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Exhibit 10.47
FORWARD STOCK CONTRACT
To: Starwood Lodging Trust
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Mr. Xxxxxx Xxxxx
To: Starwood Lodging Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxx
From: Union Bank of Switzerland, London Branch
c/o UBS Securities LLC, as agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Date: 13 October 1997
Ladies and Gentlemen,
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern. References herein to the "Transaction" shall be deemed to be references
to a "Swap Transaction" solely for the purposes of the 1991 ISDA Definitions.
This Confirmation supplements, forms a part of, and is subject to, the ISDA
Master Agreement dated as of 13 October 1997, as amended and supplemented from
time to time (the "Agreement"), between you and us. All provisions contained in
the Agreement govern this Confirmation except as expressly modified below. In
the event of any inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purposes of this
Transaction.
The Agreement and each Confirmation thereunder will be governed by and construed
in accordance with the laws of the State of New York without reference to choice
of law doctrine.
I. THE TRANSACTION
Starwood Lodging Trust, a Maryland real estate investment trust (the "Trust"),
Starwood Lodging Corporation, a Maryland corporation ("SLC") (the Trust and SLC
being sometimes collectively referred to as the Company) and Union Bank of
Switzerland, London Branch ("UBS") acting through UBS Securities LLC as its
agent for each purchase or sale of Securities ("UBS LLC"), hereby agree to
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FORWARD STOCK CONTRACT
make the payments and deliveries provided for in Sections III, IV and V hereof,
all on the terms more particularly specified herein (this "Confirmation").
II. DEFINITIONS
For the purposes of this Confirmation, the following terms shall have the
meanings set opposite:
Adjustments: In the event of:
(a) a subdivision, consolidation or
reclassification of the Paired Shares, or a free
distribution or dividend of any Paired Shares to
all existing holders of Paired Shares by way of
bonus, capitalization or similar issue;
(b) a distribution or dividend to all existing
holders of Paired Shares of (i) additional Paired
Shares or (ii) other share capital or securities
granting right to payment of dividends and/or the
proceeds of liquidation of the Company equally or
proportionally with such payments to holders of
Paired Shares or (iii) any other type of
securities, warrants or other assets, in any case
for payment (cash or otherwise) at less than the
prevailing market price; or
(c) any other event that has a diluting or
concentrative effect on the value of the Underlying
Shares (other than (i) the issuance by the Company
to its employees, officers and directors of options
to purchase Paired Shares, restricted Paired Shares
or limited partnership units of SLC Operating
Limited Partnership and SLT Realty Limited
Partnership or (ii) the issuance by the Company of
Paired Shares for cash or in connection with any
acquisition, merger, exchange offer or similar
transaction, in each case approved by the Boards of
Directors of SLC and the Trust).
an adjustment shall thereupon be effected to the
Forward Price and/or the Underlying Shares at the
time of such event with the intent that following
such adjustment, the value of this Transaction is
economically equivalent to the value immediately
prior to the occurrence of the event causing the
adjustment.
Calculation Agent: UBS, whose calculations and determinations shall be
made in a commercially reasonable manner and shall
be binding absent manifest error; provided that the
Company my dispute any determination, adjustment or
calculation by the Calculation Agent, or failure by
the Calculation Agent to make any determination,
adjustment or estimate required by this
Confirmation, by notice to the Calculation Agent
promptly following the day notice from the
Calculation Agent to the Company of such
determination, adjustment or calculation is
effective or at any time the Company believes that
the Calculation Agent has failed to make a
determination, adjustment or calculation required
by this Confirmation. If such dispute cannot be
resolved within three Business Days following the
day on which
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FORWARD STOCK CONTRACT
the Company's notice to the Calculation Agent is
effective, then (i) the relevant party shall pay
the amount, if any, that is not in dispute and (ii)
the parties shall agree upon and appoint an
independent third party to resolve the dispute, the
determination of which shall be final and binding
absent manifest error.
Calculation Period: Means each period commencing on and including:
(i) in the case of the first Calculation Period,
the Effective Date and ending on but excluding the
first Interim Settlement Date, and
(ii) for each period thereafter, an Interim
Settlement Date and ending on but excluding the
earlier of the next following Interim Settlement
Date or Day S.
If there is a Partial Settlement, then (i) the
Calculation Period for the Settlement Shares
covered by such Partial Settlement Share shall end
on Day S for such Partial Settlement and (ii) the
Calculation Period for the remaining Underlying
Shares shall be determined without regard to such
Partial Settlement.
Collateral Release Shares: Paired Shares delivered pursuant to Section V.C.
Collateral Valuation Date: In the event that the Company chooses to post cash
collateral pursuant to Section V. or VI. any day
upon which the amount of collateral required is
calculated.
Compounding Period: Means each period commencing on and including:
(i) in the case of the first Compounding Period,
the Effective Date and ending on but excluding the
first Reset Date, and
(ii) for each period thereafter, a Reset Date and
ending on (but excluding) the earlier of the next
following Reset Date or Day S.
If there is a Partial Settlement, then(i) the
Compounding Period for the Settlement Shares
covered by such Partial Settlement shall end on Day
S for such Partial Settlement and (ii) the
Compounding Period for the remaining Underlying
Shares shall be determined without regard to such
Partial Settlement.
Customer Account: the account established in favor of the Company
pursuant to the Customer Account Agreement dated
the date hereof between the Company and UBS
Securities LLC
Daycount Actual/360
Day S: For Settlement pursuant to Section III. or VI. or
Interim Net Stock Settlement pursuant to Section
IV., the day upon which settlement activities shall
begin.
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FORWARD STOCK CONTRACT
Dividend Amount: A) Means, on each Reset Date or Day S an amount in
U.S. Dollars equal to:
(i) the sum of all cash distributions paid on a
single Common Share during the relevant Compounding
Period; plus
(ii) an amount representing interest that could
have been earned on such distributions at the LIBOR
rate plus Spread for a Designated Maturity of 1
month for the period from the date that such
distributions would have been received by a holder
of such Paired Shares until such Reset Date, or Day
S, as the case may be.
B) Separately, and not included in Dividend Amount,
UBS will cause UBS LLC to pay to the Company on the
Business Day after the relevant dividend payment
date declared by the Company's Board of Directors,
(i) all cash dividends on Paired Shares that have
gone ex-dividend, but on which dividends have not
been paid, prior to the end of the final
Compounding Period for any settlement, based on a
number of Paired Shares equal to the number of
Settlement Shares for such settlement, (ii) all
cash dividends received by UBS at any time, on
Paired Shares delivered by the Company pursuant to
Section III. E. that have gone ex-dividend after
Day S but prior to the end of the Unwind Period for
any settlement, and (iii) all cash dividends paid
on Paired Shares held in the Customer
Account.
Effective Date: 15 October 1997
Exchange Trading Day: Each day on which the Relevant Exchange is open for
trading.
Forward Price: On each Reset Date or Day S, the Forward Price
shall be determined for such day by:
a) multiplying the Initial Price for the
Compounding Period by the sum of
1 plus (i) LIBOR; determined as of the previous
Reset Date for a Designated Maturity of 1 month,
plus (ii) Spread; and
b) subtracting the Dividend Amount at that date;
provided however that if the Company delivers
Interim Settlement Shares pursuant to Section IV.
or Collateral Release Shares pursuant to Section
V.C. during any Calculation Period, the Forward
Price for purposes of determining the Initial Price
for the first Compounding Period during such
Calculation Period, shall be adjusted to a price
equal to the closing price of the Paired Shares on
the Exchange Trading Day immediately prior to the
most recent Interim Settlement Date, adjusted up
for any positive result or down for any negative
result of the following formula:
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(ii) the Interim Settlement Amount for the most
recent Interim Settlement Date.
minus,
(i) (a) the number of Interim Settlement Shares or
Collateral Release Shares, as the case may be,
times (b) the average closing price of the Paired
Shares on the five (5) Exchange Trading Days
immediately following the receipt of the Interim
Settlement Shares by UBS pursuant to Section IV.A.
or the Collateral Release Shares pursuant to
Section V.C.
such result divided by,
(iii) the number of Underlying Shares.
Initial Price: Means,
a) for the Compounding Period ending on the first
Reset Date, an amount in U.S. Dollars equal to
$57.25, and
b) for each subsequent Reset Date, the Forward
Price as calculated on or adjusted as of the prior
Reset Date.
Interim Settlement Dates: 15 January 1997, 15 April 1998, 15 July 1998,
subject to adjustment in accordance with the
Modified Following Business Day convention.
Interim Settlement Amount: on any Interim Settlement Date, the product of (a)
the number of Underlying Shares, and (b) the amount
by which the Forward Price exceeds the closing
price of the Paired Shares on the Exchange Trading
Day immediately prior to such Interim Settlement
Date.
Interim Settlement Shares: (i) 110% times (ii) Interim Settlement Amount
divided by (iii) the closing price of the Paired
Shares on the Exchange Trading Day immediately
prior to such Interim Settlement Date.
LIBOR means USD-LIBOR-BBA as such term is defined in the
Agreement.
Mandatory Unwind Date: In the case of a Mandatory Unwind Event specified
in clause (i) or the definition thereof, 1 Exchange
Trading Day after such Mandatory Unwind Event
occurs. In the case of a Mandatory Unwind Event
specified in clause (ii) of such provision, the
date specified in the notice delivered to the
Company (which date shall be at least 5 Business
Days after the date such notice becomes effective).
Mandatory Unwind Mandatory
Thresholds: Unwind Thresholds Unwind Share Limit
$40.00 up to 25% of Underlying
Shares
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FORWARD STOCK CONTRACT
$37.00 50%
$35.50 75%
$34.00 100%
Maturity Date: One (1) year after the Effective Date, subject to
extension upon the written approval of UBS in its
sole discretion.
Paired Shares: Shares of beneficial interest, $0.01 par value per
share, of the Trust (the "Trust Shares") and shares
of Common Stock, par value $0.01 per share, of SLC
(the "SLC Shares"), which are paired and traded as
a unit consisting of one (1) Trust Share and one
(1) SLC Share.
Partial Settlement: Any contemplated settlement, pursuant to sections
III. or VI., in which the designated Settlement
Shares are less than Underlying Shares.
Preliminary Net Stock
Settlement Shares: All Paired Shares delivered by the Company pursuant
to Section III.E.2 and III.E.3(b) (other than
Paired Shares delivered after the Unwind Period).
Relevant Exchange: Means, with respect to any Exchange Trading Day,
the principal Stock Exchange on which the Paired
Shares are traded on that day.
Reset Dates: 13 November 1997, 13 December 1997, 13 January
1998, 13 February 1998, 13 March 1998, 13 April
1998, 13 May 1998, 13 June 1998, 13 July 1998, 13
August 1998, 13 September 1998, 13 October 1998,
subject to adjustment in accordance with the
Modified Following Business Day convention.
Settlement Amount: The product of the Settlement Price and the
Settlement Shares.
Settlement Disruption Event: Means an event beyond the control of the parties as
a result of which The Depository Trust Company
("DTC") or any successor depository cannot effect a
transfer of the Settlement Shares or the Paired
Shares. If there is a Settlement Disruption Event
on a Valuation Date, then the transfer of the
Paired Shares that would otherwise be due to be
made by UBS LLC for the account of UBS or the
transfer of the Paired Shares that would otherwise
be due to be made by the Company, as applicable, on
that date shall take place on the first succeeding
Exchange Trading Day on which settlement can take
place through DTC, provided that if such a
Settlement Disruption Event persists for five
consecutive Business Days, then the Party obliged
to deliver such Settlement Shares shall use its
best efforts to cause such Shares to be delivered
promptly thereafter to the other Party in any
commercially reasonable manner.
Settlement Price: If Day S is a Reset Date, the Forward Price. If Day
S is not a Reset Date, the Forward Price adjusted
for LIBOR breakage adjustments (either positive or
negative) for the Settlement Shares for the period
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FORWARD STOCK CONTRACT
from Day S to the next following Reset Date. Any
breakage adjustments shall be calculated by the
Calculation Agent in accordance with normal
industry standards.
Settlement Shares: The number of shares up to the full number of
Underlying Shares subject to settlement under
Section III. or VI.
Spread: 1.50% per annum.
Stock Exchange: Means the New York Stock Exchange, the American
Stock Exchange or NASDAQ.
Stock Settlement
Unwind Price: The daily average closing price of the Paired
Shares for Exchange Trading Days during the Unwind
Period.
