Notice" shall have the meaning set forth in
paragraph (a)(i) of Article 6.15.5 hereof.
"Exchange Issuance Date" shall have the meaning set forth in
paragraph (b) of Article 6.15.5 hereof.
"Exchange Promissory Note" shall mean an unsecured promissory
note of the Trust in such form as the Trust shall reasonably prescribe
with a maturity date ninety (90) days after the date of issuance of
such note. Such Exchange Promissory Note shall bear interest in an
amount equal to the amount of any dividends paid during the period that
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such note remains outstanding on a number of Paired Shares equal to the
number of Excess Shares for which such Exchange Promissory Note is
being substituted pursuant to paragraph (a)(ii) of Article 6.15.5
hereof, which interest shall be payable on the dates of payment of the
corresponding dividends.
"Exchange Ratio" shall have the meaning set forth in paragraph
(d)(i) of Article 6.15.5 hereof.
"Issue Date" shall mean the first date on which any shares of
Class A EPS are issued by the Trust.
"Junior Dividend" means a dividend payable in respect of any
class or series of shares of beneficial interest in the Trust over
which the Class A Preferred Dividends have preference or priority as to
the payment of dividends, including, without limitation, any Trust
Common Dividend, any Class A Participation Dividend and any Class B
Participation Dividend.
"Junior Liquidating Distribution" shall mean any distribution
of assets of the Trust in connection with a Liquidation Event to
holders of any class or series of shares of beneficial interest in the
Trust over which the Class A Liquidation Preference has preference or
priority in the distribution of assets upon the occurrence of such
Liquidation Event, including, without limitation, any such distribution
of assets to holders of Trust Shares or in respect of the Class A
Liquidation Participation Right or the Class B Liquidation
Participation Right.
"Junior Shares" shall mean the Trust Shares and any other
class or series of shares of beneficial interest in the Trust now or
hereafter issued and outstanding over which the Class A Preferred
Dividends have full preference or priority in the payment of dividends
or over which the Class A Liquidation Preference has full preference or
priority in the distribution of assets on the occurrence of any
Liquidation Event, including, without limitation, the Trust Shares but
excluding the Class B EPS.
"Liquidation Date" shall have the meaning set forth in
paragraph (a) of Article 6.15.4 hereof.
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all of the Trust's
assets shall not be deemed to be a Liquidation Event.
"Non-Electing Shares" shall have the meaning set forth in
paragraph (e)(ii) of Article 6.15.5 hereof.
"NYSE" shall mean the New York Stock Exchange.
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<PAGE> 39
"Offered Shares" shall have the meaning set forth in paragraph
(a)(ii) of Article 6.15.5 hereof.
"Ownership Limit" shall have the meaning set forth in Section
6.12 of the Declaration.
"Paired Shares" shall mean units consisting of one Trust Share
paired with one Corporation Share (subject to adjustment as
contemplated provided in paragraph (e) of Article 6.15.5 hereof) and
represented by a single share certificate, as provided in the Pairing
Agreement dated as of June 25, 1980, between the Trust and the
Corporation, as amended from time to time.
"Paired Shares Adjustment Event" shall have the meaning set
forth in paragraph (d)(i) of Article 6.15.5 hereof.
"Parity Liquidation Preference" shall mean the liquidation
preference of any class or series of shares of beneficial interest in
the Trust that ranks on a parity with the Class A Liquidation
Preference.
"Parity Preferred Dividend" shall mean any dividend payable in
respect of any class or series of shares of beneficial interest in the
Trust that ranks on a parity in right of payment with the Class A
Preferred Dividends, whether or not the dividend rate, dividend payment
dates, liquidation preference, redemption rights, conversion or
exchange rights or other features of such class or series are different
from those of the Class A EPS.
"Person" shall mean any individual, firm, partnership,
corporation, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Registered Sale Option" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"REIT Rules" shall mean the requirements (i) for the Trust to
qualify as a real estate investment trust under the Code as set forth
in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
Corporation or any affiliate of the Corporation which is a tenant of
the Trust to not be treated as a related party pursuant to Section
856(d)(2)(B) of the Code.
"Requested Shares" shall have the meaning set forth in
paragraph (a)(ii) of Article 6.15.5 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
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<PAGE> 40
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest of the Trust;
provided, however, that if any funds for any class or series of Junior
Shares or any class or series of shares of beneficial interest of the
Trust ranking on a parity with the Class A EPS as to the payment of
dividends are placed in a separate account of the Trust or delivered to
a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Class A EPS shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or similar agent.
"Trading Day" with respect to publicly traded Paired Shares or
any other shares of beneficial interest or other securities of the
Trust or any other issuer shall mean any day on which the shares or
other securities in question are traded on the NYSE, or if such shares
or other securities are not listed or admitted for trading on the NYSE,
on the principal national securities exchange on which such shares or
other securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the NASDAQ National
Market, or if such shares or other securities are not quoted on such
NASDAQ National Market, in the applicable securities market in which
such shares or other securities are traded.
"Transaction" shall have the meaning set forth in paragraph
(e)(ii) of Article 6.15.5 hereof.
"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class A EPS and the Class B EPS.
"Trust" shall mean Starwood Lodging Trust, a Maryland real
estate investment trust, and any successor.
"Trust Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Trust Shares that is payable in additional Trust
Shares;
(ii) The subdivision of the outstanding Trust Shares
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Trust Shares
into a smaller number of shares (whether by reverse share
split or otherwise); or
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<PAGE> 41
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Trust Shares.
"Trust Common Dividend" shall mean any dividend or
distribution paid or made by the Trust pro rata on the outstanding
Trust Shares other than (i) a distribution of assets of the Trust upon
the occurrence of a Trust Liquidation Event or (ii) on a dividend or
distribution that constitutes a Trust Common Adjustment Event. In
addition, a distribution to the holders of shares of beneficial
interest in the Trust of rights to subscribe for or purchase additional
Trust Shares under a shareholders protective rights plan or agreement
or any similar plan or agreement shall not be deemed to constitute a
Trust Common Dividend to the extent that the Trust makes provision so
that such rights, to the extent still outstanding with respect to the
outstanding Trust Shares, shall be issued to the holders of any Trust
Shares issued upon exercise of the Class A Exchange Right (and, to the
extent applicable, shall attach to such Trust Shares) in an amount and
manner and to the extent provided in such plans or agreements with
respect to already outstanding Trust Shares.
"Trust Shares" shall mean the common shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
"Westin Transaction Agreement" shall mean the Transaction
Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
Investor Partnership, Nomura Asset Capital Corporation, Juergen
Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
Limited Partnership, the Corporation and SLC Operating Limited
Partnership, as such agreement may be amended from time to time.
"Westin Transaction Securities" shall mean, with respect to a
holder of Class A EPS or an Affiliate thereof, any shares of Class A
EPS, shares of Class B EPS, Starwood Operating Partnership Units and
Starwood Realty Partnership Units (as such terms are defined in the
Westin Transaction Agreement) received by such holder or Affiliate
pursuant to the Westin Transaction Agreement, together with any shares
of Class B EPS, Class A EPS or Paired Shares (or other securities)
issued upon exchange or conversion of any such Westin Transaction
Securities.
6.15.3. DIVIDENDS.
(a) In General. The holders of Class A EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class A Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based on
the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
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<PAGE> 42
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class A Participation Dividend").
(b) Class A Preferred Dividend.
(i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class A Preferred Dividend will automatically accrue with
respect to each share of Class A EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the corresponding Class A
Preferred Dividend either (A) in the same form as such Corporation Common
Distribution (i.e., by delivery of the same type of securities or other property
as distributed in the Corporation Common Distribution), (B) in cash in an amount
equal to the fair market value of such securities or other property as
determined in good faith by the Board of Trustees (subject to the rights of the
affected holders of Class A EPS to request a valuation from a nationally
recognized investment banking firm as provided in paragraph (g)(v) of Article
6.15.5 hereof) or (C) a combination thereof. Each Class A Preferred Dividend
will be cumulative from the payment date for the related Corporation Common
Distribution and will be payable to holders of record of Class A EPS on such
record date as shall be fixed by the Board of Trustees, which record date shall
be the same as the record date for the corresponding Class B Preferred Dividend
that will have accrued or will accrue based on such Corporation Common
Distribution and not earlier than the record date for such Corporation Common
Distribution. The Board of Trustees may, at any time between the declaration of
a Corporation Common Distribution and the related payment date, declare a
corresponding Class A Preferred Dividend conditioned on the actual payment of
such Corporation Common Distribution (any such Class A Preferred Dividend being
sometimes referred to herein as a "Conditionally Declared Class A Dividend"
until such time as the corresponding Corporation Common Distribution is paid, at
which time it will no longer be a Conditionally Declared Class A Dividend but
will instead be deemed to be an accrued Class A Preferred Dividend). The
"Dividend Correspondence Ratio" for the purposes of determining the amount of
any Class A Preferred Dividend shall mean the number of Class A Underlying
Corporation Shares for which each share of Class A EPS is exchangeable as of the
record date for the related Corporation Common Distribution upon exercise of the
Class A Exchange Right, as such number shall be proportionately adjusted to
reflect any share dividend, share split, reverse share split or other
combination or subdivision of the Class A EPS that becomes effective between
(or, if the record date for such event is different from the effective date
therefor, that has a record date that falls between) (A) the record date for the
Corporation Common Distribution and (B) the date of payment of such Corporation
Common Distribution or, if earlier, the record date for such Class A Preferred
Dividend.
(ii) So long as any shares of Class A EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment, (B)
no
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Parity Preferred Dividend shall be declared or paid or set aside for payment
unless a ratable portion of all accrued but unpaid Class A Preferred Dividends
and Conditionally Declared Class A Dividends has been or is concurrently
declared and paid, or declared and a sum sufficient for the payment thereof set
apart for payment (with such ratable portion being based on the portion of the
accrued but unpaid Parity Preferred Dividends being paid) and (C) no Junior
Shares may be redeemed, purchased or otherwise acquired by the Trust (other than
a redemption, purchase or other acquisition of Trust Shares made for purposes of
and in compliance with requirements of an employee incentive or benefit plan of
the Trust or any subsidiary or upon any exchange or redemption of other
securities at the option of the holders thereof, or as required or permitted
under Article VI of the Declaration) for consideration (or any moneys paid or
made available for a sinking fund for the redemption of any Junior Shares),
directly or indirectly (except for conversion into or exchange for Junior
Shares) unless all accrued Class A Preferred Dividends and Conditionally
Declared Class A Dividends have been or are concurrently declared and paid, or
declared and a sum sufficient for the payment thereof set apart for payment.
(c) Class A Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class A Participation Dividend entitling each share of
Class A EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class A
Underlying Trust Shares for which each share of Class A EPS is then exchangeable
upon exercise of the Class A Exchange Right as of the record date for such Trust
Common Dividend. Such Class A Participation Dividend shall be payable on the
same date on which the corresponding Trust Common Dividend is payable, shall be
payable in the same form as the corresponding Trust Common Dividend and shall be
paid to holders of record of the Class A EPS on the same record date as is fixed
by the Board of Trustees for the payment of such Trust Common Dividend.
6.15.4. LIQUIDATION RIGHTS.
(a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class A EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class A Liquidation Preference described in paragraph (b) below determined as of
the effective date of such Liquidation Event or, if no effective date is
provided, as of the record date of the first liquidating distribution relating
to such Liquidation Event (in either such case, the "Liquidation Date") and (ii)
to participate on the basis described in paragraph (c) below in any liquidating
distribution to holders of Trust Shares (the "Class A Liquidation Participation
Right"). In determining whether a distribution (other than upon the occurrence
of a Liquidation Event), by dividend, redemption or other acquisition of shares
of beneficial interest in the Trust or otherwise, is permitted under Maryland
law, amounts that would be needed, if the Trust were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution of the
holders of Class A EPS whose preferential rights upon dissolution are senior to
those receiving the distribution shall not be added to the Trust's total
liabilities.
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(b) Class A Liquidation Preference. The "Class A Liquidation
Preference" of a share of Class A EPS as of the applicable Liquidation Date
shall mean the sum of (A) the fair market value (as determined in good faith by
the Board of Trustees, subject to the right of the holders of Class A EPS to
request a valuation from a nationally recognized investment banking firm
pursuant to paragraph (g)(v) of Article 6.15.5 hereof) as of such date of the
number of Class A Underlying Corporation Shares for which each Class A EPS is
exchangeable as of such date upon exercise of the Class A Exchange Right plus
(B) the amount of any accrued but unpaid Class A Preferred Dividends in respect
of each share of Class A EPS as of such date (other than any such accrued but
unpaid Class A Preferred Dividends that have been declared with a record date
prior to such Liquidation Date, which the Trust shall separately be obligated to
pay to the holders of record of the Class A EPS as of such record date). Until
each holder of shares of Class A EPS has received distributions equal to the
Class A Liquidation Preference, no Junior Liquidating Distributions may be paid
to holders of any other class or series of shares of beneficial interest in the
Trust. Subject to the rights of the holders of shares of beneficial interest in
the Trust with liquidation preferences ranking prior to or on a parity with the
Class A Liquidation Preference, after payment shall have been made in full of
the Class A Liquidation Preference as provided in this paragraph (b), Junior
Liquidating Distributions may be paid to the holders of any shares of beneficial
interest entitled to receive such distributions and the holders of the Class A
EPS shall not be entitled to share therein except as provided in paragraph (c)
of this Article 6.15.4. In the event that the assets of the Trust available for
liquidating distributions to holders of shares of beneficial interest in the
Trust in connection with any Liquidation Event are insufficient to pay the Class
A Liquidation Preference on all outstanding Class A EPS and any Parity
Liquidation Preferences in respect of any other classes or series of shares of
beneficial interest in the Trust, then the holders of the Class A EPS and such
other classes and series of shares of beneficial interest in the Trust shall
share ratably in any such distribution of assets in proportion to the Class A
Liquidation Preference and the Parity Liquidation Preferences to which they
would otherwise be respectively entitled.
(c) Class A Liquidation Participation Right. In addition to
being entitled to receive the Class A Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of Class A EPS shall be entitled
to participate, pursuant to the Class A Liquidation Participation Right, ratably
with the holders of Trust Shares in any liquidating distributions to such
holders. For such purpose, each share of Class A EPS shall be deemed to
represent a number of Trust Shares equal to the number of Class A Underlying
Trust Shares for which each share of Class A EPS could be exchanged upon
exercise of the Class A Exchange Right as of the record date for such
distribution.
6.15.5. EXCHANGE RIGHT.
(a) Class A Exchange Right. (i) A holder of shares of Class A
EPS shall have the right to exchange such shares in whole or in part at any time
for fully paid and non-assessable Paired Shares to the extent described below
(the "Class A Exchange Right"). A holder of shares of Class A EPS desiring to
exchange such shares for Paired Shares shall surrender the certificate or
certificates evidencing such shares, duly endorsed or assigned to the Trust or
in blank, to the Transfer Agent together with a duly completed and executed
exchange notice (a "Class A
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<PAGE> 45
Exchange Notice") in such form as the Trust shall prescribe from time to time
and such related certifications as the Trust may reasonably prescribe from time
to time. Unless any Paired Shares to be issued in exchange for such shares of
Class A EPS are to be issued in the same name as the name in which such shares
of Class A EPS are registered, each share certificate surrendered shall be
accompanied by instruments of transfer, in form reasonably satisfactory to the
Trust, duly executed by the holder or such holder's duly authorized attorney and
an amount sufficient to pay any applicable transfer or similar tax (or evidence
reasonably satisfactory to the Trust demonstrating that such taxes have been
paid). As promptly as practicable (and in any event within five (5) Business
Days after receipt of a Class A Exchange Notice and such required certificates
and documents, the Trust shall elect, pursuant to an election notice given to
the exchanging holder (an "Exchange Election Notice"), to either: (i) deliver to
such holder the number of Paired Shares corresponding to the number of shares of
Class A EPS being exchanged based on the Exchange Ratio described in paragraph
(d) of this Article 6.15.5 (including procuring the issuance by the Corporation
of the Corporation Shares component of such Paired Shares) or (ii) pay to the
holder the Cash Equivalent of such Paired Shares or (iii) a combination of (i)
and (ii).
(ii) If the delivery to such holder of the full
number of Paired Shares requested to be delivered pursuant to the Class A
Exchange Notice (the "Requested Shares") would result in a violation of either
the Ownership Limit or the REIT Rules, the Trust may elect in the Exchange
Election Notice to either (A) deliver to such holder the maximum number of
Paired Shares that may be delivered without causing such a violation (the
"Delivered Shares", with the number of Requested Shares in excess of the
Delivered Shares being referred to herein as the "Excess Shares"), together with
either the Cash Equivalent (determined as of the date of delivery of the
applicable Class A Exchange Notice and the related certificates and other
documents described above) of the Excess Shares or an Exchange Promissory Note
in a principal amount equal to such Cash Equivalent or (B) deliver to such
holder the Cash Equivalent (determined as of such notice delivery date) of the
Requested Shares. Notwithstanding the foregoing, in the event that the delivery
of the full number of Requested Shares pursuant to a Class A Exchange Notice
would violate either the Ownership Limit or the REIT Rules because the
exchanging Class A EPS holder, together with such holder's Affiliates (but
without giving effect to any other applicable attribution rules under the Code),
beneficially owns, as of the date the Exchange Election Notice is given, Paired
Shares other than through the ownership of Westin Transaction Securities, the
Trust will have the option (the "Registered Sale Option"), exercisable in the
Exchange Election Notice, in lieu of delivering an Exchange Promissory Note in a
principal amount equal to the Cash Equivalent of the Excess Shares, to procure
the filing of a registration statement under the Securities Act, and to publicly
offer and sell pursuant to such registration statement in such manner as the
Trust in good faith determines to be appropriate a number of Paired Shares equal
to the number of such Excess Shares (the "Offered Shares"), the net proceeds of
which sale (after deducting any applicable underwriting discounts or commissions
and the expenses of such offering) shall be paid to such holder.
(iii) In the event that the issuance of the full
number of Requested Shares upon any exercise of the Class A Exchange Right would
violate either the Ownership Limit or the REIT Rules and either (i) the Trust
elects to deliver the Delivered Shares together with an
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<PAGE> 46
Exchange Promissory Note in a principal amount equal to the Cash Equivalent of
the Excess Shares or (ii) the Trust exercises the Registered Sale Option, the
holder of the shares of Class A EPS being exchanged will have the right to
withdraw his or her Class A Exchange Notice as to the Excess Shares, which
withdrawal must be made by written notice to the Transfer Agent within ten (10)
Business Days after receipt of the Trust's Exchange Election Notice.
(b) Delivery of Securities and Cash. If the Exchange Election
Notice relating to an exercise of the Class A Exchange Right does not give rise
to a withdrawal right pursuant to paragraph (a)(iii) above, such Exchange
Election Notice shall be accompanied by the delivery of the Paired Shares and/or
cash required to be delivered pursuant to such Exchange Election Notice. If the
Exchange Election Notice does give rise to such a withdrawal right, but such
right is not exercised by the exchanging holder, the Trust shall deliver the
Paired Shares, Exchange Promissory Note and/or cash required to be delivered
pursuant to such Exchange Election Notice within five (5) Business Days after
the expiration of such withdrawal right. If the Exchange Election Notice
includes the exercise of the Registered Sale Option, the proceeds from the sale
of the Offered Shares shall be paid over to the applicable holder promptly upon
receipt. Any cash payable to an exchanging holder hereunder shall be payable at
the election of the Trust by check or by wire transfer to an account designated
in writing by the exchanging holder, if one has been so designated. With respect
to any Paired Shares to be issued pursuant to an Exchange Election Notice, the
Trust shall issue and deliver (and shall cause the Corporation to issue and
deliver) at the office of the Transfer Agent to the exchanging holder, or on his
or her written order, a certificate or certificates for the number of full
Paired Shares deliverable in accordance with the provisions of this Article
6.15.5, and any fractional interest in respect of a unit of Paired Shares
arising upon such exercise of the Class A Exchange Right shall be settled as
provided in paragraph (c) of this Article 6.15.5 (the date of delivery of such
certificate or certificates being sometimes referred to herein as the "Exchange
Issuance Date"). Any such Paired Shares issued upon such exercise shall be
deemed to have been issued immediately prior to the close of business on the
Exchange Issuance Date, and the Person or Persons in whose name or names any
certificate or certificates for Paired Shares shall be issuable pursuant to such
Class A Exchange Notice shall be deemed to have become the holder or holders of
record of the Paired Shares represented thereby at such time on such date unless
the share transfer records for the Paired Shares shall be closed on such date,
in which event such Person or Persons shall be deemed to have become such holder
or holders of record at the close of business on the next succeeding day on
which such share transfer books are open. If less than the full number of shares
of Class A EPS represented by the certificate or certificates surrendered to the
Trust in connection with an exercise of the Class A Exchange Right are being
exchanged pursuant to such exercise, the Trust shall also deliver to the
exchanging holder a new certificate or certificates evidencing the excess shares
not being exchanged.
(c) Fractional Interests. No fractional Paired Share units or
scrip evidencing fractions of Paired Shares shall be issued upon exercise of the
Class A Exchange Right. Instead of any fractional interest in a unit of Paired
Shares that would otherwise be deliverable upon such exercise, the Trust shall
pay to the exchanging holder an amount in cash equal to the corresponding
fraction of the Current Market Price of the Paired Shares on the Trading Day
immediately preceding the Exchange Issuance Date. If more than one share of
Class A EPS shall
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be surrendered for exchange at one time by the same holder, the number of full
Paired Shares issuable upon exercise of the Class A Exchange Right shall be
computed on the basis of the aggregate number of shares of Class A EPS so
surrendered.
(d) Exchange Ratio and Adjustments.
(i) Initially, one unit of Paired Shares will be
issuable upon exchange of each share of Class A EPS pursuant to the exercise of
the Class A Exchange Right (the "Exchange Ratio"). If, at any time after the
Issue Date, a Trust Common Adjustment Event shall occur in conjunction with the
occurrence of a corresponding Corporation Common Adjustment Event as a result of
which the number of outstanding Paired Shares is increased or decreased but
neither the nature of the securities comprising the Paired Shares nor the ratio
of outstanding Trust Shares to Common Shares is affected (a "Paired Shares
Adjustment Event"), the Exchange Ratio in effect as of the close of business on
the record date for such Paired Shares Adjustment Event or, if no such record
date applies, the effective date of such Paired Shares Adjustment Event shall be
adjusted so that a holder of shares of Class A EPS who thereafter exercises the
Class A Exchange Right with respect to such shares will be entitled to receive
upon such exercise the number of Paired Shares that such holder would have owned
or have been entitled to receive after the happening of such Paired Shares
Adjustment Event if such holder had exercised the Class A Exchange Right
immediately prior to such record date or effective date. An adjustment pursuant
to this subparagraph (i) shall become effective (subject to subparagraph (iv)
below) immediately upon the opening of business on the Business Day next
following the record date for the applicable Paired Shares Adjustment Event or,
if no such record date applies, the Business Day next following the effective
date of such Paired Shares Adjustment Event.
