exv4w2



 







Exhibit 4.2




Starwood Hotels & Resorts Worldwide, Inc.




and




American Stock Transfer and Trust Company




as Rights Agent




 






Amended and Restated Rights Agreement




Dated as of April 7, 2006




 









 





Table of Contents




	 	 	 	 	 	 	 
	Section	 	 	 	Page
	Section 1.

	 	Certain Definitions
	 	 	1	 
	Section 2.

	 	Appointment of Rights Agent
	 	 	5	 
	Section 3.

	 	Issue of Rights Certificates
	 	 	5	 
	Section 4.

	 	Form of Rights Certificates
	 	 	7	 
	Section 5.

	 	Countersignature and Registration
	 	 	8	 
	Section 6.

	 	Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	8	 
	Section 7.

	 	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	Section 8.

	 	Cancellation and Destruction of Rights Certificates
	 	 	11	 
	Section 9.

	 	Reservation and Availability of Stock
	 	 	11	 
	Section 10.

	 	Preferred Stock Record Date
	 	 	12	 
	Section 11.

	 	Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights
	 	 	13	 
	Section 12.

	 	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	20	 
	Section 13.

	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	21	 
	Section 14.

	 	Fractional Rights and Fractional Shares
	 	 	23	 
	Section 15.

	 	Rights of Action
	 	 	24	 
	Section 16.

	 	Agreement of Rights Holders
	 	 	24	 
	Section 17.

	 	Rights Certificate Holder Not Deemed a Stockholder
	 	 	25	 
	Section 18.

	 	Concerning the Rights Agent
	 	 	25	 
	Section 19.

	 	Merger or Consolidation or Change of Name of Rights Agent
	 	 	26	 
	Section 20.

	 	Duties of Rights Agent
	 	 	26	 
	Section 21.

	 	Change of Rights Agent
	 	 	28	 
	Section 22.

	 	Issuance of New Rights Certificates
	 	 	29	 
	Section 23.

	 	Redemption and Termination
	 	 	30	 
	Section 24.

	 	Exchange
	 	 	30	 
	Section 25.

	 	Notice of Certain Events
	 	 	31	 
	Section 26.

	 	Notices
	 	 	32	 
	Section 27.

	 	Supplements and Amendments
	 	 	33	 
	Section 28.

	 	Successors
	 	 	33	 
	Section 29.

	 	Determination and Actions by the Board of Directors, etc.
	 	 	33	 
	Section 30.

	 	Benefits of this Agreement
	 	 	34	 
	Section 31.

	 	Severability
	 	 	34	 
	Section 32.

	 	Governing Law
	 	 	34	 
	Section 33.

	 	Counterparts
	 	 	34	 
	Section 34.

	 	Descriptive Headings
	 	 	34	 






 









 






AMENDED AND RESTATED RIGHTS AGREEMENT




          AMENDED AND RESTATED RIGHTS AGREEMENT dated as of April 7, 2006 (this “Agreement”), between
STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the “Corporation”), and AMERICAN
STOCK TRANSFER AND TRUST COMPANY, a New York banking corporation, as Rights Agent (the “Rights
Agent”).




WITNESSETH:




          WHEREAS (i) on March 15, 1999 (the “Rights Dividend Declaration Date”), the Corporation
declared a dividend distribution of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Corporation outstanding at the Close of Business (as
hereinafter defined) on April 5, 1999 (the “Record Date”), each Right initially representing the
right to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $.01 per share, of the Corporation having the rights, powers and preferences set forth in
the form of Articles Supplementary filed on March 15, 1999, upon the terms and subject to the
conditions set forth in the Original Agreement, and (ii) the Board of Directors of the Corporation
has authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to
the provisions of Section 11(p)) for each share of Common Stock of the Corporation issued between
the Record Date and the earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined) or, in certain circumstances provided in Section 22, after the Distribution
Date;




          WHEREAS the Corporation and the Rights Agent entered into the Rights Agreement dated as of
March 15, 1999, as amended on October 2, 2003 and October 24, 2003 (as amended, the “Original
Agreement”) in respect of the Rights; and




          WHEREAS the Corporation wishes to amend the Original Agreement and reclassify the terms of the
Series A Junior Participating Preferred Stock as set forth in the form of Articles Supplementary
attached hereto as Exhibit A to reflect that, in connection with the sale of Starwood Hotels &
Resorts, a Maryland real estate investment trust (the “Trust”), the Corporation and the Trust
terminated the Amended and Restated Intercompany Agreement dated as of January 6, 1999, between the
Corporation and the Trust on April 7, 2006, and from and after April 7, 2006, the Common Stock are
generally transferable separately from the Class B Shares of beneficial interest, par value $.01
per share, of the Trust.




          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:




          Section 1. Certain Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:





     (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates
and Associates of such Person, shall be the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding, but shall not include the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or of any Subsidiary of the
Corporation, or any Person organized, appointed or established by



 









 






the Corporation for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an “Acquiring Person” as
the result of an acquisition of shares of Common Stock by the Corporation which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the shares of Common Stock then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding by reason of share purchases by the Corporation and shall, after such share
purchases by the Corporation, become the Beneficial Owner of any additional shares of Common
Stock, then such Person shall be deemed to be an “Acquiring Person”. Notwithstanding the
foregoing, if the Board of Directors of the Corporation determines in good faith that a
Person who would otherwise be an “Acquiring Person” (as defined pursuant to the foregoing
provisions of this paragraph (a)) has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an “Acquiring Person” (as defined pursuant to the foregoing provisions of
this paragraph (a)), then such Person shall be deemed not to be an “Acquiring Person” for
any purposes of this Agreement.




     (b) “Act” shall mean the Securities Act of 1933, as amended.




     (c) “Affiliate” and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.




     (d) A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:




     (i) which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants or options, or otherwise;
provided, however, that a Person shall be deemed not the “Beneficial Owner” of, or
to “beneficially own,” (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person’s Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of a Triggering
Event or (C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by such Person or any
of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(a) or Section 22 (the “Original Rights”) or pursuant to Section 11(i)
in connection with an adjustment made with respect to any Original Rights;




     (ii) which such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any agreement,



2









 






arrangement or understanding, whether or not in writing; provided, however,
that a Person shall be deemed not the “Beneficial Owner” of, or to “beneficially
own,” any security by reason of this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the Exchange Act
and (B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or




     (iii) which are beneficially owned, directly or indirectly, by any other Person
(or any Affiliate or Associate thereof) with which such Person (or any of such
Person’s Affiliates or Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to subparagraph (ii) of
this paragraph (d)) or disposing of any voting securities of the Corporation;




provided, however, that nothing in this paragraph (d) shall cause a Person
engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to
“beneficially own,” any securities acquired through such Person’s participation in good
faith in a firm commitment underwriting until the expiration of forty days after the date of
such acquisition.