Trade Date: 13 October 1997
UBS LLC: UBS Securities LLC
Unwind Period: In the event of Stock Settlement or Net Stock
Settlement, such number of Exchange Trading Days
(which shall not be more than 70; (subject to
change based on mutual agreement) beginning on Day
S; provided that UBS may extend such period (such
extension not to exceed 10 Exchange Trading Days)
or upon the occurrence of a Market Disruption
Event.
Underlying Shares: 2,185,000 Paired Shares of the Company (ticker
"HOT"), subject to adjustment in the event of
Partial Settlements.
Valuation Date: In the case of determining any Cash Settlement
value, Net Stock Settlement Shares or Stock
Settlement Shares, Day S, the day preceding Day S
and all Exchange Trading Days during the Unwind
Period; in the case of determining any Preliminary
Stock Settlement Shares or Preliminary Net Stock
Settlement Shares, the Exchange Trading Day
immediately preceding Day S; in the case of
determining the Interim Settlement Amount and
related calculation, the day prior to the Interim
Settlement Date, and the 5 Exchange Trading Days
following receipt of Interim Settlement Shares by
UBS.
Valuation Time: 4:00 pm EST, or in the event the Relevant Exchange
closes early, such closing time.
III. SETTLEMENT
A. NOTICE AND PROCEDURES
1. The Company may on any Exchange Trading Day up to and including the
Maturity Date, upon the giving of at least five (5) Business Days telephonic
notice to UBS (the "Settlement
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Notice"), settle all or part of this Transaction. The Settlement Notice shall
specify:
(i) the Settlement Shares,
(ii) the settlement method (Cash, Stock or Net Stock Settlement,
as such methods are described below);
(iii) the number of Exchange Trading Days in the Unwind Period,
and
(iv) Day S, which must be an Exchange Trading Day; provided
however, that if Cash or Net Stock Settlement is selected and in
UBS' reasonable judgement the settlement of the Settlement Shares
would potentially violate or contravene any legal or regulatory
prohibition or requirement applicable to UBS or cause UBS to
contravene any established UBS corporate policy or compliance
policy which relates to any legal or regulatory prohibition or
requirement applicable to UBS (other than any corporate policy
limiting the amount of UBS's investment in another entity) then
UBS shall at least three (3) Business Days prior to the proposed
Day S, notify the Company telephonically (confirmed by writing)
of any such impediment and its estimate of the period during
which such impediment will preclude UBS' ability to settle all or
part of this Transaction.
The Settlement Notice shall be effective only if the notice
requirements specified above are fulfilled; provided, that if no
settlement method is specified, then the settlement method shall
be deemed to be Cash Settlement and provided further that the
Company may upon telephonic notice to UBS at least one (1)
Exchange Trading Day prior to the proposed Day S withdraw any
Settlement Notice.
In the case of any Partial Settlement, following such settlement the
number of Underlying Shares to which this Transaction shall relate shall
be adjusted, as of Day S, by subtracting the number of Settlement Shares
from the number of Underlying Share (as the same may have been adjusted
prior to such Partial Settlement) immediately prior to such Day S. The
Settlement Shares shall not be subject to forward accretion and shall be
treated separately from the remaining Underlying Shares during any
Unwind Period.
2. On Day S, the Settlement Price for the Settlement Shares and the
Settlement Amount shall be determined for Day S.
3. The Settlement Amount shall be settled pursuant to the settlement method
(B, C, or D of this section III.) selected by the Company in its sole
discretion.
4. If settlement with respect to the Settlement Shares shall occur pursuant
to Section III.A1 (but not as a result of a Mandatory Unwind Event) on
or before the 180th day following the Effective Date, then the
Settlement Price for purposes of such settlement shall be increased by
any positive amount, calculated by UBS as follows:
Spread x Forward Price x (180 - calendar days since Trade Date)
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5. It shall be a condition precedent to any right of the Company to elect
Stock Settlement (III. C. below) or Net Stock Settlement (III. D.
below), that the Company must (i) notify UBS of such
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election at least 5 Business Days prior to Day S and (ii) prior to Day
S, cause to be filed with the Securities and Exchange Commission (the
"Commission") and cause to become effective under the Securities Act of
1933, as amended (the "Securities Act") a registration statement that
results in UBS being able to resell all Paired Shares to be delivered by
the Company to UBS LLC for the account of UBS in effecting such Stock
Settlement or Net Stock Settlement without further registration under
the Securities Act of 1933, as amended, such registration statement to
include one or more preliminary prospectuses, prospectuses, and any
amendments and supplements thereto such that any preliminary prospectus
or prospectus, as amended or supplemented, shall not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they are made. In
addition, the Company shall not deliver any Paired Shares to UBS LLC for
the account of UBS pursuant to Sections IV.A or IV.D. below unless at
the time of such delivery a registration statement has become effective
under the Securities Act that results in UBS being able to resell such
Paired Shares without further registration under the Securities Act,
such Registration Statement to include one or more preliminary
prospectuses, prospectus and any amendments or supplements thereto such
that any preliminary prospectus or prospectus, as amended or
supplemented, shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they are made. The Company further agrees that
it will cause any such Registration Statement referred to in this
paragraph 5 of Section III.A. to remain in effect until the earliest of
the date on which (i) all Paired Shares issued pursuant hereto and not
required to be delivered to the Company hereunder have been sold by UBS
LLC for the account of UBS and UBS agrees to notify the Company of such
fact, within two (2) Business Days of its occurrence, (ii) UBS LLC for
the account of UBS is able to sell the Paired Shares subject thereto
under Rule 144(k), or (iii) UBS has advised the Company that it no
longer requires that such registration statement be effective; provided,
however, that in no event shall the Company be obligated to keep such
Registration Statement effective for more than 10 Exchange Trading Days
after the end of the applicable Unwind Period.
B. CASH SETTLEMENT
If the Company elects Cash Settlement, the Company shall settle by
delivering cash in an amount equal to the Settlement Amount in exchange
for the Settlement Shares ("Cash Settlement") on the Exchange Trading
Day immediately succeeding Day S. UBS shall cause UBS LLC for the
account of UBS to deliver the Settlement Shares to the Company on the
Exchange Trading Day immediately succeeding Day S upon receipt of such
Cash Settlement.
C. STOCK SETTLEMENT
If the Company elects to settle the Settlement Amount by delivering
Paired Shares in exchange for the Settlement Shares ("Stock
Settlement"), the number of Paired Shares to be delivered (the "Stock
Settlement Shares") shall be equal to (a) the Settlement Amount divided
by (b) the Stock Settlement Unwind Price. The mechanics for settlement
are set forth in Section III. E. below and Article VI.
D. NET STOCK SETTLEMENT
If the Company elects to settle the Settlement Amount on a net stock
basis ("Net Stock
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Settlement"), the number of net stock settlement shares (the "Net Stock
Settlement Shares") shall equal:
i) the number of Settlement Shares, times
ii) the Settlement Price minus the Stock Settlement Unwind
Price, divided by
iii) the Stock Settlement Unwind Price.
If such calculation yields a negative number, this shall indicate the
number of Paired Shares to be delivered from UBS LLC for the account of
UBS to the Company. The mechanics for settlement are set forth in
Section III. E. below and Article VI. (This section does not apply for
purposes of Interim Net Stock Settlement.)
E. STOCK AND NET STOCK SETTLEMENT MECHANICS
1. Preliminary Stock Settlement:
If the Company has chosen Stock Settlement, the Company shall deliver
to UBS LLC for the account of UBS, by 11:00 a.m. on Day S, that
number of Paired Shares (the "Preliminary Stock Settlement Shares"),
equal to the product of (i)(a) the Settlement Amount divided by (b)
the closing price of the Paired Shares on the Exchange Trading Day
immediately preceding Day S, times (ii) 110%. Upon receipt of the
Preliminary Stock Settlement Shares, UBS will cause UBS LLC to
deposit the Settlement Shares in the Company's Customer Account.
2. Preliminary Net Stock Settlement:
If the Company has chosen Net Stock Settlement and if the Settlement
Price exceeds the closing price of the Paired Shares on the Exchange
Trading Day immediately preceding Day S, the Company shall deliver to
UBS LLC for the account of UBS by 11:00 a.m. on Day S, that number of
Paired Shares (the "Preliminary Net Stock Settlement Shares) equal to
(i)(a) the number of Settlement Shares times (b) the difference
between the Settlement Price and the closing price of the Paired
Shares on the Exchange Trading Day immediately preceding Day S
divided by (ii) the closing price of the Paired Shares on the
Exchange Trading Day immediately preceding Day S times (iii) 125%. If
the closing price of the Paired Shares on the Exchange Trading Day
immediately preceding Day S exceeds the Settlement Price, the Company
shall not be required to deliver any shares to UBS LLC for the
account of UBS under this subsection III.E.2.
3. By 11:00 a.m. on every fifth (5th) Exchange Trading Day (other than
the final Exchange Trading Day) during the Unwind Period and on the
Business Day following the final Exchange Trading Day of the Unwind
Period:
A. For Stock Settlement:
Stock Settlement Shares shall be calculated as if such Exchange
Trading Day were Day S, except that (a) there shall be no
recalculation of the Settlement Amount and (b) for purposes of
calculating the Stock Settlement Unwind Price, the Unwind
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Period shall be deemed to have ended on the Exchange Trading Day for
which the calculation is made.
(i) if (a) Stock Settlement Shares (calculated as set forth above)
are greater than (b) the sum of (x) Preliminary Stock Settlement
Shares plus (y) any shares previously delivered pursuant to this
subparagraph (i), then the Company shall deliver that number of
Paired Shares equal to the difference between (a) and (b) to UBS LLC
for the account of UBS, and
(ii) as of the final day of the Unwind Period, if (a) the sum of (x)
Preliminary Stock Settlement Shares plus (y) any shares previously
delivered pursuant to this settlement under subparagraph (i), above
is greater than Stock Settlement Shares, then UBS LLC, for the
account of UBS, shall deliver that number of Paired Shares equal to
the difference between (a) and (b) above to the Company's Customer
Account,
B. For Net Stock Settlement:
Net Stock Settlement Shares shall be calculated as if such Exchange
Trading Day were Day S except that (a) there shall be no
recalculation of the Settlement Amount and (b) for purposes of
calculating the Stock Settlement Unwind Price, the Unwind Period
shall be deemed to have ended on the Exchange Trading Day for which
the calculation is made.
(i) if (a) Net Stock Settlement Shares are greater than (b) the sum
of (x) Preliminary Net Stock Settlement Shares plus (y) any shares
previously delivered pursuant to this settlement under this
subparagraph (i), then the Company shall deliver Paired Shares (which
Paired Shares may be delivered from its Margin Account) equal in
number to the difference between (a) and (b) to UBS LLC for the
account of UBS, or
(ii) as of the final day of the Unwind Period, if (a) the sum of (x)
Preliminary Net Stock Settlement Shares plus (y) any shares
previously delivered pursuant to this settlement under subparagraph
(i), above is greater than (b) Net Stock Settlement Shares, then UBS
LLC, for the account of UBS, shall deliver that number of Paired
Shares equal to the difference between (a) and (b) above to the
Company's Customer Account.
4. The Company shall cause all shares delivered by it to UBS LLC for
the account of UBS to be fully and effectively registered under the
Securities Act (as provided in Section III.A.5 above).
5. On the Exchange Trading Day following the final Exchange Trading
Day of the Unwind Period, UBS LLC for the account of UBS shall
release all claims to Paired Shares held in the Company's Customer
Account, including any Settlement Shares delivered pursuant to
Preliminary Stock Settlement (Section III. E. 1. above), and deliver
all such Paired Shares to the Company with the dollar value of all
fractional shares settled in cash.
6. In the event of Stock or Net Stock Settlement pursuant to Section
III.C. or III.D., the Company shall pay an unwind accretion fee, in
cash or stock, calculated in
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FORWARD STOCK CONTRACT
accordance with the following formula:
Settlement Amount x (days in Unwind Period) x (1 month LIBOR + Spread)
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7. In the event of Stock or Net Stock Settlement pursuant to Section
III.C. or III.D., the Company shall pay a placement fee to UBS LLC for
the account of UBS calculated as: Settlement Amount x 0.50%
IV. INTERIM NET STOCK SETTLEMENT
On each Interim Settlement Date, if the Forward Price exceeds the
closing price of the Paired Shares on such Interim Settlement Date, then
on the Business Day following the Fifth Exchange Trading Day thereafter
the Company shall deliver a number of Paired Shares to UBS LLC for the
account of UBS equal to the Interim Settlement Shares; provided,
however, that if the Company is restricted by law or regulation or
self-regulatory requirements or related policies and procedures, whether
or not such requirements, policies or procedures are imposed by law
directly or have been voluntarily adopted by the Company to insure
compliance with applicable laws, or in its reasonable judgement is
otherwise unable or unwilling to deliver registered Paired Shares, the
Company shall deliver Cash Collateral to UBS as described in Section
V.B. below.
