1
EXHIBIT 3
AMENDED AND RESTATED INTERCOMPANY AGREEMENT
AMENDED AND RESTATED INTERCOMPANY AGREEMENT dated as of _________ __,
1999, between Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
(the "Corporation"), and Starwood Hotels & Resorts, a Maryland real estate
investment trust (the "Trust").
WHEREAS the Corporation and the Trust are parties to the Pairing
Agreement dated as of June 25, 1980, as amended as of February 1, 1995 and as of
January 2, 1998 (the "Original Agreement");
WHEREAS the Corporation, the Trust and a wholly owned subsidiary of the
Corporation ("Merger Sub") have entered into the Agreement and Plan of
Restructuring dated as of September 16, 1998 (the "Restructuring Agreement");
WHEREAS, pursuant to the Restructuring Agreement, on the date hereof
Merger Sub is merging into the Trust (the "Merger"), whereupon the separate
existence of Merger Sub will cease and the Trust will continue as the surviving
entity;
WHEREAS, by virtue of the Merger, each outstanding common share of
beneficial interest, par value $.01 per share, of the Trust ("Old Trust Shares")
will be converted into Class B shares of beneficial interest, par value $.01 per
share, of the Trust ("Class B Shares"), and each outstanding common share of
beneficial interest, par value $.01 per share, of Merger Sub will be converted
into Class A shares of beneficial interest, par value $.01 per share, of the
Trust ("Class A Shares");
WHEREAS the Original Agreement provided, among other things, that the
Old Trust Shares and the shares of common stock, par value $.01 per share, of
the Corporation ("Corporation Shares") were paired, such that Old Trust Shares
were transferable only with an equal number of Corporation Shares and vice
versa;
WHEREAS the Trust and the Corporation wish to cause the Class B Shares,
and not the Old Trust Shares, to be attached to the Corporation Shares, so that
Class B Shares are transferable only with an equal number of Corporation Shares
and vice versa;
WHEREAS, in order to provide for the Class B Shares to be attached to
the Corporation Shares, and to make other necessary or appropriate changes, the
Board of Trustees of the Trust and the Board of Directors of the Corporation
have agreed to amend and restate the Original Agreement in its entirety in the
form of this Agreement and directed that this Agreement be submitted to the
shareholders of the Trust at the 1998 Annual Meeting of Shareholders of the
2
Trust (the "Trust Meeting") and to the stockholders of the Corporation at the
1998 Annual Meeting of Stockholders of the Corporation (the "Corporation
Meeting"); and
WHEREAS this Agreement was duly approved by the shareholders of the
Trust at the Trust Meeting and the stockholders of the Corporation at the
Corporation Meeting;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree:
1. On and after the Effective Time (as defined in the Restructuring
Agreement):
(a) except as provided in Section 10, the Class B Shares and the
Corporation Shares shall not be transferable, and shall not be transferred
on the books of the Trust or of the Corporation, respectively, unless in
connection with such transfer the transferee acquires the same number of
Class B Shares and Corporation Shares (each Class B Share and Corporation
Share, as so attached, being together referred to as a "Unit");
(b) upon presentation to the Trust's transfer agent of any certificate
evidencing ownership of Old Trust Shares issued prior to June 25, 1980 duly
endorsed for transfer or accompanied by a duly executed stock power, there
shall be issued to the transferee a certificate or certificates evidencing
both the number of Class B Shares into which the Old Trust Shares so
transferred were converted in the Merger and the same number of Corporation
Shares, and there shall be issued a certificate or certificates evidencing
both the Class B Shares into which any Old Trust Shares not transferred were
converted in the Merger and the same number of Corporation Shares; and
(c) except as provided in Section 10, neither the Trust nor the
Corporation shall issue or transfer or agree to issue or transfer any Class
B Shares or Corporation Shares unless effective provision is made for the
issuance or transfer to the same person of the same number of Class B Shares
and Corporation Shares and unless the Trust and the Corporation agree on the
manner and basis of allocating the consideration to be received between the
Trust and the Corporation or on the payment by one entity to the other of
cash or other consideration in lieu of a portion of such consideration.