(ii) No adjustment in the Exchange Ratio shall be
required pursuant to subparagraph (i) above unless such adjustment would require
a cumulative increase or decrease of at least one percent (1%) in such ratio;
provided, however, that any adjustments that by reason of this subparagraph (ii)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment until made. All calculations of the Exchange Ratio
under this paragraph (d) shall be made to the nearest one-tenth of a share (with
.05 of a share being rounded upward).
(iii) Notwithstanding any other provisions of this
Article 6.15.5, the Trust shall not be required to make any adjustment to the
Exchange Ratio based on any issuance of Paired Shares pursuant to any plan
providing for the reinvestment of dividends or interest payable on securities of
the Trust (or the Corporation) and the investment of additional optional amounts
in Paired Shares under such plan.
(iv) In any case in which this paragraph (d) provides
that an adjustment to the Exchange Ratio shall become effective immediately
following the record date for an event, the Trust may defer until the occurrence
of such event (A) issuing to the holder of any shares of Class A EPS exchanged
after such record date but before the occurrence of such event the additional
Paired Shares (or the cash, Exchange Promissory Notes or other property to be
delivered in lieu thereof pursuant to this Article 6.15.5) issuable pursuant to
such exchange by reason of the
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<PAGE> 48
adjustment required pursuant to this paragraph (d) in respect of such event and
(B) paying to the exchanging holder any amount of cash in lieu of any fractional
interest in Paired Shares pursuant to paragraph (c) of this Article 6.15.5.
(v) If at the time of any exercise of the Class A
Exchange Right there are any accrued but unpaid Class A Preferred Dividends or
Class A Participation Dividends other than Class A Preferred Dividends or Class
A Participation Dividends that have been declared with a record date prior to
such exercise, the Exchange Ratio shall be adjusted so that the number of Paired
Shares into which the shares of Class A EPS being exchanged are then
exchangeable is increased by a number of Paired Shares (the "Class A Dividend
Replacement Shares") equal to (A) the aggregate amount of such accrued but
unpaid Class A Preferred Dividends and Class A Participation Dividends with
respect to each share of Class A EPS being exchanged divided by (B) the Current
Market Price of the Paired Shares during the five (5) Trading Days immediately
preceding the date of delivery of the applicable Class A Exchange Notice and all
related certificates and other documents.
(e) Adjustments to Composition of Paired Shares Issuable Upon
Exchange.
(i) If, at any time after the Issue Date, a Trust
Common Adjustment Event or a Corporation Common Adjustment Event shall occur
other than as part of a Paired Shares Adjustment Event, each unit of Paired
Shares issuable upon exercise of the Class A Exchange Right shall be adjusted
(subject to subparagraph (iii) below) as of the close of business on the record
date for such event or, if no such record date applies, the effective date of
such event so as to consist of the number of Trust Shares, the number of
Corporation Shares and the number of any other shares of beneficial interest in
the Trust or shares of stock of the Corporation that a holder of one unit of
Paired Shares would have held or have been entitled to receive after giving
effect to such event.
(ii) If, at any time after the Issue Date, the Trust
or the Corporation shall become a party to any transaction, including, without
limitation, a merger, consolidation, statutory share exchange, self tender offer
for all or substantially all outstanding Trust Shares and/or Corporation Shares,
sale of all or substantially all of the Trust's or the Corporation's assets or
recapitalization of the Trust Shares and/or the Corporation Shares (but
excluding any event constituting a Trust Common Adjustment Event or a
Corporation Common Adjustment Event) (each of the foregoing being referred to
herein as a "Transaction"), in each case as a result of which the outstanding
Trust Shares and/or Corporation Shares shall be converted into or exchanged for
the right to receive stock, securities or other property (including cash or any
combination thereof), effective as of the effective date of such Transaction,
each unit of Paired Shares issuable upon exercise of the Class A Exchange Right
with respect to any shares of Class A EPS that are not converted into or
exchanged for the right to receive stock, securities or other property in
connection with such Transaction shall thereafter be deemed to consist of the
kind and amount of shares of beneficial interest in the Trust, shares of stock
of the Corporation and other securities and property (including cash or any
combination thereof) that would have been held or receivable upon the
consummation of such Transaction by a holder of a number of Paired Shares equal
to the number of Class A Underlying Paired Shares for which one share of Class A
EPS
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<PAGE> 49
would have been exchangeable immediately prior to such Transaction, assuming
such holder of Paired Shares (A) is not a Person with which the Trust or the
Corporation consolidated or into which the Trust or the Corporation was merged
or which merged into the Trust or the Corporation or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an Affiliate
of a Constituent Person and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each unit of Paired Shares
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Shares"), then for the purposes of this
subparagraph (ii) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction in respect of each
Non-Electing Share shall be deemed to be the kind and amount so receivable per
share by a plurality of the Non-Electing Shares). The provisions of this
paragraph (e) shall similarly apply to successive transactions.
(iii) In any case in which this paragraph (e)
provides that an adjustment to the composition of the units of Paired Shares
issuable upon exercise of the Class A Exchange Right shall become effective
immediately following the record date for an event, the Trust may defer until
the occurrence of such event (A) issuing to the holder of any shares of Class A
EPS exchanged after such record date but before the occurrence of such event the
additional Paired Shares (or the cash, Exchange Promissory Notes or other
property to be delivered in lieu thereof pursuant to this Article 6.15.5)
issuable pursuant to such exchange before giving effect to such adjustment and
(B) paying to the exchanging holder any amount of cash in lieu of any fractional
interest in Paired Shares pursuant to paragraph (c) of this Article 6.15.5.
(f) Notice of Adjustments. Whenever the Exchange Ratio or the
composition of a unit of Paired Shares is adjusted as provided in paragraph (d)
or (e) above, the Trust shall promptly file with the Transfer Agent an officer's
certificate setting forth the Exchange Ratio after such adjustment and, in the
case of an adjustment pursuant to paragraph (e), describing the kind and amount
of stock, securities and other property (including cash) then constituting a
unit of Paired Shares. Such certificate shall also set forth a brief statement
of the facts requiring such adjustment and shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly after delivery of
such certificate, the Trust shall prepare a notice of such adjustment setting
forth the adjusted Exchange Ratio, the effective date of such adjustment and, in
the case of an adjustment pursuant to paragraph (e), a description of the kind
and amount of stock, securities and other property (including cash) then
constituting a unit of Paired Shares, and shall mail such notice of such
adjustment to the holder of each share of Class A EPS, and to the extent that
any shares of Class B EPS are then outstanding to each holder of Class B EPS, at
such holder's last address as shown on the share records of the Trust.
(g) Miscellaneous Provisions.
(i) There shall be no adjustment of the Exchange
Ratio or the composition of the units of Paired Shares issuable upon exercise of
the Class A Exchange Right in case of the
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issuance of any shares of beneficial interest in the Trust in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Article 6.15.5.
(ii) If the Trust shall take any action affecting the
Trust Shares or the Corporation shall take any action affecting the Corporation
Shares, other than an action described in this Article 6.15.5, that in the
opinion of the Board of Trustees would materially affect the exchange rights of
the holders of the Class A EPS provided for in this Article 6.15.5, the Exchange
Ratio and/or the composition of the units of Paired Shares may be adjusted, to
the extent permitted by law, in such manner, if any, and at such time, as the
Board of Trustees, in its sole discretion, may determine to be equitable in the
circumstances.
(iii) The Trust covenants that any Paired Shares
issued upon exercise of the Class A Exchange Right will be validly issued, fully
paid and non-assessable. The Trust shall reserve and shall at all times have
reserved out of its authorized but unissued Trust Shares, solely for issuance
pursuant to exercise of the Class A Exchange Right and shall use its best
efforts to cause the Corporation to reserve and at all times have, solely for
issuance pursuant to exercise of the Class A Exchange Right, sufficient
Corporation Shares to permit the exercise of such Class A Exchange Right. The
Trust shall use its best efforts to cause the Corporation not to close its
transfer books so as to prevent the timely issuance of Corporation Shares upon
the exercise of the Class A Exchange Right. The Trust shall not close its
transfer books so as to prevent the timely issuance of Trust Shares upon the
exercise of the Class A Exchange Right. The Trust shall pay any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of Paired Shares or other securities or property upon exercise
of the Class A Exchange Right; provided, however, that the Trust shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of any Paired Shares or other securities or property in
a name other than that of the holder of the shares of Class A EPS being
exchanged, and no such issue or delivery shall be made unless and until the
Person requesting such issue or delivery has paid to the Trust the amount of any
such tax or established, to the reasonable satisfaction of the Trust, that such
tax has been paid.
(iv) Except as provided in paragraph (g)(v) below,
any determination required or permitted to be made by the Board of Trustees by
these Articles Supplementary shall be final, conclusive and binding on the
holders of Class A EPS.
(v) In the event that: (A) the Trust elects to pay
the Cash Equivalent of Paired Shares or other securities pursuant to an exercise
of the Class A Exchange Right and in connection therewith the Board of Trustees
makes a determination of the value of the Paired Shares or other securities at a
time when the Paired Shares or such other securities are not publicly traded,
(B) the Trust elects to pay in cash a Class A Preferred Dividend corresponding
to a Corporation Common Distribution in the form of securities or other property
and in connection therewith the Board of Trustees makes a determination of the
fair market value of such securities or other property or (C) the Board of
Trustees makes a determination of the fair market value of Class A Underlying
Corporation Shares for the purpose of determining the amount of the Class A
Liquidation Preference in connection with a Liquidation Event, then the Trust
shall deliver to each affected holder of Class A EPS a written notice (which, in
the case of an exercise of the Class A
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<PAGE> 51
Exchange Right may be set forth in the related Exchange Election Notice) setting
forth the valuation determined by the Board of Trustees. At any time within ten
(10) Business Days after receipt of such notice, any affected holder of Class A
EPS may request in writing that the Trust obtain a written valuation of such
Paired Shares, Class A Underlying Corporation Shares or other securities or
property from an investment banking firm. Promptly after receipt of any such
request, the Trust shall select a nationally recognized investment banking firm
to perform such valuation and shall provide such investment banking firm with
such relevant information as the Trust may have in relation thereto. Such
investment banking firm shall be instructed to prepare a written valuation
report within thirty (30) days after its appointment, and upon receipt of such
valuation report, the Trust shall mail a copy to each affected holder of Class A
EPS. If the valuation as determined by such investment banking firm is greater
than the valuation as determined by the Board of Trustees, the Trust shall
promptly pay the amount of such difference to each affected holder of Class A
EPS. If, however, the valuation as determined by such investment banking firm is
less than the valuation determined by the Board of Trustees, the Trust may at
its option require each affected holder of Class A EPS to repay the amount of
such difference to the Trust, which amount shall be so repaid by each such
holder promptly after receipt of the Trust's request. The fees and expenses of
such investment banking firm shall be paid by the Trust.
6.15.6. REACQUIRED SHARES TO BE RETIRED.
All shares of Class A EPS which shall have been issued and
reacquired in any manner by the Trust shall be restored to the status of
authorized but unissued shares of beneficial interest in the Trust without
designation as to class.
6.15.7. VOTING.
(a) General Voting Rights. The holders of shares of Class A
EPS shall be entitled to vote upon all matters upon which holders of Trust
Shares have the right to vote, and shall be entitled to the number of votes
equal to the largest whole number of Class A Underlying Trust Shares for which
such shares of Class A EPS could be exchanged pursuant to the provisions of
Article 6.15.5 hereof as of the record date for determination of the
shareholders entitled to vote on such matters, or, if no such record date is
established, as of the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of beneficial interest in the Trust having general voting powers and not
separately as a class.
(b) Special Voting Rights. So long as any shares of Class A
EPS are outstanding, in addition to any other vote or consent of holders of such
shares required by the Declaration or these Articles Supplementary, the
affirmative vote of at least a majority of the votes entitled to be cast by the
holders of all outstanding shares of Class A EPS, given in person or by proxy,
either in writing without a meeting or by vote at any meeting called for that
purpose, shall be necessary for effecting or validating any amendment,
alteration or repeal of any of the provisions of the Declaration or these
Articles Supplementary that materially and adversely affects the voting powers,
rights or preferences of the holders of the Class A EPS disproportionately
(based on the
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number of Underlying Class A Trust Shares at the time) to the effect of such
amendment, alteration or repeal on the holders of Trust Shares; provided,
however, that (i) any amendment of the provisions of the Declaration so as to
authorize or create, or to increase the authorized amount of, any class or
series of shares of beneficial interest in the Trust, whether ranking prior to,
on a parity with or junior to the Class A EPS shall not be deemed to materially
and adversely affect the voting powers, rights or preferences of the holders of
Class A EPS and (ii) no filing with the State Department of Assessments and
Taxation of Maryland by the Trust in connection with a merger, consolidation or
sale of all or substantially all of the assets of the Trust shall be deemed to
be an amendment, alteration or repeal of any of the provisions of the
Declaration or these Articles Supplementary unless such filing expressly
purports to amend, alter or repeal one or more of such provisions. For the
purposes of this paragraph (b), each share of Class A EPS will have one vote per
share.
6.15.8. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record
holder of any shares of Class A EPS as the true and lawful owner thereof for all
purposes, and neither the Trust nor the Transfer Agent shall be affected by any
notice to the contrary.
6.15.9. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class A EPS constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class A EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.
6.16 Class B Exchangeable Preferred Shares Articles Supplementary
6.16.1. NUMBER OF SHARES AND DESIGNATION.
There are hereby designated 15,000,000 "Class B Exchangeable
Preferred Shares", par value $.01 per share ("Class B EPS").
6.16.2. DEFINITIONS.
For purposes of the Class B EPS, the following terms have the
meanings indicated:
"Affiliate" shall mean with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
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"Articles Supplementary" shall mean either Article 6.15 or
Article 6.16, as the case may be, of the Declaration.
"Base Preference Amount" per share of Class B EPS as of any
date shall mean the Stated Value per share as of such date.
"Board of Trustees" shall mean the Board of Trustees of the
Trust or any committee authorized by the Board of Trustees from time to
time to exercise any of its powers or perform any of its
responsibilities with respect to the Class B EPS.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open.
"Class A Articles Supplementary" shall mean Article 6.15
hereof pursuant to which the Trust has classified and designated
30,000,000 shares of beneficial interest in the Trust as "Class A
Exchangeable Preferred Shares".
"Class A EPS" means the Class A Exchangeable Preferred Shares,
par value $0.01 per share, created by the Class A Articles
Supplementary.
"Class A EPS Adjustment Event" shall mean any of the following
events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Class A EPS that is payable in additional shares
of Class A EPS;
(ii) The subdivision of the outstanding Class A EPS
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Class A EPS
into a smaller number of shares (whether by reverse share
split or otherwise); or
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Class A EPS.
"Class A Exchange Right" shall have the meaning set forth in
paragraph (a) of Article 6.15.5 hereof.
"Class A Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.15.4 hereof.
"Class A Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.15.4 hereof.
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"Class A Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.15.3 hereof.
"Class A Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.15.3 hereof.
"Class B Articles Supplementary" shall mean this Article 6.16.
"Class B Conversion Notice" shall have the meaning set forth
in paragraph (b)(ii) of Article 6.16.5 hereof.
"Class B Conversion/Redemption Election Right" shall have the
meaning set forth in Article 6.16.7 hereof.
"Class B Conversion/Redemption Notice" shall have the meaning
set forth in Article 6.16.7 hereof.
"Class B Conversion Right" shall have the meaning set forth in
paragraph (b)(i) of Article 6.16.5 hereof.
"Class B Dividend Replacement Shares" shall have the meaning
set forth in paragraph (e)(v) of Article 6.16.5 hereof.
"Class B EPS" shall have the meaning set forth in Article
6.16.1 hereof.
"Class B Liquidation Preference" shall have the meaning set
forth in paragraph (b) of Article 6.16.4 hereof.
"Class B Liquidation Participation Right" shall have the
meaning set forth in paragraph (a) of Article 6.16.4 hereof.
"Class B Participation Dividend" shall have the meaning set
forth in paragraph (a) of Article 6.16.3 hereof.
"Class B Preferred Dividend" shall have the meaning set forth
in paragraph (a) of Article 6.16.3 hereof.
"Class B Redemption Date" shall have the meaning set forth in
paragraph (c)(ii) of Article 6.16.6 hereof.
"Class B Redemption Notice" shall have the meaning set forth
in paragraph (c)(ii) of Article 6.16.6 hereof.
"Class B Redemption Right" shall have the meaning set forth in
paragraph (a) of Article 6.16.6 hereof.
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"Class B Underlying Class A EPS" with respect to any shares of
Class B EPS as of a specified date shall mean the number of shares of
Class A EPS issuable on such date upon exercise of the Class B
Conversion Right with respect to such shares of Class B EPS (including
fractional interests but without taking into account any Class B
Dividend Replace ment Shares except for the purposes of an actual
exercise of the Class B Conversion Right).
"Class B Underlying Corporation Shares" as of any time shall
mean the Corporation Shares component of the Class B Underlying Paired
Shares as of such time.
"Class B Underlying Paired Shares" as of any time shall mean
the Paired Shares for which each share of Class B EPS is then
indirectly exchangeable assuming both (i) the conversion at such time
of such share of Class B EPS into the corresponding number of shares of
Class B Underlying Class A EPS upon exercise of the Class B Conversion
Right and (ii) the simultaneous exchange of such shares of Class A EPS
for Paired Shares (including, unless otherwise expressly provided
herein, fractional shares but excluding any Class A Dividend
Replacement Shares, as defined in paragraph (d)(v) of Article 6.15.5
hereof) upon exercise of the Class A Exchange Right.
"Class B Underlying Trust Shares" as of any time shall mean
the Trust Shares component of the Class B Underlying Paired Shares as
of such time.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Conditionally Declared Class B Dividend" shall have the
meaning set forth in paragraph (b)(i) of Article 6.16.3 hereof.
"Constituent Person" shall have the meaning set forth in
paragraph (f) of Article 6.16.5 hereof.
"Conversion Ratio" shall have the meaning set forth in
paragraph (e)(i) of Article 6.16.5 hereof.
"Corporation" shall mean Starwood Lodging Corporation, a
Maryland corporation, and any successor.
"Corporation Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Corporation of a dividend on
the outstanding Corporation Shares that is payable in
additional Corporation Shares;
(ii) The subdivision of the outstanding Corporation
Shares into a greater number of shares (whether by stock split
or otherwise);
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(iii) The combination of the outstanding Corporation
Shares into a smaller number of shares (whether by reverse
stock split or otherwise); or
(iv) The issuance of any shares of stock of the
Corporation by reclassification of the Corporation Shares.
"Corporation Common Distribution" shall mean any dividend or
distribution paid or made by the Corporation (including, without
limitation, any distribution of assets on any liquidation, dissolution
or winding up of the Corporation) in respect of the Corporation Shares,
other than a dividend or distribution that constitutes a Corporation
Common Adjustment Event. In addition, a distribution to the holders of
Corporation Shares of rights to subscribe for or purchase additional
Corporation Shares under a shareholders protective rights plan or
agreement shall not be deemed to constitute a Corporation Common
Distribution to the extent that the Corporation makes provision so that
such rights, to the extent still outstanding with respect to the
outstanding Corporation Shares, shall be issued to the holders of any
Corporation Shares issued upon exercise of the Class A Exchange Right
(and, to the extent applicable, shall attach to such Corporation
Shares) in an amount and manner and to the extent provided in such
shareholders protective rights plans or agreements with respect to
already outstanding Corporation Shares.
"Corporation Shares" shall mean the shares of common stock,
par value $.01 per share, of the Corporation or any stock of the
Corporation into which such common stock may hereafter be changed.
"Cross-Over Date" shall mean the fifth anniversary of the
Issue Date, subject to extension as described in paragraph (a) of
Article 6.16.9 hereof.
"Current Market Price" of publicly traded Paired Shares or any
other shares of beneficial interest or other securities of the Trust or
any other issuer as of any Trading Day shall mean the last reported
sales price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the NYSE or, if
such shares or other securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which
such shares or other securities are listed or admitted for trading or,
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market or, if such shares or other
securities are not quoted on such NASDAQ National Market, the average
of the closing bid and asked prices on such day in the over-the-counter
market as reported by NASDAQ or, if bid and asked prices for such
shares or other securities on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Chief Executive Officer or
Chief Financial Officer of the Trust or the Board of Trustees.
"Declaration" shall mean the Amended and Restated Declaration
of Trust of the Trust, as amended from time to time.
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"Default Rate Dividends" shall have the meaning set forth in
paragraph (d) of Article 6.16.3 hereof.
"Dividend Correspondence Ratio" shall have the meaning set
forth in paragraph (b)(i) of Article 6.16.3 hereof.
"Issue Date" shall mean the first date on which any Class B
EPS are issued by the Trust.
"Junior Dividend" means a dividend payable in respect of any
class or series of shares of beneficial interest in the Trust over
which the Class B Preferred Dividends have preference or priority as to
the payment of dividends, including, without limitation, any Trust
Common Dividend, any Class B Participation Dividend and any Class A
Preferred Dividend and any Class A Participation Dividend.
"Junior Liquidating Distribution" shall mean any distribution
of assets of the Trust in connection with a Liquidation Event to
holders of any class or series of shares of beneficial interest in the
Trust over which the Class B Liquidation Preference has preference or
priority in the distribution of assets upon the occurrence of such
Liquidation Event, including, without limitation, any such distribution
of assets to holders of Trust Shares or in respect of the Class B
Liquidation Participation Right, the Class A Liquidation Preference or
the Class A Liquidation Participation Right.
"Junior Shares" shall mean the Trust Shares and any other
class or series of shares of beneficial interest in the Trust now or
hereafter issued and outstanding over which the Class B Preferred
Dividends have full preference or priority in the payment of dividends
or over which the Class B Liquidation Preference has full preference or
priority in the distribution of assets on the occurrence of any
Liquidation Event. Without limiting the generality of the foregoing,
for the purposes hereof the Class A EPS and the Trust Shares constitute
Junior Shares.
"LIBOR" as of any date shall mean the rate of interest per
annum for United States dollar deposits in the amount of $100,000,000
with a one-month maturity which appears on "Telerate Page 3750" (as
defined below) as of 11:00 a.m. (London time) on such date; provided
that if such rate is no longer published, an interest rate per annum
equal to the arithmetic mean (rounded if necessary to the nearest
one-hundredth of one percent (0.01%)) of the interest rates per annum
for United States dollar deposits in such amount and with such a
maturity quoted on Reuters Screen Page "LIBO" (or if such page on such
service ceases to display such information, such other page as may
replace it on that service for the purpose of displaying such
information) as of 11:00 a.m. on such date (the rate determined as
aforesaid being the "LIBO Screen Rate"). For such purposes, the term
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Associated Press-Dow Jones Telerate Service (or such other page
as may replace Page 3750 on the Associated Press-Dow Jones Telerate
Service or such other service as may be nominated by the British
Bankers'
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Association as the information vendor for the purpose of displaying
British Bankers' Association interest rate settlement rates for United
States dollar deposits). Any LIBOR rate determined on the basis of the
rate displayed on Telerate Page 3750 or the LIBO Screen Rate determined
in accordance with the foregoing provisions of this definition shall be
subject to corrections, if any, made in such rate and displayed by the
Associated Press-Dow Jones Telerate Service or Reuters, as applicable,
within one hour of the time when such rate is first displayed by such
service. For the purposes of paragraph (d) of Article 6.16.3, the LIBOR
rate shall be determined in accordance with the foregoing as of the
date on which an Uncured Default arises and on the nearest
corresponding day of each subsequent calendar month and shall apply for
the approximate one-month period between the date of such determination
and the next succeeding date of determination.