V. COLLATERAL PROVISIONS
A. If the Company fails to deliver an effective resale registration
statement within 90 days of the Trade Date, then until an effective
resale registration statement is provided and an Interim Net Stock
Settlement can be effected, the Company shall deliver Cash Collateral in
an amount equal to the Interim Settlement Amount to UBS. If Cash
Collateral is delivered pursuant to this Section V.A., then until an
Interim Net Settlement can be effected or the transaction is settled on
a Cash Settlement basis or a registration statement becomes effective,
the Interim Settlement Amount shall be recalculated and the amount of
Cash Collateral shall be adjusted to equal such recalculated Interim
Settlement Amount on a biweekly (every 2 weeks) basis.
B. In the event that the Company does not deliver Paired Shares pursuant to
Paragraph IV. for one or more of the reasons described in the provision
at the end of such paragraph, then, unless Cash Collateral has been
delivered pursuant to Section V.A. above, the Company shall deliver Cash
Collateral in an amount equal to the Interim Settlement Amount to a Cash
Collateral Account at UBS.
C. If the Company has delivered Cash Collateral to UBS pursuant to
paragraphs A. or B. above, at the Company's option, the Company may
deliver freely saleable registered Paired Shares to UBS equal in
saleable market value, based on closing market prices on the Exchange
Trading Day prior to such delivery, to the value of the Cash Collateral
held in the Cash Collateral Account at UBS. On the day after such
Exchange Trading Day, UBS shall release all claims
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to Cash Collateral held in the Cash Collateral Account and deliver such
amounts to the Company. On any subsequent Interim Settlement Date, if
Cash Collateral is held by UBS, UBS shall deliver to the Company within
5 Business Days after such Interim Settlement Date, the amount by which
the amount of Cash Collateral exceeds the Interim Settlement Amount.
D. SECURITY INTEREST
The Company hereby pledges to UBS, as security for its obligations
herein, a first priority continuing security interest in, lien on and
right of set-off against all Cash Collateral Paid to UBS, or UBS
Securities LLC, as its agent. Upon release to the Company by UBS of such
Cash Collateral, the security interest and lien granted hereunder will
be released immediately, and, to the extent possible, without any
further action by either party.
E. REPRESENTATIONS
Each of the Trust and SLC represents to UBS (which representations will
be deemed to be repeated as of each date that the Company Pays Cash
Collateral to UBS) that:
(i) it has the power to grant a security interest in and lien on any
Cash Collateral it Pays to UBS and has taken all necessary actions to
authorize the granting of that security interest and lien;
(ii) it is the sole owner of or otherwise has the right to Pay all Cash
Collateral to UBS hereunder, free and clear of any security interest,
lien, encumbrance or other restrictions other than the security interest
and lien created hereby;
(iii) upon Payment of any Cash Collateral to UBS under the terms of this
Confirmation, UBS will have a valid and perfected first priority
security interest therein (assuming that any third-party financial
intermediary or other entity not within its control involved in the
transfer of the Cash Collateral gives the notices and takes the action
required of it under applicable law for perfection of that interest),
and
(iv) the performance by it of its obligations under this Confirmation
will not result in the creation of any security interest, lien or other
encumbrance on any Cash Collateral other than the security interest and
lien granted hereunder.
F. OTHER COLLATERAL PROVISIONS
Any Cash Collateral held by UBS during settlement of the Transaction
pursuant to Sections III. or VI. shall be held until the end of the
applicable Unwind Period and shall be released upon the final Settlement
Date for that Unwind Period.
G. DEFINITIONS RELATED TO COLLATERAL PROVISIONS
"Cash Collateral" means the amount of cash denominated in USD, if any,
Paid by the Company to or for the benefit of UBS, acting through UBS
Securities LLC as its agent, pursuant to paragraphs IV. or V. of this
Forward Stock Contract.
"Local Business Day" means a day on which commercial banks in New York,
New York are
13
14
open for business (including dealings in foreign exchange)." "Paid",
"Pays" or "Payment" means payment in same day funds in the same manner
provided for payments to be made to UBS, or UBS Securities LLC as its
agent under this Forward Stock Contract.
VI. CERTAIN COVENANTS AND OTHER PROVISIONS
Ability to Settle in Stock: As of the date hereof, each of the Trust and SLC
has not, and after the date hereof, each of the
Trust and SLC will not, enter into any obligation
that would contractually prohibit the Company from
Stock Settlement of any shares under this
Agreement.
Mandatory Unwind Event: If at any time prior to the Maturity Date:
(i) the average closing price on the Relevant
Exchange of the Paired Shares on any two
consecutive Exchange Trading Days, other than a day
on which a Market Disruption Event has occurred, is
equal to or less than any of the Mandatory Unwind
Thresholds, then UBS shall have the right upon
written notice to the Company, to require the
parties to settle all or a portion of the
Transaction (up to the cumulative Unwind Share
Limit for the corresponding Mandatory Unwind
Threshold) on the Mandatory Unwind Date pursuant to
the settlement procedures set forth in Section III.
above,
Once a Mandatory Unwind Event has occurred, if the
closing price of the Paired Shares is less than a
lower Mandatory Unwind Threshold, UBS shall have
the right upon written notice to the Company, to
require the Parties to settle on the Mandatory
Unwind Date pursuant to Section III above, all or a
portion of the Transaction, up to a number of
Paired Shares equal to the number of Underlying
Shares multiplied by the corresponding cumulative
Unwind Share Limit, on the mandatory Unwind Date
pursuant to the settlement procedures set forth in
Section III. above.
or,
ii) if any of the following events occur:
(1) any Financial Covenant Default as more
particularly described in Exhibit A attached
hereto;
(2) any Event of Default that has not been cured or
waived by the respective lender(s) under the
Trust's Revolving and Term Loan Credit Facility by
and between the Trust as borrower and Bankers Trust
Company as lead agent and dated as of September
1997.
(3) any Event of Default that has not been cured or
waived by the respective lender(s) under any other
unsecured and/or recourse lending agreement
involving the Company involving Specified
14
15
FORWARD STOCK CONTRACT
Indebtedness in aggregate amount of no less than
the Threshold Amount;
(4) Bankruptcy or Insolvency(as such terms are
defined in the Agreement); and/or
(5) any failure of the Company to post cash
collateral pursuant to IV.C. herein if such failure
is not remedied on or before the third Local
Business Day after notice of such failure is given
to such party.
then, UBS LLC for the account of UBS may, on giving
at least 5 Business Days prior written notice to
the Company require all or part of the Transaction
to be settled early on the Mandatory Unwind Date
pursuant to the settlement procedures set forth in
Section III.
For purposes of the settlement procedures set forth
in Section III, "Day S" shall be the Mandatory
Unwind Date and the "Settlement Shares" shall be
the number of Paired Shares to be settled pursuant
to clause (i) or (ii) above. The Company may elect
the method of settlement for such early settlement
in accordance with the settlement provisions set
forth herein; provided however, that if Stock
Settlement or Net Stock Settlement is elected, and
(1) no resale Registration Statement has been
provided and declared effective prior to Day S or
(2) any resale Registration Statement so provided
and declared effective becomes, on Day S or during
an Unwind Period, the subject of a stop order
suspending its effectiveness or is the subject of
any proceeding for that purpose or any such
proceeding is threatened by the Commission, then
the Company at its sole option may choose to (A)
cash collateralize 125% of its obligation to UBS in
a manner similar to that described in in Section
V., (B) effect Cash Settlement as to all of the
Settlement Shares in accordance with Section III.B.
hereof on the Exchange Trading Day immediately
succeeding the occurrence of one of the events
specified in (1) or (2) above or (C) effect
settlement with Paired Shares that are not subject
to a resale Registration Statement to allow UBS to
unwind the Transaction and liquidate any position
it may hold in such unregistered Settlement Shares
by means of negotiated private resales, to the
extent and in the manner permitted by applicable
federal and state securities laws. In recognition
that such negotiated private resales, if any, are
likely to be completed at prices reflective of a
discount to the prevailing open market prices for
any freely tradeable Paired Shares, the Company
agrees to deliver such number of supplemental
Paired Shares as UBS may reasonably request to
which UBS shall assign a dollar price in order to
approximate an aggregate amount equal to the
aggregate discount accepted by UBS in connection
with the resale of the Settlement Shares or the
Company shall pay an amount to UBS equal to the
aggregate discount accepted by UBS in connection
with the resale of the Settlement Shares.
15
16
FORWARD STOCK CONTRACT
Upon completion of all settlement activities, UBS
LLC for the account of UBS, will promptly return
all remaining shares in the Company's Customer
Account to the Company.
Market Disruption Event: The occurrence or existence on any Exchange Trading
Day during the one-half hour period that ends at
the Valuation Time of any suspension of or
limitation imposed on trading on (i) any of the
Relevant Exchanges or (ii) any of the exchange or
boards of trade or futures contract market on which
options or future contracts on the Paired Shares of
the Company are traded if, in the reasonable
determination of the Calculation Agent, such
suspension or limitation is material. In the event
that a Market Disruption Event occurs or is
continuing on a Valuation Date, then any
determination of the closing price of the Paired
Shares shall be postponed to the first succeeding
Exchange Trading Day on which there is no Market
Disruption Event, provided that if there is a
Market Disruption Event on each of the five
Exchange Trading Days immediately following the
original Valuation Date that but for the Market
Disruption Event would have been a day on which the
closing price of the Paired Shares would have been
determined, such fifth Exchange Trading Day shall
be deemed to be such Valuation Date notwithstanding
the Market Disruption Event and the Calculation
Agent shall, in consultation with the Company,
determine the closing price for that Valuation Date
based upon the last closing price prior to such
Market Disruption Event. and if applicable, shall
effect the settlement of the Underlying Shares by
using such last closing price for the determination
of the Stock Settlement Unwind Price.
The Calculation Agent shall within one (1) Business
Day notify the other party of the existence or
occurrence of a Market Disruption Event on any day
that but for the occurrence or existence of a
Market Disruption Event would have been a Valuation
Date.
Regulatory Compliance: Each party agrees that if the delivery of shares
upon settlement is subject to any restriction
imposed by a regulatory authority, it shall not be
an event of default, and the parties will negotiate
in good faith a procedure to effect settlement of
such shares in a manner which complies with any
relevant rules of such regulatory authority and
which is satisfactory in form and substance to
their respective counsel.
Securities Law Compliance: Each party agrees that it will comply, in
connection with this T ransaction and all related
or contemporaneous sales and purchases of the
Company's Paired Shares, with the applicable
provisions of the Securities Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations thereunder.
Settlement: All settlements shall occur through DTC or any
other mutually acceptable depository.
16
17
Settlement Stock Delivery: Pursuant to the Stock Settlement and Net Stock
Settlement provisions under Section III. above, UBS
LLC for the account of UBS shall deliver all
Settlement Shares to the Company's Customer
Account. Such Paired Shares will serve as
collateral until released by UBS LLC for the ac
count of UBS in accordance with the settlement
mechanics noted under III.E. above, or delivered to
the Company pursuant to Section III.E.5. Paired S
hares held in the Company's Customer Account shall
not be voted.
The Company covenants and agrees with UBS that
Paired Shares delivered by the Company pursuant to
settlement events in accordance herewith will be
duly authorized, validly issued, fully paid and
non-as sessable. The issuance of such Paired Shares
will not require the con sent, approval,
authorization, registration, or qualification of
any government authority, except such as shall have
been obtained on or before the delivery date to UBS
LLC for the account of UBS in connection with any
registration statement filed with respect to any
share or otherwise.
Solvency: Immediately following the execution of this
agreement, the Company will be solvent and able to
pay its debts as they mature, will have capital
sufficient to carry on business and all businesses
in which it engages, and will have assets which
will have a present fair market valuation greater
than the amount of all of its liabilities.
Allocation between Trust
and SLC: As between the Trust and SLC, (i) any delivery to
or by the Company of the Trust Share portion of
Paired Shares pursuant to this Confirmation shall
be made by delivery to or by the Trust, (ii) any
delivery to or by the Company of the SLC share
portion of Paired Shares pursuant to this
Confirmation shall be made by delivery to or by
SLC, and (iii) any delivery to or by the Company of
cash pursuant to this Confirmation shall be
allocated between the Trust and SLC between and
among themselves 95% to or from the Trust and 5% to
or from SLC without effect on any obligation of the
Company to UBS or on any obligation of UBS to the
Company.