     (e) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the State of New York or the State of California are authorized or
obligated by law or executive order to close.




     (f) “Close of Business” on any given date shall mean 5:00 P.M., New York City time, on
such date, provided, however, that if such date is not a Business Day it shall mean 5:00
P.M., New York City time, on the next succeeding Business Day.




     (g) “Common Stock” shall mean the common stock, par value $.01 per share, of the
Corporation, except that “Common Stock” when used with reference to any Person other than
the Corporation shall mean the class or series of stock of such Person with the greatest
voting power, or, if such Person is not a corporation, the equity securities or other equity
interest issued by such Person having power to control or direct the management of such
Person.




     (h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and in
effect on the date of this Agreement.




     (i) “Person” shall mean any individual, firm, limited liability company, corporation,
partnership or other entity and shall include any successor (by merger or otherwise) of such
entity.



3









 






     (j) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $.01 per share, of the Corporation, and, to the extent that there is not a
sufficient number of shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of preferred stock, par value $.01
per share, of the Corporation designated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating Preferred Stock.




     (k) “Right” shall mean a right initially representing the right to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock on the terms and
subject to the conditions of this Agreement.




     (l) “Section 11(a)(ii) Event” shall mean the event described in Section 11(a)(ii).




     (m) “Section 13 Event” shall have the meaning set forth in Section 13(a).




     (n) “Series A Junior Participating Preferred Stock” shall mean the Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Corporation having the
rights, powers and preferences set forth in the form of the Articles Supplementary attached
hereto as Exhibit A.




     (o) “Stock Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a press release or a
report filed pursuant to Section 13(d) of the Exchange Act) by the Corporation or an
Acquiring Person substantially to the effect that an Acquiring Person has become such.




     (p) “Subsidiary” shall mean, with reference to any Person, any other Person (other than
an individual) of which an amount of voting securities sufficient to elect at least a
majority of the board of directors (or comparable body) of such other Person is beneficially
owned by such Person, or otherwise controlled by such Person.




     (q) “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event.



          In addition, for purposes of this Agreement, the following terms have the meanings indicated
in specified sections of this Agreement: (i) “Adjustment Shares” shall have the meaning set forth
in Section 11(a)(ii); (ii) “common stock equivalents” shall have the meaning set forth in Section
11(a)(iii); (iii) “current market price” shall have the meaning set forth in Section 11(d); (iv)
“Current Value” shall have the meaning set forth in Section 11(a)(iii); (v) “Distribution Date”
shall have the meaning set forth in Section 3(a); (vi) “equivalent preferred stock” shall have the
meaning set forth in Section 11(b); (vii) “Exchange Ratio” shall have the meaning set forth in
Section 24(a); (viii) “Expiration Date” shall have the meaning set forth in Section 7(a); (ix)
“Final Expiration Date” shall have the meaning set forth in Section 7(a); (x) “Nasdaq” shall have
the meaning set forth in Section 11(d)(i); (xi) “Principal Party” shall have the meaning set forth
in Section 13(b); (xii) “Purchase Price” shall have the meaning set forth in Section 4(a); (xiii)
“Record Date” shall have the meaning set forth in the recitals hereof; (xiv) “Redemption Price”
shall have the meaning set forth in Section 23(a); (xv) “Rights” shall have the meaning set forth
in the recitals hereof; (xvi) “Rights Certificates” shall have the




4









 







meaning set forth in Section 3(a); (xvii) “Rights Dividend Declaration Date” shall have the
meaning set forth in the recitals hereof; (xviii) “Section 11(a)(ii) Trigger Date” shall have the
meaning set forth in Section 11(a)(iii); (xix) “Spread” shall have the meaning set forth in Section
11(a)(iii); (xx) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii);
(xxi) “Summary of Rights” shall have the meaning set forth in Section 3(b); and (xxii) “Trading
Day” shall have the meaning set forth in Section 11(d)(i).




          Section 2. Appointment of Rights Agent. The Corporation hereby appoints the Rights
Agent to act as agent for the Corporation in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Corporation may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any such co-Rights Agent.




          Section 3. Issue of Rights Certificates. (a) Until the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) or (ii)
the Close of Business on the tenth Business Day (or such later date as may be determined by action
of the Board of Directors of the Corporation prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than the Corporation,
any Subsidiary of the Corporation, any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation, or any Person organized, appointed or established by the Corporation
for or pursuant to the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act (or any
successor rule), if upon consummation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, (the earlier of (i) and (ii) being herein
referred to as the “Distribution Date”), (x) the Rights will be represented (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered
in the names of the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate certificates and (y) the Rights will
be transferable only in connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Corporation). As soon as practicable after the Distribution Date and
once the Rights Agent has been provided with all necessary information, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Distribution Date, at the address of such holder shown on the records of
the Corporation, one or more Rights certificates, in substantially the form of Exhibit B hereto
(the “Rights Certificates”), representing one Right for each share of Common Stock so held, subject
to adjustment as provided herein. In the event that an adjustment in the number of Rights per share
of Common Stock has been made pursuant to Section 11(p), at the time of distribution of the Rights
Certificates, the Corporation shall make the necessary and appropriate adjustments (in accordance
with Section 14(a)) so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights will be represented solely by such Rights Certificates.




          (b) As promptly as practicable following the Record Date, the Corporation will send a copy of
a Summary of Rights to Purchase Preferred Stock, in substantially the form





5









 







attached hereto as Exhibit C (the “Summary of Rights”), by first-class, postage prepaid mail,
to each record holder of the Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Corporation. With respect to certificates for
the Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be
represented by such certificates registered in the names of the holders thereof together with a
copy of the Summary of Rights attached thereto. Until the earlier of the Distribution Date or the
Expiration Date, the surrender for transfer of any certificate representing shares of Common Stock
in respect of which Rights have been issued, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights associated with such shares of
Common Stock.