"Liquidation Date" shall have the meaning set forth in
paragraph (a) of Article 6.16.4 hereof.
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all of the Trust's
assets shall not be deemed to be a Liquidation Event.
"Non-Electing Shares" shall have the meaning set forth in
paragraph (f) of Article 6.16.5 hereof.
"NYSE" shall mean the New York Stock Exchange.
"Ownership Limit" shall have the meaning set forth in Section
6.12 of the Declaration.
"Paired Shares" shall mean units consisting of one Trust Share
paired with one Corporation Share (subject to adjustment as
contemplated in paragraph (e) of Article 6.15.5 hereof) and represented
by a single share certificate, as provided in the Pairing Agreement
dated as of June 25, 1980, between the Trust and the Corporation, as
amended from time to time.
"Parity Liquidation Preference" shall mean the liquidation
preference of any class or series of shares of beneficial interest in
the Trust that ranks on a parity with the Class B Liquidation
Preference. For such purposes: (i) the Base Preference Amount portion
of the Class B Liquidation Preference will rank on a parity with the
liquidation preferences of any class or series of Preferred Shares
issued by the Trust (other than the Class A EPS to which said portion
of the Class B Liquidation Preference will rank senior in liquidation
preference), unless the articles supplementary creating such class or
series provide that such class or series will rank junior to such
portion of the Class B Liquidation Preference in the distribution of
assets upon the occurrence of a Liquidation Event, and (ii) the
Supplemental Preference Amount portion of the Class B Liquidation
Preference will rank junior to the liquidation preferences of any class
or series of Preferred Shares issued by the Trust (other than the Class
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A EPS), unless the articles supplementary creating such class or series
provide that such class or series will rank junior to or on a parity
with such portion of the Class B Liquidation Preference in the
distribution of assets upon the occurrence of a Liquidation Event.
"Parity Preferred Dividend" shall mean any dividend payable in
respect of any class or series of shares of beneficial interest in the
Trust that ranks on a parity in right of payment with the Class B
Preferred Dividends, whether or not the dividend rate, dividend payment
dates, liquidation preference or redemption price are different from
those of the Class B EPS.
"Person" shall mean any individual, firm, partnership,
corporation, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall mean any class or series of shares of
beneficial interest in the Trust now or hereafter issued and
outstanding that have preference or priority over Trust Shares in the
payment of dividends or in the distribution of assets on the occurrence
of any Liquidation Event.
"Redemption Price" shall have the meaning set forth in
paragraph (b)(i) of Article 6.16.6 hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement entered into by the Trust, the Corporation and the other
parties thereto pursuant to the Westin Transaction Agreement.
"REIT Rules" shall mean the requirements (i) for the Trust to
qualify as a real estate investment trust under the Code as set forth
in Sections 856(a)(5) and 856(a)(6) of the Code and (ii) for the
Corporation or any affiliate of the Corporation which is a tenant of
the Trust to not be treated as a related party pursuant to Section
856(d)(2)(B) of the Code.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"set apart for payment" shall be deemed to include, without
any action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest in the Trust;
provided, however, that if any funds for any class or series of Junior
Shares or any class or series of shares of beneficial interest in the
Trust ranking on a parity with the Class B EPS as to the payment of
dividends are placed in a separate account of the Trust or delivered to
a disbursing, paying or other similar agent, then "set apart for
payment" with respect to the Class B EPS shall mean placing such funds
in a separate account or delivering such funds to a disbursing, paying
or similar agent.
"Stated Value" of each share of Class B EPS shall initially
mean Thirty-Eight Dollars and Fifty Cents ($38.50) per share. Upon the
occurrence of any share split, reverse share split
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or other subdivision or combination of the Class B EPS subsequent to
the Issue Date, the Stated Amount shall be proportionately adjusted as
determined in good faith by the Board of Trustees.
"Supplemental Preference Amount" shall have the meaning set
forth in paragraph (b) of Article 6.16.4 hereof.
"Trading Day" with respect to publicly traded Paired Shares or
any other shares of beneficial interest or other securities of the
Trust or any other issuer shall mean any day on which the securities in
question are traded on the NYSE, or if such securities are not listed
or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or
if not listed or admitted for trading on any national securities
exchange, on the NASDAQ National Market, or if such securities are not
quoted on such NASDAQ National Market, in the applicable securities
market in which such securities are traded.
"Transaction" shall have the meaning set forth in paragraph
(f) of Article 6.16.5 hereof.
"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class B EPS and the Class A EPS.
"Trust" shall mean Starwood Lodging Trust, a Maryland real
estate investment trust, and any successor.
"Trust Common Adjustment Event" shall mean any of the
following events that occurs after the Issue Date:
(i) The payment by the Trust of a dividend on the
outstanding Trust Shares that is payable in additional Trust
Shares;
(ii) The subdivision of the outstanding Trust Shares
into a greater number of shares (whether by share split or
otherwise);
(iii) The combination of the outstanding Trust Shares
into a smaller number of shares (whether by reverse share
split or otherwise); or
(iv) The issuance of any shares of beneficial
interest in the Trust by reclassification of the Trust Shares.
"Trust Common Dividend" shall mean any dividend or
distribution paid or made by the Trust pro rata on the outstanding
Trust Shares other than (i) a distribution of assets of the Trust upon
the occurrence of a Trust Liquidation Event or (ii) a dividend or
distribution that
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constitutes a Trust Common Adjustment Event. In addition, a
distribution to the holders of shares of beneficial interest in the
Trust of rights to subscribe for or purchase additional Trust Shares
under a shareholders protective rights plan or agreement or any similar
plan or agreement shall not be deemed to constitute a Trust Common
Dividend to the extent that the Trust makes provision so that such
rights, to the extent still outstanding with respect to the outstanding
Trust Shares, shall be issued to the holders of any Trust Shares issued
upon exercise of the Class A Exchange Right (and, to the extent
applicable, shall attach to such Trust Shares) in an amount and manner
and to the extent provided in such plans or agreements with respect to
already outstanding Trust Shares.
"Trust Conversion Notice" shall have the meaning set forth in
paragraph (c)(ii) of Article 6.16.5 hereof.
"Trust Conversion Right" shall have the meaning set forth in
paragraph (c)(i) of Article 6.16.5 hereof.
"Trust Redemption Date" shall have the meaning set forth in
paragraph (b)(ii) of Article 6.16.6 hereof.
"Trust Redemption Notice" shall have the meaning set forth in
paragraph (b)(ii) of Article 6.16.6 hereof.
"Trust Redemption Right" shall have the meaning set forth in
paragraph (a) of Article 6.16.6 hereof.
"Trust Shares" shall mean the common shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
"Uncured Default" shall have the meaning set forth in
paragraph (a) of Article 6.16.9 hereof.
"Westin Transaction Agreement" shall mean the Transaction
Agreement dated as of September 8, 1997 among WHWE L.L.C., Woodstar
Investor Partnership, Nomura Asset Capital Corporation, Juergen
Bartels, W&S Hotel L.L.C., Westin Hotels & Resorts Worldwide, Inc., W&S
Lauderdale Corp., W&S Seattle Corp., Westin St. John Hotel Company,
Inc., W&S Denver Corp., W&S Atlanta Corp., the Trust, SLT Realty
Limited Partnership, the Corporation and SLC Operating Limited
Partnership, as such agreement may be amended from time to time.
6.16.3. DIVIDENDS.
(a) In General. The holders of Class B EPS will be entitled
(i) to receive a preferred dividend payable as described in paragraph (b) below
(a "Class B Preferred Dividend"), when, as and if declared by the Board of
Trustees out of assets of the Trust legally available for that purpose, based
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on the payment of any Corporation Common Distribution and (ii) to participate on
the basis described in paragraph (c) below in any Trust Common Dividend, when,
as and if declared by the Board of Trustees out of assets of the Trust available
for that purpose (a "Class B Participation Dividend"). In certain circumstances,
the holders of Class B EPS will also be entitled to receive a Default Rate
Dividend, as provided in paragraph (d) below.
(b) Class B Preferred Dividend.
(i) Upon the payment by the Corporation of any
Corporation Common Distribution prior to the occurrence of a Liquidation Event,
the right to receive a Class B Preferred Dividend will automatically accrue with
respect to each share of Class B EPS as of the payment date for such Corporation
Common Distribution in an amount equal to the value of the Corporation Common
Distribution paid on each Corporation Share multiplied by the applicable
Dividend Correspondence Ratio described below. To the extent that any
Corporation Common Distribution consists of securities or other property (other
than cash), the Trust will have the option of paying the corresponding Class B
Preferred Dividend either (A) in the same form as such Corporation Common
Distribution (i.e., by delivery of the same type of securities or other property
as distributed in the Corporation Common Distribution), (B) in cash in an amount
equal to the fair market value of such securities or other property as
determined in good faith by the Board of Trustees subject to the rights of the
holders of the Class B EPS to request a valuation from a nationally recognized
investment banking firm as provided in paragraph (h)(v) of Article 6.16.5 hereof
or (C) a combination thereof. Each Class B Preferred Dividend will be cumulative
from the payment date for the related Corporation Common Distribution and will
be payable to holders of record of Class B EPS on such record date as shall be
fixed by the Board of Trustees, which record date shall be the same as the
record date for the corresponding Class A Preferred Dividend based on such
Corporation Common Distribution and not earlier than the record date for such
Corporation Common Distribution. The Board of Trustees may, at any time between
the declaration of a Corporation Common Distribution and the related payment
date, declare a corresponding Class B Preferred Dividend conditioned on the
actual payment of such Corporation Common Distribution (any such Class B
Preferred Dividend being sometimes referred to herein as a "Conditionally
Declared Class B Dividend" until such time as the corresponding Corporation
Common Distribution is paid, at which time it will no longer be deemed to be a
Conditionally Declared Class B Dividend but will instead be deemed to be an
accrued Class A Preferred Dividend). The "Dividend Correspondence Ratio" for the
purposes of determining the amount of any Class B Preferred Dividend accrual
shall mean the number of Class B Underlying Corporation Shares for which each
share of Class B EPS is indirectly exchangeable as of the record date for the
related Corporation Common Distribution upon exercise of the Class B Exchange
Right, as such number shall be proportionately adjusted to reflect any share
dividend, share split, reverse share split or other combination or subdivision
of the Class B EPS or the Class A EPS that becomes effective between (or, if the
record date for such event is different from the effective date therefor, that
has a record date that falls between) (A) the record date for the Corporation
Common Distribution and (B) the date of payment of such Corporation Common
Distribution or, if earlier, the record date for such Class B Preferred
Dividend.
(ii) So long as any shares of Class B EPS are
outstanding: (A) no Junior Dividend may be declared or paid or set apart for
payment unless all accrued Class B Preferred
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Dividends and Conditionally Declared Class B Dividends have been or are
concurrently declared and paid, or declared and a sum sufficient for the payment
thereof set apart for payment, (B) no Parity Preferred Dividend shall be
declared or paid or set aside for payment unless a ratable portion of all
accrued but unpaid Class B Preferred Dividends and Conditionally Declared Class
B Dividends has been or is concurrently declared and paid, or declared and a sum
sufficient for the payment thereof set apart for payment (with such ratable
portion being based on the portion of the accrued but unpaid Parity Preferred
Dividends being paid) and (C) no Junior Shares may be redeemed, purchased or
otherwise acquired by the Trust (other than a redemption, purchase or other
acquisition of Trust Shares made for purposes of and in compliance with
requirements of an employee incentive or benefit plan of the Trust or any
subsidiary or upon any exchange or redemption of other securities at the option
of the holders thereof, or as required or permitted under Article VI of the
Declaration) for consideration (or any moneys paid or made available for a
sinking fund for the redemption of any Junior Shares), directly or indirectly
(except for conversion into or exchange for Junior Shares) unless all accrued
Class B Preferred Dividends and Conditionally Declared Class B Dividends have
been or are concurrently declared and paid, or declared and a sum sufficient for
the payment thereof set apart for payment.
(c) Class B Participation Dividend. No Trust Common Dividend
may be declared in respect of the Trust Shares unless the Board of Trustees
concurrently declares a Class B Participation Dividend entitling each share of
Class B EPS to receive an amount equal to the amount of the Trust Common
Dividend declared on each Trust Share multiplied by the number of Class B
Underlying Trust Shares for which each share of Class B EPS is indirectly
exchangeable upon exercise of the Class B Conversion Right as of the record date
for such Trust Common Dividend. Such Class B Participation Dividend shall be
payable on the same date on which the corresponding Trust Common Dividend is
payable, shall be payable in the same form as the corresponding Trust Common
Dividend and shall be paid to holders of record of the Class B EPS on the same
record date as is fixed by the Board of Trustees for the payment of such Trust
Common Dividend.
(d) Default Rate Dividends. Notwithstanding the foregoing
provisions of this Article 6.16.3 but subject to paragraph (b) of Article
6.16.9, upon the occurrence and during the continuation of any Uncured Default,
dividends ("Default Rate Dividends") shall accrue with respect to the
outstanding shares of Class B EPS in an amount equal to the product of (i) the
Stated Value of each such share multiplied by (ii) an interest rate per annum
equal to LIBOR plus four percent (4%). Any such Default Rate Dividends shall be
cumulative, shall be deemed to constitute Class B Preferred Dividends for the
purposes hereof and shall be payable quarterly on March 1, June 1, September 1
and December 1 of each year, when, as and if declared by the Board of Trustees
out of assets of the trust legally available for that purpose; provided that,
if, at any time when there are accrued but unpaid Default Rate Dividends on the
Class B EPS, a Class B Preferred Dividend or Class B Participation Dividend
accrues pursuant to paragraph (b) or (c) of this Article 6.16.3 in an amount per
share that exceeds the amount of such accrued but unpaid Default Rate Dividends
per share, the holders of shares of Class B EPS shall be entitled to receive
such Class B Preferred Dividend or Class B Participation Dividend in accordance
with the provisions of such paragraphs (b) and (c) and the Default Rate
Dividends accrued through the date of accrual of such Class B Preferred Dividend
or Class B Participation Dividend shall be reduced to zero (although additional
Default Rate Dividends
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shall again commence to accrue immediately following such date of accrual to the
extent that the Uncured Default continues unremedied).
6.16.4. LIQUIDATION RIGHTS.
(a) In General. Upon the occurrence of any Liquidation Event,
the holders of Class B EPS will be entitled (i) to receive out of the assets of
the Trust legally available for liquidating distributions to holders of shares
of beneficial interests in the Trust, prior to the making of any Junior
Liquidating Distribution, a liquidating distribution in an amount equal to the
Class B Liquidation Preference described in paragraph (b) below determined as of
the effective date of such Liquidation Event or, if no effective date is
provided, as of the record date of the first liquidating distribution relating
to such Liquidation Event (in either such case, the "Liquidation Date") and (ii)
to participate on the basis described in paragraph (c) below in any liquidating
distribution to holders of Trust Shares (the "Class B Liquidation Participation
Right"). In determining whether a distribution (other than upon the occurrence
of a Liquidation Event), by dividend, redemption or other acquisition of shares
of beneficial interest in the Trust or otherwise, is permitted under Maryland
law, amounts that would be needed, if the Trust were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution of the
holders of Class A EPS whose preferential rights upon dissolution are senior to
those receiving the distribution shall not be added to the Trust's total
liabilities.
(b) Class B Liquidation Preference. The "Class B Liquidation
Preference" of a share of Class B EPS as of the applicable Liquidation Date
shall mean the sum of (A) the Base Preference Amount as of such date and (B) the
amount of any accrued but unpaid dividends in respect of each share of Class B
EPS as of such date (other than any such accrued but unpaid Class B Preferred
Dividends that have been declared with a record date prior to such Liquidation
Date, which the Trust shall separately be obligated to pay to the holders of
record of the Class B EPS as of such record date)(the "Supplemental Preference
Amount"). Until each holder of shares of Class B EPS has received distributions
equal to the Class B Liquidation Preference, no Junior Liquidating Distributions
may be paid to holders of any other class or series of shares of beneficial
interest in the Trust. Subject to the rights of the holders of shares of
beneficial interest in the Trust with liquidation preferences ranking prior to
or on a parity with the Class B Liquidation Preference, after payment shall have
been made in full of the Class B Liquidation Preference as provided in this
paragraph (b), Junior Liquidating Distributions may be paid to the holders of
any shares of beneficial interest entitled to receive such distributions and the
holders of the Class B EPS shall not be entitled to share therein except as
provided in paragraph (c) of this Article 6.16.4. In the event that the assets
of the Trust available for liquidating distributions to holders of shares of
beneficial interest in the Trust in connection with any Liquidation Event are
insufficient to pay the Class B Liquidation Preference on all outstanding Class
B EPS and any Parity Liquidation Preferences in respect of any other classes or
series of shares of beneficial interest in the Trust, then the holders of the
Class B EPS and such other classes and series of shares of beneficial interest
in the Trust shall share ratably in any such distribution of assets in
proportion to the Class B Liquidation Preference and the Parity Liquidation
Preferences to which they would otherwise be respectively entitled.
(c) Class B Liquidation Participation Rights. In addition to
being entitled to receive the Class B Liquidation Preference, upon the
occurrence of any Liquidation Event the holders of
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Class B EPS shall be entitled to participate, pursuant to the Class B
Liquidation Participation Right, ratably with the holders of Trust Shares in any
liquidating distributions to such holders. For such purpose, each share of Class
B EPS shall be deemed to represent a number of Trust Shares equal to the number
of Class B Underlying Trust Shares for which each share of Class B EPS can be
indirectly exchanged as of the record date for such distribution.
6.16.5. CONVERSION RIGHTS.
(a) In General. Shares of Class B EPS shall be convertible
into shares of Class A EPS (A) at the option of the holder upon exercise of the
Class B Conversion Right at any time after the first anniversary of the Issue
Date and on or prior to the first anniversary of the Cross-Over Date, to the
extent provided in paragraph (b) of this Article 6.16.5, or (B) at the option of
the Trust upon exercise of the Trust Conversion Right at any time after the
Cross-Over Date, to the extent provided in paragraph (c) of this Article 6.16.5.
In addition, as more specifically provided in Article 6.16.7 hereof, upon
receipt of a Class B Conversion/Redemption Notice from any holder of shares of
Class B EPS at any time after the first anniversary of the Cross-Over Date, the
Trust will be required to elect to either exercise the Trust Conversion Right or
the Trust Redemption Right with respect to the shares specified in such Class B
Conversion/Redemption Notice.
(b) Class B Conversion Right.
(i) A holder of shares of Class B EPS shall have the
right, exercisable in the manner described in paragraph (b)(ii) below, at such
holder's option at any time after the first anniversary of the Issue Date and on
or prior to the first anniversary of the Cross-Over Date, to convert such shares
in whole or in part into fully paid and non-assessable shares of Class A EPS
based on the applicable Conversion Ratio described in paragraph (e) of this
Article 6.16.5 (the "Class B Conversion Right"); provided, however, that the
Class B Conversion Right may not be exercised (A) with respect to any shares of
Class B EPS that are already subject to a Trust Conversion Notice, (B) with
respect to any shares of Class B EPS that are already subject to a Class B
Redemption Notice or a Class B Conversion/Redemption Notice or (C) after the
applicable Redemption Date if the Trust has already given a Trust Redemption
Notice with respect to the applicable shares of Class B EPS, unless, in the case
of either (B) or (C), the Trust shall default in its obligations hereunder
arising as a result of such notice and such default shall not have been cured
within ten (10) days thereafter.
(ii) A holder of shares of Class B EPS desiring to
exercise the Class B Conversion Right with respect to such shares shall
surrender the certificate or certificates evidencing such shares, duly endorsed
or assigned to the Trust or in blank, to the Transfer Agent together with a duly
completed and executed conversion notice (a "Class B Conversion Notice") in such
form as the Trust shall prescribe from time to time and such related
certifications as the Trust may reasonably prescribe from time to time. Such
form of Class B Conversion Notice will also permit the holder of the Class B EPS
being converted to concurrently elect to exercise the Class A Exchange Right
with respect to the Class A EPS Shares to be issued pursuant to the exercise of
the Class B Conversion Right. Unless any shares of Class A EPS to be issued upon
conversion of such shares of Class B EPS are to be issued in the same name as
the name in which such shares of Class B EPS are registered, each share
certificate surrendered shall be accompanied by instruments of transfer, in form
reasonably
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satisfactory to the Trust, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any applicable transfer or
similar tax (or evidence reasonably satisfactory to the Trust demonstrating that
such taxes have been paid).
(iii) As promptly as practicable after receipt by the
Transfer Agent of a Class B Conversion Notice and the certificates and other
documents described above, the Trust shall issue and deliver at the office of
the Transfer Agent to the holder of the shares of Class B EPS being converted,
or on his or her written order, a certificate or certificates for the full
number of shares of Class A EPS issuable upon such conversion in accordance with
the provisions of this Article 6.16.5, and any fractional interest in respect of
a share of Class A EPS resulting from such conversion shall be settled as
provided in paragraph (d) of this Article 6.16.5; provided, however, that to the
extent that the holder of shares of Class B EPS with respect to which the Class
B Conversion Right has been exercised has simultaneously exercised the Class A
Exchange Right with respect to the shares of Class A EPS issuable upon such
conversion, no such certificate or certificates shall be issued with respect to
such shares of Class A EPS (and there shall be no settlement of any such
fractional interests), but such Class A Exchange Right shall be deemed to have
been exercised with respect to such shares of Class A EPS (including any such
fractional interests) as of the date of receipt of the Class B Conversion Notice
and the certificates and other documents described above, and the rights and
obligations of the Trust and such holder arising therefrom shall be governed by
Article 6.15.5 hereof. If less than the full number of shares of Class B EPS
represented by the certificate or certificates surrendered to the Trust are to
be converted pursuant to an exercise of the Class B Conversion Right, the Trust
shall also deliver to the holder a new certificate or certificates evidencing
the excess shares not being converted.
(iv) The conversion resulting from any exercise of
the Class B Conversion Right shall be deemed to have been effected immediately
prior to the close of business on the date of receipt by the Transfer Agent of
the Class B Conversion Notice and the certificates and other documents described
above, and the Person or Persons in whose name or names any certificate or
certificates for shares of Class A EPS shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Class A EPS represented thereby at such time on such date, unless the
sharetransfer books of the Trust for the Class A EPS shall be closed on such
date, in which event such Person or Persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding day
on which such sharetransfer books are open.
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(c) Trust Conversion Right.
(i) Shares of Class B EPS will also be convertible at any time
after the first anniversary of the Cross-Over Date in whole or in part at the
option of the Trust into fully paid and non-assessable shares of Class A EPS
based on the applicable Conversion Ratio described below (the "Trust Conversion
Right"); provided, however, that the Trust Conversion Right may not be exercised
with respect to any shares of Class B EPS with respect to which (A) the holder
has already given a Class B Redemption Notice or a Class B Conversion Notice or
(B) the Trust has already given a Trust Redemption Notice.