Trading Authorization: The following individuals and /or any individual
authorized in writing by the Treasurer of the
Company are authorized by the Company to provide
trading instructions to UBS LLC for the account of
UBS with regard to this transaction.
Starwood Lodging Trust:
Xxxxxx Xxxxx
Starwood Lodging Corporation:
Xxxx Xxxxxxx
Nir Margalite
17
18
FORWARD STOCK CONTRACT
VI. DELIVERY INSTRUCTIONS:
Party A: Chase, NYC
UBS Securities LLC
ABA 000000000
A/C No. ###-##-####
Attn: GED
Party B: Xxxxxx Bank Xxxxxx Bank
Chicago, IL 60603 Xxxxxxx, XX 00000
ABA # 000000000 ABA #000000000
credit account: credit account:
Starwood Lodging Trust Starwood Lodging Corporation
# 416-255-8 # 000-000-0
ATTN: Xxxxxxx XxXxxx ATTN: Xxxxxxx XxXxxx
Please confirm that the foregoing correctly sets forth the
terms of our agreement by executing the copy of this
Confirmation enclosed for that purpose and returning it to
Xx. Xxxx Xxxxxxx, 29th. Floor.
Yours faithfully,
Union Bank of Switzerland, London Branch:
By: /s/ XXXX XXXXX By: /s/ X. XXXXXXXXXXX
-------------------------------- -----------------------------------
Name: XXXX XXXXX Name: X. XXXXXXXXXXX
Title: Vice President Title: Vice President
Date: Date:
Starwood Lodging Trust:
By: By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Date: Date:
Starwood Lodging Corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Date: Date:
17
19
FORWARD STOCK CONTRACT
VI. DELIVERY INSTRUCTIONS:
Party A: Chase, NYC
UBS Securities LLC
ABA 000000000
A/C No. ###-##-####
Attn: GED
Party B: Xxxxxx Bank Xxxxxx Bank
Chicago, IL 60603 Xxxxxxx, XX 00000
ABA # 000000000 ABA #000000000
credit account: credit account:
Starwood Lodging Trust Starwood Lodging Corporation
# 416-255-8 # 000-000-0
ATTN: Xxxxxxx XxXxxx ATTN: Xxxxxxx XxXxxx
Please confirm that the foregoing correctly sets forth the
terms of our agreement by executing the copy of this
Confirmation enclosed for that purpose and returning it to
Xx. Xxxx Xxxxxxx, 29th. Floor.
Yours faithfully,
Union Bank of Switzerland, London Branch:
By: By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Date: Date:
Starwood Lodging Trust:
By: /s/ XXXXXX X. XXXXX By:
-------------------------------- -----------------------------------
Name: XXXXXX X. XXXXX Name:
Title: SENIOR VICE PRESIDENT Title:
& CFO Date:
Date:
Starwood Lodging Corporation
By: /s/ XXXX X. XXXXXXX By:
-------------------------------- -----------------------------------
Name: XXXX X. XXXXXXX Name:
Title: VICE PRESIDENT AND Title:
CORPORATE CONTROLLER Date:
Date:
20
[UBS LOGO & LETTERHEAD]
To: Starwood Lodging Trust
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Mr. Xxxxxx Xxxxx
To: Starwood Lodging Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxx
From: Union Bank of Switzerland, London Branch
c/o UBS Securities LLC, as agent
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Date: 13 October 1997
Ladies and Gentlemen,
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern. References herein to the "Transaction" shall be deemed to be references
to a "Swap Transaction" solely for the purposes of the 1991 ISDA Definitions.
This Confirmation supplements, forms a part of, and is subject to, the ISDA
Master Agreement dated as of 13 October 1997, as amended and supplemented from
time to time (the "Agreement"), between you and us. All provisions contained in
the Agreement govern this Confirmation except as expressly modified below. In
the event of any inconsistency between the provisions of that agreement and this
Confirmation, this Confirmation will prevail for the purposes of this
Transaction.
The Agreement and each Confirmation thereunder will be governed by and construed
in accordance with the laws of the State of New York without reference to choice
of law doctrine.
I. THE TRANSACTION
Starwood Lodging Trust, a Maryland real estate investment trust (the "Trust"),
Starwood Lodging Corporation, a Maryland corporation ("SLC") (the Trust and SLC
being sometimes collectively referred to as the Company) and Union Bank of
Switzerland, London Branch ("UBS") acting through UBS Securities LLC as its
agent for each purchase or sale of Securities ("UBS LLC"), hereby agree to
21
make the payments and deliveries provided for in Sections III, IV and V hereof,
all on the terms more particularly specified herein (this "Confirmation").
II. DEFINITIONS
For the purposes of this Confirmation, the following terms shall have the
meanings set opposite:
Adjustments: In the event of:
(a) a subdivision, consolidation or
reclassification of the Paired Shares, or a free
distribution or dividend of any Paired Shares to
all existing holders of Paired Shares by way of
bonus, capitalization or similar issue;
(b) a distribution or dividend to all existing
holders of Paired Shares of (i) additional Paired
Shares or (ii) other share capital or securities
granting right to payment of dividends and/or the
proceeds of liquidation of the Company equally or
proportionally with such payments to holders of
Paired Shares or (iii) any other type of
securities, warrants or other assets, in any case
for payment (cash or otherwise) at less than the
prevailing market price; or
(c) any other event that has a diluting or
concentrative effect on the value of the Underlying
Shares (other than (i) the issuance by the Company
to its employees, officers and directors of options
to purchase Paired Shares, restricted Paired Shares
or limited partnership units of SLC Operating
Limited Partnership and SLT Realty Limited
Partnership or (ii) the issuance by the Company of
Paired Shares for cash or in connection with any
acquisition, merger, exchange offer or similar
transaction, in each case approved by the Boards of
Directors of SLC and the Trust).
an adjustment shall thereupon be effected to the
Forward Price and/or the Underlying Shares at the
time of such event with the intent that following
such adjustment, the value of this Transaction is
economically equivalent to the value immediately
prior to the occurrence of the event causing the
adjustment.
Calculation Agent: UBS, whose calculations and determinations shall be
made in a commercially reasonable manner and shall
be binding absent manifest error; provided that the
Company my dispute any determination, adjustment or
calculation by the Calculation Agent, or failure by
the Calculation Agent to make any determination,
adjustment or estimate required by this
Confirmation, by notice to the Calculation Agent
promptly following the day notice from the
Calculation Agent to the Company of such
determination, adjustment or calculation is
effective or at any time the Company believes that
the Calculation Agent has failed to make a
determination, adjustment or calculation required
by this Confirmation. If such dispute cannot be
resolved within three Business Days following the
day on which the Company's notice to the
Calculation Agent is effective, then (i) the
relevant party shall pay the amount, if any, that
is not in dispute and (ii) the parties shall agree
upon and appoint an independent third party to
resolve the dispute, the determination of which
shall be final and binding absent manifest error.
Page 2
22
Calculation Period: Means each period commencing on and including:
(i) in the case of the first Calculation Period,
the Effective Date and ending on but excluding the
first Interim Settlement Date, and
(ii) for each period thereafter, an Interim
Settlement Date and ending on but excluding the
earlier of the next following Interim Settlement
Date or Day S.
If there is a Partial Settlement, then (i) the
Calculation Period for the Settlement Shares
covered by such Partial Settlement Share shall end
on Day S for such Partial Settlement and (ii) the
Calculation Period for the remaining Underlying
Shares shall be determined without regard to such
Partial Settlement.
Collateral Release Shares: Paired Shares delivered pursuant to Section V.C.
Collateral Valuation Date: In the event that the Company chooses to post cash
collateral pursuant to Section V. or VI. any day
upon which the amount of collateral required is
calculated.
Compounding Period: Means each period commencing on and including:
(i) in the case of the first Compounding Period,
the Effective Date and ending on but excluding the
first Reset Date, and
(ii) for each period thereafter, a Reset Date and
ending on (but excluding) the earlier of the next
following Reset Date or Day S.
If there is a Partial Settlement, then(i) the
Compounding Period for the Settlement Shares
covered by such Partial Settlement shall end on Day
S for such Partial Settlement and (ii) the
Compounding Period for the remaining Underlying
Shares shall be determined without regard to such
Partial Settlement.
Customer Account: the account established in favor of the Company
pursuant to the Customer Account Agreement dated
the date hereof between the Company and UBS
Securities LLC
Daycount Fraction: Actual/360
Day S: For Settlement pursuant to Section III. or VI. or
Interim Net Stock Settlement pursuant to Section
IV., the day upon which settlement activities shall
begin.
Dividend Amount: A) Means, on each Reset Date or Day S an amount in
U.S. Dollars equal to:
(i) the sum of all cash distributions paid on a
single Common Share during the relevant Compounding
Period; plus
(ii) an amount representing interest that could
have been earned on such distributions at the LIBOR
rate plus Spread for a Designated Maturity of 1
month for the period from the date that such
distributions would have been received by a holder
of such Paired Shares until such Reset Date, or Day
S, as the case may be.
Page 3
23
B) Separately, and not included in Dividend Amount,
UBS will cause UBS LLC to pay to the Company on the
Business Day after the relevant dividend payment
date declared by the Company's Board of Directors,
(i) all cash dividends on Paired Shares that have
gone ex-dividend, but on which dividends have not
been paid, prior to the end of the final
Compounding Period for any settlement, based on a
number of Paired Shares equal to the number of
Settlement Shares for such settlement, (ii) all
cash dividends received by UBS at any time, on
Paired Shares delivered by the Company pursuant to
Section III. E. that have gone ex-dividend after
Day S but prior to the end of the Unwind Period for
any settlement, and (iii) all cash dividends paid
on Paired Shares held in the Customer
Account.
Effective Date: 15 October 1997
Exchange Trading Day: Each day on which the Relevant Exchange is open for
trading.
Forward Price: On each Reset Date or Day S, the Forward Price
shall be determined for such day by:
a) multiplying the Initial Price for the
Compounding Period by the sum of
1 plus the product of (i) the appropriate Daycount
Fraction times the sum of (ii) LIBOR; determined as
of the previous Reset Date for a Designated
Maturity of 1 month, plus (ii) Spread; and
b) subtracting the Dividend Amount at that date;
provided however that if the Company delivers
Interim Settlement Shares pursuant to Section IV.
or Collateral Release Shares pursuant to Section
V.C. during any Calculation Period, the Forward
Price for purposes of determining the Initial Price
for the first Compounding Period during such
Calculation Period, shall be adjusted to a price
equal to the closing price of the Paired Shares on
the Exchange Trading Day immediately prior to the
most recent Interim Settlement Date, adjusted up
for any positive result or down for any negative
result of the following formula:
(ii) the Interim Settlement Amount for the most
recent Interim Settlement Date.
minus,
(i) (a) the number of Interim Settlement Shares or
Collateral Release Shares, as the case may be,
times (b) the average closing price of the Paired
Shares on the five (5) Exchange Trading Days
immediately following the receipt of the Interim
Settlement Shares by UBS pursuant to Section IV.A.
or the Collateral Release Shares pursuant to
Section V.C.
such result divided by,
(iii) the number of Underlying Shares.
Initial Price: Means,
Page 4
24
a) for the Compounding Period ending on the first
Reset Date, an amount in U.S. Dollars equal to
$57.25, and
b) for each subsequent Reset Date, the
Forward Price as calculated on or adjusted as of
the prior Reset Date.
Interim Settlement Dates: 15 January 1997, 15 April 1998, 15 July 1998,
subject to adjustment in accordance with the
Modified Following Business Day convention.
Interim Settlement Amount: on any Interim Settlement Date, the product of (a)
the number of Underlying Shares, and (b) the amount
by which the Forward Price exceeds the closing
price of the Paired Shares on the Exchange Trading
Day immediately prior to such Interim Settlement
Date.
Interim Settlement Shares: (i) 110% times (ii) Interim Settlement Amount
divided by (iii) the closing price of the Paired
Shares on the Exchange Trading Day immediately
prior to such Interim Settlement Date.
LIBOR means USD-LIBOR-BBA as such term is defined in the
Agreement.
Mandatory Unwind Date: In the case of a Mandatory Unwind Event specified
in clause (i) or the definition thereof, 1 Exchange
Trading Day after such Mandatory Unwind Event
occurs. In the case of a Mandatory Unwind Event
specified in clause (ii) of such provision, the
date specified in the notice delivered to the
Company (which date shall be at least 5 Business
Days after the date such notice becomes effective).
Mandatory Unwind
Thresholds: Mandatory
Unwind Thresholds Unwind Share Limit
----------------- ------------------
$40.00 up to 25% of Underlying Shares
$37.00 50%
$35.50 75%
$34.00 100%
Maturity Date: One (1) year after the Effective Date, subject to
extension upon the written approval of UBS in its
sole discretion.
