EXHIBIT 10.4
STARWOOD HOTELS & RESORTS
AMENDED AND RESTATED
NON-QUALIFIED STOCK OPTION AGREEMENT
This Amended and Restated Non-Qualified Stock Option Agreement, is made by
and between Starwood Hotels & Resorts, a Maryland real estate investment trust
(the "Company") and Xxxxx X. Xxxxxxxxxx (the "Optionee"), as of May 22, 2002
(the "Agreement"). References to employment by the Company shall include
employment by a "subsidiary corporation" of the Company, as such term is defined
in Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").
Capitalized terms not defined herein shall have the meanings specified in the
Plan (as defined below).
WITNESSETH:
WHEREAS, the Company and Optionee entered into that certain Non-Qualified
Stock Option Agreement dated as of August 12, 1996 pursuant to the Company's
Share Option Plan (the "Plan"); and
WHEREAS, Optionee was granted, as of August 12, 1996 (the "Option Date"),
a non-qualified option to purchase from the Company (the "Option") 300,000
Shares, at the price of $35.875 per Paired Share upon and subject to the terms
and conditions set forth below.
NOW, THEREFORE, in exchange for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and in consideration of
the mutual covenants set forth herein, the parties agree as follows:
1. Option Subject to Acceptance of Agreement.
The Option may not be exercised unless the Optionee shall accept this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
2.1 Maximum Term of Option. In no event may the Option be exercised,
in whole or in part, after ten years from Option Date (the "Expiration Date").
2.2 Exercise of Option. (a) The Option shall become exercisable as
to one-fourth of the number of Paired Shares subject to the Option on each
anniversary of the Option Date, commencing with the second anniversary
(occurring in 1998) through the fifth anniversary (occurring in 2001) and
otherwise as provided below in this Section 2.2.
(b) If the Optionee's employment by the Company terminates for
Cause, the Option, whether or not then exercisable, shall terminate
automatically on the effective date of the Optionee's termination of employment
for Cause. For purposes of this Section 2.2, if the Optionee and the Company
have entered into an Employment Agreement which provided for termination for
Cause and is applicable to this Option, Optionee shall only be deemed terminated
by the Company for Cause if his termination for Cause has become effective under
and pursuant to such Employment Agreement. In the absence of an Employment
Agreement or a provision for termination for Cause thereunder which applies to
this Option, Cause shall be limited to conviction of a felony, or determination
of a court of competent jurisdiction of significant violation of Optionee's duty
of loyalty to the Company or of a substantial disregard of the duties properly
assigned to the Optionee (other than as a result of disability).
(c) If the Optionee's employment by the Company is terminated by the
Company other than for "Cause" within the meaning of Section 2.2(b) hereof (and
a termination due to Executive's death or Disability shall be treated for
purposes of this Agreement as a termination by the company other than for
"Cause"), or if the Optionee's employment by the company is terminated by the
Optionee for "Good Reason" as determined in accordance with the provisions of
any Employment Agreement, then the Option shall become fully exercisable and may
thereafter be exercised by the Optionee or the Optionee's Legal Representative
until and including the Expiration Date.
(d) If the Optionee's employment by the Company is treated (after
giving effect to any required arbitration proceeding) as having been terminated
by the Optionee without Good Reason under the Employment Agreement, the Option
shall be exercisable only to the extent it is exercisable on the effective date
of the Optionee's termination of employment and may thereafter be exercised by
the Optionee or the Optionee's Legal Representative until and including the
earlier of (i) the date which is three months after the effective date of the
Optionee's termination of employment or service and (ii) the Expiration Date.
(e) If the Optionee dies at any time prior to the Expiration Date
following termination of employment for a reason giving Optionee the right to
exercise until the Expiration Date under paragraph (c) above, the Option shall
be exercisable by the Optionee's Legal Representative or Permitted Transferees,
as the case may be, until and including the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole Paired Shares to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) previously
owned whole Paired Shares (which the Optionee has held for at least six months
prior to the delivery of such Paired Shares or which the Optionee purchased on
the Open market and for which the Optionee has good title, free and clear of all
liens and encumbrances) having a fair market value, determined as of the date of
exercise, equal to the aggregate purchase price payable
pursuant to the Option by reason of such exercise, (iii) in cash by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (iv) a combination of (i) and (ii), and (2) by
executing such documents as the Company may reasonably request. The Committee
shall have sole discretion to disapprove of an election pursuant to either
clause (ii) or (iii). Any fraction of a Paired Share which would be required to
pay such purchase price shall be disregarded and the remaining amount due shall
be paid in cash by the Optionee. No certificate representing a Paired Share
shall be delivered until the full purchase therefor has been paid.