(ii) The Trust Conversion Right may be exercised by the Trust
giving written notice of such exercise to the holders of the shares of the Class
B EPS with respect to which the Trust desires to exercise such right (a "Trust
Conversion Notice").
(iii) The shares of Class B EPS of a holder specified in such Trust
Conversion Notice shall be deemed to have been converted as of the date of the
applicable Trust Conversion Notice into the full number of shares of Class A EPS
issuable upon such conversion in accordance with the provisions of this Article
6.16.5, and any fractional interest in respect of a share of Class A EPS
resulting from such conversion shall be settled as provided in paragraph (d) of
this Article 6.16.5. The conversion provided for in this paragraph (c) shall be
automatic without the requirement of any action on the part of the affected
holders of shares of Class B EPS and whether or not the certificates evidencing
such shares of Class B EPS are surrendered to the Trust or the Transfer Agent;
provided that the Trust shall not be obligated to issue to any such holders
certificates evidencing the shares of Class A EPS into which such Class B EPS
shares have been converted until certificates evidencing the shares of Class B
EPS held by such holder have been delivered to the Trust or the Transfer Agent.
If less than the full number of shares of Class B EPS represented by the
certificate or certificates surrendered to the Trust in connection with an
exercise of the Trust Conversion Right have been converted pursuant to such
exercise, the Trust shall also deliver to the holder a new certificate or
certificates evidencing the excess shares not being converted.
(d) Fractional Interests. No fractional shares or scrip evidencing
fractions of shares of Class A EPS shall be issued upon exercise of the Class B
Conversion Right or the Trust Conversion Right. Instead of any fractional
interest in a share of Class A EPS that would otherwise be deliverable upon the
conversion of shares of Class B EPS, the Trust shall pay to the holder of such
shares of Class B EPS an amount in cash equal to the product of (A) such
fraction, (B) the then current Exchange Ratio of Class A EPS for Paired Shares,
as determined pursuant to the provisions of paragraph (d) of Article 6.15.5
hereof, and (C) the Current Market Price of the Paired Shares as of the Trading
Day immediately preceding the date on which the applicable Class B Conversion
Notice or Trust Conversion Notice (as applicable) and all related certificates
and other documents were received by the Transfer Agent.
(e) Conversion Ratio and Adjustments.
(i) Initially, one share of Class A EPS will be issuable upon
conversion of each share of Class B EPS pursuant to an exercise of the Class B
Conversion Right or the Trust
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Conversion Right (the "Conversion Ratio"), which Conversion Ratio will be
subject to adjustment from the Issue Date through the Cross-Over Date. After
such date, the Conversion Ratio will be equal to the Class B Liquidation
Preference (determined without taking into consideration any accrued but unpaid
dividends other than Default Rate Dividends) as of the date of exercise of the
Class B Conversion Right or the Trust Conversion Right, as applicable, divided
by the product of (A) the number of Class A Underlying Paired Shares (including
fractional interests) for which each share of Class A EPS is exchangeable as of
such date pursuant to Article 6.15.5 hereof multiplied by (B) the Current Market
Price of the Paired Shares as of such date. All calculations of the Conversion
Ratio under this paragraph (e) shall be made to the nearest one-tenth of a share
(with .05 of a share being rounded upward).
(ii) If, at any time between the Issue Date and the Cross-Over
Date, a Class A EPS Adjustment Event shall occur, the Conversion Ratio in effect
as of the close of business on the record date for such Class A EPS Adjustment
Event or, if no such record date applies, the effective date of such Class A EPS
Adjustment Event shall be adjusted so that in connection with any exercise of
the Class B Conversion Right or the Trust Conversion Right the shares of Class B
EPS subject to such exercise will be converted into the number of shares of
Class A EPS that such holder would have owned or been entitled to receive after
the happening of such Class A EPS Adjustment Event if such Class B Conversion
Right or Trust Conversion Right had been exercised immediately prior to such
record date or effective date. An adjustment pursuant to this subparagraph (ii)
shall become effective (subject to subparagraph (iv) below) immediately upon the
opening of business on the Business Day next following the record date for the
applicable Class A EPS Adjustment Event or, if no such record date applies, the
Business Day next following the effective date of such Class A EPS Adjustment
Event.
(iii) No adjustment in the Conversion Ratio shall be required
pursuant to subparagraph (ii) above unless such adjustment would require a
cumulative increase or decrease of at least one percent (1%) in such ratio;
provided, however, that any adjustments that by reason of this subparagraph
(iii) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment until made.
(iv) In any case in which subparagraph (ii) above provides that an
adjustment to the Conversion Ratio shall become effective immediately following
the record date for a Class A EPS Adjustment Event, the Trust may defer until
the occurrence of such event (A) issuing to the holder of any shares of Class B
EPS converted after such record date but before the occurrence of such event the
additional shares of Class A EPS issuable pursuant to such conversion by reason
of the adjustment required pursuant to subparagraph (ii) in respect of such
Class A EPS Adjustment Event and (B) paying to such holder any amount of cash in
lieu of any fractional interest in shares of Class EPS pursuant to paragraph (d)
of this Article 6.16.5.
(v) If at the time of any exercise of the Class B Conversion Right
on or prior to the Cross-Over Date there are any accrued but unpaid Default Rate
Dividends with respect to the shares of Class B EPS being converted, the
Conversion Ratio shall be adjusted so that the number of shares of Class A EPS
issuable upon such exercise is increased by a number of shares (the "Class B
Dividend Replacement Shares", which term shall also be deemed to refer to any
shares of Class A
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EPS issued upon exercise of the Class B Conversion Right in respect of accrued
but unpaid Default Rate Dividends pursuant to subparagraph (ii) above) equal to
(A) the amount of the accrued but unpaid Default Rate Dividends with respect to
the shares of Class B EPS being exchanged divided by (B) the product of (1) the
number of Paired Shares for which each share of Class A EPS is then exchangeable
upon exercise of the Class A Exchange Right multiplied by (2) the Current Market
Price of the Paired Shares during the five (5) Trading Days immediately
preceding the date of delivery of the applicable Class B Conversion Notice or
Trust Conversion Notice and all related certificates and other documents.
(f) Effect of Mergers and Certain Other Transactions. If, at any time
after the Issue Date, the Trust shall become a party to any transaction,
including, without limitation, a merger, consolidation, statutory share
exchange, self tender offer for all or substantially all outstanding Trust
Shares, sale of all or substantially all of the Trust's assets or
recapitalization of the Class A EPS (but excluding any event constituting a
Class A EPS Adjustment Event)(each of the foregoing being referred to herein as
a "Transaction"), in each case as a result of which the outstanding shares of
Class A EPS shall be converted into or exchanged for the right to receive stock,
securities or other property (including cash or any combination thereof),
effective as of the effective date of such Transaction, each share of Class A
EPS issuable upon exercise of the Class B Conversion Right or the Trust
Conversion Right with respect to any shares of Class B EPS that are not
converted into or exchanged for the right to receive stock, securities or other
property in connection with such Transaction shall thereafter be deemed to
consist of the kind and amount of shares of stock and other securities and
property (including cash or any combination thereof) that would have been held
or receivable upon the consummation of such Transaction by a holder of a number
of shares of Class A EPS equal to the number of Class B Underlying Class A EPS
Shares into which each share of Class B EPS would have been convertible
immediately prior to such Transaction, assuming such holder of shares of Class A
EPS (A) is not a Person with which the Trust consolidated or into which the
Trust was merged or which merged into the Trust or to which such sale or
transfer was made, as the case may be (a "Constituent Person"), or an Affiliate
of a Constituent Person and (B) failed to exercise his or her rights of
election, if any, as to the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of stock, securities and other property (including cash)
receivable upon such Transaction is not the same for each share of Class A EPS
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Share"), then for the purposes of this
subparagraph (ii) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction by each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the Non-Electing Shares). The provisions of this paragraph (f) shall
similarly apply to successive Transactions.
(g) Notice of Adjustment. Whenever the Conversion Ratio or the nature
and amount of the securities and other property issuable upon exercise of the
Class B Conversion Right or the Trust Conversion Right is adjusted as provided
in paragraph (e) or (f) above, the Trust shall promptly file with the Transfer
Agent an officer's certificate setting forth the Conversion Ratio after such
adjustment and, in the case of an adjustment pursuant to paragraph (f),
describing the kind and amount of stock, securities and other property
(including cash) thereafter issuable upon such exercise. Such certificate shall
also set forth a brief statement of the facts requiring such adjustment and
shall
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be conclusive evidence of the correctness of such adjustment absent manifest
error. Promptly after delivery of such certificate, the Trust shall prepare a
notice of such adjustment setting forth the adjusted Conversion Ratio, the
effective date of such adjustment and, in the case of an adjustment pursuant to
paragraph (f), a description of the kind and amount of stock, securities and
other property (including cash) thereafter issuable upon exercise of the Class B
Conversion Right or the Trust Conversion Right, and shall mail such notice of
such adjustment to the holder of each share of Class B EPS at such holder's last
address as shown on the sharerecords of the Trust.
(h) Miscellaneous Provisions.
(i) There shall be no adjustment of the Conversion Ratio in case of
the issuance of any shares of beneficial interest in the Trust in a
reorganization, acquisition or other similar transaction except as specifically
set forth in this Article 6.16.5.
(ii) If the Trust shall take any action affecting the Trust Shares
or the Corporation shall take any action affecting the Corporation Shares, other
than an action described in this Article 6.16.5, that in the opinion of the
Board of Trustees would materially and adversely affect the conversion rights of
the holders of the Class B EPS provided for in this Article 6.16.5, the
Conversion Ratio may be adjusted, to the extent permitted by law, in such
manner, if any, and at such time, as the Board of Trustees, in its sole
discretion, may determine to be equitable in the circumstances.
(iii) The Trust covenants that any shares of Class A EPS issued
upon exercise of the Class B Conversion Right or the Trust Conversion Right will
be validly issued, fully paid and non-assessable. The Trust shall reserve and
shall at all times have reserved out of its authorized but unissued Class A EPS
sufficient Class A EPS to permit the exercise of the Class B Conversion Right.
The Trust shall also comply with its obligations under paragraph (g)(iii) of
Article 6.15.5 hereof as if such shares of Class A EPS issuable upon exercise of
the Class B Conversion Right were issued and outstanding. The Trust shall pay
any and all documentary stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of shares of Class A EPS or other securities or
property upon exercise of the Class B Conversion Right or the Trust Conversion
Right; provided, however, that the Trust shall not be required to pay any tax
that may be payable in respect of any transfer involved in the issue or delivery
of any shares of Class A EPS or other securities or property in a name other
than that of the holder of the shares of Class B EPS being converted, and no
such issue or delivery shall be made unless and until the Person requesting such
issue or delivery has paid to the Trust the amount of any such tax or
established, to the reasonable satisfaction of the Trust, that such tax has been
paid.
(iv) Except as provided in paragraph (g)(v) below, any
determination required or permitted to be made by the Board of Trustees by these
Articles Supplementary shall be final, conclusive and binding on the holders of
Class B EPS.
(v) In the event that the Trust elects to pay in cash a Class B
Preferred Dividend corresponding to a Corporation Common Distribution in the
form of securities or other property and in connection therewith the Board of
Trustees makes a determination of the fair market
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value of such securities or other property, the Trust shall deliver to each
affected holder of Class B EPS a written notice setting forth the valuation
determined by the Board of Trustees. At any time within ten (10) Business Days
after receipt of such notice, any affected holder of Class B EPS may request in
writing that the Trust obtain a written valuation of such securities or other
property from an investment banking firm. Promptly after receipt of any such
request, the Trust shall select a nationally recognized investment banking firm
to perform such valuation and shall provide such investment banking firm with
such relevant information as the Trust may have in relation thereto. Such
investment banking firm shall be instructed to prepare a written valuation
report within thirty (30) days after its appointment, and upon receipt of such
valuation report, the Trust shall mail a copy to each affected holder of Class B
EPS. If the valuation as determined by such investment banking firm is greater
than the valuation as determined by the Board of Trustees, the Trust shall
promptly pay the amount of such difference to each affected holder of Class B
EPS. If, however, the valuation as determined by such investment banking firm is
less than the valuation determined by the Board of Trustees, the Trust may at
its option require each affected holder of Class B EPS to repay the amount of
such difference to the Trust, which amount shall be so repaid by each such
holder promptly after receipt of the Trust's request. The fees and expenses of
such investment banking firm shall be paid by the Trust.
6.16.6. REDEMPTION RIGHTS.
(a) In General. Shares of Class B EPS will be redeemable at the option
of the Trust at any time after the Cross-Over Date in accordance with the
provisions of paragraph (b) of this Article 6.16.6 (the "Trust Redemption
Right") and will be redeemable at the option of the holders at any time during
the period commencing on the Cross-Over Date and ending on the first anniversary
of the Cross-Over Date in accordance with the provisions of paragraph (c) of
this Article 6.16.6 (the "Class B Redemption Right"). Prior to the Cross-Over
Date, shares of Class B EPS will not be redeemable at the option of either the
Trust or the holder. In addition, as more specifically provided in Article
6.16.7 hereof, upon receipt of a Class B Conversion/Redemption Notice from any
holder of shares of Class B EPS at any time after the first anniversary of the
Cross-Over Date, the Trust will be required to elect to either exercise the
Trust Conversion Right or the Trust Redemption Right with respect to the shares
specified in such Class B Conversion/Redemption Notice.
(b) Redemption at the Option of the Trust.
(i) Pursuant to the Trust Redemption Right, shares of Class B EPS
may be redeemed in cash in whole or in part at the option of the Trust at any
time and from time to time (in the case of partial redemptions) after the
Cross-Over Date at a redemption price (the "Redemption Price") equal to the
Class B Liquidation Preference of such shares as of the applicable Trust
Redemption Date; provided, however, that the Trust Redemption Right may not be
exercised with respect to any shares of Class B EPS that are already subject to
(A) a Trust Conversion Notice or (B) a Class B Conversion Notice or a Class B
Redemption Notice. Such redemption shall be deemed to have been made as of the
close of business on the applicable Trust Redemption Date, and after such Trust
Redemption Date, provided that the Trust Redemption Price has been duly paid or
set apart for payment, dividends shall cease to accrue on the shares of Class B
EPS called for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as
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shareholders of the Trust shall cease, except the right to receive the
Redemption Price, without interest thereon, upon surrender of the certificates
evidencing such shares.
(ii) Notice of any exercise of the Trust Redemption Right (a "Trust
Redemption Notice") shall be given to the holders of the shares of Class B EPS
to be redeemed not less than ten (10) nor more than sixty (60) days prior to the
date fixed for redemption (the "Trust Redemption Date"). Each Trust Redemption
Notice shall be given by first class mail to each holder of shares to be
redeemed at such holder's address as shown on the sharebooks of the Trust and
shall specify (A) the Trust Redemption Date, (B) the number of shares of Class B
EPS to be redeemed from such holder, (C) the Trust Redemption Price, (D) the
place or places where certificates for the shares of Class B EPS to be redeemed
are to be surrendered for payment of the Trust Redemption Price, (E) that
dividends will cease to accrue on the shares of Class B EPS to be redeemed on
the Redemption Date and (F) that the ability of the holders to exercise the
Class B Conversion Right with respect to the shares to be redeemed will
terminate on the Trust Redemption Date. If less than all outstanding shares of
Class B EPS are to be redeemed upon exercise of the Trust Redemption Right, the
shares to be redeemed shall be selected in such manner as the Trust deems
appropriate.
(iii) Upon receipt of a Trust Redemption Notice, each holder of
shares of Class B EPS being redeemed shall surrender to the Transfer Agent a
certificate or certificates evidencing such shares. As soon as practicable, and
in any event within five (5) Business Days, after such surrender, the Trust
shall pay the applicable Redemption Price to such holder and, if less than the
full number of shares represented by the certificate or certificates so
surrendered are to be redeemed, the Trust shall deliver to such holder a
certificate or certificates evidencing the excess shares not being redeemed. The
Redemption Price shall be payable at the election of the Trust by check or by
wire transfer to an account designated in writing by the holder at least two (2)
Business Days prior to the applicable Trust Redemption Date, if one has been so
designated.
(c) Redemption at the Option of the Holders.
(i) Under the Class B Redemption Right, to the extent permitted
under applicable law, each holder of shares of Class B EPS shall have the right,
at his or her option, to require the Trust at any time or from time to time (in
the case of partial redemptions) after the Cross-Over Date and on or prior to
the first anniversary of the Cross-Over Date to redeem some or all of such
shares in cash at the Redemption Price (determined as of the Class B Redemption
Date); provided, however, that the Class B Redemption Right may not be exercised
with respect to any shares of Class B EPS that are already subject to (A) a
Trust Conversion Notice or a Trust Redemption Notice or (B) a Class B Conversion
Notice. Such redemption shall be deemed to have been made as of the close of
business on the applicable Class B Redemption Date, and after such Class B
Redemption Date, provided that the Redemption Price has been duly paid or set
apart for payment, dividends shall cease to accrue on the shares of Class B EPS
surrendered for redemption, such shares shall no longer be deemed to be
outstanding and all rights of the holders of such shares as shareholders of the
Trust shall cease, except the right to receive the Redemption Price, without
interest thereon.
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(ii) A holder of shares of Class B EPS may exercise the Class B
Redemption Right with respect to some or all of such shares by surrendering a
certificate or certificates evidencing the shares to be redeemed, duly endorsed
or assigned to the Trust in blank, to the Transfer Agent accompanied by a
written notice (a "Class B Redemption Notice") in such form as the Trust shall
prescribe from time to time specifying the number of shares (which shall be a
whole number) to be redeemed in accordance with the provisions of this paragraph
(c). As soon as practicable, and in any event within five (5) Business Days,
after receipt of a Class B Redemption Notice and the related certificates (the
date of such receipt being sometimes referred to herein as the "Class B
Redemption Date"), to the extent permitted under applicable law, the Trust shall
pay the Redemption Price to the holder and, if less than the full number of
shares of Class B EPS represented by the certificate or certificates surrendered
together with such Class B Redemption Notice are to be redeemed, the Trust shall
deliver to such holder a certificate or certificates evidencing the excess
shares not being redeemed. The Redemption Price shall be payable at the election
of the Trust by check or by wire transfer to an account designated in writing by
the holder at least two (2) Business Days prior to the applicable Class B
Redemption Date, if one has been so designated.
6.16.7. CLASS B CONVERSION/REDEMPTION ELECTION RIGHT.
In addition to the Class B Conversion Right and the Class B Redemption
Right, at any time after the first anniversary of the Cross-Over Date, each
holder of shares of Class B EPS will have the right (the "Class B
Conversion/Redemption Election Right"), upon written notice to the Trust in such
form as the Trust shall prescribe from time to time (a "Class B
Conversion/Redemption Notice"), to require that the Trust elect either to
exercise the Trust Conversion Right or the Trust Redemption Right described
below with respect to the shares of Class B EPS held by such holder and
designated in the Class B Conversion/Redemption Notice; provided, however, that
the Class B Conversion Right may not be exercised with respect to any shares of
Class B EPS (A) with respect to which the holder has already given a Class B
Redemption Notice or (B) after the applicable Redemption Date if the Trust has
already given a Trust Redemption Notice with respect to such shares unless, in
either such case, the Trust shall default in the payment of the applicable
Redemption Price required to be paid pursuant to Article 6.16.6 above. Within
five (5) Business Days after receipt of any such Class B Conversion/Redemption
Notice, the Trust shall either give the relevant holder a Trust Conversion
Notice or a Trust Redemption Notice with respect to the shares of Class B EPS
specified in such Class B Conversion/Redemption Notice.
6.16.8. REACQUIRED SHARES TO BE RETIRED.
All shares of Class B EPS which shall have been issued and reacquired
in any manner by the Trust shall be restored to the status of authorized but
unissued shares of beneficial interest in the Trust without designation as to
class.
6.16.9. DEFAULT RIGHTS.
(a) Consequences of Uncured Default. Subject to paragraph (b) of this
Article 6.16.9, in the event that the Trust at any time defaults in its
obligations with respect to any exercise of the Class B Redemption Right, the
Class B Conversion Right or the Class B Conversion/Redemption
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Election Right, and such default shall continue for a period of thirty (30) days
from the date that performance of such obligations was due (an "Uncured
Default"), then: (i) the holders of the outstanding shares of Class B EPS will
have the rights with respect to the election of two additional members of the
Board of Trustees described in paragraph (c) of Article 6.16.10 hereof, (ii) the
dividend rate on the Class B EPS will be increased as provided in paragraph (d)
of Article 6.16.3 hereof, (iii) the Registration Rights Agreement will be
amended to provide the holders of Class B EPS with registration rights
thereunder and (iv) the Cross-Over Date (if not already past) will be extended
by a number of days equal to the number of days that an Uncured Default
continues unremedied. Any Uncured Default may be waived at any time by the
holders of shares of Class B EPS constituting a majority of all shares of Class
B EPS then outstanding.
6.16.10. VOTING.
(a) General Voting Rights. The holders of shares of Class B EPS shall
be entitled to vote upon all matters upon which holders of Trust Shares have the
right to vote, and shall be entitled to the number of votes equal to the largest
whole number of Class B Underlying Trust Shares for which such shares of Class B
EPS could be indirectly exchanged (assuming the exercise of the Class B
Conversion Right and the concurrent exercise of the Class A Exchange Right with
respect to the shares of Class A EPS issuable upon exercise of such Class B
Conversion Right) as of the record date for determination of the shareholders
entitled to vote on such matters, or, if no such record date is established, as
of the date such vote is taken or any written consent of shareholders is
solicited, such votes to be counted together with all other shares of beneficial
interest in the Trust having general voting powers and not separately as a
class.
(b) Special Voting Rights. So long as any shares of Class B EPS are
outstanding, in addition to any other vote or consent of holders of such shares
required by the Declaration or these Articles Supplementary, the affirmative
vote of at least a majority of the votes entitled to be cast by the holders of
all outstanding shares of Class B EPS, given in person or by proxy, either in
writing without a meeting or by vote at any meeting called for that purpose,
shall be necessary for effecting or validating any amendment, alteration or
repeal of any of the provisions of the Declaration or these Articles
Supplementary that materially and adversely affects the voting powers, rights or
preferences of the holders of the Class B EPS disproportionately (based on the
number of Underlying Class B Trust Shares at the time) to the effect of such
amendment, alteration or repeal on the holders of the Trust Shares; provided,
however, that (i) any amendment of the provisions of the Declaration so as to
authorize or create, or to increase the authorized amount of, any class or
series of shares of beneficial interest in the Trust, whether ranking prior to,
on a parity with or junior to the Class B EPS shall not be deemed to materially
and adversely affect the voting powers, rights or preferences of the holders of
Class B EPS and (ii) no filing with the State Department of Assessments and
Taxation of Maryland by the Trust in connection with a merger, consolidation or
sale of all or substantially all of the assets of the Trust shall be deemed to
be an amendment, alteration or repeal of any of the provisions of the
Declaration or these Articles Supplementary unless such filing expressly
purports to amend, alter or repeal one or more of such provisions. For the
purposes of this paragraph (b), each share of Class B EPS will have one vote per
share.
(c) Default Voting Rights.