Paired Shares: Shares of beneficial interest, $0.01 par value per
share, of the Trust (the "Trust Shares") and shares
of Common Stock, par value $0.01 per share, of SLC
(the "SLC Shares"), which are paired and traded as
a unit consisting of one (1) Trust Share and one
(1) SLC Share.
Partial Settlement: Any contemplated settlement, pursuant to sections
III. or VI., in which the designated Settlement
Shares are less than Underlying Shares.
Preliminary Net Stock
Settlement Shares: All Paired Shares delivered by the Company pursuant
to Section III.E.2 and III.E.3(b) (other than
Paired Shares delivered after the Unwind Period).
Relevant Exchange: Means, with respect to any Exchange Trading Day,
the principal Stock Exchange on which the Paired
Shares are traded on that day.
Reset Dates: 15 November 1997, 15 December 1997, 15 January
1998, 15
Page 5
25
February 1998, 15 March 1998, 15 April 1998, 15 May
1998, 15 June 1998, 15 July 1998, 15 August 1998,
15 September 1998, 15 October 1998, subject to
adjustment in accordance with the Modified
Following Business Day convention.
Settlement Amount: The product of the Settlement Price and the
Settlement Shares.
Settlement Disruption Event: Means an event beyond the control of the parties as
a result of which The Depository Trust Company
("DTC") or any successor depository cannot effect a
transfer of the Settlement Shares or the Paired
Shares. If there is a Settlement Disruption Event
on a Valuation Date, then the transfer of the
Paired Shares that would otherwise be due to be
made by UBS LLC for the account of UBS or the
transfer of the Paired Shares that would otherwise
be due to be made by the Company, as applicable, on
that date shall take place on the first succeeding
Exchange Trading Day on which settlement can take
place through DTC, provided that if such a
Settlement Disruption Event persists for five
consecutive Business Days, then the Party obliged
to deliver such Settlement Shares shall use its
best efforts to cause such Shares to be delivered
promptly thereafter to the other Party in any
commercially reasonable manner.
Settlement Price: If Day S is a Reset Date, the Forward Price. If Day
S is not a Reset Date, the Forward Price adjusted
for LIBOR breakage adjustments (either positive or
negative) for the Settlement Shares for the period
from Day S to the next following Reset Date. Any
breakage adjustments shall be calculated by the
Calculation Agent in accordance with normal
industry standards.
Settlement Shares: The number of shares up to the full number of
Underlying Shares subject to settlement under
Section III. or VI.
Spread: 1.50% per annum.
Stock Exchange: Means the New York Stock Exchange, the American
Stock Exchange or NASDAQ. Stock Settlement Unwind
Price: The daily average closing price of the
Paired Shares for Exchange Trading Days during the
Unwind Period.
Trade Date: 13 October 1997
UBS LLC: UBS Securities LLC
Unwind Period: In the event of Stock Settlement or Net Stock
Settlement, such number of Exchange Trading Days
(which shall not be more than 70; (subject to
change based on mutual agreement) beginning on Day
S; provided that UBS may extend such period (such
extension not to exceed 10 Exchange Trading Days)
or upon the occurrence of a Market Disruption
Event.
Underlying Shares: 2,185,000 Paired Shares of the Company (ticker
"HOT"), subject to adjustment in the event of
Partial Settlements.
Valuation Date: In the case of determining any Cash Settlement
value, Net Stock Settlement Shares or Stock
Settlement Shares, Day S, the day
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26
preceding Day S and all Exchange Trading Days
during the Unwind Period; in the case of
determining any Preliminary Stock Settlement Shares
or Preliminary Net Stock Settlement Shares, the
Exchange Trading Day immediately preceding Day S;
in the case of determining the Interim Settlement
Amount and related calculation, the day prior to
the Interim Settlement Date, and the 5 Exchange
Trading Days following receipt of Interim
Settlement Shares by UBS.
Valuation Time: 4:00 pm EST, or in the event the Relevant Exchange
closes early, such closing time.
III. SETTLEMENT
A. NOTICE AND PROCEDURES
1. The Company may on any Exchange Trading Day up to and including the
Maturity Date, upon the giving of at least five (5) Business Days telephonic
notice to UBS (the "Settlement Notice"), settle all or part of this Transaction.
The Settlement Notice shall specify:
(i) the Settlement Shares,
(ii) the settlement method (Cash, Stock or Net Stock Settlement,
as such methods are described below);
(iii) the number of Exchange Trading Days in the Unwind Period,
and
(iv) Day S, which must be an Exchange Trading Day; provided
however, that if Cash or Net Stock Settlement is selected and in
UBS' reasonable judgement the settlement of the Settlement
Shares would potentially violate or contravene any legal or
regulatory prohibition or requirement applicable to UBS or cause
UBS to contravene any established UBS corporate policy or
compliance policy which relates to any legal or regulatory
prohibition or requirement applicable to UBS (other than any
corporate policy limiting the amount of UBS's investment in
another entity) then UBS shall at least three (3) Business Days
prior to the proposed Day S, notify the Company telephonically
(confirmed by writing) of any such impediment and its estimate
of the period during which such impediment will preclude UBS'
ability to settle all or part of this Transaction.
The Settlement Notice shall be effective only if the notice
requirements specified above are fulfilled; provided, that if no
settlement method is specified, then the settlement method shall
be deemed to be Cash Settlement and provided further that the
Company may upon telephonic notice to UBS at least one (1)
Exchange Trading Day prior to the proposed Day S withdraw any
Settlement Notice.
In the case of any Partial Settlement, following such settlement the
number of Underlying Shares to which this Transaction shall relate shall
be adjusted, as of Day S, by subtracting the number of Settlement Shares
from the number of Underlying Share (as the same may have been adjusted
prior to such Partial Settlement) immediately prior to such Day S. The
Settlement Shares shall not be subject to forward accretion and shall be
treated separately from the remaining Underlying Shares during any
Unwind Period.
2. On Day S, the Settlement Price for the Settlement Shares and the
Settlement Amount shall be determined for Day S.
3. The Settlement Amount shall be settled pursuant to the settlement method
(B, C, or D of this
Page 7
27
section III.) selected by the Company in its sole discretion.
4. If settlement with respect to the Settlement Shares shall occur pursuant
to Section III.A1 (but not as a result of a Mandatory Unwind Event) on
or before the 180th day following the Effective Date, then the
Settlement Price for purposes of such settlement shall be increased by
any positive amount, calculated by UBS as follows:
Spread x Forward Price x (180 - calendar days since Trade Date)
--------------------------------------
360
5. It shall be a condition precedent to any right of the Company to elect
Stock Settlement (III. C. below) or Net Stock Settlement (III. D.
below), that the Company must (i) notify UBS of such election at least 5
Business Days prior to Day S and (ii) prior to Day S, cause to be filed
with the Securities and Exchange Commission (the "Commission") and cause
to become effective under the Securities Act of 1933, as amended (the
"Securities Act") a registration statement that results in UBS being
able to resell all Paired Shares to be delivered by the Company to UBS
LLC for the account of UBS in effecting such Stock Settlement or Net
Stock Settlement without further registration under the Securities Act
of 1933, as amended, such registration statement to include one or more
preliminary prospectuses, prospectuses, and any amendments and
supplements thereto such that any preliminary prospectus or prospectus,
as amended or supplemented, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances under which they are made. In addition, the
Company shall not deliver any Paired Shares to UBS LLC for the account
of UBS pursuant to Sections IV.A or IV.D. below unless at the time of
such delivery a registration statement has become effective under the
Securities Act that results in UBS being able to resell such Paired
Shares without further registration under the Securities Act, such
Registration Statement to include one or more preliminary prospectuses,
prospectus and any amendments or supplements thereto such that any
preliminary prospectus or prospectus, as amended or supplemented, shall
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under
which they are made. The Company further agrees that it will cause any
such Registration Statement referred to in this paragraph 5 of Section
III.A. to remain in effect until the earliest of the date on which (i)
all Paired Shares issued pursuant hereto and not required to be
delivered to the Company hereunder have been sold by UBS LLC for the
account of UBS and UBS agrees to notify the Company of such fact, within
two (2) Business Days of its occurrence, (ii) UBS LLC for the account of
UBS is able to sell the Paired Shares subject thereto under Rule 144(k),
or (iii) UBS has advised the Company that it no longer requires that
such registration statement be effective; provided, however, that in no
event shall the Company be obligated to keep such Registration Statement
effective for more than 10 Exchange Trading Days after the end of the
applicable Unwind Period.
B. CASH SETTLEMENT
If the Company elects Cash Settlement, the Company shall settle by
delivering cash in an amount equal to the Settlement Amount in exchange
for the Settlement Shares ("Cash Settlement") on the Exchange Trading
Day immediately succeeding Day S. UBS shall cause UBS LLC for the
account of UBS to deliver the Settlement Shares to the Company on the
Exchange Trading Day immediately succeeding Day S upon receipt of such
Cash Settlement.
C. STOCK SETTLEMENT
If the Company elects to settle the Settlement Amount by delivering
Paired Shares in exchange for the Settlement Shares ("Stock
Settlement"), the number of Paired Shares to be delivered (the "Stock
Settlement Shares") shall be equal to (a) the Settlement Amount divided
Page 8
28
by (b) the Stock Settlement Unwind Price. The mechanics for settlement
are set forth in Section III. E. below and Article VI.
D. NET STOCK SETTLEMENT
If the Company elects to settle the Settlement Amount on a net stock
basis ("Net Stock Settlement"), the number of net stock settlement
shares (the "Net Stock Settlement Shares") shall equal:
i) the number of Settlement Shares, times
ii) the Settlement Price minus the Stock Settlement Unwind
Price, divided by
iii) the Stock Settlement Unwind Price.
If such calculation yields a negative number, this shall indicate the
number of Paired Shares to be delivered from UBS LLC for the account of
UBS to the Company. The mechanics for settlement are set forth in
Section III. E. below and Article VI. (This section does not apply for
purposes of Interim Net Stock Settlement.)
E. STOCK AND NET STOCK SETTLEMENT MECHANICS
1. Preliminary Stock Settlement:
If the Company has chosen Stock Settlement, the Company shall
deliver to UBS LLC for the account of UBS, by 11:00 a.m. on Day
S, that number of Paired Shares (the "Preliminary Stock
Settlement Shares"), equal to the product of (i)(a) the
Settlement Amount divided by (b) the closing price of the Paired
Shares on the Exchange Trading Day immediately preceding Day S,
times (ii) 110%. Upon receipt of the Preliminary Stock
Settlement Shares, UBS will cause UBS LLC to deposit the
Settlement Shares in the Company's Customer Account.
2. Preliminary Net Stock Settlement:
If the Company has chosen Net Stock Settlement and if the
Settlement Price exceeds the closing price of the Paired Shares
on the Exchange Trading Day immediately preceding Day S, the
Company shall deliver to UBS LLC for the account of UBS by 11:00
a.m. on Day S, that number of Paired Shares (the "Preliminary
Net Stock Settlement Shares) equal to (i)(a) the number of
Settlement Shares times (b) the difference between the
Settlement Price and the closing price of the Paired Shares on
the Exchange Trading Day immediately preceding Day S divided by
(ii) the closing price of the Paired Shares on the Exchange
Trading Day immediately preceding Day S times (iii) 125%. If the
closing price of the Paired Shares on the Exchange Trading Day
immediately preceding Day S exceeds the Settlement Price, the
Company shall not be required to deliver any shares to UBS LLC
for the account of UBS under this subsection III.E.2.
3. By 11:00 a.m. on every fifth (5th) Exchange Trading Day (other
than the final Exchange Trading Day) during the Unwind Period
and on the Business Day following the final Exchange Trading Day
of the Unwind Period:
A. For Stock Settlement:
Stock Settlement Shares shall be calculated as if such Exchange
Trading Day were Day S, except that (a) there shall be no
recalculation of the Settlement Amount and (b) for purposes of
calculating the Stock Settlement Unwind Price, the Unwind
Page 9
29
Period shall be deemed to have ended on the Exchange Trading Day
for which the calculation is made.