          (c) Rights shall be issued in respect of all shares of Common Stock which are issued (whether
originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date or, in certain circumstances provided in Section 22,
after the Distribution Date. Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear a legend substantially in the following form:





This certificate also represents and entitles the holder hereof to
certain rights as set forth in the Amended and Restated Rights
Agreement dated as of April 7, 2006 (the “Rights Agreement”) between
Starwood Hotels & Resorts Worldwide, Inc. (the “Corporation”) and
American Stock Transfer and Trust Company, as Rights Agent (the
“Rights Agent”), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal offices
of the Corporation. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be represented by separate
certificates and will no longer be represented by this certificate.
The Corporation will mail to the holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may
become null and void and will no longer be transferable.



          With respect to such certificates containing the foregoing legend, until the earlier of (i)
the Distribution Date or (ii) the Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be represented by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated Rights, and the
surrender for transfer of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates. In the event the Corporation
purchases or acquires any shares of its Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares shall be deemed cancelled




6









 







and retired so that the Corporation shall not be entitled to exercise any Rights associated
with shares of Common Stock that are not outstanding. Notwithstanding this Section 3(c), the
omission of a legend shall not affect the enforceability of any part of this Agreement or the
rights of any holder of the Rights.




          Section 4. Form of Rights Certificates. (a) The Rights Certificates (and the forms
of election to purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as the Corporation may
deem appropriate (but which do not affect the duties or responsibilities of the Rights Agent
hereunder) and as are not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date or, in the case of Rights with respect
to shares of Common Stock issued or becoming outstanding after the Record Date, the same date as
the stock certificate representing such shares, and on their face shall entitle the holders thereof
to purchase such number of one one-thousandths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one one-thousandth of a share, the
“Purchase Price”), but the amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject to adjustment from time to time as provided
in Sections 11 and 13(a).




          (b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 that represents
Rights beneficially owned by any Person known to be: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any
Associate or Affiliate thereof) to holders of equity interests in such Acquiring Person (or any
Associate or Affiliate thereof) or to any Person with whom such Acquiring Person (or any Associate
or Affiliate thereof) has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Corporation has determined
is part of a plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e), and any Rights Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:





The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of such
Agreement.



7









 





          Section 5. Countersignature and Registration. (a) The Rights Certificates shall be
executed on behalf of the Corporation by its Chairman of the Board, its Chief Executive Officer,
its President or any Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Corporation, either manually or by facsimile signature. The Rights
Certificates shall be countersigned manually or by facsimile signature by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer of the Corporation
who shall have signed any of the Rights Certificates shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Corporation with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer of the Corporation; and any
Rights Certificates may be signed on behalf of the Corporation by any person who, at the actual
date of the execution of such Rights Certificate, shall be a proper officer of the Corporation to
sign such Rights Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.




          (b) Following the Distribution Date, the Rights Agent will keep or cause to be kept (to the
extent all necessary information has been received by the Rights Agent), at its principal office or
offices designated as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights Certificates, the
number of Rights represented on its face by each of the Rights Certificates and the certificate
number and the date of each of the Rights Certificates.




          Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a) Subject to the provisions of
Section 4(b), Section 7(e) and Section 14, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates (other than Rights Certificates representing Rights that have become
null and void pursuant to Section 7(e) or that have been exchanged pursuant to Section 24) may be
transferred, split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one one-thousandths of a share of
Preferred Stock (or, following a Triggering Event, shares of Common Stock, other securities, cash
or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Corporation shall be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation or the Rights Agent shall
reasonably request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e),
Section 14 and Section 24, countersign and deliver to the Person entitled thereto a Rights




8









 







Certificate or Rights Certificates, as the case may be, as so requested. The Corporation may
require payment of a sum sufficient to cover any tax or charge that may be imposed in connection
with any transfer, split up, combination or exchange of Rights Certificates. Neither the Rights
Agent nor the Corporation shall have any duty or obligation under this Section 6 unless and until
they are satisfied that all such taxes and/or changes have been paid.




          (b) Upon receipt by the Corporation and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security satisfactory to them, and reimbursement to the
Corporation and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights Certificates if mutilated, the Corporation will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.




          Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a)
Subject to Section 7(e), the registered holder of any Rights Certificate may exercise the Rights
represented thereby (except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23) in
whole or in part at any time after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to the total number of
one one-thousandths of a share of Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then exercisable, at or prior to the
earliest of (i) the Close of Business on April 5, 2009 (the “Final Expiration Date”), (ii) the time
at which the Rights are redeemed as provided in Section 23 or (iii) the time at which such Rights
are exchanged pursuant to Section 24 (the earliest of (i), (ii) and (iii) being herein referred to
as the “Expiration Date”).




          (b) The Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $125, and shall be subject to adjustment from time to
time as provided in Sections 11 and 13(a) and shall be payable in accordance with paragraph (c)
below.




          (c) Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate on the reverse side thereof duly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per one one-thousandth of a
share of Preferred Stock (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable tax or charge required to be
paid by the holder of the Rights Certificate in accordance with Section 9(e), the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if the Rights Agent is the transfer agent for
such shares) certificates for the total number of one one-thousandths of a share of Preferred Stock
to be purchased and the Corporation hereby irrevocably authorizes its transfer agent to comply with
all such requests or (B) if the Corporation shall have elected to deposit the total number of
shares of Preferred Stock issuable upon exercise of the Rights





9









 







hereunder with a depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and the Corporation
will direct the depositary agent to comply with such request, (ii) requisition from the Corporation
the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14,
(iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)) shall be made in cash
or by certified bank check or bank draft payable to the order of the Corporation. In the event that
the Corporation is obligated to issue other securities of the Corporation, pay cash and/or
distribute other property pursuant to Section 11(a), the Corporation will make all arrangements
necessary so that such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when necessary to comply with the terms of this Agreement. The
Corporation reserves the right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.




          (d) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights represented thereby, a new Rights Certificate representing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of,
the registered holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14.




          (e) Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes
such or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any Affiliate or Associate thereof) to holders of equity interests in such Acquiring
Person (or any Affiliate or Associate thereof) or to any Person with whom the Acquiring Person (or
any Affiliate or Associate thereof) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors of the Corporation
has determined is part of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Corporation shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are complied with, but
neither the Corporation nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company’s failure to make any determinations with
respect to an Acquiring Person or any of its Affiliates, Associates or transferees hereunder.