2. Except as provided in Section 10, each certificate issued after the
Effective Time representing Corporation Shares shall have printed on its reverse
side a certificate representing the same number of Class B Shares and shall be
in a form satisfactory to The New York Stock Exchange. A legend shall be placed
on the face or reverse side of each certificate representing ownership of
Corporation Shares and Class B Shares issued on or after the Effective Time
referring to the restrictions on transfer of the Class B Shares and the
Corporation Shares set forth herein.
-2-
3
3. After the Effective Time, neither the Trust nor the Corporation
shall issue any securities convertible into Class B Shares or Corporation Shares
or issue rights or warrants to purchase such Class B Shares or Corporation
Shares, unless both the Trust and the Corporation take action to the end that
the outstanding Class B Shares and Corporation Shares will be attached to one
another as Units as contemplated herein.
4. If, after the Effective Time, either the Trust or the Corporation
shall declare or pay any distribution consisting in whole or in part of Class B
Shares or Corporation Shares, or subdivide, combine or otherwise reclassify such
Class B Shares or Corporation Shares (each, a "Unit Adjustment Event"), the
number and the classes of securities comprising a Unit shall be adjusted such
that each Unit shall consist of the number of Class B Shares, the number of
Corporation Shares and the number of any other shares of beneficial interest in
the Trust or shares of stock of the Corporation that a holder of a Unit would
have held or have been entitled to receive after giving effect to such Unit
Adjustment Event.
5. After the Effective Time, neither the Trust nor the Corporation will
be a party to any merger, consolidation, sale of assets, liquidation or other
form of reorganization pursuant to which either the Class B Shares or the
Corporation Shares are converted, redeemed or otherwise changed unless the other
entity either is also a party to such transaction or waives its right hereunder
to be such a party.
6. The Trust and the Corporation agree to appoint the same banks or
trust companies as transfer agents and the same banks or trust companies as
registrars for the Class B Shares and the Corporation Shares.
7. The Trust and the Corporation shall use their best efforts to effect
(in the case of the Class B Shares) and to maintain the listing of the Class B
Shares and Corporation Shares on The New York Stock Exchange.
8. This Agreement may be amended by action of the Trustees of the Trust
and the Board of Directors of the Corporation without the consent of any holder
of Units or of any other person; provided, however, that no such amendment may
materially and adversely affect the rights of the holders of the Class B Shares
contemplated by Section 10 (or this Section 8) without the prior approval of the
holders of a majority of the then outstanding Class B Shares.
9. In the event that (x) the Trust issues Excess Trust Shares, par
value $.01 per share, or Excess Trust Preferred Shares, par value $.01 per
share, of the Trust ("Excess Shares") or the Corporation issues shares of Excess
Common Stock, par value $.01 per share, or Excess Preferred Stock, par value
$.01 per share, of the Corporation ("Excess Stock"), and (y) the shares of
beneficial interest in the Trust and the shares of stock of the Corporation
which were converted into such Excess Shares and such Excess Stock,
respectively, comprised a Unit immediately prior to such conversion, then in
addition to, and not in any respect in limitation of,
-3-
4
the provisions of the Declaration of Trust of the Trust and the charter of the
Corporation (as each may be amended from time to time):
(i) such Excess Shares and such Excess Stock shall not be transferable,
and shall not be transferred on the books of the Trust or of the
Corporation, respectively, unless in connection with such transfer the
transferor transfers and the transferee acquires a number of Excess Shares
and a number of shares of Excess Stock in a 1:1 proportion (or, from and
after the occurrence of a United Adjustment Event, in such proportion as
shall equal the proportion of Class B Shares and Corporation Shares then
comprising a Unit);
(ii) neither the Trust nor the Corporation shall issue or transfer or
agree to issue or transfer any Excess Shares or Excess Stock unless
effective provision is made for the issuance or transfer to the same person
of a number of Excess Shares and a number of shares of Excess Stock in a 1:1
proportion (or, from and after the occurrence of a Unit Adjustment Event, in
such proportion as shall equal the proportion of Class B Shares and
Corporation Shares then comprising a Unit); and
(iii) each certificate evidencing Excess Stock shall have printed on
its reverse side a certificate evidencing the appropriate number of Excess
Shares. A legend shall be placed on the face or reverse side of each
certificate evidencing ownership of Excess Shares and Excess Stock referring
to the restrictions on transfer of the Excess Shares and Excess Stock set
forth herein.