(i) if (a) Stock Settlement Shares (calculated as set forth
above) are greater than (b) the sum of (x) Preliminary Stock
Settlement Shares plus (y) any shares previously delivered
pursuant to this subparagraph (i), then the Company shall
deliver that number of Paired Shares equal to the difference
between (a) and (b) to UBS LLC for the account of UBS, and
(ii) as of the final day of the Unwind Period, if (a) the sum of
(x) Preliminary Stock Settlement Shares plus (y) any shares
previously delivered pursuant to this settlement under
subparagraph (i), above is greater than Stock Settlement Shares,
then UBS LLC, for the account of UBS, shall deliver that number
of Paired Shares equal to the difference between (a) and (b)
above to the Company's Customer Account,
B. For Net Stock Settlement:
Net Stock Settlement Shares shall be calculated as if such
Exchange Trading Day were Day S except that (a) there shall be
no recalculation of the Settlement Amount and (b) for purposes
of calculating the Stock Settlement Unwind Price, the Unwind
Period shall be deemed to have ended on the Exchange Trading Day
for which the calculation is made.
(i) if (a) Net Stock Settlement Shares are greater than (b) the
sum of (x) Preliminary Net Stock Settlement Shares plus (y) any
shares previously delivered pursuant to this settlement under
this subparagraph (i), then the Company shall deliver Paired
Shares (which Paired Shares may be delivered from its Margin
Account) equal in number to the difference between (a) and (b)
to UBS LLC for the account of UBS, or
(ii) as of the final day of the Unwind Period, if (a) the sum of
(x) Preliminary Net Stock Settlement Shares plus (y) any shares
previously delivered pursuant to this settlement under
subparagraph (i), above is greater than (b) Net Stock Settlement
Shares, then UBS LLC, for the account of UBS, shall deliver that
number of Paired Shares equal to the difference between (a) and
(b) above to the Company's Customer Account.
4. The Company shall cause all shares delivered by it to UBS LLC
for the account of UBS to be fully and effectively registered
under the Securities Act (as provided in Section III.A.5 above).
5. On the Exchange Trading Day following the final Exchange Trading
Day of the Unwind Period, UBS LLC for the account of UBS shall
release all claims to Paired Shares held in the Company's
Customer Account, including any Settlement Shares delivered
pursuant to Preliminary Stock Settlement (Section III. E. 1.
above), and deliver all such Paired Shares to the Company with
the dollar value of all fractional shares settled in cash.
6. In the event of Stock or Net Stock Settlement pursuant to
Section III.C. or III.D., the Company shall pay an unwind
accretion fee, in cash or stock, calculated in accordance with
the following formula:
Settlement Amount x (days in Unwind Period) x (1 month LIBOR +
----------------- ----------------------- Spread)
2 360
7. In the event of Stock or Net Stock Settlement pursuant to
Section III.C. or III.D., the Company shall pay a placement fee
to UBS LLC for the account of UBS calculated
Page 10
30
as:
Settlement Amount x 0.50%
IV. INTERIM NET STOCK SETTLEMENT
On each Interim Settlement Date, if the Forward Price exceeds the
closing price of the Paired Shares on such Interim Settlement Date, then
on the Business Day following the Fifth Exchange Trading Day thereafter
the Company shall deliver a number of Paired Shares to UBS LLC for the
account of UBS equal to the Interim Settlement Shares; provided,
however, that if the Company is restricted by law or regulation or
self-regulatory requirements or related policies and procedures, whether
or not such requirements, policies or procedures are imposed by law
directly or have been voluntarily adopted by the Company to insure
compliance with applicable laws, or in its reasonable judgement is
otherwise unable or unwilling to deliver registered Paired Shares, the
Company shall deliver Cash Collateral to UBS as described in Section
V.B. below.
V. COLLATERAL PROVISIONS
A. If the Company fails to deliver an effective resale registration
statement within 90 days of the Trade Date, then until an effective
resale registration statement is provided and an Interim Net Stock
Settlement can be effected, the Company shall deliver Cash Collateral in
an amount equal to the Interim Settlement Amount to UBS. If Cash
Collateral is delivered pursuant to this Section V.A., then until an
Interim Net Settlement can be effected or the transaction is settled on
a Cash Settlement basis or a registration statement becomes effective,
the Interim Settlement Amount shall be recalculated and the amount of
Cash Collateral shall be adjusted to equal such recalculated Interim
Settlement Amount on a biweekly (every 2 weeks) basis.
B. In the event that the Company does not deliver Paired Shares pursuant to
Paragraph IV. for one or more of the reasons described in the provision
at the end of such paragraph, then, unless Cash Collateral has been
delivered pursuant to Section V.A. above, the Company shall deliver Cash
Collateral in an amount equal to the Interim Settlement Amount to a Cash
Collateral Account at UBS.
C. If the Company has delivered Cash Collateral to UBS pursuant to
paragraphs A. or B. above, at the Company's option, the Company may
deliver freely saleable registered Paired Shares to UBS equal in
saleable market value, based on closing market prices on the Exchange
Trading Day prior to such delivery, to the value of the Cash Collateral
held in the Cash Collateral Account at UBS. On the day after such
Exchange Trading Day, UBS shall release all claims to Cash Collateral
held in the Cash Collateral Account and deliver such amounts to the
Company. On any subsequent Interim Settlement Date, if Cash Collateral
is held by UBS, UBS shall deliver to the Company within 5 Business Days
after such Interim Settlement Date, the amount by which the amount of
Cash Collateral exceeds the Interim Settlement Amount.
D. Security Interest
The Company hereby pledges to UBS, as security for its obligations
herein, a first priority continuing security interest in, lien on and
right of set-off against all Cash Collateral Paid to UBS, or UBS
Securities LLC, as its agent. Upon release to the Company by UBS of such
Cash Collateral, the security interest and lien granted hereunder will
be released immediately, and, to the extent possible, without any
further action by either party.
Page 11
31
E. Representations
Each of the Trust and SLC represents to UBS (which representations will
be deemed to be repeated as of each date that the Company Pays Cash
Collateral to UBS) that:
(i) it has the power to grant a security interest in and lien on any
Cash Collateral it Pays to UBS and has taken all necessary actions to
authorize the granting of that security interest and lien;
(ii) it is the sole owner of or otherwise has the right to Pay all Cash
Collateral to UBS hereunder, free and clear of any security interest,
lien, encumbrance or other restrictions other than the security interest
and lien created hereby;
(iii) upon Payment of any Cash Collateral to UBS under the terms of this
Confirmation, UBS will have a valid and perfected first priority
security interest therein (assuming that any third-party financial
intermediary or other entity not within its control involved in the
transfer of the Cash Collateral gives the notices and takes the action
required of it under applicable law for perfection of that interest),
and
(iv) the performance by it of its obligations under this Confirmation
will not result in the creation of any security interest, lien or other
encumbrance on any Cash Collateral other than the security interest and
lien granted hereunder.
F. Other Collateral Provisions
Any Cash Collateral held by UBS during settlement of the Transaction
pursuant to Sections III. or VI. shall be held until the end of the
applicable Unwind Period and shall be released upon the final Settlement
Date for that Unwind Period.
G. Definitions related to Collateral Provisions
"Cash Collateral" means the amount of cash denominated in USD, if any,
Paid by the Company to or for the benefit of UBS, acting through UBS
Securities LLC as its agent, pursuant to paragraphs IV. or V. of this
Forward Stock Contract.
"Local Business Day" means a day on which commercial banks in New York,
New York are open for business (including dealings in foreign
exchange)."
"Paid", "Pays" or "Payment" means payment in same day funds in the same
manner provided for payments to be made to UBS, or UBS Securities LLC as
its agent under this Forward Stock Contract.
VI. CERTAIN COVENANTS AND OTHER PROVISIONS
Ability to Settle in Stock: As of the date hereof, each of the Trust and SLC
has not, and after the date hereof, each of the
Trust and SLC will not, enter into any obligation
that would contractually prohibit the Company from
Stock Settlement of any shares under this
Agreement.
Mandatory Unwind Event: If at any time prior to the Maturity Date:
(i) the average closing price on the Relevant
Exchange of the Paired Shares on any two
consecutive Exchange Trading Days, other than a day
on which a Market Disruption Event has occurred, is
equal to or less than any of the Mandatory Unwind
Thresholds, then UBS shall have the right upon
written notice to the Company, to require the
parties to settle all or a portion of the
Transaction (up to the
Page 12
32
cumulative Unwind Share Limit for the corresponding
Mandatory Unwind Threshold) on the Mandatory Unwind
Date pursuant to the settlement procedures set
forth in Section III. above.
Once a Mandatory Unwind Event has occurred, if the
closing price of the Paired Shares is less than a
lower Mandatory Unwind Threshold, UBS shall have
the right upon written notice to the Company, to
require the Parties to settle on the Mandatory
Unwind Date pursuant to Section III above, all or a
portion of the Transaction, up to a number of
Paired Shares equal to the number of Underlying
Shares multiplied by the corresponding cumulative
Unwind Share Limit, on the mandatory Unwind Date
pursuant to the settlement procedures set forth in
Section III. above.
or,
ii) if any of the following events occur:
(1) any Financial Covenant Default as more
particularly described in Exhibit A attached
hereto;
(2) any Event of Default that has not been cured or
waived by the respective lender(s) under the
Trust's Revolving and Term Loan Credit Facility by
and between the Trust as borrower and Bankers Trust
Company as lead agent and dated as of September
1997.
(3) any Event of Default that has not been cured or
waived by the respective lender(s) under any other
unsecured and/or recourse lending agreement
involving the Company involving Specified
Indebtedness in aggregate amount of no less than
the Threshold Amount;
(4) Bankruptcy or Insolvency(as such terms are
defined in the Agreement); and/or
(5) any failure of the Company to post cash
collateral pursuant to IV.C. herein if such failure
is not remedied on or before the third Local
Business Day after notice of such failure is given
to such party.
then, UBS LLC for the account of UBS may, on giving
at least 5 Business Days prior written notice to
the Company require all or part of the Transaction
to be settled early on the Mandatory Unwind Date
pursuant to the settlement procedures set forth in
Section III.
For purposes of the settlement procedures set forth
in Section III, "Day S" shall be the Mandatory
Unwind Date and the "Settlement Shares" shall be
the number of Paired Shares to be settled pursuant
to clause (i) or (ii) above. The Company may elect
the method of settlement for such early settlement
in accordance with the settlement provisions set
forth herein; provided however, that if Stock
Settlement or Net Stock Settlement is elected, and
(1) no resale Registration Statement has been
provided and declared effective prior to Day S or
(2) any resale Registration Statement so provided
and declared effective becomes, on Day S or during
an Unwind Period, the subject of a stop order
suspending its effectiveness or is the subject of
any proceeding for that purpose or any such
proceeding is threatened by the Commission, then
the Company at its
Page 13
33
sole option may choose to (A) cash collateralize
125% of its obligation to UBS in a manner similar
to that described in in Section V., (B) effect Cash
Settlement as to all of the Settlement Shares in
accordance with Section III.B. hereof on the
Exchange Trading Day immediately succeeding the
occurrence of one of the events specified in (1) or
(2) above or (C) effect settlement with Paired
Shares that are not subject to a resale
Registration Statement to allow UBS to unwind the
Transaction and liquidate any position it may hold
in such unregistered Settlement Shares by means of
negotiated private resales, to the extent and in
the manner permitted by applicable federal and
state securities laws. In recognition that such
negotiated private resales, if any, are likely to
be completed at prices reflective of a discount to
the prevailing open market prices for any freely
tradeable Paired Shares, the Company agrees to
deliver such number of supplemental Paired Shares
as UBS may reasonably request to which UBS shall
assign a dollar price in order to approximate an
aggregate amount equal to the aggregate discount
accepted by UBS in connection with the resale of
the Settlement Shares or the Company shall pay an
amount to UBS equal to the aggregate discount
accepted by UBS in connection with the resale of
the Settlement Shares.
Upon completion of all settlement activities, UBS
LLC for the account of UBS, will promptly return
all remaining shares in the Company's Customer
Account to the Company.
Market Disruption Event: The occurrence or existence on any Exchange Trading
Day during the one-half hour period that ends at
the Valuation Time of any suspension of or
limitation imposed on trading on (i) any of the
Relevant Exchanges or (ii) any of the exchange or
boards of trade or futures contract market on which
options or future contracts on the Paired Shares of
the Company are traded if, in the reasonable
determination of the Calculation Agent, such
suspension or limitation is material. In the event
that a Market Disruption Event occurs or is
continuing on a Valuation Date, then any
determination of the closing price of the Paired
Shares shall be postponed to the first succeeding
Exchange Trading Day on which there is no Market
Disruption Event, provided that if there is a
Market Disruption Event on each of the five
Exchange Trading Days immediately following the
original Valuation Date that but for the Market
Disruption Event would have been a day on which the
closing price of the Paired Shares would have been
determined, such fifth Exchange Trading Day shall
be deemed to be such Valuation Date notwithstanding
the Market Disruption Event and the Calculation
Agent shall, in consultation with the Company,
determine the closing price for that Valuation Date
based upon the last closing price prior to such
Market Disruption Event. and if applicable, shall
effect the settlement of the Underlying Shares by
using such last closing price for the determination
of the Stock Settlement Unwind Price.