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(i) Upon the occurrence of any Uncured Default, the number of
trustees then constituting the Board of Trustees shall be increased by two and
the holders of the outstanding shares of Class B EPS shall be entitled to elect
the two additional trustees to serve on the Board of Trustees at any annual
meeting of shareholders, or at a special meeting of the holders of Class B EPS
then outstanding called as provided in subparagraph (ii) below. If such Uncured
Default shall at any time cease to be continuing or shall be waived, then the
right of the holders of the Class B EPS to elect such additional two trustees
shall cease (but subject always to the same provision for the vesting of such
voting rights upon the occurrence of any subsequent Uncured Default) and the
terms of office of all persons elected as trustees by such holders shall
forthwith terminate and the number of trustees constituting the Board of
Trustees shall be reduced accordingly. For the purposes of this paragraph (c),
each share of Class B EPS will have one vote per share.
(ii) At any time after the voting power described in subparagraph
(i) above shall have been vested in the holders of shares of Class B EPS, the
Secretary of the Trust may, and upon the written request of any holder of Class
B EPS (addressed to the Secretary at the principal office of the Trust) shall,
call a special meeting of the holders of the Class B EPS for the election of the
two trustees to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Trust for a special meeting
of the shareholders or as required by law. If any such special meeting required
to be called as above provided shall not be called by the Secretary within
twenty (20) days after receipt of such request, then any holder of shares of
Class B EPS may call such meeting, upon the notice above provided and for that
purpose shall have access to the sharebooks of the Trust. The trustees elected
at any such special meeting shall hold office until the next annual meeting of
the shareholders or special meeting held in lieu thereof if such office shall
not have previously terminated as above provided. If any vacancy shall occur
among the trustees elected by the holders of the Class B EPS, a successor shall
be elected by the Board of Trustees, upon the nomination of the then-remaining
trustee elected by the holders of the Class B EPS or the successor of such
remaining trustee, to serve until the next annual meeting of the shareholders if
such office shall not have previously terminated as provided above.
6.16.11. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record holder
of any Class B EPS as the true and lawful owner thereof for all purposes, and
neither the Trust nor the Transfer Agent shall be affected by any notice to the
contrary.
6.16.11. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class B EPS constitute shares of beneficial interest in the Trust
that are governed by and issued subject to all the limitations, terms and
conditions of the Declaration applicable to shares of beneficial interest in the
Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class B EPS of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class A EPS shall be enforced by the Trust to the
extent that such
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restrictions would otherwise cause the Trust to fail to meet the requirements of
Section 856(a)(2) of the Code.
6.17 Redemption. In the event that the Corporation shall redeem any
shares of its stock pursuant to Article FIFTEENTH of the charter of the
Corporation and such shares are subject to the limitation on transfer provided
for in the Intercompany Agreement, the Trust shall simultaneously redeem, upon
the terms of such Article FIFTEENTH, any Shares that are paired with such shares
of the Corporation's stock pursuant to the Intercompany Agreement.
6.18 Class A Shares.
6.18.1. NUMBER OF SHARES AND DESIGNATION.
The class of shares of beneficial interest in the Trust
authorized by this Section 6.18.1 shall be designated as "Class A
Shares", par value $.01 per share (the "Class A Shares"), and five
thousand (5,000) shall be the number of Class A Shares constituting
such class.
6.18.2. DEFINITIONS.
For purposes of this Section 6.18, the following terms have the
meanings indicated:
"Board of Trustees" shall mean the Board of Trustees of the Trust
or any committee authorized by the Board of Trustees from time to time
to exercise any of its powers or perform any of its responsibilities
with respect to the Class A Shares.
"Class A EPS" shall mean the Class A Exchangeable Preferred Shares
of the Trust.
"Class A Liquidating Distribution" shall mean, after the
occurrence of a Liquidation Event, the payment to the holders of the
Class A Shares (and of any shares of beneficial interest in the Trust
entitled to participate in such distributions received by the holders
of Class A Shares) of a liquidating distribution, out of the assets of
the Trust legally available for liquidating distributions to holders of
shares of beneficial interests in the Trust, in the amount of the
aggregate book value of the total equity of the Trust on December 31,
1998 less the amount of such book value represented by the Class A EPS
and the Class B EPS as conclusively determined by the Trust's audited
balance sheet as of December 31, 1998 included in the Trust's Annual
Report on Form 10-K for the year ended December 31, 1998.
"Class A Shares" shall have the meaning set forth in Section
6.18.1.
"Class B EPS" shall mean the Class B Exchangeable Preferred Shares
of the Trust.
"Class B Shares" shall mean the Class B Shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
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"Code" shall mean the Internal Revenue Code of 1986, as amended,
or any successor thereto.
"Declaration" shall mean the Amended and Restated Declaration of
Trust of the Trust, as amended from time to time.
"Junior Shares" shall mean the Class A Shares, the Class B Shares
and any other shares of beneficial interest in the Trust that do not
entitle the holders thereof to a liquidation preference with respect to
the Class A Shares and the Class B Shares, but shall not include the
Class A EPS or the Class B EPS.
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all the Trust's
assets shall be deemed not to be a Liquidation Event.
"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class B Shares.
"Trust" shall mean Starwood Hotels & Resorts, a Maryland real
estate investment trust, and any successor thereto.
6.18.3. DIVIDENDS.
The Trustees may from time to time authorize and the Trust may pay
to the holders of Class A Shares such dividends or distributions in cash or
other form, out of current or accumulated income, capital, capital gains,
principal, surplus, proceeds from the increase or refinancing of Trust
obligations, or from the sale of portions of the assets of the Trust or from any
other source as the Trustees in their discretion shall determine. Such holders
shall have no right to any dividend or distribution unless authorized by the
Trustees.
6.18.4. LIQUIDATION RIGHTS.
Upon the occurrence of any Liquidation Event, the holders of Class
A Shares (and of any shares of beneficial interest in the Trust entitled to
participate in such distributions received by the holders of the Class A Shares)
will be entitled to receive out of the assets of the Trust legally available for
liquidating distributions to holders of shares of beneficial interests in the
Trust, after the payment in full of any liquidation preference of any
outstanding shares of beneficial interest in the Trust (other than Junior
Shares), including the Class A EPS (to the extent of the Class A Liquidation
Preference (as defined in Section 6.15.2)) and the Class B EPS (to the extent of
the Class B Liquidation Preference (as defined in Section 6.16.2)), (i) the
Class A Liquidating Distribution and (ii) a liquidating distribution in an
amount equal to 90% of such assets remaining after the payment in full of the
Class A Liquidating Distribution, with the remaining 10% of such assets to be
distributed
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concurrently to the holders of the Class B Shares (and of any shares of
beneficial interest in the Trust entitled to participate in such distributions
received by the holders of Class B Shares, including the Class A EPS (to the
extent of the Class A Liquidation Participation Right (as defined in Section
6.15.2)) and the Class B EPS (to the extent of the Class B Liquidation
Participation Right (as defined in Section 6.16.2))).
6.18.5. REACQUIRED SHARES.
All Class A Shares that shall have been issued and reacquired in
any manner by the Trust shall be restored to the status of authorized but
unissued shares of beneficial interest in the Trust without designation as to
class.
6.18.6. VOTING.
(a) General Voting Rights. Subject to Section 6.18.6(b), the
holders of Class A Shares shall be entitled to vote upon all matters, including
the election of Trustees (other than Trustees who may be elected from time to
time by holders of one or more other classes or series of shares of beneficial
interest in the Trust), properly presented to the shareholders of the Trust
generally for a vote.
(b) Special Voting Rights. So long as any Class A Shares are
outstanding, in addition to any other vote or consent of holders of such shares
required by the Declaration, the affirmative vote of at least a majority of the
votes entitled to be cast by the holders of all outstanding Class A Shares,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for that purpose, shall be necessary for effecting or
validating any amendment, alteration or repeal of any of the provisions of the
Declaration that materially and adversely affects the rights of the holders of
the Class A Shares.
(c) Votes per Share. For the purposes of this Section 6.18.6, each
Class A Share will have one vote per share.
6.18.7. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record
holder of any Class A Shares as the true and lawful owner thereof for all
purposes, and neither the Trust nor the Transfer Agent shall be affected by any
notice to the contrary.
6.18.8. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class A Shares constitute shares of beneficial interest in the
Trust that are governed by and issued subject to all the limitations, terms and
conditions of the Declaration applicable to shares of beneficial interest in the
Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class A Shares of any
other term or provision of the Declaration. No
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restrictions on the transferability of shares of Class A Shares shall be
enforced by the Trust to the extent that such restrictions would otherwise cause
the Trust to fail to meet the requirements of Section 856(a)(2) of the Code.
6.19 Class B Shares.
6.19.1. NUMBER OF SHARES AND DESIGNATION.
The class of shares of beneficial interest in the Trust authorized
by this Section 6.19 shall be designated as "Class B Shares", par value $.01 per
share (the "Class B Shares"), and one billion (1,000,000,000) shall be the
number of Class B Shares constituting such class. For purposes of Article VI,
Sections 6.15 and 6.16, the Class B Shares shall be deemed to be the shares of
beneficial interest in the Trust into which the Trust Shares are changed in the
merger of ST Acquisition Trust into the Trust pursuant to the Articles of Merger
accepted for record by the State Department of Assessments and Taxation of
Maryland on ___________, 1999.
6.19.2. DEFINITIONS.
For purposes of this Section 6.19, the following terms have the
meanings indicated:
"Affiliate" shall mean with respect to any Person, any other
Person which directly or indirectly controls, is controlled by or is
under common control with such Person.
"Board of Trustees" shall mean the Board of Trustees of the Trust
or any committee authorized by the Board of Trustees from time to time
to exercise any of its powers or perform any of its responsibilities
with respect to the Class B Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or
a day on which state or federally chartered banking institutions in New
York, New York are not required to be open.
"Cash Equivalent" of Units or any other shares of beneficial
interest or other securities of the Trust or any other issuer as of any
date shall mean an amount of cash equal to (i) the average of the daily
Current Market Prices per Unit or other shares or securities during the
five (5) consecutive Trading Days immediately preceding such date or
(ii) if the Units or such other shares or securities are not publicly
traded on such date, the fair market value of Units or other shares or
securities as of such date as determined by the Board of Trustees in
good faith.
"Class A Dividend" shall mean any dividend or distribution paid or
made by the Trust pro rata on or with respect to the outstanding Class
A Shares other than a distribution of assets of the Trust upon the
occurrence of a Liquidation Event; provided that a distribution to the
holders of shares of beneficial interest in the Trust of rights to
subscribe for or purchase additional equity securities under a
shareholders' protective rights plan or agreement or any similar plan
or agreement shall be deemed not to constitute a Class A Dividend.
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"Class A EPS" shall mean the Class A Exchangeable Preferred Shares
of the Trust.
"Class A Liquidating Distribution" shall mean, after the
occurrence of a Liquidation Event, the payment to the holders of the
Class A Shares (and of any shares of beneficial interest in the Trust
entitled to participate in such distributions received by the holders
of Class A Shares) of a liquidating distribution, out of the assets of
the Trust legally available for liquidating distributions to holders of
shares of beneficial interests in the Trust, in the amount of the
aggregate book value of the total equity of the Trust on December 31,
1998 less the amount of such book value represented by the Class A EPS
and the Class B EPS as conclusively determined by the Trust's audited
balance sheet as of December 31, 1998 included in the Trust's Annual
Report on Form 10-K for the year ended December 31, 1998.
"Class A Shares" shall mean the Class A Shares of beneficial
interest in the Trust, par value $.01 per share, or any shares of
beneficial interest in the Trust into which such common shares may be
changed.
"Class B EPS" shall mean the Class B Exchangeable Preferred Shares
of the Trust.
"Class B Shares" shall have the meaning set forth in Section
6.19.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
or any successor thereto.
"Common Shares and Equivalents" shall mean the Class A Shares, the
Class B Shares, the Class A Underlying Trust Shares (as defined in
Section 6.15.2), which shares shall be deemed outstanding to the extent
the corresponding Class A EPS is outstanding, the Class B Underlying
Trust Shares (as defined in Section 6.16.2), which shares shall be
deemed outstanding to the extent the corresponding Class B EPS is
outstanding, and any other shares of beneficial interest in the Trust
that do not entitle the holders thereof to a liquidation preference
with respect to the Class A Shares and the Class B Shares, but shall
not include the Class A EPS or the Class B EPS.
"Corporation" shall mean Starwood Hotels & Resorts Worldwide,
Inc., a Maryland corporation, and any successor thereto.
"Corporation Shares" shall mean the shares of common stock, par
value $.01 per share, of the Corporation or any stock of the
Corporation into which such common stock may hereafter be changed.
"Current Market Price" of publicly traded Units or any other
shares of beneficial interest or other securities of the Trust or any
other issuer as of any Trading Day shall mean the last reported sales
price, regular way, on such day, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the NYSE or, if such
shares or other securities are not listed or admitted for trading on
the NYSE, on the principal national securities exchange on which such
shares
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or other securities are listed or admitted for trading or, if not
listed or admitted for trading on any national securities exchange, on
the NASDAQ National Market or, if such shares or other securities are
not quoted on such NASDAQ National Market, the average of the closing
bid and asked prices on such day in the over-the-counter market as
reported by NASDAQ or, if bid and asked prices for such shares or other
securities on such day shall not have been reported through NASDAQ, the
average of the bid and asked prices on such day as furnished by any
NYSE member firm regularly making a market in such shares or other
securities selected for such purpose by the Chief Executive Officer or
Chief Financial Officer of the Trust or the Board of Trustees.
"Declaration" shall mean the Amended and Restated Declaration of
Trust of the Trust, as amended from time to time.
"Dividend Amount" shall mean an amount equal to $0.60 per Class B
Share per annum; provided that such amount shall increase by 15% per
annum commencing January 1, 2000 (rounded to the nearest $.01);
provided further that if the Dividend Amount for any calendar year
would (without giving effect to this proviso) exceed 25% (but be less
than or equal to 35%) of FFO Per Share for the prior calendar year,
then the Dividend Amount shall increase by 5% for such year (so
rounded); provided further that if the Dividend Amount for such
calendar year would (without giving effect to the preceding proviso)
exceed 35% of FFO Per Share for such prior calendar year, then the
Dividend Amount for such calendar year shall equal the Dividend Amount
for such prior calendar year; and provided further that in no calendar
year shall the Dividend Amount exceed an amount equal to 49% of the
Taxable Income Per Share for the prior calendar year (so rounded).
"Exchange Amount" shall have the meaning set forth in paragraph
(a)(i) of Section 6.19.5.
"Exchange Date" shall have the meaning set forth in paragraph
(a)(ii) of Section 6.19.5.
"Exchange Notice" shall have the meaning set forth in paragraph
(a)(iii) of Section 6.19.5.
"Exchange Issuance Date" shall have the meaning set forth in
paragraph (a)(iv) of Section 6.19.5.
"FFO Per Share" for any calendar year shall mean "funds from
operations" of the Trust for such year, as such amount is calculated
and publicly disclosed by the Trust from time to time, divided by the
average number of Common Shares and Equivalents outstanding during such
calendar year.
"Intercompany Agreement" shall mean the Amended and Restated
Intercompany Agreement dated as of _______, 1999, between the Trust and
the Corporation, as amended from time to time.
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"Issue Date" shall mean the first date on which any Class B Shares
are issued by the Trust.
"Junior Shares" shall mean the Class A Shares, the Class B Shares
and any other shares of beneficial interest in the Trust that do not
entitle the holders thereof to a liquidation preference with respect to
the Class A Shares and the Class B Shares, but shall not include the
Class A EPS or the Class B EPS.
"Liquidation Event" shall mean any liquidation, dissolution or
winding up of the affairs of the Trust, whether voluntary or
involuntary. For the purposes hereof, (i) a consolidation or merger of
the Trust with one or more entities, (ii) a statutory share exchange
and (iii) a sale or transfer of all or substantially all the Trust's
assets shall be deemed not to be a Liquidation Event.
"NYSE" shall mean The New York Stock Exchange.
"Person" shall mean any individual, firm, trust, partnership,
corporation, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Trust in its
accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to a declaration of dividends or other distribution
by the Board of Trustees, the allocation of funds to be so paid on any
series or class of shares of beneficial interest of the Trust.
"Taxable Income Per Share" for any calendar year shall mean the
taxable income of the Trust under the Code as reported by the Trust to
the Internal Revenue Service for such calendar year, divided by the
average number of Common Shares and Equivalents outstanding during such
calendar year.
"Trading Day" with respect to publicly traded Units or any other
shares of beneficial interest or other securities of the Trust or any
other issuer shall mean any day on which the shares or other securities
in question are traded on the NYSE, or if such shares or other
securities are not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such shares or other
securities are listed or admitted, or if not listed or admitted for
trading on any national securities exchange, on the NASDAQ National
Market, or if such shares or other securities are not quoted on such
NASDAQ National Market, in the applicable securities market in which
such shares or other securities are traded.
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"Transfer Agent" shall mean ChaseMellon Shareholder Services,
L.L.C. (or any successor thereof), or such other agent or agents of the
Trust as may be designated by the Board of Trustees or their designee
as the transfer agent for the Class B Shares.
"Trust" shall mean Starwood Hotels & Resorts, a Maryland real
estate investment trust, and any successor thereto.
"Units" shall mean units consisting of one Class B Share and one
Corporation Share (subject to adjustment as contemplated by the
Intercompany Agreement) and represented by a single share certificate,
as provided in the Intercompany Agreement.
6.19.3. DIVIDENDS.
(a) General. The holders of Class B Shares are entitled to receive
a noncumulative dividend in an amount per share equal to the Dividend Amount,
when, as and if authorized by the Board of Trustees out of assets of the Trust
legally available for that purpose. Each dividend will be noncumulative and will
be payable to holders of record of Class B Shares on such record date as shall
be fixed by the Board of Trustees.
(b) Restriction on Class A Dividends. So long as any Class B
Shares are outstanding, no Class A Dividend may be declared or paid or set apart
for payment with respect to any fiscal quarter unless all accrued dividends on
the Class B Shares with respect to such quarter have been or are concurrently
declared and paid; provided, however, that the restriction on the payment of
Class A Dividends set forth in this Section 6.19.3(b) shall not apply to the
extent (x) that the Trust is restricted, under the terms of any bona fide loan
or credit agreement or indenture relating to a borrowing by the Trust or the
Corporation or any of their respective subsidiaries, from declaring or paying,
with respect to any fiscal quarter, any dividend on the Class B Shares but not a
Class A Dividend or (y) necessary, in the good faith judgment of the Board of
Trustees, to permit the Trust to continue to qualify for taxation as a "real
estate investment trust" under Section 856 of the Code.
6.19.4. LIQUIDATION RIGHTS.
Upon the occurrence of any Liquidation Event, the holders of Class
B Shares (and of any shares of beneficial interest in the Trust entitled to
participate in such distributions received by the holders of the Class B Shares,
including the Class A EPS (to the extent of the Class A Liquidation
Participation Right (as defined in Section 6.15.2)) and the Class B EPS (to the
extent of the Class B Liquidation Participation Right (as defined in Section
6.16.2))) will be entitled to receive out of the assets of the Trust legally
available for liquidating distributions to holders of shares of beneficial
interests in the Trust, after the payment in full of any liquidation preference
of any outstanding shares of beneficial interest in the Trust (other than Junior
Shares), including the Class A EPS (to the extent of the Class A Liquidation
Preference (as defined in Section 6.15.2)) and the Class B EPS (to the extent of
the Class B Liquidation Preference (as defined in Section 6.16.2)) and of the
Class A Liquidating Distribution, a liquidating distribution in an amount equal
to 10% of such assets, with the remaining 90% of such assets to be distributed
concurrently to the holders of the Class A Shares (and
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of any shares of beneficial interest in the Trust entitled to participate in
such distributions received by the holders of Class A Shares).
6.19.5. CORPORATION EXCHANGE RIGHT.
(a) Corporation Exchange Right.
(i) The Corporation shall have the right, to the extent
permitted by the Intercompany Agreement, to exchange for all or any portion of
the Class B Shares cash, Corporation Shares or other property with a fair market
value, in the good faith judgment of the Board of Trustees, at least equal to
the fair market value of the Class B Shares being exchanged (the "Exchange
Amount").
(ii) Such exchange shall be deemed to have been made as of
the close of business on the applicable date fixed by the Corporation for such
exchange (the "Exchange Date") and after such Exchange Date, provided that the
Exchange Amount has been duly paid or set apart for payment in full, dividends
shall cease to accrue on the Class B Shares called for exchange, such shares
shall be deemed no longer to be outstanding and all rights of the holders of
such shares as shareholders of the Trust shall cease, except the right to
receive the Exchange Amount, without interest thereon, upon surrender of the
certificates evidencing such shares.
(iii) Notice of any exchange (an "Exchange Notice") shall be
given by the Corporation to the Trust not less than ten (10) nor more than sixty
(60) days prior to the Exchange Date. Each Exchange Notice shall concurrently be
given by the Corporation by first class mail to each holder of shares to be
exchanged at such holder's address as shown on the sharebooks of the Trust and
shall specify (A) the Exchange Date, (B) the number of Class B Shares to be
exchanged in the aggregate and from such holder, (C) the Exchange Amount,
specifying whether the Exchange Amount will be paid in cash, Corporation Shares
or other property (and identifying such other property, if other property is to
be exchanged), (D) the place or places where certificates for the Class B Shares
to be exchanged are to be surrendered for payment of the Exchange Amount and (E)
that dividends will cease to accrue on the Class B Shares to be exchanged on the
Exchange Date. If less than all outstanding Class B Shares are to be exchanged,
the shares to be exchanged shall be selected pro rata, by lot or in such other
manner as the Trust deems appropriate.
(iv) Upon receipt of an Exchange Notice, each holder of
Class B Shares being exchanged shall surrender to the Transfer Agent a
certificate or certificates evidencing such shares. As soon as practicable, and
in any event within five (5) Business Days, after such surrender, the Trust
shall cause the Corporation to pay the applicable Exchange Amount to such holder
and, if less than the full number of shares represented by the certificate or
certificates so surrendered are to be exchanged, the Trust shall promptly
deliver to such holder a certificate or certificates evidencing the excess Class
B Shares not being exchanged. The Trust shall cause the Corporation to deliver
promptly to such holder a certificate or certificates evidencing the Corporation
Shares previously evidenced by the certificate or certificates surrendered. The
Exchange Amount, if payable in cash, shall be payable at the election of the
Corporation by check or by wire transfer to an account designated in writing by
the holder at least two (2) Business Days prior to the applicable Exchange
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Date, if one has been so designated; if the Exchange Amount is not payable in
cash, then the Exchange Amount shall be payable in such manner as may be
determined by the Corporation and set forth in the Exchange Notice.