10









 








          (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Corporation shall be obligated to undertake any action with respect to a registered holder upon
the occurrence of any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate surrendered for such
exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Corporation or the Rights Agent
shall reasonably request.




          Section 8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Corporation or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof, except as expressly permitted by
any of the provisions of this Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificates purchased or acquired by the Corporation otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Rights Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Corporation.




          Section 9. Reservation and Availability of Stock. (a) The Corporation covenants and
agrees that it will cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement, including Section 11(a)(iii), will be sufficient
to permit the exercise in full of all outstanding Rights in accordance with the terms of this
Agreement.




          (b) So long as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, shares of Common Stock and/or other securities) issuable and deliverable upon the exercise
of the Rights may be listed on any national securities exchange or The Nasdaq National Market (or
any successor), the Corporation shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange
or The Nasdaq National Market (or any successor), upon official notice of issuance upon such
exercise.




          (c) The Corporation shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Corporation upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii), a registration statement under the Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such filing and (iii) cause
such registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the date of the expiration of the Rights. The Corporation




11









 







will also take such action as may be appropriate under, or to ensure compliance with, the
securities or “Blue Sky” laws of the various states in connection with the exercisability of the
Rights. The Corporation may temporarily suspend, for a period of time not to exceed 90 days after
the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Corporation shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect (with prompt notice of any such announcements
to the Rights Agent). In addition, if following the Distribution Date the Corporation shall
determine that a registration statement is required in connection with the exercise of the Rights,
and a Section 11(a)(ii) Event has not occurred, the Corporation may temporarily suspend the
exercisability of Rights until such time as the applicable registration statement has been declared
effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification or exemption in such jurisdiction
shall not have been obtained, the exercise thereof shall not be permitted under applicable law or
an applicable registration statement shall not have been declared effective, unless in any such
case the Corporation makes a public announcement to the contrary.




          (d) The Corporation covenants and agrees that it will take all such actions as may be
necessary to ensure that all one one-thousandths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.




          (e) The Corporation further covenants and agrees that it will pay, when due and payable, any
and all taxes and charges that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or shares of Common Stock and/or other securities, as the case may be) upon the exercise of
Rights. The Corporation shall not, however, be required to pay any tax or charge that may be
payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of a number of one one-thousandths of a share of Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates representing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one one-thousandths of a share of
Preferred Stock (or shares of Common Stock and/or other securities, as the case may be) in a name
other than that of the registered holder upon the exercise of any Rights until such tax or charge
shall have been paid (any such tax or charge being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company’s satisfaction that no
such tax or charge is due.




          Section 10. Preferred Stock Record Date. Each Person in whose name any certificate
for a number of one one-thousandths of a share of Preferred Stock (or shares of Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional shares of Preferred Stock (or
shares of Common Stock and/or other securities, as the case may be)




12









 







represented thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate representing such Rights was duly surrendered and payment of the Purchase Price (and
all applicable taxes or charges) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Stock (or shares of Common Stock and/or other
securities, as the case may be) transfer books of the Corporation (or other Person, as the case may
be) are closed, such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock (or shares of Common Stock and/or other securities, as the case may
be) transfer books of the Corporation (or other Person, as the case may be) are open. Prior to the
exercise of the Rights represented thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Corporation with respect to shares or other
securities for which the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Corporation, except as provided
herein.




          Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights. The Purchase Price, the number and kind of shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.





     (a)(i) In the event the Corporation shall at any time after the date of this
Agreement (A) declare and pay a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares or (D) issue any shares
of its stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving Corporation), except as otherwise
provided in this Section 11(a) and Section 7(e), the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares of
Preferred Stock or other stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or other stock, as the case
may be, which, if such Right had been exercised immediately prior to such date and
at a time when the Preferred Stock transfer books of the Corporation were open, such
holder would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. If an event occurs that
would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).




     (ii) Subject to Section 24, in the event any Person becomes an Acquiring
Person, then each holder of a Right (except as provided below and in Section 7(e))
shall thereafter have the right to receive, upon exercise thereof at a



13









 






price equal to the then current Purchase Price in accordance with the terms of
this Agreement, in lieu of a number of one one-thousandths of a share of Preferred
Stock, such number of shares of Common Stock as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event and (y)
dividing that product (which, following such first occurrence shall thereafter be
referred to as the “Purchase Price” for each Right and for all purposes of this
Agreement, except as otherwise contemplated by Section 13(a)) by 50% of the current
market price (determined pursuant to Section 11(d)) per share of Common Stock on the
date of such first occurrence (such number of shares of Common Stock, the
“Adjustment Shares”).




     (iii) In the event that the number of shares of Common Stock that are
authorized by the Company’s charter, but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights, is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Corporation shall: (A) determine the value of the Adjustment
Shares issuable upon the exercise of a Right (the “Current Value”) and (B) with
respect to each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) shares of Common Stock or other equity securities of the
Corporation (including, without limitation, shares of preferred stock, such as the
Preferred Stock, which the Board of Directors of the Corporation has deemed to have
substantially the same value or economic rights as such shares of
Common Stock (such shares of preferred stock, “common stock equivalents”)), (4) debt securities of the
Corporation, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the Board of
Directors of the Corporation based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the Corporation;
provided, however, that if the Corporation shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (the later of (x)
and (y) being referred to herein as the “Section 11(a)(ii) Trigger Date”), then the
Corporation shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares of Common Stock
and/or cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term “Spread” shall mean the excess of (i) the Current Value
over (ii) the Purchase Price. If the Board of Directors of the Corporation shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the Rights,
the 30-day period set forth above may be extended to the extent necessary, but not
more than 90 days after the Section 11(a)(ii) Trigger Date, in order that



14









 






the Corporation may seek stockholder (and shareholder, as the case may be)
approval for the authorization of such additional shares of Common Stock (such
30-day period, as it may be extended, the “Substitution Period”). To the extent that
action is to be taken pursuant to the first and/or third sentences of this Section
11(a)(iii), the Corporation (x) shall provide, subject to Section 7(e), that such
action shall apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek such stockholder approval for such authorization of additional shares
of Common Stock and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the event of
any such suspension, the Corporation shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect (with prompt
notice of any such announcements to the Rights Agent). For purposes of this Section
11(a)(iii), the value of each Adjustment Share shall be the current market price (as
determined pursuant to Section 11(d)) per share of Common Stock on the Section
11(a)(ii) Trigger Date and the value of any “common stock equivalent” shall be
deemed to equal the current market price (as determined pursuant to Section 11(d))
per share of Common Stock on such date.