2.4 Termination of Option. (a) In no event may the Option be
exercised after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the
Paired Shares subject to the Option expire or are exercised, cancelled or
forfeited, the Optionee shall promptly return this Agreement to the Company for
full or partial cancellation, as the case may be. Such cancellation shall be
effective regardless of whether the Optionee returns this Agreement. If the
Optionee continues to have rights to purchase Paired Shares hereunder, the
Company shall, within 10 days of the Optionee's delivery of this Agreement to
the Company, either (i) xxxx this Agreement to indicate the extent to which the
Option has expired or been exercised, cancelled or forfeited or (ii) issue to
the Optionee a substitute option agreement applicable to such rights, which
agreement shall otherwise be identical to this Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1 Transferability of Option. (a) the Optionee may transfer to
employees and prior employees of Starwood Capital Group, LLC, a Connecticut
limited liability company ("SCG"), or its affiliates, the right to purchase from
the Company the securities underlying the Options.
b) The Options may not be transferred by the Optionee other than (i)
as provided in Section 3.1(a) above, (ii) by will or the laws of descent and
distribution or (iii) pursuant to the beneficiary designation procedures
approved by the Company. Except to the extent permitted by the foregoing
sentence, during the Optionee's lifetime the Options are exercisable only by the
Optionee or the Optionee's Legal Representative. Except as permitted by the
foregoing, the Options may not be sold, transferred, assigned, pledged,
hypothecated, voluntarily encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to sell, transfer, assign, pledge, hypothecate,
voluntarily encumber or otherwise dispose of the Options (unless permitted by
Section 3.1(a) above or this Section 3.1(b)), the Options and all rights
hereunder shall, to the extent of any such attempt, immediately become null and
void.
3.2 Investment Representation. The Optionee hereby represents and
covenants that (a) any Paired Shares purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), unless such purchase has been registered under the Securities Act and any
applicable state securities laws; (b) any subsequent sale of any such Paired
Shares shall be made either pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws, or pursuant
to an exemption from registration under the Securities Act and such state
securities laws; and (c) if requested by the Company, the Optionee shall submit
a written statement, in form satisfactory to the Company, to the effect that
such representation (x) is true and correct as of the date of purchase of any
Paired Shares hereunder or (y) is true and correct as of the date of any sale of
any such Paired Shares, as applicable. As further condition precedent to any
exercise of the Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of or supervision over
the issuance or delivery of the Paired Shares and, in connection therewith,
shall execute any documents which the Board or the Committee shall in its sole
discretion deem necessary or advisable.
3.3 Withholding Taxes. (a) As a condition precedent to the delivery
of Paired Shares upon exercise of the Option, the Optionee shall, upon request
by the Company, pay to the Company in addition to the purchase price of the
Paired Shares, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to withhold and
pay over as income or other withholding taxes (the "Required Tax Payments") with
respect to such exercise of the Option. If the Optionee shall fail to advance
the Required Tax Payments after request by the Company, the Company may, in its
discretion, deduct any Required Tax Payments from any amount then or thereafter
payable by the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a cash
payment to the Company pursuant to Section 3.3(a), (2) delivery to the Company
of previously owned whole Paired Shares (which the Optionee has held for at
least six months prior to the delivery of such Paired Shares or which the
Optionee purchased on the open market and for which the Optionee has good title,
free and clear of all liens and encumbrances) having a fair market value,
determined as of the date the obligation to withhold or pay taxes first arises
in connection with the Option (the "Tax Date"), equal to the Required Tax
Payments, (3) a cash payment by a broker-dealer acceptable to the Company to
whom the Optionee has submitted an irrevocable notice of exercise or (4) any
combination of (1) and (2). The Committee shall have sole discretion to
disapprove of an election pursuant to any of clauses (2)-(4). Paired Shares to
be delivered may not have a Fair Market Value in excess of the minimum amount of
the Required Tax Payments. Any fraction of a Paired Share which would be
required to satisfy any such obligation shall be disregarded and the remaining
amount due shall be paid in cash by the Optionee. No certificate representing a
Paired Share shall be delivered until the Required Tax payments have been
satisfied in full.