The Calculation Agent shall within one (1) Business
Day notify the other party of the existence or
occurrence of a Market Disruption Event on any day
that but for the occurrence or existence of a
Market Disruption Event would have been a Valuation
Date.
Regulatory Compliance: Each party agrees that if the delivery of shares
upon settlement is
Page 14
34
subject to any restriction imposed by a regulatory
authority, it shall not be an event of default, and
the parties will negotiate in good faith a
procedure to effect settlement of such shares in a
manner which complies with any relevant rules of
such regulatory authority and which is satisfactory
in form and substance to their respective counsel.
Securities Law Compliance: Each party agrees that it will comply, in
connection with this T ransaction and all related
or contemporaneous sales and purchases of the
Company's Paired Shares, with the applicable
provisions of the Securities Act, the Securities
Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations thereunder.
Settlement: All settlements shall occur through DTC or any
other mutually acceptable depository.
Settlement Stock Delivery: Pursuant to the Stock Settlement and Net Stock
Settlement provisions under Section III. above, UBS
LLC for the account of UBS shall deliver all
Settlement Shares to the Company's Customer
Account. Such Paired Shares will serve as
collateral until released by UBS LLC for the ac
count of UBS in accordance with the settlement
mechanics noted under III.E. above, or delivered to
the Company pursuant to Section III.E.5. Paired S
hares held in the Company's Customer Account shall
not be voted.
The Company covenants and agrees with UBS that
Paired Shares delivered by the Company pursuant to
settlement events in accordance herewith will be
duly authorized, validly issued, fully paid and
non-as sessable. The issuance of such Paired Shares
will not require the con sent, approval,
authorization, registration, or qualification of
any government authority, except such as shall have
been obtained on or before the delivery date to UBS
LLC for the account of UBS in connection with any
registration statement filed with respect to any
share or otherwise.
Solvency: Immediately following the execution of this
agreement, the Company will be solvent and able to
pay its debts as they mature, will have capital
sufficient to carry on business and all businesses
in which it engages, and will have assets which
will have a present fair market valuation greater
than the amount of all of its liabilities.
Allocation between Trust
and SLC: As between the Trust and SLC, (i) any delivery to
or by the Company of the Trust Share portion of
Paired Shares pursuant to this Confirmation shall
be made by delivery to or by the Trust, (ii) any
delivery to or by the Company of the SLC share
portion of Paired Shares pursuant to this
Confirmation shall be made by delivery to or by
SLC, and (iii) any delivery to or by the Company of
cash pursuant to this Confirmation shall be
allocated between the Trust and SLC between and
among themselves 95% to or from the Trust and 5% to
or from SLC without effect on any obligation of the
Company to UBS or on any obligation of UBS to the
Company.
Trading Authorization: The following individuals and /or any individual
authorized in writing by the Treasurer of the
Company are authorized by the Company to provide
trading instructions to UBS LLC for the account
Page 15
35
of UBS with regard to this transaction.
Starwood Lodging Trust:
Xxxxxx Xxxxx
Starwood Lodging Corporation:
Xxxx Xxxxxxx
Nir Margalite
Page 16
36
VI. DELIVERY INSTRUCTIONS:
Party A: Chase, NYC
UBS Securities LLC
ABA 000000000
A/C No. ###-##-####
Attn: GED
Party B: Xxxxxx Bank Xxxxxx Bank
Chicago, IL 60603 Xxxxxxx, XX 00000
ABA # 000000000 ABA #000000000
credit account: credit account:
Starwood Lodging Trust Starwood Lodging Corporation
# 416-255-8 # 000-000-0
ATTN: Xxxxxxx XxXxxx ATTN: Xxxxxxx XxXxxx
Please confirm that the foregoing correctly sets
forth the terms of our agreement by executing the
copy of this Confirmation enclosed for that purpose
and returning it to Xx. Xxxx Xxxxxxx, 29th. Floor.
Yours faithfully,
Union Bank of Switzerland, London Branch:
By: /s/ X. XXXXXXXXXXX By: /s/ XXXX XXXXXXXX
-------------------------------- -----------------------------------
Name: X. XXXXXXXXXXX Name: XXXX XXXXXXXX
Title: Vice President Title: VICE PRESIDENT
Date: Date:
Starwood Lodging Trust:
By: By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Date: Date:
Starwood Lodging Corporation
By: By:
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
Date: Date:
Page 17
37
SCHEDULE
TO THE
MASTER AGREEMENT (THE "AGREEMENT")
DATED AS OF OCTOBER 13, 1997 BETWEEN
UNION BANK OF SWITZERLAND, LONDON BRANCH ("PARTY A") A
BANK REGISTERED UNDER THE LAWS OF SWITZERLAND,
AND
STARWOOD LODGING TRUST, A MARYLAND REAL ESTATE INVESTMENT TRUST ("TRUST") AND
STARWOOD LODGING CORPORATION ("SLC"), A MARYLAND CORPORATION, (TRUST AND SLC
SOMETIMES HEREAFTER REFERRED TO AS "COUNTERPARTY" AND COLLECTIVELY AS "PARTY B")
The parties intend that the only Transaction that shall be subject to this
Agreement is the Transaction as provided for in the Forward Stock Contract dated
October 13, 1997 Party A and Party B (the "Sole Transaction"), which Forward
Stock Contract also constitutes a Confirmation hereunder.
PART 1
TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means (i) in relation to Party A - none; and (ii) in
relation to Party B: - none.
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of
this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) of this Agreement, as
modified by Part 5(d) herein, will apply to Party A and to Party B.
Notwithstanding the provisions of Section 6 of the Agreement, any Cross
Default with respect to Party B shall constitute a Mandatory Unwind
Event in accordance with the Forward Stock Contract. During any
Mandatory Unwind Period resulting from a Cross Default, Party A may not
exercise it's "Right to Terminate Following an Event of Default"
pursuant to Section 6 of the Agreement unless and until:
(i) Party B fails to fulfill its obligations to deliver an effective
resale Registration Statement as required under the Forward Stock
Contract; or
(ii) any effective resale Registration Statement provided by Party B as
required under the Forward Stock Contract is subject to a stop order on
Day S or during the Unwind Period; or
(iii) any event of default under any other unsecured and /or recourse
lending agreement involving Party B has occurred and the obligations
under such lending agreement have been accelerated;
provided that the foregoing shall in no way limit Party A's rights upon
the occurrence of any other Event of Default by Party B
"SPECIFIED INDEBTEDNESS" means (i) with respect to Party A, any
obligation (whether present or future, contingent or otherwise as
principal or surety or otherwise) for the payment or repayment of any
money but shall not include obligations in respect of deposits received
in the ordinary course of a party's banking business and (ii) with
respect to Party B, any obligation (whether present or future,
contingent or otherwise, as principal or surety or otherwise) for the
payment or repayment of any money under any unsecured and/or recourse
lending agreement and involving the Trust and/or SLC.
"THRESHOLD AMOUNT" means USD10,000,000 (or the equivalent in any other
currency or currencies).
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) of this
Agreement will apply to Party A and Party B, as modified by Part 5(a) of
this Agreement.
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(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) of this
Agreement will not apply to Party A or to Party B.
(f) PAYMENTS ON EARLY TERMINATION for the purpose of Section 6(e) of this
Agreement: (i) Loss shall apply; and (ii) the Second Method shall apply.
(g) "TERMINATION CURRENCY" means one of the currencies in which payments are
required to be made pursuant to a Confirmation in respect of a
Terminated Transaction selected by the non-Defaulting Party or the
non-Affected Party, as the case may be, or , in the circumstances where
there are two Affected Parties, as agreed between the parties, or,
failing such agreement as aforesaid, or if the currency so selected is
not freely available, the Termination Currency shall be U.S. Dollars.
(h) ADDITIONAL TERMINATION EVENT. Not applicable.
PART 2
TAX REPRESENTATIONS
(a) PAYER TAX REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and Party B each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i)
the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the
satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement, PROVIDED that it shall not be a breach of this
representation where reliance is placed on sub-clause (ii) above and the
other party does not deliver a form or document under Section 4(a)(iii)
by reason of material prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below,
if any:
(i) The following representation will apply to Party A (except when
acting through an Office in the United States) and will apply to Party
B:
It is fully eligible for the benefits of the "Business Profits"
or "Industrial and Commercial Profits" provision, as the case may be,
the "Interest" provision or the "Other Income" provision (if any) of the
Specified Treaty with respect to any payment described in such
provisions and received or to be received by it in connection with this
Agreement and no such payment is attributable to a trade or business
carried on by it through a permanent establishment in the Specified
Jurisdiction. "Specified Treaty" means: Income Tax Convention between
the United States of America and Switzerland. "Specified Jurisdiction"
means with respect to Party A: the United States of America. "Specified
Jurisdiction" means with respect to Party B: Switzerland.
(ii) The following representation will apply to Party A when acting
through an Office in the United States and will apply to Party B:
Each payment received or to be received by it in connection with
this Agreement will be effectively connected with its conduct of trade
or business in the Specified Jurisdiction. "Specified Jurisdiction"
means: the United States of America.
(iii) The following representation will apply to Party A when acting
through an Office in the United Kingdom and will not apply to Party B:
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(A) It is entering into each Transaction in the ordinary course
of its trade as, and is, either (1) a recognized U.K. bank or (2) a
recognized U.K. swaps dealer (in either case (1) or (2), for the
purposes of the United Kingdom Inland Revenue extra statutory concession
C17 on interest and currency swaps dated March 14, 1989), and (B) it
will bring into account payments made and received in respect of each
Transaction in computing its income for United Kingdom tax purposes.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purposes of Sections 3(d), 4(a)(i) and (ii) of this Agreement, each
party agrees to supply the following documents:
(a) Tax forms, documents or certificates to be delivered are:
Each party agrees to complete, accurately and in a manner reasonably
satisfactory to the other party (or any Specified Entity of the other
party), and to execute, arrange for any required certification of, and
deliver to the other party (or such Specified Entity) (or to such
government or taxing authority as the other party (or such Specified
Entity) reasonably directs), any form or document that may be required
or reasonably requested in order to allow the other party (or such
Specified Entity) to make a payment under this Agreement (or a Credit
Support Document of the other party or a Specified Entity thereof)
without any deduction or withholding for or on account of any Tax or
with such deduction or withholding at a reduced rate, promptly upon the
earlier of (i) reasonable demand by the other party (or such Specified
Entity) and (ii) learning that the form or document is required.
(b) Other documents to be delivered and covered by the Section 3(d)
representation are:
PARTY A: None;
PARTY B: Opinion of Party B's legal counsel in a form
satisfactory to Party A; and
PARTY A AND PARTY B: Each party shall provide to the other party
evidence of the authority and true
signatures of each official or
representative signing this Agreement.
PART 4
MISCELLANEOUS
(a) ADDRESS FOR NOTICES. For the purpose of Section 12(a) of this Agreement:
ADDRESS FOR NOTICES OR COMMUNICATIONS TO PARTY A: To the office(s)
specified in the relevant Confirmation with a copy of any notice or
other communication under Section 5 or 6 to both the London and Zurich
Branches of Party A as set out below:
ZURICH BRANCH LONDON BRANCH
Union Bank of Switzerland Union Bank of Switzerland
Xxxxxxxxxxxxxx 00 000 Xxxxxxxxx Xxxxxx
8021 Zurich Xxxxxx XX0X 0XX
Attn: HADP - Derivative Operations Attn: Derivative Legal Group - DELG
Telex: 814449 UB CH Telex: 923333 UBSPDW G
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Address for notices or communications to Party B:
Starwood Lodging Trust Starwood Lodging Corporation
0000 Xxxx Xxxxxxxxx Xxxx 0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000 Xxxxx 000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attn: Mr. Xxx Xxxxx Attn: Xx. Xxxx Xxxxxxx
Telecopier: 000-000-0000 Telecopier: 000-000-0000
Phone: 000-000-0000 Phone: 000-000-0000
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement: Party
A appoints as its Process Agent: UBS Securities LLC, 000 Xxxx Xxxxxx,
Xxx Xxxx, XX 00000, Attention: Legal Department. Party B makes no
appointment of Process Agent.
(c) OFFICES. The provisions of Section 10(a) to this Agreement will apply to
this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Neither Party A or Party B is a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document in
relation to Party A: - not applicable, and in relation to Party B: - The
Forward Stock Contract for the Sole Transaction.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A and Party B: Not Applicable.