With respect to any Corporation Shares or other securities to
be issued pursuant to such exchange, the Trust shall cause the Corporation or
the issuer of such other securities to issue and deliver, at the office of the
Transfer Agent to the exchanging holder, a certificate or certificates for the
number of full Corporation Shares or other securities deliverable in accordance
with the provisions of this Section 6.19.5, and any fractional interest in
respect of a Corporation Share or other securities arising upon such exchange
shall be settled as provided in paragraph (b) of this Section 6.19.5 (the date
of delivery of such certificate or certificates being sometimes referred to
herein as the "Exchange Issuance Date"). Any such Corporation Shares or other
securities issued upon such exchange shall be deemed to have been issued
immediately prior to the close of business on the Exchange Issuance Date, and
the Person or Persons in whose name or names any certificate or certificates for
Corporation Shares or other securities shall be issuable pursuant to such
exchange shall be deemed to have become the holder or holders of record of the
Corporation Shares or other securities represented thereby at such time on such
date unless the share transfer records for the Corporation Shares or other
securities shall be closed on such date, in which event such Person or Persons
shall be deemed to have become such holder or holders of record at the close of
business on the next succeeding day on which such share transfer books are open.
(b) Fractional Interests. Unless otherwise determined by the
Trust and set forth in the Exchange Notice, no fractional Corporation Shares or
scrip evidencing fractions thereof shall be issued upon such exchange. Instead
of any fractional interest in a Corporation Share that would otherwise be
deliverable upon such exchange, the Trust shall cause the Corporation to pay to
the exchanging holder an amount in cash equal to the corresponding fraction of
the Current Market Price of the Units on the Trading Day immediately preceding
the Exchange Issuance Date. If more than one Class B Share shall be surrendered
for exchange at one time by the same holder, the number of full Corporation
Shares issuable upon exchange shall be computed on the basis of the aggregate
number of Class B Shares so surrendered.
(c) Miscellaneous Provisions.
(i) The Trust shall pay or cause to be paid any and all
documentary stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of the Exchange Amount upon any such exchange; provided,
however, that the Trust shall not be required to pay or cause to be paid any tax
that may be payable in respect of any transfer involved in the issue or delivery
of any Exchange Amount in a name or to any Person other than that of the holder
of the Class B Shares being exchanged, and no such issue or delivery shall be
made unless and until the Person requesting such issue or delivery has paid to
the Trust the amount of any such tax or established, to the reasonable
satisfaction of the Trust, that such tax has been paid.
(ii) Any determination required or permitted to be made
by the Board of Trustees by this Section 6.19.5 shall be final, conclusive and
binding on the holders of Class B Shares.
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6.19.6. REACQUIRED SHARES.
All Class B Shares that shall have been issued and reacquired
in any manner by the Trust shall be restored to the status of authorized but
unissued shares of beneficial interest in the Trust without designation as to
class.
6.19.7. VOTING.
(a) No General Voting Rights. Subject to Section 6.19.7(b),
the holders of Class B Shares shall not be entitled to vote upon any matter
regardless of whether holders of Class A Shares have the right to vote on such
matter.
(b) Special Voting Rights. So long as any Class B Shares are
outstanding, in addition to any other vote or consent of holders of such shares
required by the Declaration, the affirmative vote of at least a majority of the
votes entitled to be cast by the holders of all outstanding Class B Shares,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for that purpose, shall be necessary for effecting or
validating any amendment, alteration or repeal of any of the provisions of the
Declaration that materially and adversely affects the rights of the holders of
the Class B Shares disproportionately to the effect of such amendment,
alteration or repeal on the holders of Class A Shares; provided, however, that
(i) any amendment of the provisions of the Declaration so as to authorize or
create, or to increase the authorized amount of, any class or series of shares
of beneficial interest in the Trust, whether ranking prior to, on a parity with
or junior to the Class B Shares shall be deemed not to materially and adversely
affect the rights of the holders of Class B Shares and (ii) no filing with the
State Department of Assessments and Taxation of Maryland or otherwise in
connection with a merger, consolidation or sale of all or substantially all the
assets of the Trust shall be deemed to be an amendment, alteration or repeal of
any of the provisions of the Declaration unless such filing expressly purports
to amend, alter or repeal this Section 6.19. For the purposes of this paragraph
(b), each Class B Share will have one vote per share.
6.19.8. RECORD HOLDERS.
The Trust and the Transfer Agent may deem and treat the record
holder of any Class B Shares as the true and lawful owner thereof for all
purposes, and neither the Trust nor the Transfer Agent shall be affected by any
notice to the contrary.
6.19.9. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
The Class B Shares constitute shares of beneficial interest in
the Trust that are governed by and issued subject to all the limitations, terms
and conditions of the Declaration applicable to shares of beneficial interest in
the Trust generally, including, without limitation, the terms and conditions
(including exceptions and exemptions) of Article VI of the Declaration
applicable to shares of beneficial interest in the Trust. The foregoing sentence
shall not be construed to limit the applicability to the Class B Shares of any
other term or provision of the Declaration. No restrictions on the
transferability of shares of Class B Shares shall be enforced by the Trust to
the
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extent that such restrictions would otherwise cause the Trust to fail to meet
the requirements of Section 856(a)(2) of the Code.
ARTICLE VII.
Liability of Trustees, Shareholders
and Officers, and Other Matters
7.1 Exculpation of Trustee and Officers. No Trustee, officer or agent
of the Trust shall be liable or held to any personal liability whatsoever for an
obligation or contract of the Trust. The provisions of section 2-405.1 of the
Corporations and Associations Article of the Annotated Code of Maryland (as
amended and interpreted from time to time, and any successor statute thereto),
which sets forth the standard of care required of directors of corporations
organized under the laws of the State of Maryland, and all other statutory or
decisional law (as amended or interpreted from time to time) which sets forth
the standard of care required of officers, employees and agents for corporations
organized under the laws of the State of Maryland, shall be fully applicable to
the Trust, and to the Trustees, officers, employees and agents of the Trust, as
if the Trust were a corporation organized under the laws of the State of
Maryland and its Trustees, officers, employees and agents were respectively,
directors, officers, employees and agents of such corporation.
Notwithstanding the foregoing, to the fullest extent permitted by
Maryland statutory or decisional law, as amended or interpreted from time to
time, no Trustee or officer of the Trust shall be liable to the Trust or its
shareholders for money damages arising out of acts or omissions occurring on or
after June 6, 1988; provided, however, that this provision shall not restrict or
limit the liability of the Trust's Trustees or officers to the Trust or its
shareholders (i) to the extent that it is proved that such Person actually
received an improper benefit or profit in money, property or services, for the
amount of the benefit or profit in money, property or services actually
received, or (ii) to the extent that a judgment or final adjudication adverse to
such Person is entered in a proceeding based on a finding in the proceeding that
such Person's action, or failure to act, was the result of active and deliberate
dishonesty which was material to the cause of action adjudicated in the
proceeding. No amendment to this Section 7.1 or repeal of any of its provisions
shall limit or eliminate the effect of this Section 7.1 with respect to any act
or omission which occurs prior to such amendment or repeal.
7.2 Limitation of Liability of Shareholders, Trustees and Officers. The
Trustees and officers in incurring any debts, liabilities or obligations, or in
taking or omitting any other actions for or in connection with the Trust are,
and shall be deemed to be, acting as Trustees or officers of the Trust and not
in their own individual capacities. Except to the extent provided by applicable
law, no Trustee, Shareholder, officer, employee or other agent shall be liable
for any debt, claim, demand, judgment, decree, liability or obligation of any
kind of, against or with respect to the Trust, arising out of any action taken
or omitted for or on behalf of the Trust and the Trust shall be solely liable
therefor and resort shall be had solely to the Trust Estate for the payment or
performance thereof. Each Shareholder shall be entitled to pro rata indemnity
from the Trust Estate if, contrary to the provisions hereof, such Shareholder
shall be held to any personal liability.
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7.3 Express Exculpatory Clauses and Instruments. In all agreements,
obligations, instruments, and actions in regard to the affairs of this Trust,
this Trust and not the Shareholders, officers, or agents shall be the principal
and entitled as such to enforce the same, collect damages, and take all other
action. All such agreements, obligations, instruments, and actions shall be
made, executed, incurred, or taken by or in the name and on behalf of this Trust
or by the Trustees as Trustees hereunder, but not personally. All such
agreements, obligations, and instruments shall acknowledge notice of this
paragraph or shall refer to this Declaration and contain a statement to the
effect that the name of this Trust refers to the Trustees as Trustees but not
personally, and that no Trustee, Shareholder, officer, or agent shall be held to
any personal liability thereunder; and neither the Trustees nor any officer or
agent shall have any power or authority to make, execute, incur, or take any
agreement, obligation, instrument or action unless the requirements of this
paragraph are met; however, the omission of such provision from any such
instrument shall not render the Shareholders or any Trustee or officer liable
nor shall the Trustees or any officer of the Trust be liable to anyone for such
omission.
7.4 Indemnification of Trustees, Officers, Employees and Other Agents.
The provisions of Section 2-418 of the Corporations and Associations Article of
the Annotated Code of Maryland (as amended and interpreted from time to time,
and any successor statute thereto), which empowers a corporation organized under
the laws of the State of Maryland to indemnify its directors, officers,
employees and other agents against certain liabilities and obligations, and for
the right of directors, officers, employees and other agents of such corporation
to be so indemnified (as amended, interpreted and superseded, "Section 2-418"),
shall be fully applicable to the Trust and to the Trustees, officers, employees
and other agents of the Trust as if the Trust were a corporation organized under
the laws of the State of Maryland and its Trustees, officers, employees and
other agents were, respectively, directors, officers, employees and agents of
such corporation. In each and every situation where the Trust may do so under
said Section 2-418 or other applicable law, the Trust hereby obligates itself to
so indemnify its Trustees, officers, employees and other agents, and in each
case where the Trust must make certain investigations on a case-by-case basis
prior to indemnification, the Trust hereby obligates itself to pursue such
investigations diligently, it being the specific intention of this Section 7.4
to obligate the Trust to indemnify each Person whom the Trust may indemnify to
the fullest extent permitted by Section 2-418 or by other applicable law at any
time and from time to time. The rights accruing to any Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled, nor shall anything contained herein restrict the right of the Trust to
indemnify or reimburse such Person in any proper case even though not
specifically provided for herein, nor shall anything contained herein restrict
such right of a Trustee to contribution as may be available under applicable
law. In addition, and without limiting the generality of the foregoing, the
Trust shall have the power to purchase and maintain insurance on behalf of any
Person entitled to indemnify hereunder against any liability asserted against
him and incurred by him in a capacity mentioned above, or arising out of his
status as such, whether or not the Trust would have the power to indemnify him
against such liability under the provisions hereof.
7.5 Right of Trustees and Officers to Own Shares or Other Property and
to Engage in Other Business. Any Trustee or officer may acquire, own, hold and
dispose of Shares in the Trust, for his individual account, and may exercise all
rights of a Shareholder to the same extent and in the same manner as if he were
not a Trustee or officer. Any Trustee or officer may have personal
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business interests and may engage in personal business activities, which
interest and activities may include the acquisition, syndication, holding,
management, operation or disposition, for his own account or for the account of
others, of interests in Mortgages, interests in Real Property, or interests in
Persons engaged in the real estate business, including serving as a trustee or
officer of any other Real Estate Investment Trust. Subject to the provisions of
Article IV any Trustee or officer may be interested as a trustee, officer,
director, stockholder, partner, member, advisor or employee of, or otherwise
have a direct or indirect interest in, any Person who may be engaged to render
advice or services to the Trust, and may receive compensation from such Person
as well as compensation as Trustee, officer, or otherwise hereunder. None of
these activities shall be deemed to conflict with his duties and powers as
Trustee or officer.
7.6 Transactions Between the Trustees and the Trust.
(a) If subsection (b) of this Section 7.6 is complied with, a contract
or other transaction between the Trust and any corporation, firm or other entity
in which any of the Trustees is a director or has a material financial interest
is not void or voidable solely because of any one or more of the following: (i)
the common directorship or interest; (ii) the presence of the Trustee at the
meeting of the Board of Trustees or a committee of the Board of Trustees which
authorizes, approves or ratifies the contract or transaction; or (iii) the
counting of the vote of the Trustee for the authorization, approval or
ratification of the contract or transaction.
(b) Subsection (a) of this Section 7.6 applies if:
(i) The fact of the common directorship or interest is disclosed or
known to (a) the Board of Trustees or the committee, and the Board of
Trustees or committee authorizes, approves or ratifies the contract or
transaction by the affirmative vote of a majority of disinterested
Trustees, even if the disinterested Trustees constitute less than a
quorum; or (b) the shareholders entitled to vote, and the contract or
transaction is authorized, approved or ratified by a majority of the
votes cast by the shareholders entitled to vote other than the votes of
shares owned of record or beneficially by the interested Trustee or
corporation, firm or other entity; or
(ii) The contract or transaction is fair and reasonable to the
Trust.
(c) Common or interested Trustees, or the Shares owned by them or by an
interested corporation, firm or other entity, may be counted in determining the
presence of a quorum at a meeting of the Board of Trustees or a committee of the
Board of Trustees or at a meeting of the shareholders, as the case may be, at
which the contract or transaction is authorized, approved or ratified.
(d) If a contract or transaction is not authorized, approved or
ratified in one of the ways provided for in subsection (b)(i) of this Section
7.6, the person asserting the validity of the contract or transactions bears the
burden of proving that the contract or transaction was fair and reasonable to
the Trust at the time it was authorized, approved or ratified. This subsection
(d) does not apply
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to the fixing by the Board of Trustees of reasonable compensation for a Trustee,
whether as a Trustee or in any other capacity.
(e) Any procedures authorized by Section 7.4 of this Declaration shall
be deemed to satisfy subsection (b)(i) of this Section 7.6. Any provision of
this Declaration, the Bylaws or any contract, or any transaction, requiring or
permitting indemnification of Trustees, including advances of expenses, is fair
and reasonable to the Trust.
(f) Any Trustee or officer, employee or agent of the Trust may acquire,
own, hold and dispose of Securities of the Trust, for his individual account,
and may exercise all rights of a holder of such Securities to the same extent
and in the same manner as if he were not such a Trustee or officer, employee or
agent. The Trustees shall use their reasonable best efforts to obtain through an
Advisor or other Persons a continuing and suitable investment program,
consistent with the investment policies and objectives of the Trust, and the
Trustees shall be responsible for reviewing and approving or rejecting
investment opportunities presented by the Advisor or such other Persons. So long
as there is such Advisor or other Person, the Trustees shall have no
responsibility for the origination of investment opportunities for the Trust.
Any Trustee or officer, employee, or agent of the Trust may, in his personal
capacity, or in a capacity of trustee, officer, director, stockholder, partner,
member, advisor or employee of any Person, have business interests and engage in
business activities in addition to those relating to the Trust, which interests
and activities may include the acquisition, syndication, holding, management,
operation or disposition, for his own account or for the account of such Person,
of interests in Mortgages, interests in Real Property, or interests in Persons
engaged in the real estate business, and each Trustee, officer, employee and
agent of the Trust shall be free of any obligation to present to the Trust any
investment opportunity which comes to him in any capacity other than solely as
Trustee, officer, employee or agent of the Trust, even if such opportunity is of
a character which, if presented to the Trust, could be taken by the Trust;
provided, however, that the provisions of this sentence shall not extend to any
of such Trustees or agents of the Trust who are affiliates of the Advisor, or to
any officer or employee of the Trust or (at a time when there is no such Advisor
or other Person providing an investment program for the Trust as aforesaid) to
any Trustee of the Trust, in each case who is not acting as a trustee, officer,
director, stockholder, partner, member, advisor or employee of any Person but is
acting for his own personal account. Subject to the provisions of this Section
7.6, any Trustee or officer, employee or agent of the Trust may be interested as
trustee, officer, director, stockholder, partner, member, advisor or employee
of, or otherwise have a direct or indirect interest in, any Person who may be
engaged to render advice or services to the Trust, and may receive compensation
from such Person as well as compensation as Trustee, officer, employee or agent
of the Trust or otherwise hereunder. None of the activities in this paragraph
shall be deemed to conflict with his duties and powers as Trustee, officer,
employee or agent of the Trust.
(g) Nothing contained in this Declaration shall prohibit or in any way
limit any person described in Section 3.2(n) of this Declaration from
contracting with others for the performing of services similar or identical to
those undertaken by such Person pursuant to this Declaration or from conducting
the usual and normal business operations of such Person. The Trustees are not
restricted by this Section 7.6 from forming a corporation, partnership, trust or
other business association owned by the Trustees or by their nominees for the
purpose of holding title to property of the Trust or
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managing property of the Trust providing the Trustees' motive for the formation
of such business association is not their own enrichment.
7.7 Restriction of Duties and Liabilities. To the extent that the
nature of this Trust (that is, a Maryland real estate investment trust) will
permit, the duties and liabilities of Shareholders, Trustees and officers shall
in no event be greater than the duties and liabilities of shareholders,
directors and officers of a Maryland corporation. The Shareholders, Trustees and
officers shall in no event have any greater duties or liabilities than those
imposed by applicable law as shall be in effect from time to time.
7.8 Persons Dealing with Trustees or Officers. Any act of the Trustees
or officers purporting to be done in their capacity as such, shall, as to any
persons dealing with such Trustees or officers, be conclusively deemed to be
within the purposes of this Trust and within the power of the Trustees and
officers. No Person dealing with the Trustees or any of them, or with the
authorized officers, agents or representatives of the Trust, shall be bound to
see to the application, of any funds or property passing into their hands of
control. The receipt of the Trustees, or any of them, or of authorized officers,
agents, or representatives of the Trust, for moneys or other consideration,
shall be binding upon the Trust.
7.9 Reliance. The Trustees and officers may consult with counsel and
the advice or opinion of such counsel shall be full and complete personal
protection to all of the Trustees and officers in respect to any action taken or
suffered by them in good faith and in reliance on and in accordance with such
advice or opinion. In discharging their duties, Trustees and officers, when
acting in good faith, may rely upon financial statements of the Trust
represented to them to be correct by the President or the officer of the Trust
having charge of its books of account, or stated in a written report by an
independent certified public accountant fairly to present the financial position
of the Trust. The Trustees may rely, and shall be personally protected in
acting, upon any instrument or other document believed by them to be genuine.
7.10 Income Tax Status. Anything to the contrary herein notwithstanding
and without limitation of any rights of indemnification or non-liability of the
Trustees herein, said Trustees by this Declaration make no commitment or
representation that the Trust will qualify for the dividends paid deduction
permitted by the Internal Revenue Code, by the Tax-General Article, Section
10-304 (or any successor provision) of the Annotated Code of Maryland, or by any
Rules and Regulations hereunder pertaining to Real Estate Investment Trusts, in
any given year. The failure of the Trust to qualify as a Real Estate Investment
Trust under the Internal Revenue Code or under Maryland law shall not render the
Trustees liable to the Shareholders or to any other person or in any manner
operate to annul the Trust.
ARTICLE VIII.
Duration, Amendment, Termination and
Qualification of Trust
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8.1 Duration of Trust. The Trust shall continue without limitation of
time, unless terminated as provided in Section 8.2.
8.2 Termination of Trust.
(a) The Trust may be terminated by the affirmative vote of the holders
of two-thirds (2/3) in interest of all outstanding Shares entitled to vote
thereon, at any meeting of Shareholders. Upon termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer, or
otherwise dispose of all or any part of the remaining Trust Estate to
one or more persons at public or private sale for consideration which
may consist in whole or in part of cash, securities or other property
of any kind, discharge or pay its liabilities and do all other acts
appropriate to liquidate its business; provided, that any sale,
conveyance, assignment, exchange, transfer or other disposition of more
than fifty percent (50%) of the Trust Estate shall require approval of
the principal terms of the transaction and the nature and amount of the
consideration by vote or consent of the holders of a majority of all
the outstanding Shares entitled to vote thereon.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon the receipt of such releases, indemnities, and
refunding agreements as they deem necessary for their protection, the
Trustees may distribute the remaining Trust Estate, in cash or in kind,
or partly each, among the Shareholders, according to their respective
rights.
(b) After termination of the Trust and distribution to the shareholders
as herein provided, the Trustees shall execute and lodge among the records of
the Trust an instrument in writing, setting forth the fact of such termination,
and the Trustees shall thereupon be discharged from all further liabilities and
duties hereunder, and the rights and interests of all Shareholders shall
thereupon cease.
8.3 Amendment Procedure.
(a) This Declaration may be amended by the vote or written consent of
Shareholders holding a majority of the outstanding Shares entitled to vote
thereon. The Trustees may also amend this Declaration without the vote or
consent of Shareholders as provided in Section 9.6.
(b) A certification, in recordable form, signed by a majority of the
Trustees, setting forth an amendment and reciting that it was duly adopted by
the Shareholders or by the Trustees as aforesaid, or a copy of the Declaration,
as amended, in recordable form, and executed by a majority of the Trustees,
shall be conclusive evidence of such amendment when lodged among the records of
the Trust.
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(c) Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exception from personal liability of the
Shareholders, Trustees, officers, and agents of this Trust.
8.4 Qualification Under the REIT Provisions of the Internal Revenue
Code. It is intended that the Trust shall qualify as a "real estate investment
trust" under the REIT Provisions of the Internal Revenue Code during such period
as the Trustees shall deem it advisable so to qualify the Trust.
ARTICLE IX.
Miscellaneous
9.1 Applicable Law. This Declaration has been executed and acknowledged
by the Trustees with reference to the statutes and laws of the State of Maryland
and the rights of all parties and the construction and effect of every provision
hereof shall be subject to and construed according to statutes and laws of said
State.
9.2 Index and Headings for Reference Only. The index and headings
preceding the text, articles and sections hereof have been inserted for
convenience and reference only and shall not be construed to affect the meaning,
construction or effect of this Declaration.
9.3 Successors in Interest. This Declaration and the Bylaws shall be
binding upon and inure to the benefit of the undersigned Trustees and their
successors, assigns, heirs, distributees and legal representatives, and every
Shareholder and his successors, assigns, heirs, distributees and legal
representatives.
9.4 Inspection of Records. Trust records shall be available for
inspection by Shareholders at the same time and in the same manner and to the
extent that comparable records of a Maryland corporation would be available for
inspection by corporate shareholders under the laws of the State of Maryland.
Except as specifically provided for in this Declaration, Shareholders shall have
no greater right than shareholders of a Maryland corporation to require
financial or other information from the Trust, Trustees or officers. Any Federal
or state securities administration, the State Department of Assessments and
Taxation of Maryland, or other similar authority shall have the right, at
reasonable times during business hours and for proper purposes, to inspect the
books and records of the Trust.
9.5 Counterparts. This instrument may be simultaneously executed in
several counterparts, each of which when so executed shall be deemed to be an
original and such counterparts together shall constitute one in the same
instrument, which shall be sufficiently evidenced by any such original
counterparts.
9.6 Provisions of the Trust in Conflict with Law or Regulations.
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(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any one or more of
such provisions (the "Conflicting Provisions") are in conflict with the REIT
Provisions of the Internal Revenue Code, with other applicable federal laws and
regulations, or with the REIT provisions of the Annotated Code of Maryland, the
Conflicting Provisions shall be deemed never to have constituted a part of the
Declaration; provided, however, that such determination by the Trustees shall
not affect or impair any of the remaining provisions of this Declaration or
render invalid or improper any action taken or omitted (including but not
limited to the election of Trustees) prior to such determination. A
certification in recordable form signed by a majority of the Trustees setting
forth any such determination and reciting that it was duly adopted by the
Trustees, or a copy of this Declaration, with the Conflicting Provisions removed
pursuant to such determination, in recordable form, signed by a majority of the
Trustees, shall be conclusive evidence of such determination when lodged in the
records of the Trust. The Trustees shall not be liable for failure to make any
determination under this Section 9.6(a). Nothing in this Section 9.6(a) shall in
any way limit or affect the right of the Shareholders to amend this Declaration
as provided in Section 8.3(a).