          (b) In case the Corporation shall fix a record date for the issuance of rights (other than the
Rights), options or warrants to all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of Preferred Stock
(“equivalent preferred stock”)) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as determined pursuant to Section
11(d)) per share of Preferred Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of shares of Preferred Stock which
the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery of consideration part or all
of which may be in a form other than cash, the value of such consideration shall be as determined
in good faith by the Board of Directors of the Corporation, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights. Shares of Preferred Stock owned by or held for the account of the Corporation shall
not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price




15









 







shall be adjusted to be the Purchase Price which would then be in effect if such record date
had not been fixed.




          (c) In case the Corporation shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or merger
in which the Corporation is the continuing Corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend out of the earnings or retained earnings of the
Corporation), assets (other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Corporation, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and
the holders of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a share of Preferred Stock and
the denominator of which shall be such current market price (as determined pursuant to Section
11(d)) per share of Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made, the Purchase Price
shall be adjusted to be the Purchase Price that would have been in effect if such record date had
not been fixed.





     (d) (i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii), the “current market price” per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of Common
Stock, respectively, for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to but not including such date, and for purposes of computations
made pursuant to Section 11(a)(iii), the “current market price” per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices per share of Common
Stock, respectively, for the ten consecutive Trading Days immediately following but not
including such date; provided, however, that in the event that the current market price per
share of Common Stock is determined during a period following the announcement by the
Corporation or other issuer of such Common Stock of (A) in the case of the shares of Common
Stock, a dividend or distribution on the Common Stock payable in shares of Common Stock or
securities convertible into or exercisable for shares of such Common Stock (other than the
Rights) or in the case of the Common Stock of any other issuer, a dividend or distribution
on such Common Stock payable in shares of Common Stock or securities convertible into or
exercisable for shares of such Common Stock, or (B) in the case of the shares of Common
Stock, any subdivision, combination or reclassification of the Common Stock, or in the case
of the Common Stock of any other issuer, any subdivision, combination or reclassification of
such Common Stock, and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification shall not have occurred prior to
the commencement of the requisite 30 Trading Day or ten Trading Day period, as set forth
above, then, and in each such case, the “current market price” shall be properly adjusted to
take into account any trading during the period prior to such ex-dividend date



16









 






or record date. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System (“Nasdaq”) or such other system then
in use, or, if on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock selected by the Board of Directors of the
Corporation. If on any such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by the Board of Directors
of the Corporation shall be used. The term “Trading Day” shall mean a day on which the
principal national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any national securities exchange, a Business
Day. If the shares of Common Stock are not publicly held or not so listed or traded,
“current market price” per share of Common Stock shall mean the fair value per share of
Common Stock, respectively, as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.




     (ii) For the purpose of any computation hereunder, the “current market price” per share
of Preferred Stock shall be determined in the same manner as set forth above for the shares
of Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof).
If the current market price per share of Preferred Stock cannot be determined in the manner
provided above, or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the “current market price” per share
of Preferred Stock shall be conclusively deemed to be an amount equal to 1000 (as such
number may be appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to shares of Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share of Common Stock. If neither the
Common Stock nor the Preferred Stock are publicly held or so listed or traded, “current
market price” per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Corporation, whose determination
shall be described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. For all purposes of this Agreement, the “current
market price” of one one-thousandth of a share of Preferred Stock shall be equal to the
“current market price” of one share of Preferred Stock divided by 1000.



17









 





          (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the
nearest one ten-thousandth of a share of Common Stock or one one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the provisos to the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction that mandates such adjustment and (ii) the Expiration
Date.




          (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a), the
holder of any Right thereafter exercised shall become entitled to receive any shares of stock other
than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (l) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall apply on like
terms to any such other shares.




          (g) All Rights originally issued by the Corporation subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a share of Preferred Stock purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided herein.




          (h) Unless the Corporation shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b)
and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one-thousandths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by (i) multiplying (x)
the number of one one-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.




          (i) The Corporation may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The Corporation shall
make a public announcement of its election to adjust the number of Rights, indicating the record
date for the adjustment, and, if known at the time, the amount of the




18









 







adjustment to be made (with prompt notice thereof to the Rights Agent). This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date Rights Certificates
representing, subject to Section 14, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Corporation, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required by the
Corporation, new Rights Certificates representing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option of the
Corporation, the adjusted Purchase Price) and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public announcement.




          (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandths of a share that were expressed in
the initial Rights Certificates issued hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then stated value, if any, of the number of one one-thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Corporation shall take any corporate action that may, in
the opinion of its counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Preferred Stock at such adjusted Purchase Price.




          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Corporation may elect to
defer adjustment (and shall provide the Rights Agent prompt notice of such election) until the
occurrence of such event the issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock and other stock or securities, if
any, issuable upon such exercise over and above the number of one one-thousandths of a share of
Preferred Stock and other stock or securities, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that the Corporation
shall deliver to such holder a due bill or other appropriate instrument representing such holder’s
right to receive such additional shares (fractional or otherwise) or securities upon the occurrence
of the event requiring such adjustment.




          (m) Anything in this Section 11 to the contrary notwithstanding, the Corporation shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board of Directors of the Corporation,
in its good faith judgment, shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock
at less than the current market price, (iii) issuance wholly for cash




19









 







of shares of Preferred Stock or securities that by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options
or warrants referred to in this Section 11 hereafter made by the Corporation to holders of its
Preferred Stock, shall not be taxable to such stockholders.




          (n) The Corporation covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Corporation in a
transaction that complies with Section 11(o)), (ii) merge with or into any other Person (other than
a Subsidiary of the Corporation in a transaction that complies with Section 11(o)) or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or earning power of
the Corporation and its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Corporation and/or any of its Subsidiaries in one or more transactions each of which complies
with Section 11(o)), if (x) at the time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, sale or transfer, the stockholders of the Person that constitutes, or would
constitute, the “Principal Party” for purposes of Section 13(a) shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates or Associates.




          (o) The Corporation covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 27, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such action would diminish
substantially or otherwise eliminate the benefits intended to be afforded by the Rights.




          (p) In the event that the Corporation shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare and pay a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.




          Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or Section 13, the Corporation shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Preferred Stock and the Common Stock, a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Rights Certificate (or, if prior




20









 







to the Distribution Date, to each holder of a certificate representing shares of Common Stock)
in accordance with Section 26. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall have no duty with respect to and
shall not be deemed to have knowledge of such adjustment unless and until it shall have received
such certificate.




          Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Corporation in a transaction that complies with Section 11(o)), and the
Corporation shall not be the continuing or surviving Corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Corporation in a transaction that complies with
Section 11(o)) shall consolidate with, or merge with or into, the Corporation, and the Corporation
shall be the continuing or surviving Corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Corporation shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or earning power of
the Corporation and its Subsidiaries (taken as a whole) to any Person or Persons (other than the
Corporation or any Subsidiary of the Corporation in one or more transactions each of which complies
with Section 11(o)) (any event described in clauses (x), (y) or (z) of this Section 13(a) following
the Stock Acquisition Date, a “Section 13 Event”), then, and in each such case, proper provision
shall be made so that: (i) each holder of a Right, except as provided in Section 7(e), shall
thereafter have the right to receive upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, in lieu of a number of one one-thousandths of a
share of Preferred Stock, such number of validly authorized and issued, fully paid, nonassessable
and freely tradeable shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or other adverse claims,
as shall be equal to the result obtained by (l) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such
one one-thousandths of a share of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right and
for all purposes of this Agreement) by (2) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of the Common Stock of such Principal Party on the date of consummation
of such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of the Corporation
pursuant to this Agreement; (iii) the term “Corporation” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of Section 11 shall apply
only to such Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the authorization and
reservation of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the




21









 







provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) shall be of no effect following the first occurrence of any Section
13 Event.




          (b) “Principal Party” shall mean:





     (i) in the case of any transaction described in clause (x) or (y) of Section
13(a), the Person that is the issuer of any securities into which shares of Common
Stock of the Corporation are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such merger or
consolidation; and




     (ii) in the case of any transaction described in clause (z) of Section 13(a),
the Person that is the party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or transactions;


provided, however, that in any such case, (1) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, “Principal Party” shall refer to
such other Person; and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stock of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having
the greatest aggregate market value.




          (c) The Corporation shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock
which have not been issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Corporation and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will:





     (i) prepare and file a registration statement under the Act, with respect to
the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration statement
to (A) become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the Act) until
the Expiration Date; and




     (ii) deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates that comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.



          (d) The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall




22









 







occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in the manner described in Section
13(a).




          Section 14. Fractional Rights and Fractional Shares. (a) The Corporation shall not
be required to issue fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p), or to distribute Rights Certificates which represent fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock Exchange, as reported to the
principal consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights selected by the
Board of Directors of the Corporation. If on any such date no such market maker is making a market
in the Rights the fair value of the Rights on such date as determined in good faith by the Board of
Directors of the Corporation shall be used.




          (b) The Corporation shall not be required to issue fractions of shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a share of Preferred
Stock) upon exercise of the Rights or to distribute certificates that represent fractional shares
of Preferred Stock (other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock in integral multiples of one
one-thousandth of a share may, at the election of the Corporation, be represented by depositary
receipts pursuant to an appropriate agreement between the Corporation and a depositary selected by
it; provided, however, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the shares represented by such depositary receipts. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth of a share of
Preferred Stock otherwise issuable hereunder, the Corporation shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of one one-thousandth
of a share of Preferred Stock shall be one one-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii)) for the Trading Day immediately prior
to the date of such exercise.




23









 








          (c) Following the occurrence of a Triggering Event, the Corporation shall not be required to
issue fractions of shares of Common Stock upon exercise of the Rights or to distribute certificates
that represent fractional shares of Common Stock. In lieu of fractional shares of Common Stock
otherwise issuable hereunder, the Corporation shall pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one share of Common Stock. For purposes of this
Section 14(c), the current market value of one shares of Common Stock shall be the closing price of
one shares of Common Stock (as determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise.




          (d) The holder of a Right by the acceptance of the Rights expressly waives such holder’s right
to receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.




          Section 15. Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to the terms of this Agreement, are
vested in the respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in such holder’s own behalf and for such holder’s own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, such holder’s right to exercise the Rights represented by
such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.




          Section 16. Agreement of Rights Holders. Every holder of a Right by accepting the
same consents and agrees with the Corporation and the Rights Agent and with every holder of a Right
that:




          (a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of Common Stock;




          (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate
forms and certificates fully executed;




          (c) subject to Section 6(a) and Section 7(f), the Corporation and the Rights Agent may deem
and treat the person in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights
represented thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificates made by anyone




24









 







other than the Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent shall be required to be affected by any notice to the contrary;
and




          (d) notwithstanding anything in this Agreement to the contrary, neither the Corporation nor
the Rights Agent shall have any liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree, judgment or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided, however, the
Corporation must use reasonable efforts to have any such order, decree, judgment or ruling lifted
or otherwise overturned as soon as possible.




          Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
to be the holder of the number of one one-thousandths of a share of Preferred Stock or any other
securities of the Corporation which may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Corporation or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in Section
25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
represented by such Rights Certificate shall have been exercised in accordance with the provisions
hereof.




          Section 18. Concerning the Rights Agent. (a) The Corporation agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the preparation, delivery, amendment and execution of this
Agreement and the exercise and performance of its duties hereunder. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance and administration of
this Agreement, including without limitation the costs and expenses of defending against any claim
of liability arising therefrom, directly or indirectly. The indemnity provided herein shall survive
the termination of this Agreement and the termination and expiration of the Rights. The costs and
expenses incurred by the Rights Agent in enforcing this indemnification shall be paid by the
Corporation. Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable
for special, indirect, consequential or incidental loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.




          (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its




25









 







acceptance and administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Corporation, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine and to be executed
and, where necessary, verified or acknowledged, by the proper Person or Persons, or otherwise upon
the advice of counsel as set forth in Section 20.




          Section 19. Merger or Consolidation or Change of Name of Rights Agent. (a) Any
Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may
be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the shareholder
services business of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21.




          In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at the time any of the Rights Certificates
shall not have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.




          (b) In case at any time the name of the Rights Agent shall be changed, and at such time any of
the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights Certificates so countersigned; and in
case, at that time, any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.