(c) Unless the Committee otherwise determines, if the Optionee is
subject to Section 16 of the Exchange Act, the Optionee may deliver to the
Company previously owned whole Paired Shares in accordance with Section 3.3(b),
but only if such delivery is in connection with the delivery of Paired Shares in
payment of the exercise price of the Option.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Paired Shares other than a regular cash
dividend, the number and class of securities subject to the Option and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Option, the Company shall
pay the Optionee, in connection with the first exercise of the Option, in whole
or in part, occurring after such adjustment, an amount in cash determined by
multiplying (i) the fraction of such security (rounded to the nearest hundredth)
by (ii) the excess, if any, of (A) the fair market value of a Paired Share on
the exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
3.5 Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the Paired
shares subject to the Option upon any securities exchange or under any law, or
the consent or approval of any government body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with, the
purchase or delivery of Paired Shares hereunder, the Option may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained, free of
any conditions not acceptable to the Company. The Company agrees to use
reasonable efforts to effect or obtain any such listing, registration,
qualification, consent or approval.
3.6 Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of Paired Shares purchased against full
payment therefor. The Company shall pay all original issue or transfer taxes and
all fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7 Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to Paired Shares subject
to the Option unless and until purchased and delivered upon the exercise of the
Option, in whole or in part, and the Optionee becomes a stockholder of record
with respect to such delivered Paired Shares; and the Optionee shall not be
considered a stockholder of the Company or the Corporation with respect to any
Paired Shares not so purchased and delivered.
3.8 Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or be
deemed to
give the Optionee any right to continued employment by the Company or any
affiliate of the Company.
3.9 Decisions of Board or Committee. The Board or the Committee
shall have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other action
made or taken by the Board or the Committee regarding the Plan or this Agreement
shall be final, binding and conclusive (subject to the provisions for
termination by the Company for Cause and termination by the Optionee for Good
Reason as set forth in any Employment Agreement).
3.10 Company to Reserve Paired Shares. The Company shall at all
times prior to the expiration or termination of the Option reserve or cause to
be reserved and keep or cause to be kept available, either in its treasury or
out of its authorized but unissued Paired Shares, the full number of Paired
Share subject to the Option from time to time.
3.11 Agreement Subject to the Plan. Except to the extent otherwise
expressly provided herein, this Agreement is subject to the provisions of the
Plan and shall be interpreted in accordance therewith. The Optionee hereby
acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
4.1 Designation as Non-Qualified Stock Option. The Option is hereby
designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2 Meaning of Certain Terms. (a) As used herein, the term "Legal
Representative" shall include an executor, administrator, legal representative,
beneficiary or similar person and the term "Permitted Transferee" shall include
any transferee (i) pursuant to a transfer permitted under Section 4.4 of the
Plan and Section 3.1 hereof or (ii) designated pursuant to beneficiary
designation procedures which may be approved by the Company.
4.3 Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights hereunder
in accordance with this Agreement or the Plan.
4.4 Notices. All notices, requests or other communications provided
for in this Agreement shall be made, if to the Company, to the Secretary of the
Company at the Company's principal executive office, and if to the Optionee, to
his address on the books of the Company (or to such other address as the company
or Optionee may give to the other or purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing
in the United States mails to the last known address of the party entitled
thereto or (d) by express courier service. The notice, request or other
communication shall be deemed to be received upon personal delivery, upon
confirmation of mail or express courier service; provided, however, that if a
notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5 Governing Law. The Option, this Agreement, and all
determinations made and actions taken pursuant hereto and thereto, to the extent
not governed by the laws of the United States, shall be governed by the laws of
the State of New York and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.6 Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
4.7 Disclaimer. The name "Starwood Hotels & Resorts" is the
designation of Maryland real estate investment trust and its Trustees (as
Trustees but not personally) under an Amended and Restated Declaration of Trust
dated April 16, 1999, and all personal dealing with Starwood Hotels & Resorts
must look solely to Starwood Hotels & Resorts' property for the enforcement of
any claims against Starwood Hotels & Resorts, as the Trustees, officers, agents
and security holders of Starwood Hotels & Resorts assume no personal obligation
of Starwood Hotels & Resorts, and their respective property shall not be subject
to claims of any person relating to such obligation.
STARWOOD HOTELS & RESORTS
By/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Vice President, General Counsel and
Secretary
Accepted:
/s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
"Optionee"