(h) GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York (without reference to
choice of law doctrine).
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
does not apply.
(j) "AFFILIATE" will have the meaning set out in Section 14 of this
Agreement.
PART 5
OTHER PROVISIONS
(a) MODIFICATIONS TO THE AGREEMENT.
(i) MODIFICATIONS TO CERTAIN EVENTS OF DEFAULT AND TERMINATION
EVENTS. For the Events of Default and Termination Events listed
below, including any modifications in this Schedule, the "Right
to Terminate Following an Event of Default", or "Right to
Terminate Following Termination Event" shall be modified so
that, in lieu of the remedies detailed in Section 6 for Early
Termination, settlement shall instead, after any applicable
grace period, be effected as if a Mandatory Unwind Event has
occurred pursuant to Section VI of the Forward Stock Contract
for the Sole Transaction:
A. Events of Default:
(1) Section 5(a)(ii), Breach of Agreement
(2) Section 5(a)(iv), Misrepresentation
(3) Section 5(a)(viii) - Merger Without Assumption
B. Termination Events:
(1) Section 5(b)(i), Illegality
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(2) Section 5(b)(ii), Tax Event
(3) Section 5(b)(iii), Tax Event Upon Merger
(4) Section 5(b)(iv), Credit Event Upon Merger
(ii) RELATIONSHIP BETWEEN THE PARTIES. This Agreement is hereby
amended by the addition of a new Section 15 as follows:
"15. RELATIONSHIP BETWEEN THE PARTIES.
Each party will be deemed to represent to the other party on the
date on which it enters into a Transaction (absent a written
agreement between the parties that expressly imposes affirmative
obligations to the contrary for that Transaction):
(a) NON RELIANCE. It is acting for its own account, and it
has made its own independent decisions to enter into that
transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment
and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication (written
or oral) of the other party as investment advice or as a
recommendation to enter into that Transaction; it being
understood that information and explanations related to
the terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter
into that Transaction. No communication (written or oral)
received from the other party shall be deemed to be an
assurance or guarantee as to the expected results of that
Transaction.
(b) ASSESSMENT AND UNDERSTANDING. It is capable of
assessing the merits of and understanding (on its own
behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks
of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or an adviser to it in respect of that
Transaction."
(iii) BASIC REPRESENTATIONS. Section 3(a) of this Agreement is hereby
amended by the deletion of "and" at the end of Section 3(a)(iv);
the substitution of a comma for the period at the end of Section
3(a)(v) and the addition of Sections 3(a)(vi) to (ix) as
follows:
"(vi) ELIGIBLE SWAP PARTICIPANT; LINE OF BUSINESS. It is
an "eligible swap participant" as defined in Commodity
Futures Trading Commission Rule 35.1(b)(2) (17 C.F.R.
35.1(b)(2)) and it has entered into this Agreement and the
Transactions in connection with its business or a line of
business (including financial intermediation);
(vii) COMPLIANCE WITH INTERNAL INVESTMENT POLICIES. In the
case of each Counterparty, each Transaction entered into
under this Agreement will be entered into in accordance
with, and will at all times comply with, applicable
internal investment policies and guidelines from time to
time adopted by such Counterparty; and
(viii) PURPOSE. In the case of Party B, it has entered
into this Agreement (and it will enter into each
Transaction hereunder) in connection with exchange rate,
interest rate or other price exposures arising in the
conduct or financing of its business or in order to manage
its assets or liabilities.
(iv) AGREEMENTS. Section 4 of this Agreement is hereby amended by the
addition of Sections 4(f) as follows:
"(f) PHYSICAL DELIVERY. In respect of any physically
settled Transactions, it will, at the time of delivery, be
the legal and beneficial owner, free of liens and other
encumbrances, of any securities or commodities it delivers
to the other Party."
(v) EVENTS OF DEFAULT: Section 5 of this Agreement is hereby amended
as follows:
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(1) FAILURE TO PAY OR DELIVER. Section 5(a)(i) of this
Agreement is hereby amended by the substitution of the
following therefor:
"FAILURE TO PAY OR DELIVER. Failure by a party to make,
when due, any payment under Section 2(a)(i) or 2(e) of
this Agreement required to be made by it if such failure
is not remedied on or before the third Local Business Day
after notice of such failure is given to the party.
Failure by a party to make, when due, any delivery under
Section 2(a)(i) of this Agreement required to be made by
it if such failure is not remedied on or before the first
day that the relevant settlement or clearance system is
open for the acceptance and execution of settlement
instructions after notice of such failure is given to the
party."
(2) BANKRUPTCY. Section 5(a)(vii) of this Agreement is hereby
amended as follows:
(A) Section 5(a)(vii)(4) of this Agreement is hereby
amended by the insertion of a semi-colon after
"liquidation" the first time it appears in such Section
and by the deletion of the remainder of such Section; and
(B) Section 5(a)(vii)(7) of this Agreement is hereby
amended by the substitution of "10" for "30".
(v) TAX EVENT. Section 5(b)(ii) of this Agreement is hereby amended
by the deletion of "or there is a substantial likelihood that it
will," from line four thereof.
(b) SET-OFF.
(i) In addition to any rights of set-off a party may have as a
matter of law or otherwise, upon the occurrence of an Event of
Default with respect to Party ("X") hereof (or a provision
analogous thereto) or a Termination Event where X is the sole
Affected Party, the other party ("Y") shall have the right (but
shall not be obliged) without prior notice to X or any other
person to set off any obligation of X owing to Y (whether or not
arising under this Agreement, whether or not matured, whether or
not contingent and regardless of the currency, place of payment
or booking office of the obligation) against any obligations of
Y owing to X (whether or not arising under this Agreement,
whether or not matured, whether or not contingent and regardless
of the currency, place of payment or booking office of the
obligation).
(ii) For the purpose of cross-currency set off, Y may convert any
obligation to another currency at a market rate determined by Y.
(iii) Nothing in this paragraph will have the effect of creating a
charge or other security interest. This paragraph shall be
without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which any party
is at any time otherwise entitled (whether by operation of law,
contract or otherwise).
(c) CONSENT TO RECORDING.
Each Party (i) consents to the recording of the telephone conversations
of trading and marketing personnel of the Parties and their Affiliates
in connection with this Agreement or any potential Transaction and (ii)
agrees to obtain any necessary consent of, and give notice of such
recording to, such personnel of it and its Affiliates.
(d) MODIFICATION TO CROSS DEFAULT.
Section 5(a)(vi) of this Agreement is hereby amended by the addition of
the following subparagraph at the end thereof:
Any event of default in accordance with the "Credit Agreement"
or "Purchase Agreement", as defined below, shall constitute an
Event of Default with respect to Party B. "Credit Agreement"
means the
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Revolving and Term Loan Credit Facility dated as of September,
1997 among the Trust, as borrower, the Lenders identified
therein, and Bankers Trust N.A., as lead agent, as amended,
supplemented or restated from time to time. "Purchase Agreement"
shall mean the Purchase Agreement dated October 13, 1997 between
Party B, Party A and UBS Securities (Portfolio) LLC; or
Any FINANCIAL COVENANT DEFAULT as more particularly described in
Exhibit A attached hereto and incorporated by reference herein.
(e) ADDITIONAL AGREEMENTS.
Party B further agrees that Party B will deliver to Party A at
the address for notices to Party A provided in Part 4 of this
Schedule each notice, document, certificate or other writing as
Party B is obligated to furnish to any party in accordance with
the terms of the Credit Agreement until all of both parties'
obligations under this Agreement (whether absolute or
contingent) are fully performed.
IN WITNESS WHEREOF the parties have executed this Schedule on the respective
dates specified below with effect from the date specified on the first page of
this document.
UNION BANK OF SWITZERLAND, STARWOOD LODGING TRUST
LONDON BRANCH
BY: BY: /s/ XXXXXX X. XXXXX
----------------------------- -----------------------------
NAME: NAME: XXXXXX X. XXXXX
TITLE : TITLE: SENIOR VICE PRESIDENT & CFO
DATE: DATE:
STARWOOD LODGING CORPORATION
BY: BY: /s/ XXXX X. XXXXXXX
----------------------------- -----------------------------
NAME: NAME: XXXX X. XXXXXXX
TITLE : TITLE: VICE PRESIDENT AND
CORPORATE CONTROLLER
DATE: DATE:
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Revolving and Term Loan Credit Facility dated as of September,
1997 among the Trust, as borrower, the Lenders identified
therein, and Bankers Trust N.A., as lead agent, as amended,
supplemented or restated from time to time. "Purchase Agreement"
shall mean the Purchase Agreement dated October 13, 1997 between
Party B, Party A and UBS Securities (Portfolio) LLC; or
Any FINANCIAL COVENANT DEFAULT as more particularly described in
Exhibit A attached hereto and incorporated by reference herein.
(e) ADDITIONAL AGREEMENTS.
Party B further agrees that Party B will deliver to Party A at
the address for notices to Party A provided in Part 4 of this
Schedule each notice, document, certificate or other writing as
Party B is obligated to furnish to any party in accordance with
the terms of the Credit Agreement until all of both parties'
obligations under this Agreement (whether absolute or
contingent) are fully performed.
IN WITNESS WHEREOF the parties have executed this Schedule on the respective
dates specified below with effect from the date specified on the first page of
this document.
UNION BANK OF SWITZERLAND, STARWOOD LODGING TRUST
LONDON BRANCH
BY: BY:
----------------------------- ----------------------------
NAME: NAME:
TITLE: TITLE:
DATE: DATE:
STARWOOD LODGING CORPORATION
BY: BY:
----------------------------- -----------------------------
NAME: NAME:
TITLE: TITLE:
DATE: DATE:
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EXHIBIT A
The Company's financial covenant compliance below is based on the Company's 12
months rolling financial data:
FINANCIAL COVENANTS
($ MILLION WHERE APPROPRIATE) Threshold
Total Outstanding Debt/Total Value(1)
9 Months after Closing < 60%
-
Thereafter < 50%
-
Secured Debt/Total Value(1) < 30%
Secured Recourse Debt < 15% of Total Value, or < $300 mio. (greater of two)(3)
- -
Unsecured Debt < Facility plus (greater of 15% of Total Value or $300 mio.)(4)
-
Unencumbered Assets/Unsecured Debt
9 Months after Closing > 1.67x
-
Thereafter > 2.00x
-
Unencumbered Assets plus Secured Recourse Assets/
Unsecured Debt plus Secured Recourse Debt
9 Months after Closing > 1.63x
-
Thereafter > 2.00x
-
EBITDA/Interest Expense
9 Months after Closing > 2.00x
-
Thereafter > 2.50x
-
Unencumbered EBITDA/Unsecured Interest Expense
9 Months after Closing > 2.00x
-
Thereafter > 2.50x
-
EBITDA/Fixed Charges(2)
9 Months after Closing > 2.00x
-
Thereafter > 2.25x
-
Unencumbered EBITDA/Unsecured Fixed Charges(2)
9 Months after Closing > 2.00x
-
Thereafter > 2.25x
-
Minmum Equity Value > $591.5 mio. plus 75% of new equity
-
Dividends (both Preferred and < 85% of FFO or min. amount for REIT status(whichever greater)
Common) re Starwood Lodging -
Dividends (both Preferred < 85% of FFO or min. amount for REIT status (whichever greater)
and Common) re the REIT -
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FINANCIAL COVENANTS (CONTINUED)
($ MILLION WHERE APPROPRIATE) Threshold
Investment Restrictions
a) Mortgage Notes/Total Value < 10%
-
b) Unimproved Land/Total Value < 2.5%
-
c) Hotel Stock Acquistions/Total Value < 5%
-
d) Operation Costs of Hotels/Total Value < 15%
-
e) Non-Hotel Assets/Total Value < 2.5%
-
f) Lines a) through e)/Total Value < 20%
-
g) Joint Ventures/Total Value < 20%
-
1) Total Value defined as the sum of (a) EBITDA capped at 10% for
properties owned more than 4 qtrs; plus 95% of cost of subsequent
acquisitions;(b) Mortgage Notes;(c) Available Cash; (d) Hotel
Renovations; (e) Properties under Construction; (f) Unimproved Land; and
(g) Eligible Management Assets.
2) Fixed Charges include Interest Expense, Amortization and Preferred
Dividends.
Any above capitalized term shall be defined pursuant to the Company's $ 1.2
billion unsecured credit line, evidenced by that certain Credit Agreement by and
between the Company as borrower and Bankers Trust as lead agent and dated as of
September 10, 1997.
The Financial Covenants will be tested quarterly, only at the end of each fiscal
quarter, during the term of the Transaction.
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