          Section 20. Duties of Rights Agent. The Rights Agent undertakes only the duties and
obligations expressly imposed by this Agreement upon the following terms and conditions, by all of
which the Corporation and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:




          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Corporation), and the written advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for
or in respect of any action taken, suffered or omitted by it in good faith and in accordance with
such written advice or opinion.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without




26









 







limitation, the identity of any Acquiring Person and the determination of “current market
price”) be proved or established by the Corporation prior to taking, omitting or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the
Corporation and delivered to the Rights Agent; and such certificate shall be full authorization and
protection to the Rights Agent, and the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith under the provisions of this Agreement in
reliance upon such certificate.




          (c) The Rights Agent shall be liable hereunder to the Corporation and any other Person only
for its own gross negligence, bad faith or willful misconduct.




          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Corporation only.




          (e) The Rights Agent shall not be under any liability or responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Corporation of any
covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to Section 7(e) hereof) or any adjustment required under the provisions of
Section 3, Section 11, Section 13, Section 23 or Section 24 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights represented by Rights
Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or reservation of any shares
of Common Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.




          (f) The Corporation agrees that it will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer
or any Assistant Treasurer of the Corporation, and to apply to such officers for advice or
instructions in connection with its duties, and it shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith in accordance with instructions of any
such officer, or for any delay in acting while waiting for those instructions.





27










 






Any application by the Rights Agent for written instructions from the Corporation may, at
the option of the Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent under this Agreement and the date on and/or after which such action
shall be taken or suffered or such omission shall be effective. The Rights Agent shall not be
liable for any action taken or suffered by, or omission of, the Rights Agent in accordance with a
proposal included in such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date the Corporation actually receives
such application sent pursuant to Section 26, unless the Corporation shall have consented in
writing to any earlier date) unless prior to taking any such action (or the effective date in the
case of an omission), the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken, suffered or omitted.




          (h) The Rights Agent and any stockholder, director, Affiliate, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of the Corporation or
become pecuniarily interested in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other Person.




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Corporation resulting from any such act,
default, neglect or misconduct absent gross negligence, bad faith or willful misconduct in the
selection and continued employment thereof.




          (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if it believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.




          (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has not been completed to certify by the person executing such certificate that
(i) the Rights Certificate is not being sold, assigned or transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring Person and (ii)
after due inquiry and to the best knowledge of the person signing such certificate, it did not
acquire the Rights represented by the Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person, the
Rights Agent shall not take any further action with respect to such requested exercise or transfer
without first consulting with the Corporation.




          Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Corporation, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates by first-class mail.
The Corporation may remove the Rights Agent or any successor Rights Agent




28









 







upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting, the Corporation
shall appoint a successor to the Rights Agent. If the Corporation shall fail to make such
appointment within a period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Rights Certificate (who shall, with such notice, submit such holder’s
Rights Certificate for inspection by the Corporation), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Corporation or by such a court, shall
be (i) a Person organized and doing business under the laws of the United States or of the State of
Maryland or the State of New York (or of any other state of the United States or of the District of
Columbia so long as such Person is authorized to do business in the State of Maryland or the State
of New York), in good standing, having an office or agency in the State of Maryland or the State of
New York, which is authorized under such laws to exercise stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $10,000,000 or (ii) an
Affiliate of such Person. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further reasonable assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Corporation shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock,
and send by first-class mail a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21 or any defect therein
shall not affect the legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.




          Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation may, at its option,
issue new Rights Certificates representing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Corporation (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement,
granted or awarded prior to the Distribution Date, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Corporation, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Corporation, issue Rights Certificates
representing an appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the extent that, the
Corporation shall be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Corporation or the Person to whom such Rights

29









 








Certificate would be issued and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.




          Section 23. Redemption and Termination. (a) The Board of Directors of the
Corporation may, at its option, at any time prior to the earlier of (i) the Close of Business on
the tenth day following the Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business on the tenth day following the Record
Date) or (ii) the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be appropriately adjusted by the
Board of Directors of the Corporation to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being hereinafter referred to as
the “Redemption Price”). Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Corporation’s right of redemption hereunder has expired. The Corporation may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the “current market
price”, as defined in Section 11(d)(i), of the shares of Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by its Board of Directors. The redemption of the
Rights by the Board of Directors may be made effective at such time, on such basis and with such
conditions such Board of Directors in its sole discretion may establish.




          (b) Immediately upon the action of the Board of Directors of the Corporation ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of Directors of the Corporation ordering the
redemption of the Rights, the Corporation shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such notice to all such holders at each
holder’s last address as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common Stock; provided,
however, that the failure to give, or any defect in, such notice shall not affect the validity of
such redemption. Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be effected.




          Section 24. Exchange. (a) The Board of Directors of the Corporation may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have become null and void
pursuant to the provisions of Section 7(e)) for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such exchange ratio being hereinafter
referred to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of Directors of the
Corporation shall not be empowered to effect such exchange at any time after any Person (other than
the Corporation, any Subsidiary of the Corporation, any employee benefit plan of the Corporation or
of any Subsidiary of the Corporation, or any Person organized, appointed or established by the
Corporation for or pursuant to the terms of any such plan),

30









 








together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the Common Stock then outstanding.




          (b) Immediately upon the action of the Board of Directors of the Corporation ordering the
exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of any such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The
Corporation shall promptly give public notice (with prompt notice thereof to the Rights Agent) of
any exchange; provided, however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Corporation promptly shall mail a notice of any such
exchange to all of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be exchanged. Any partial
exchange will be effected pro rata based on the number of Rights (other than Rights that have
become null and void pursuant to the provisions of Section 7(e)) held by each holder of Rights.




          (c) In any exchange pursuant to this Section 24, the Corporation, at its option, may
substitute shares of Preferred Stock (or equivalent preferred stock, as such term is defined in
paragraph (b) of Section 11) for shares of Common Stock exchangeable for Rights, at the initial
rate of one one-thousandth of a share of Preferred Stock (or equivalent preferred stock) for each
share of Common Stock, as appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share of Preferred Stock
delivered in lieu of each share of Common Stock shall have the same voting rights as one share of
Common Stock.




          (d) In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Corporation shall take all such actions as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the Rights.




          (e) The Corporation shall not be required to issue fractions of shares of Common Stock or to
distribute certificates that represent fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of the current market value of a whole share
of Common Stock. For the purposes of this subsection (e), the current market value of a whole share
of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to
the second sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.