(b) If any provisions of this Declaration shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other provision of this Declaration, and this Declaration shall be carried
out as if any such invalid or unenforceable provision were not contained herein.
9.7 Certifications. The following certifications shall be final and
conclusive as to any persons dealing with the Trust:
(a) A certification of a vacancy among the Trustees by reason of
resignation, removal, increase in the number of Trustees, incapacity, death or
otherwise, when made in writing by majority of the remaining Trustees;
(b) A certification as to the persons holding office as Trustees or
officers at any particular time, when made in writing by the Secretary of the
Trust or by any Trustee;
(c) A certification that a copy of this Declaration or of the Bylaws is
a true and correct copy thereof as then in force, when made in writing by the
Secretary of the Trust or by any Trustee;
(d) The certification referred to in Section 8.3(b) and 9.6(a) hereof;
(e) A certification as to any action by Trustees, other than the above,
when made in writing by the Secretary of the Trust, or by any Trustee.
9.8 Recording and Filing. A copy of this instrument and any other
amendments to the Declaration shall be filed with the State Department of
Assessments and Taxation of Maryland. This Declaration and any amendments may
also be filed or recorded in such other places as the Trustees deem appropriate.
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9.9 Resident Agent. The name and post office address of the resident
agent of the Trust in the State of Maryland is The Corporation Trust, 33 South
Street, Baltimore, Maryland 21202. Said resident is a citizen of the State of
Maryland actually residing therein. The resident agent may be removed, and a
vacancy existing in such office for any reason may be filled by the Board of
Trustees.
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EXHIBIT 2
COMPOSITE CONFORMED
TRUSTEES' REGULATIONS OF
STARWOOD HOTELS & RESORTS
(AS AMENDED THROUGH NOVEMBER 19, 1998)
ARTICLE I
TRUSTEES
SECTION 1. NUMBER. There shall be not less than three (3) nor more than
fifteen (15) Trustees; within such limits, the number of Trustees may be fixed,
increased or decreased from time to time by the Trustees.
SECTION 2. QUALIFYING SHARES NOT REQUIRED. No Trustee need be a
Shareholder.
SECTION 3. QUORUM. A majority of the Trustees shall constitute a
quorum.
SECTION 4. ELECTION. The Trustees shall be divided, with respect to the
time for which they severally hold office, into three classes, as nearly equal
in number as reasonably possible, with each Trustee to hold office until his or
her successor shall have been duly elected and qualified. At each Annual Meeting
of Shareholders (i) Trustees elected to succeed those Trustees whose terms then
expire shall be elected for a term of office to expire at the third succeeding
Annual Meeting of Shareholders after their election, with each Trustee to hold
office until his or her successor shall have been duly elected and qualified,
and (ii) if authorized by a resolution of the Board of Trustees, Trustees may be
elected to fill any vacancy on the Board of Trustees, regardless of how such
vacancy shall have been created.
SECTION 5. VACANCIES. Vacancies occurring among the Trustees (including
vacancies created by increases in number) may be filled by a majority of the
remaining Trustees, though less than a quorum, or by a sole remaining Trustee,
and the person so appointed shall hold office for a term expiring at the Annual
Meeting of Shareholders at which the term of office of the class to which he or
she has been appointed expires and until his or her successor is elected and
qualified.
SECTION 6. PLACE OF MEETING. Each meeting of the Trustees shall be held
at such place within or without the State of Maryland as is fixed from time to
time by resolution of the Trustees (or, in the absence of such resolution, as
specified in the notice of such meeting).
SECTION 7. ANNUAL MEETINGS. Promptly following each Annual Meeting of
Shareholders, a meeting of the Trustees shall be held for the purpose of
electing officers and transacting other business. Notice of such meetings need
not be given.
SECTION 8. REGULAR MEETINGS. Regular meetings of the Board of Trustees
need not be held.
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SECTION 9. SPECIAL MEETINGS. Special meetings of the Trustees may be
called at any time by the Chairman, and the Chairman shall call a special
meeting at any time upon the written request of two (2) Trustees. Written notice
of the time and place of a special meeting shall be given to each Trustee,
either personally or by sending a copy thereof by mail or by telecopier to his
or her address appearing on the books of the Trust or theretofore given by him
to the Trust for the purpose of notice. In case of personal service or notice by
telecopier, such notice shall be so delivered at least twenty-four (24) hours
prior to the time fixed for the meeting. If such notice is mailed, it shall be
deposited in the United States mail at least seventy-two (72) hours prior to the
time fixed for the holding of the meeting. Notice of a meeting may be given by
the Chairman, the Trustees requesting the meeting or the Secretary.
SECTION 10. ADJOURNED MEETINGS. A quorum of the Trustees may adjourn
any Trustees' meeting to meet again at a stated day and hour. In the absence of
a quorum a majority of the Trustees present may adjourn from time to time to
meet again at a stated day and hour prior to the time fixed for the next regular
meeting of the Trustees. Notice of the time and place of an adjourned meeting
need not be given to any Trustee if the time and place is fixed at the meeting
adjourned.
SECTION 11. WAIVER OF NOTICE. The transactions of any meeting of the
Trustees, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice if a quorum is
present and if either before or after the meeting each of the Trustees not
present signs a written waiver of notice or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be lodged with the Trust records or made a part of the minutes
of the meeting.
SECTION 12. ACTION WITHOUT MEETING. Any action required or permitted to
be taken by the Trustees may be taken without a meeting, if a majority of the
Trustees shall individually or collectively consent in writing to such action.
Such written consent or consents shall be lodged with the records of the Trust.
Such action by written consent shall have the same force and effect as a vote of
the Trustees adopted at a meeting duly called and held.
SECTION 13. POWERS AND DUTIES. The powers and duties of the Trustees,
in addition to the powers and duties set forth in the Declaration, are:
(a) Selection and Removal of Officers, Agents and Employees. To select
all the other officers, agents and employees of the Trust, to remove them at
pleasure, either with or without cause, to prescribe for them duties
consistent with the Declaration and the Trustees' Regulations, and to fix
their compensation.
(b) Authorization of Signatures. From time to time to designate the
person or persons authorized to sign or endorse checks, drafts, or other
orders for the payment of money, issued in the name of or payable to the
Trust.
(c) Fixing Principal Office and Place of Meetings. From time to time to
change the location of the principal office of the Trust and from time to
time to designate any place within or without the State of Maryland as the
place at which meetings of Trustees or of the Shareholders shall be held.
(d) General Powers. Generally to exercise such other powers as are
usually vested in directors of corporations organized under the laws of the
State of Maryland.
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SECTION 14. EXECUTIVE COMMITTEE. (a) The Board of Trustees may appoint
two or more trustees to constitute an Executive Committee. One of such trustees
shall be designated as Chairman of the Executive Committee. The Executive
Committee shall have and may exercise all of the rights, powers and authority of
the Board of Trustees, except as expressly limited by the Maryland General
Corporation Law as amended from time to time.
(b) The Executive Committee shall fix its own rules of procedure and
shall meet at such times and at such place or places as it may determine. The
Chairman of the Executive Committee or, in the absence of a Chairman, a member
of the Executive Committee chosen by a majority of the members present, shall
preside at meetings of the Executive Committee, and another member thereof
chosen by the Executive Committee shall act as secretary. A majority of the
Executive Committee shall constitute a quorum for the transaction of business,
and the affirmative vote of a majority of the members present at a meeting shall
be required for any action of the Executive Committee.
SECTION 15. OTHER COMMITTEES. The Board of Trustees may appoint such
other committees as it shall deem advisable and with such authority as the
Board of Trustees shall from time to time determine.
SECTION 16. OTHER PROVISIONS REGARDING COMMITTEES. (a) The Board of
Trustees shall have the power at any time to fill vacancies in, change the
membership of, or discharge any committee.
(b) Members of any committee shall be entitled to such compensation for
their services as from time to time may be fixed by the Board of Trustees. No
committee member who receives compensation as a member of any one or more
committees shall be barred from serving the Trust in any other capacity or from
receiving compensation and reimbursement of reasonable expenses for any or all
such other services.
(c) Unless prohibited by law, the provisions of Sections 11, 12 and 17
of this Article I shall apply to all committees.
SECTION 17. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS. The Board
of Trustees may participate in meetings by means of conference telephone or
similar communications equipment, whereby all trustees participating in the
meeting can hear each other at the same time, and participation in any such
meeting shall constitute presence in person at such meeting. A written record
shall be made of all actions taken at any meeting conducted by a means of a
conference telephone or similar communications equipment.
SECTION 18. TRANSACTIONS WITH INTERESTED PERSONS. (a) Notwithstanding
anything to the contrary contained in these Trustees' Regulations, in addition
to any affirmative vote required either by law, the Partnership Agreement, the
Declaration of Trust of the Trust or these Trustees' Regulations, any
Transaction involving the Trust or any of its subsidiaries or the Realty
Partnership shall require the affirmative vote of a majority of the Trustees
("Disinterested Members") on the Board of Trustees of the Trust who are not
employees, officers, directors, Affiliates or Associates of the Interested
Person who or which is a party to the Transaction.
(b) As used in these Trustee's Regulations:
(i) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
June 25, 1998 (the "Exchange Act");
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(ii) A Person shall "Beneficially Own" and be the "Beneficial
Owner" of any Paired Shares or Units:
(A) which such Person or any of its Affiliates or
Associates beneficially owns, directly or indirectly, within
the meaning of Rule 13d-3 under the Exchange Act; or
(B) which such Person or any of its Affiliates or
Associates has (I) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (II) the right to vote
pursuant to any agreement, arrangement or understanding (but
neither such Person nor any such Affiliate or Associate shall
be deemed to be the Beneficial Owner of any Paired Shares or
Units solely by reason of a revocable proxy granted for a
particular meeting of shareholders, pursuant to a public
solicitation of proxies for such meeting, and with respect to
which Paired Shares or Units neither such Person nor any such
Affiliate or Associate is otherwise deemed the Beneficial
Owner); or
(C) which are beneficially owned, directly or
indirectly, within the meaning of the Rule 13d-3 under the
Exchange Act, by any other Person with which such Person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting (other than solely by reason of a revocable
proxy as described in subparagraph (B) above) or disposing of
any Paired Shares or Units.
(iii) "Corporation" shall mean Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation.
(iv) "Interested Person" shall mean any Person who or which is
the Beneficial Owner, directly or indirectly, of 5% or more of the
outstanding Paired Shares or the outstanding Units or who or which is
an Affiliate or Associate of the Trust, the Corporation or either of
the Partnerships. For the purposes of determining whether a Person is
an Interested Person, the number of Paired Shares or Units deemed to be
outstanding shall include Paired Shares or Units deemed owned through
application of paragraphs (A), (B) and (C) of paragraph (ii) above but
shall not include any other unissued Paired Shares or Units which may
be issuable pursuant to any agreement, arrangement or understanding, or
upon exercise of conversion rights, warrants or options, or otherwise.
(v) "Paired Shares" shall mean the shares of common stock of
the Corporation and the shares of beneficial interest of the Trust
which are paired pursuant to the Pairing Agreement dated June 25, 1980
between the Trust and the Corporation, as amended from time to time.
(vi) "Partnership Agreement" shall mean the Limited
Partnership Agreement of the Realty Partnership, as amended from time
to time.
(vii) "Partnerships" shall mean the Realty Partnership and SLC
Operating Limited Partnership, a Delaware limited partnership.
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(viii) "Person" shall mean any individual, limited
partnership, general partnership, corporation, limited liability
company or any other firm or entity.
(ix) "Realty Partnership" shall mean SLT Realty Limited
Partnership, a Delaware limited partnership.
(x) "Shareholder" shall mean a Person that owns Paired Shares.
(xi) "Transaction" shall mean any contract, sale, lease,
exchange, mortgage, transfer or disposition to or with, or any other
transaction with, any Interested Person, including, without limitation,
any election with respect to the method of payment for an exchange of
Units for Paired Shares, or any action to be taken by the Trust, the
Corporation or the Partnership with respect to the senior debt of the
Realty Partnership.
(xii) "Trust" means Starwood Hotels & Resorts, a Maryland real
estate investment trust.
(xiii) "Units" shall have the meaning set forth in the
Partnership Agreement.
(c) A majority of the Disinterested Members shall have the power and
duty to determine, on the basis of information known to them after
reasonable inquiry, all facts necessary to determine compliance with this
Section 18, including, without limitation, (i) whether a Person is an
Interested Person, (ii) the number of Paired Shares or Units that any Person
Beneficially Owns, and (iii) whether a Person is an Affiliate or Associate
of another. A majority of the Disinterested Members shall have the right to
demand that any Person who is reasonably believed to be an Interested Person
(or who holds of record Paired Shares or Units that any Interested Person
Beneficially Owns) supply the Trust with complete information as to (i) the
record owner(s) of all Paired Shares or Units that such Person who is
reasonably believed to be an Interested Person Beneficially Owns, (ii) the
number of, and class or series of, Paired Shares or Units that such Person
who is reasonably believed to be an Interested Person Beneficially Owns and
the number(s) of the certificate(s), if any, evidencing such Paired Shares
or Units, and (iii) any other factual matter relating to the applicability
or effect of this Section 18, as may be reasonably requested of such Person,
and such Person shall furnish such information within 10 days after receipt
of such demand.
(d) Nothing contained in this Section 18 shall be construed to relieve
any Interested Person from any fiduciary obligation imposed by law.
(e) Notwithstanding anything to the contrary contained in these
Trustees' Regulations this Section 18 may be amended or repealed only by a
majority of Trustees on the Board of Trustees of the Trust who are not
employees, officers, Affiliates or Associates of the Trust, the Corporation,
the Partnerships or any Interested Person.
SECTION 19. INDEPENDENT TRUSTEES. Notwithstanding anything to the
contrary contained in these Trustees' Regulations, not less than a majority of
the Board of Trustees of the Trust shall be composed of "Independent Trustees."
For purposes of this Section 19, an "Independent Trustee" is a Trustee of the
Trust who is not employed by or an affiliate (as defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act), of the Trust, the
Corporation or Starwood Capital Group, L.L.C.
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ARTICLE II
OFFICERS
SECTION 1. ENUMERATION. The officers of the Trust shall be a Chairman,
a President, one or more Vice-Presidents, a Secretary, a Treasurer, and such
other officers as are elected by the Trustees. Officers shall be elected by and
shall hold office at the pleasure of the Trustees. Any two or more offices,
except those of Chairman and President, President and Secretary, or President
and Assistant Secretary, may be held by the same person.
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN. The Chairman shall be the
chief executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the business
of the Trust and its employees and shall have such other powers and duties as
are usually vested in the office of chief executive officer of a corporation.
The Chairman shall, if present, preside at all meetings of the Trustees and of
the Shareholders and exercise and perform such other powers and duties as may be
from time to time assigned to him by the Trustees. The Chairman shall have the
power and authority to execute all written instruments on behalf of the Trust of
every nature whatsoever, and shall be, ex officio, a member of all standing
committees.
SECTION 3. POWERS AND DUTIES OF THE PRESIDENT. The President shall have
such duties and responsibilities for the supervision, direction and control of
the Trust as may be delegated to the President by the Board of Trustees or the
Chairman. The President shall have the power and authority to execute all
written instruments on behalf of the Trust of every nature whatsoever. In the
absence of the Chairman, the President shall preside at all meetings of the
Trustees and of the Shareholders, and shall be, ex officio, a member of all
standing committees.
SECTION 4. POWERS AND DUTIES OF THE VICE PRESIDENTS. In the absence or
disability of the President, the Vice-Presidents in order of their rank as fixed
by the Trustees or, if not ranked, the Vice-President designated by the
Trustees, shall perform all of the duties of the President and when so acting
shall have all the powers of and be subject to all of the restrictions upon the
President. The Vice-Presidents shall have the power and authority to execute on
behalf of the Trust all written instruments of every nature whatsoever. The
Vice-Presidents shall have such other powers and perform such other duties as
are prescribed for them from time to time by the Trustees.
SECTION 5. DUTIES OF THE SECRETARY. The Secretary shall keep full and
complete minutes of the meetings of the Trustees and of the meetings of the
Shareholders and give notice, as required, of all such meetings. The Secretary
shall perform all other duties that pertain to such office and which are
required by the Trustees.
SECTION 6. DUTIES OF THE CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall (i) maintain custody of and keep the books of account of the
Trust; (ii) receive, deposit and disburse funds belonging to the Trust, and
(iii) perform all other duties that pertain to such office and which are
required by the Trustees.
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ARTICLE III
SHAREHOLDERS
SECTION 1. QUORUM. The presence in person or by proxy of Persons
entitled to vote a majority of the voting shares at any meeting of Shareholders
shall constitute a quorum. The Shareholders present at a duly called or held
meeting at which a quorum is present may continue to do business until
adjournment notwithstanding the withdrawal of enough Shareholders to leave less
than a quorum.
SECTION 2. PLACE OF MEETING. Meetings of the Shareholders shall be held
at the principal office of the Trust or at another convenient location within or
without the State of Maryland as is designated by the Trustees or by the written
consent of all Shareholders entitled to vote thereat, given either before or
after the meeting and filed with the Secretary of the Trust.
SECTION 3. ANNUAL MEETING. A regular annual meeting of the Shareholders
shall be held on such date and at such time as may be fixed by the Board of
Trustees.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Shareholders may
be held at any time for any purpose or purposes. Such special meetings may be
called at any time by the Chairman or by the Trustees or by any two or more
Trustees, or by one or more Shareholders holding not less than a majority of the
outstanding Shares of the Trust.
SECTION 5. NOMINATION OF TRUSTEES. Nominations of Persons for election
as Trustees at an annual meeting of the Shareholders may be made at such meeting
only by or at the direction of the Trustees, by any nominating committee or
person(s) appointed by the Trustees, or by any Shareholder entitled to vote for
the election of Trustees at the meeting who complies with the notice procedures
set forth in this Section 5.
Any Shareholder entitled to vote for the election of Trustees may
nominate one or more Persons for election as Trustee at a meeting of
Shareholders only if written notice of such Shareholder's intent to make such
nomination or nominations has been delivered personally to the Secretary at, or
been mailed to the Secretary and received at, the principal executive offices of
the Trust not earlier than the close of business on the 75th day nor later than
the close of business on the 50th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date or if the Trust has not previously held
an annual meeting, notice by the shareholder to be timely must be so delivered
not earlier than the close of business on the 75th day prior to such annual
meeting and not later than the close of business on the later of the 50th day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made by the Trust. Such
Shareholder's notice to the Secretary shall set forth: (i) the name and address
of the Shareholder who intends to make the nominations(s) and of the Person or
Persons to be nominated; (ii) the class and number of Shares that are held of
record, beneficially owned and represented by proxy by such Shareholder as of
the record date for the meeting (if such date then shall have been made publicly
available) and as of the date of such notice; (iii) a representation that such
Shareholder intends to appear in person or by proxy at the meeting to nominate
the Person or Persons specified in the notice; (iv) a description of any
contract, arrangement or understanding between such Shareholder and each nominee
and any other Person or Persons (naming such Person or Persons) pursuant to
which the nomination or nominations are to be made by such Shareholder; (v) such
other information regarding each nominee proposed by such Shareholder as would
be required to be disclosed in a proxy statement used in a solicitation of
proxies for the election of directors which solicitation was subject to the
rules and regulations of the Securities and Exchange
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Commission (the "SEC") under Section 14 of the Exchange Act, as from time to
time amended; and (vi) the consent of each nominee to serve as a Trustee if so
elected.
No Person shall be eligible for election as a Trustee unless as
nominated in accordance with the procedures set forth herein.
SECTION 6. ADJOURNED MEETINGS. Any meeting of Shareholders, whether or
not a quorum is present, may be adjourned from day to day or from time to time
by the vote of a majority of the Shares the holders of which are either present
at the meeting or represented by proxy. The motion for adjournment shall be
lodged with the records of the Trust.
SECTION 7. NOTICE OF REGULAR OR SPECIAL MEETINGS. Written notice
specifying the place, day and hour of any regular or special meeting, the
general nature of the business to be transacted thereof, to the extent required
by law, and all other matters required by law shall be given to each Shareholder
of record entitled to vote, either personally or by sending a copy thereof by
mail or telegraph to his or her address appearing on the books of the Trust or
theretofore given by him to the Trust for the purpose of notice or, if no
address appears or has been given, addressed to the place where the principal
office of the Trust is situated. It shall be the duty of the Secretary to give
notice of each Annual Meeting of the Shareholders at least ten (10) days and not
more than ninety (90) days before the date on which it is to be held. If notice
is not so given by the Secretary, it may be given by any other officer.
Within twenty (20) days after the Trust receives a Shareholder request
for the calling of a special meeting, the Trustees shall designate the date on
which such meeting is to be held and the Secretary shall inform the Shareholders
who make the request of the reasonably estimated costs of preparing and mailing
a notice of the meeting, and on payment of those costs to the Trust, notify each
Shareholder entitled to notice of the meeting. Any such special meeting shall be
held on a date not earlier than the twentieth (20th) day, and not later than the
ninetieth (90th) day, following the date on which such notice is given. If the
date of such special meeting is not so fixed and notice thereof given within
twenty (20) days after the date such Shareholder request is received by the
Trust, the date of such meeting may be fixed by the Person or Persons requesting
the meeting, in which event notice of such meeting shall be given by such Person
or Persons not less than twenty (20), nor more than sixty (60), days before the
date on which the meeting is to be held.
Notwithstanding the foregoing, if as of the date a Shareholder request
for a special meeting is received or within twenty (20) days thereafter, the
Trustees have called or call a meeting of Shareholders (whether annual or
special) for a purpose or purposes other than the purpose(s) stated in the
Shareholder request, the Trustees need not call, and the Secretary need not give
notice of, a separate and additional meeting of Shareholders for the purpose(s)
stated in the Shareholder request if (i) the Trustees determine in good faith
that calling such a separate and additional meeting would require the Trust to
incur undue cost and expense, and (ii) the Secretary notifies both the
requesting Shareholder(s) and all other Shareholders entitled to vote, within
twenty (20) days after the Trust receives the Shareholder request, that the
matter(s) proposed by the requesting Shareholder(s) to be considered at a
special meeting may be proposed and considered at the meeting otherwise called
by the Trustees. In addition, if not later than the thirtieth (30th) day prior
to the date on which any special meeting called by the Trustees pursuant to a
Shareholder request is to be held, the Trustees determine in good faith to
present for consideration by the Shareholders of the Trust one or more matters
other than those proposed by the requesting Shareholder(s) to be considered, the
Trustees may postpone the previously called special meeting for a period of up
to sixty (60) days following the date of which notice of such postponement is
given. Notice of such postponement and of the additional matter(s) to be
considered at such meeting shall be given by the Secretary to all Shareholders
entitled to vote at the meeting not later than the thirtieth (30th) day prior to
the originally scheduled meeting date.