10. If a Tax Event, a Creditor Event or any Other Event (each as
defined below) shall occur and be continuing, or at any time after the date that
is five years after the Effective Time, the Corporation, at its sole option, but
solely in accordance with the Declaration of Trust of the Trust (as it may be
amended from time to time), will have the right to exchange (the "Exchange
Right") for all or any portion of the outstanding Class B Shares cash,
Corporation Shares, or other property with a fair market value, in the good
faith judgment of the Board of Trustees of the Trust, at least equal to the fair
market value of the Class B Shares being exchanged. Notwithstanding anything to
the contrary contained in this Agreement, (i) upon exercise of the Exchange
Right, the Corporation may acquire Class B Shares without acquiring any
Corporation Shares; (ii) any Class B Shares acquired by the Corporation upon
exercise of the Exchange Right may be transferred (and may be transferred by any
transferee of such Class B Shares) without any requirement that the transferee
acquire any Corporation Shares; and (iii) in connection with the exercise of the
Exchange Right, the Corporation may issue Corporation Shares without any
requirement that the Trust issue any Class B Shares. In connection with the
exercise of the Exchange Right, the Board of Directors of the Corporation, in
its sole discretion and without the consent of the Trustees of the Trust or the
holders of Units, may amend this Agreement to provide for any adjustments to the
number and the classes of securities comprising a Unit that it deems necessary
or appropriate.
-4-
5
"Tax Event" shall mean (i) the good faith determination by the Board of
Trustees of the Trust, after consultation with counsel experienced in such
matters, that, as a result of any amendment to, or change in (including any
enacted prospective amendment or change), the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the Effective Time, there is a substantially
increased likelihood that (A) dividends payable by the Trust are not, or within
90 days after the date of such determination, will not be, deductible by the
Trust, in whole or in part, for United States federal income tax purposes, or
(B) the Trust is not, or within 180 days after the date of such determination
will not be, taxable as a "real estate investment trust" for United States
federal income tax purposes (a "REIT") or (ii) the Trust revokes or terminates
or states its intention to revoke or terminate its election to be taxed as a
REIT.
"Creditor Event" shall mean the occurrence of one or more material
defaults (whether or not any applicable cure period has expired), as determined
in good faith by the Board of Directors of the Corporation or the Board of
Trustees of the Trust, under any agreement or instrument governing a material
amount of indebtedness of the Trust, the Corporation or any of their
subsidiaries, including, without limitation, the Credit Agreement, dated as of
February 23, 1998, among the Corporation, the Trust, the Realty Partnership and
ITT, certain additional borrowers, various lenders and Xxxxxx Brothers
Commercial Paper Inc., as Syndication Agent, and Bankers Trust Company and The
Chase Manhattan Bank, as Administrative Agents, together with the related
documents thereto (including any guarantee agreements and security documents),
in each case as such agreements may be amended (including any amendment and
restatement thereof), supplemented, replaced, refinanced or otherwise modified
from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder or adding or deleting subsidiaries of
the Corporation or the Trust as additional borrowers or guarantors thereunder)
all or any portion of the indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Other Event" shall mean any of the following: (i) the consummation of
any public offering or distribution of equity securities of the Trust (other
than as Units), (ii) the consummation of any transaction or series of
transactions that results in the Corporation beneficially owning securities
carrying less than 50% of the aggregate voting power of all the outstanding
voting securities of the Trust, (iii) consummation by the Corporation of any
transaction or series of related transactions in which stock of the Corporation
or securities convertible into or exchangeable or exercisable for stock of the
Corporation are issued, if the stock of the Corporation has or will have upon
issuance voting power or value equal to or in excess of 20% of the voting power
or value, respectively, of the stock of the Corporation outstanding before the
issuance of such stock of the Corporation or securities convertible into or
exchangeable or exercisable for stock of the Corporation or (iv) any change
(including any prospective change) after the Effective Time in the accounting
principles applicable to the
-5-
6
preparation of the financial statements filed by the Trust or the Corporation
with the Securities and Exchange Commission that, in the good faith
determination of the Board of Trustees of the Trust or the Board of Directors of
the Corporation, respectively, has or would have a material adverse effect on
the Trust or the Corporation in the event the Exchange Right were not exercised,
but which effect would be mitigated by such exercise.
11. This Agreement, except for the provisions of Section 8, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
STARWOOD HOTELS & RESORTS
By:
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
By:
-6-