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For purposes of this Section 7, a Shareholder request shall be deemed
received by the Trust when delivered to an officer of the Trust in person or on
the date on which such request is mailed to the Trust, duly addressed to its
principal office.
SECTION 8. NOTICE OF ADJOURNED MEETINGS. It shall not be necessary to
give any notice of the time and place of any adjourned meeting or of the
business to be transacted thereat other than by announcement at the meeting at
which such adjournment is taken.
SECTION 9. PROXIES. The appointment of a proxy or proxies shall be made
by an instrument in writing executed by the Shareholder or his or her duly
authorized agent and filed with the Secretary of the Trust. No proxy shall be
valid after the expiration of eleven (11) months from the date of its execution
unless the Shareholder executing it specifies therein the length of time for
which it is to continue in force, which is no case shall exceed seven (7) years
from the date of its execution. At a meeting of Shareholders all questions
concerning the qualification of voters, the validity of proxies, and the
acceptance or rejection of votes, shall be decided by the secretary of the
meeting unless inspectors of election are appointed pursuant to Section 13 of
this Article III, in which event such inspectors shall pass upon all questions
and shall have all other duties specified in said section.
SECTION 10. CONSENT OF ABSENTEES. The transactions of any meeting of
Shareholders, either annual, special, or adjourned, however called and noticed,
shall be as valid as though had at a meeting duly held after the regular call
and notice if a quorum is present and, if either before or after the meeting,
each Shareholder entitled to vote, not present in person or by proxy, signs a
written waiver of notice or a consent to the holding of such meeting or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be lodged with the Trust records or made a part of the minutes of the meeting.
SECTION 11. VOTING RIGHTS. If no future date is fixed for the
determination of the Shareholders entitled to vote at any meeting of
Shareholders, only Persons in whose names Shares entitled to vote stand on the
stock records of the Trust on the day of any meeting of Shareholders shall be
entitled to vote at such meeting.
SECTION 12. NO CUMULATIVE VOTING. Shareholders shall not be entitled to
cumulate votes in any elections of Trustees of the Trust.
SECTION 13. CONDUCT OF MEETINGS; INSPECTORS OF ELECTION. The presiding
officer at a meeting of the Shareholders shall have all power and authority
vested in a presiding officer by law or practice, including, without limitation,
the authority to determine whether the nomination of any person is made in
compliance with applicable provisions of these Trustees' Regulations (and to
refuse to acknowledge the nomination of any Person not made in such compliance);
to determine whether any item of business proposed to be brought before the
meeting has been properly brought (and to declare that any business not so
brought shall be disregarded and not transacted); to establish rules pertaining
to reasonable time limits and the amount of time that may be taken up in remarks
by any Shareholder or group of Shareholders and otherwise pertaining to the
conduct of the meeting; and to otherwise decide all matters relating to the
conduct of the meeting. The presiding officer may appoint a parliamentarian and
one or more sergeants-at-arms. The parliamentarian may advise the presiding
officer upon matters relating to the conduct of the meeting. The sergeant- or
sergeants-at-arms shall have authority to take any and all actions that such
Persons deem necessary or appropriate to assure that the meeting is conducted
with decorum and in an orderly manner, including, without limitation, authority
to expel or cause the expulsion of any Person who the presiding officer
determines is failing to comply with the rules concerning the conduct of, or is
otherwise disrupting, the meeting.
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In advance of any meeting of the Shareholders, the Trustees may appoint
any one or more Persons (other than nominees for office) to act as inspectors of
election at the meeting or any adjournment thereof. If no inspector of election
is so appointed, the presiding officer of the meeting may, and on the request of
any Shareholder or any Shareholder's proxy shall, appoint one or more such
inspectors of election. The number of inspectors shall be either one (1) or
three (3), as determined by the presiding officer; provided, however, that if
such inspector(s) is or are to be appointed at the meeting on the request of one
or more Shareholders or proxies, the holders of a majority of Shares present (in
person or by duly executed proxy) shall determine whether one (1) or three (3)
inspectors are to be appointed. If the Person appointed as inspector of election
fails to appear at the meeting or fails or refuses to act as inspector, the
presiding officer of the meeting may, and upon the request of any Shareholder or
any Shareholder's proxy shall, appoint a Person to fill that vacancy. The
inspector(s) of election shall:
(a) Determine the number of Shares outstanding and the voting power of
each, the Shares represented at the meeting, the existence of a quorum, and
the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Count and tabulate all vote or consents;
(d) Determine and report to the Trust the results of the voting; and
(e) Do any other acts that may be proper to conduct the election or
vote with fairness to all Shareholders.
On the request of the presiding officer of the meeting or of any
Shareholder or such Shareholder's proxy, the inspector(s) of election shall make
a report in writing of any question or other matter determined by him or them
and execute a certificate of any facts found by him or them.
If there are three (3) inspectors of election, the decision, act,
report or certificate of a majority shall be effective in all respects as the
decision, act, report or certificate of the inspectors."
SECTION 14. BUSINESS. Except as may be otherwise provided by applicable
law, the only business that shall be conducted at any meeting of the
Shareholders (other than matters incident to the conduct of the meeting) shall
be business brought before the meeting by or at the direction of the Trustees or
by a Shareholder who complies with the procedures set forth in this Section 14.
Except as otherwise provided by Section 5 of this Article III or by
applicable law, the only business that shall be conducted at any meeting of the
Shareholders shall (i) have been specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Trustees, (ii) otherwise
be brought before such meeting by or at the direction of the Trustees or the
presiding officer of the meeting, or (iii) be otherwise properly brought before
the meeting by or on behalf of a Shareholder who shall have been a Shareholder
of record on the record date for such meeting, who shall continue to be entitled
to vote thereat, and who shall have complied with the procedures set forth in
the remainder of this Section 14. In addition to any and all other applicable
requirements, for business to be properly brought before a meeting of the
Shareholders by a Shareholder, the Shareholder must have given timely notice
thereof in writing to the Secretary. To be timely, a Shareholder's notice must
be delivered personally or mailed to and received at the principal executive
offices of the Trust (i) in the case of an annual meeting, not earlier than the
close of business on the 75th day nor later than the close of business on the
50th day prior to the first anniversary of the preceding
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year's annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than 30 days or delayed by more than 60 days
from such anniversary date or if the Trust has not previously held an annual
meeting, notice by the stockholder to be timely must be so delivered not earlier
than the close of business on the 75th day prior to such annual meeting and not
later than the close of business on the later of the 50th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made by the Trust, or (ii) in the case of a
special meeting, within ten days of the earlier of (a) the date that notice of
the meeting was mailed in accordance with this Article III or prior public
disclosure of the date of the meeting was made or (b) the date that a request
for a special meeting was made by a Shareholder in accordance with Section 7 of
this Article III.
A Shareholder's notice to the Secretary shall set forth (i) a
description of each item of business the Shareholder proposes to bring before
the meeting and the wording of the proposal, if any, to be submitted for a vote
of the Shareholders with respect thereto; (ii) the name and address of the
Shareholder; (iii) the class and number of Shares held of record, owned
beneficially and represented by proxy by such Shareholder as of the record date
for the meeting (if such date shall then have been publicly disclosed) and as of
the date of such notice; and (iv) all other information that would be required
to be included in a proxy statement filed with the SEC if, with respect to any
such item of business, such Shareholder were a participant in a solicitation
subject to Section 14 of the Exchange Act.
SECTION 15. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of Shareholders may be taken without a
meeting if there is filed with the records of Shareholders meetings a unanimous
written consent which sets forth the action and is signed by each Shareholder
entitled to vote on the matter and a written waiver of any right to dissent
signed by each Shareholder entitled to notice of the meeting but not entitled to
vote at it.
ARTICLE IV
MISCELLANEOUS
SECTION 1. RECORD DATES AND CLOSING OF TRANSFER BOOKS. From time to
time the Trustees may fix a future date as the record date for the purpose of
making any proper determination with respect to Shareholders, including which
Shareholders are entitled to notice of a meeting, to vote at a meeting, to
receive a dividend or to be allocated other rights. Such record date may not be
prior to the close of business on the day the record date is fixed. Except as
may be otherwise set forth in the Section 2-511 of the Corporations and
Associations Article, Annotated Code of Maryland, as in effect from time to time
and as applicable to Maryland corporations, the record date for any
determination shall not be more than 90 days before the date on which the action
requiring the determination will be taken. If a record date is so fixed for a
meeting, to receive a dividend or to be allocated other rights, only
Shareholders of record on the date so fixed shall be entitled to notice of and
to vote at such meeting or to receive such dividend or allotment of rights, as
the case may be, notwithstanding any transfer of Shares on the books of the
Trust after the record date so fixed.
SECTION 2. INSPECTION OF TRUST RECORDS. The share register or duplicate
share register, the books of account, and the minutes of the proceedings of the
Shareholders and Trustees shall be open to inspection upon the written demand of
any Shareholder to the same extent as is permitted by the laws of Maryland for
the inspection of corporate records by corporate shareholders. Such inspection
may be made in person or by an agent or attorney and shall include the right to
make extracts. Demand for inspection shall be made in writing upon the
President, Secretary or Assistant Secretary of the Trust.
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SECTION 3. INSPECTION OF TRUSTEES' REGULATIONS. The Trustees shall keep
at the principal office for the transaction of business of the Trust the
original or a copy of the Trustees' Regulations as amended or otherwise altered
to date, certified by the Secretary, which shall be open to inspection by the
Shareholders at all reasonable times during office hours.
SECTION 4. REPRESENTATION OF SHARES OF CORPORATIONS. The Chairman, the
President or any Vice-President and the Secretary or Assistant Secretary of the
Trust, acting either in person or by a proxy or proxies designated in a written
instrument duly executed by said officers, are authorized to vote, represent,
and exercise on behalf of the Trust all rights incident to any shares of any
corporation standing in the name of the Trust.
SECTION 5. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE. The
provisions of Sections 3-701 to 3-709 of the Corporations and Associations
Article of the Annotated Code of Maryland shall not apply to any shares of
beneficial interest of the Trust now or hereafter held of record or beneficially
held by any person whatsoever, it being the intent of this provision that the
Trust opt out of the aforementioned sections in their entirety and that all
persons and shares of beneficial interest held by such persons be exempted from
such sections to the fullest extent permitted by Maryland law.
ARTICLE V
SEAL
The Trust may have a seal containing the name of the Trust and the
words "Maryland, 1969."
ARTICLE VI
AMENDMENTS
These Trustees' Regulations may be amended or repealed or new or
additional Trustees' Regulations may be adopted only by the vote or written
consent of the Trustees, and the Shareholders shall not have any power to amend
or repeal these Trustees' Regulations or to adopt new or additional Trustees'
Regulations.
ARTICLE VII
DEFINITIONS
All terms defined in the Declaration of Trust of Hotel Investors Trust
dated as of August 15, 1969, as amended from time to time, shall have the same
meaning when used in these Trustees' Regulations.
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EXHIBIT 3
AMENDED AND RESTATED INTERCOMPANY AGREEMENT
AMENDED AND RESTATED INTERCOMPANY AGREEMENT dated as of _________ __,
1999, between Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
(the "Corporation"), and Starwood Hotels & Resorts, a Maryland real estate
investment trust (the "Trust").
WHEREAS the Corporation and the Trust are parties to the Pairing
Agreement dated as of June 25, 1980, as amended as of February 1, 1995 and as of
January 2, 1998 (the "Original Agreement");
WHEREAS the Corporation, the Trust and a wholly owned subsidiary of the
Corporation ("Merger Sub") have entered into the Agreement and Plan of
Restructuring dated as of September 16, 1998 (the "Restructuring Agreement");
WHEREAS, pursuant to the Restructuring Agreement, on the date hereof
Merger Sub is merging into the Trust (the "Merger"), whereupon the separate
existence of Merger Sub will cease and the Trust will continue as the surviving
entity;
WHEREAS, by virtue of the Merger, each outstanding common share of
beneficial interest, par value $.01 per share, of the Trust ("Old Trust Shares")
will be converted into Class B shares of beneficial interest, par value $.01 per
share, of the Trust ("Class B Shares"), and each outstanding common share of
beneficial interest, par value $.01 per share, of Merger Sub will be converted
into Class A shares of beneficial interest, par value $.01 per share, of the
Trust ("Class A Shares");
WHEREAS the Original Agreement provided, among other things, that the
Old Trust Shares and the shares of common stock, par value $.01 per share, of
the Corporation ("Corporation Shares") were paired, such that Old Trust Shares
were transferable only with an equal number of Corporation Shares and vice
versa;
WHEREAS the Trust and the Corporation wish to cause the Class B Shares,
and not the Old Trust Shares, to be attached to the Corporation Shares, so that
Class B Shares are transferable only with an equal number of Corporation Shares
and vice versa;
WHEREAS, in order to provide for the Class B Shares to be attached to
the Corporation Shares, and to make other necessary or appropriate changes, the
Board of Trustees of the Trust and the Board of Directors of the Corporation
have agreed to amend and restate the Original Agreement in its entirety in the
form of this Agreement and directed that this Agreement be submitted to the
shareholders of the Trust at the 1998 Annual Meeting of Shareholders of the
<PAGE> 2
Trust (the "Trust Meeting") and to the stockholders of the Corporation at the
1998 Annual Meeting of Stockholders of the Corporation (the "Corporation
Meeting"); and
WHEREAS this Agreement was duly approved by the shareholders of the
Trust at the Trust Meeting and the stockholders of the Corporation at the
Corporation Meeting;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree:
1. On and after the Effective Time (as defined in the Restructuring
Agreement):
(a) except as provided in Section 10, the Class B Shares and the
Corporation Shares shall not be transferable, and shall not be transferred
on the books of the Trust or of the Corporation, respectively, unless in
connection with such transfer the transferee acquires the same number of
Class B Shares and Corporation Shares (each Class B Share and Corporation
Share, as so attached, being together referred to as a "Unit");
(b) upon presentation to the Trust's transfer agent of any certificate
evidencing ownership of Old Trust Shares issued prior to June 25, 1980 duly
endorsed for transfer or accompanied by a duly executed stock power, there
shall be issued to the transferee a certificate or certificates evidencing
both the number of Class B Shares into which the Old Trust Shares so
transferred were converted in the Merger and the same number of Corporation
Shares, and there shall be issued a certificate or certificates evidencing
both the Class B Shares into which any Old Trust Shares not transferred were
converted in the Merger and the same number of Corporation Shares; and
(c) except as provided in Section 10, neither the Trust nor the
Corporation shall issue or transfer or agree to issue or transfer any Class
B Shares or Corporation Shares unless effective provision is made for the
issuance or transfer to the same person of the same number of Class B Shares
and Corporation Shares and unless the Trust and the Corporation agree on the
manner and basis of allocating the consideration to be received between the
Trust and the Corporation or on the payment by one entity to the other of
cash or other consideration in lieu of a portion of such consideration.
2. Except as provided in Section 10, each certificate issued after the
Effective Time representing Corporation Shares shall have printed on its reverse
side a certificate representing the same number of Class B Shares and shall be
in a form satisfactory to The New York Stock Exchange. A legend shall be placed
on the face or reverse side of each certificate representing ownership of
Corporation Shares and Class B Shares issued on or after the Effective Time
referring to the restrictions on transfer of the Class B Shares and the
Corporation Shares set forth herein.
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<PAGE> 3
3. After the Effective Time, neither the Trust nor the Corporation
shall issue any securities convertible into Class B Shares or Corporation Shares
or issue rights or warrants to purchase such Class B Shares or Corporation
Shares, unless both the Trust and the Corporation take action to the end that
the outstanding Class B Shares and Corporation Shares will be attached to one
another as Units as contemplated herein.
4. If, after the Effective Time, either the Trust or the Corporation
shall declare or pay any distribution consisting in whole or in part of Class B
Shares or Corporation Shares, or subdivide, combine or otherwise reclassify such
Class B Shares or Corporation Shares (each, a "Unit Adjustment Event"), the
number and the classes of securities comprising a Unit shall be adjusted such
that each Unit shall consist of the number of Class B Shares, the number of
Corporation Shares and the number of any other shares of beneficial interest in
the Trust or shares of stock of the Corporation that a holder of a Unit would
have held or have been entitled to receive after giving effect to such Unit
Adjustment Event.
5. After the Effective Time, neither the Trust nor the Corporation will
be a party to any merger, consolidation, sale of assets, liquidation or other
form of reorganization pursuant to which either the Class B Shares or the
Corporation Shares are converted, redeemed or otherwise changed unless the other
entity either is also a party to such transaction or waives its right hereunder
to be such a party.
6. The Trust and the Corporation agree to appoint the same banks or
trust companies as transfer agents and the same banks or trust companies as
registrars for the Class B Shares and the Corporation Shares.
7. The Trust and the Corporation shall use their best efforts to effect
(in the case of the Class B Shares) and to maintain the listing of the Class B
Shares and Corporation Shares on The New York Stock Exchange.
8. This Agreement may be amended by action of the Trustees of the Trust
and the Board of Directors of the Corporation without the consent of any holder
of Units or of any other person; provided, however, that no such amendment may
materially and adversely affect the rights of the holders of the Class B Shares
contemplated by Section 10 (or this Section 8) without the prior approval of the
holders of a majority of the then outstanding Class B Shares.
9. In the event that (x) the Trust issues Excess Trust Shares, par
value $.01 per share, or Excess Trust Preferred Shares, par value $.01 per
share, of the Trust ("Excess Shares") or the Corporation issues shares of Excess
Common Stock, par value $.01 per share, or Excess Preferred Stock, par value
$.01 per share, of the Corporation ("Excess Stock"), and (y) the shares of
beneficial interest in the Trust and the shares of stock of the Corporation
which were converted into such Excess Shares and such Excess Stock,
respectively, comprised a Unit immediately prior to such conversion, then in
addition to, and not in any respect in limitation of,
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the provisions of the Declaration of Trust of the Trust and the charter of the
Corporation (as each may be amended from time to time):
(i) such Excess Shares and such Excess Stock shall not be transferable,
and shall not be transferred on the books of the Trust or of the
Corporation, respectively, unless in connection with such transfer the
transferor transfers and the transferee acquires a number of Excess Shares
and a number of shares of Excess Stock in a 1:1 proportion (or, from and
after the occurrence of a United Adjustment Event, in such proportion as
shall equal the proportion of Class B Shares and Corporation Shares then
comprising a Unit);
(ii) neither the Trust nor the Corporation shall issue or transfer or
agree to issue or transfer any Excess Shares or Excess Stock unless
effective provision is made for the issuance or transfer to the same person
of a number of Excess Shares and a number of shares of Excess Stock in a 1:1
proportion (or, from and after the occurrence of a Unit Adjustment Event, in
such proportion as shall equal the proportion of Class B Shares and
Corporation Shares then comprising a Unit); and
(iii) each certificate evidencing Excess Stock shall have printed on
its reverse side a certificate evidencing the appropriate number of Excess
Shares. A legend shall be placed on the face or reverse side of each
certificate evidencing ownership of Excess Shares and Excess Stock referring
to the restrictions on transfer of the Excess Shares and Excess Stock set
forth herein.
10. If a Tax Event, a Creditor Event or any Other Event (each as
defined below) shall occur and be continuing, or at any time after the date that
is five years after the Effective Time, the Corporation, at its sole option, but
solely in accordance with the Declaration of Trust of the Trust (as it may be
amended from time to time), will have the right to exchange (the "Exchange
Right") for all or any portion of the outstanding Class B Shares cash,
Corporation Shares, or other property with a fair market value, in the good
faith judgment of the Board of Trustees of the Trust, at least equal to the fair
market value of the Class B Shares being exchanged. Notwithstanding anything to
the contrary contained in this Agreement, (i) upon exercise of the Exchange
Right, the Corporation may acquire Class B Shares without acquiring any
Corporation Shares; (ii) any Class B Shares acquired by the Corporation upon
exercise of the Exchange Right may be transferred (and may be transferred by any
transferee of such Class B Shares) without any requirement that the transferee
acquire any Corporation Shares; and (iii) in connection with the exercise of the
Exchange Right, the Corporation may issue Corporation Shares without any
requirement that the Trust issue any Class B Shares. In connection with the
exercise of the Exchange Right, the Board of Directors of the Corporation, in
its sole discretion and without the consent of the Trustees of the Trust or the
holders of Units, may amend this Agreement to provide for any adjustments to the
number and the classes of securities comprising a Unit that it deems necessary
or appropriate.
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"Tax Event" shall mean (i) the good faith determination by the Board of
Trustees of the Trust, after consultation with counsel experienced in such
matters, that, as a result of any amendment to, or change in (including any
enacted prospective amendment or change), the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the Effective Time, there is a substantially
increased likelihood that (A) dividends payable by the Trust are not, or within
90 days after the date of such determination, will not be, deductible by the
Trust, in whole or in part, for United States federal income tax purposes, or
(B) the Trust is not, or within 180 days after the date of such determination
will not be, taxable as a "real estate investment trust" for United States
federal income tax purposes (a "REIT") or (ii) the Trust revokes or terminates
or states its intention to revoke or terminate its election to be taxed as a
REIT.
"Creditor Event" shall mean the occurrence of one or more material
defaults (whether or not any applicable cure period has expired), as determined
in good faith by the Board of Directors of the Corporation or the Board of
Trustees of the Trust, under any agreement or instrument governing a material
amount of indebtedness of the Trust, the Corporation or any of their
subsidiaries, including, without limitation, the Credit Agreement, dated as of
February 23, 1998, among the Corporation, the Trust, the Realty Partnership and
ITT, certain additional borrowers, various lenders and Lehman Brothers
Commercial Paper Inc., as Syndication Agent, and Bankers Trust Company and The
Chase Manhattan Bank, as Administrative Agents, together with the related
documents thereto (including any guarantee agreements and security documents),
in each case as such agreements may be amended (including any amendment and
restatement thereof), supplemented, replaced, refinanced or otherwise modified
from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder or adding or deleting subsidiaries of
the Corporation or the Trust as additional borrowers or guarantors thereunder)
all or any portion of the indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Other Event" shall mean any of the following: (i) the consummation of
any public offering or distribution of equity securities of the Trust (other
than as Units), (ii) the consummation of any transaction or series of
transactions that results in the Corporation beneficially owning securities
carrying less than 50% of the aggregate voting power of all the outstanding
voting securities of the Trust, (iii) consummation by the Corporation of any
transaction or series of related transactions in which stock of the Corporation
or securities convertible into or exchangeable or exercisable for stock of the
Corporation are issued, if the stock of the Corporation has or will have upon
issuance voting power or value equal to or in excess of 20% of the voting power
or value, respectively, of the stock of the Corporation outstanding before the
issuance of such stock of the Corporation or securities convertible into or
exchangeable or exercisable for stock of the Corporation or (iv) any change
(including any prospective change) after the Effective Time in the accounting
principles applicable to the
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preparation of the financial statements filed by the Trust or the Corporation
with the Securities and Exchange Commission that, in the good faith
determination of the Board of Trustees of the Trust or the Board of Directors of
the Corporation, respectively, has or would have a material adverse effect on
the Trust or the Corporation in the event the Exchange Right were not exercised,
but which effect would be mitigated by such exercise.
11. This Agreement, except for the provisions of Section 8, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
STARWOOD HOTELS & RESORTS
By:
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
By:
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