          Section 25. Notice of Certain Events. (a) In case the Corporation shall propose, at
any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to

31









 








the holders of Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the
Corporation), (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for
or to purchase any additional shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding shares of Preferred
Stock), (iv) to effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Corporation in a transaction that complies with Section 11(o)), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related transactions, of more than 50% of the assets
or earning power of the Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(o)) or (v) to effect the liquidation, dissolution or winding up
of the Corporation, then, in each such case, the Corporation shall give to the Rights Agent and to
each holder of a Rights Certificate, to the extent feasible and in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 20 days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock, whichever shall be the earlier.




          (b) In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Corporation
shall as soon as practicable thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under Section 11(a)(ii),
and (ii) all references in the preceding paragraph to Preferred Stock shall be deemed thereafter to
refer to shares of Common Stock and/or, if appropriate, other securities.




          Section 26. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificate to or on the Corporation shall
be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:




Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Ave.

White Plains, New York 10604

Attention: General Counsel




          Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to
be given or made by the Corporation or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Corporation) as follows:




32









 








American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention: Corporate Trust Department




          Notices or demands authorized by this Agreement to be given or made by the Corporation or the
Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Corporation.




          Section 27. Supplements and Amendments. The Corporation may from time to time
supplement or amend this Agreement without the approval of any holders of Rights Certificates in
order to cure any ambiguity, to correct or supplement any provision contained herein that may be
defective or inconsistent with any other provision herein, or to make any other provisions with
respect to the Rights that the Corporation may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Corporation and the Rights Agent; provided,
however, that from and after such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner that would adversely affect the interests of the holders of
Rights, and further provided that the Rights Agent is not obligated to enter into any such
supplement or amendment that would change or increase the duties, liabilities or obligations of the
Rights Agent hereunder. Prior to the Distribution Date, the interest of the holders of Rights shall
be deemed coincident with the interests of the holders of Common Stock.




          Section 28. Successors. All the covenants and provisions of this Agreement by or for
the benefit of the Corporation or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.




          Section 29. Determination and Actions by the Board of Directors, etc. For all
purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at
any particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(l)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers specifically granted
to the Board of Directors of the Corporation or to the Corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including, but not limited to, a
determination to redeem or not redeem the Rights or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) that are done or made by the Board of Directors of the
Corporation in good faith shall (x) be final, conclusive and binding on the Corporation, the Rights
Agent, the holders of the Rights and all other Persons, and (y) not subject the Board of Directors
of the Corporation to any liability to the holders of the Rights or any other Person. The Rights
Agent is entitled to always assume that the

33









 








Board of Directors of the Corporation acted in good faith and shall be fully protected and
incur no liability in reliance thereon.




          Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any Person other than the Corporation, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock).




          Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Corporation determines in its good faith judgment
that severing the invalid language from this Agreement would materially adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in Section 23 shall be
reinstated and shall not expire until the Close of Business on the tenth day following the date of
such determination by the Board of Directors of the Corporation.




          Section 32. Governing Law. This Agreement, each Right and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the State of Maryland and
for all purposes shall be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such State; provided, however,
that the rights, privileges, protections and immunities of the Rights Agent pursuant to Section 18,
Section 19, Section 20 and Section 21 shall be governed by and construed in accordance with the
laws of the State of New York.




          Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument.




          Section 34. Descriptive Headings. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof. Section references herein are to the several Sections
of this Agreement unless otherwise specified.




34









 





          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
their respective corporate seals to be hereunto affixed and attested, all as of the day and year
first above written.




	 	 	 	 	 	 	 
	Attest:

	 	 	 	STARWOOD
	 	HOTELS & RESORTS WORLDWIDE, INC.
	 
	By:

	 	/s/ Marshal Donat	 	By:	 	/s/ Michael Dojlidko
	 

	 	 
	 	 	 	 
	Name:

	 	Marshal Donat	 	Name:	 	Michael Dojlidko
	Title:

	 	Assistant Secretary	 	Title:	 	Assistant Secretary
	 
	Attest:

	 	 	 	AMERICAN
	 	STOCK TRANSFER AND TRUST COMPANY
	 
	By:

	 	/s/ Eileen Schwartz	 	By:	 	/s/ Paula Caroppoli
	 

	 	 
	 	 	 	 
	Name:

	 	Eileen Schwartz	 	Name:	 	Paula Caroppoli
	Title:

	 	Executive Assistant	 	Title:	 	Vice President







 









 








Exhibit A




STARWOOD HOTELS & RESORTS WORLDWIDE, INC.




ARTICLES SUPPLEMENTARY




SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




          Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the “Corporation”), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:




          FIRST: Under a power contained in Article FIFTH of the charter of the Corporation (the
“Charter”) in accordance with Section 2-208 of the Maryland General Corporation Law (the “MGCL”),
the Board of Directors of the Corporation (the “Board of Directors”), by resolution duly adopted at
a meeting duly called and held, reclassified and redesignated 1,000,000 shares (the “Shares”) of
Series A Junior Participating Preferred Stock of the Corporation, par value $0.01 per share, as
shares of Series A Junior Participating Preferred Stock of the Corporation, par value $0.01 per
share, with the preferences, conversion and other rights, voting powers, restrictions, limitations
as to dividends and other distributions, qualifications and terms and conditions of redemption as
follows, which upon any restatement of the Charter shall be made part of Article FIFTH of the
Charter, with any necessary or appropriate changes to the enumeration or lettering of the
provisions thereof (all capitalized terms used herein that are defined in the Charter shall be
deemed to have the meanings provided therein):




          Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preferred Stock” and the number of shares constituting such series
shall be 1,000,000. Such number of shares may be increased or decreased by resolution of the Board
of Directors and filing of articles supplementary in accordance with the MGCL stating that such
increase or decrease has been so authorized; provided, however, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than the number of shares of Series A
Preferred Stock then outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon conversion of any outstanding securities issued
by the Corporation convertible into shares of Series A Preferred Stock.




          Section 2. Dividends and Distributions. (A) Subject to the prior and superior
rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if authorized by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in cash on the first
business day of March, June, September and December in each year (each such date being referred to
herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $.01 or (b) subject to
the provisions for adjustment hereinafter set forth, (i) 1000 times the aggregate per share amount
of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in




 









 







shares of common stock, par value $.01 per share, of the Corporation (the “Common Stock”) or a
subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time
after March 15, 1999 (the “Rights Declaration Date”) (x) declare any dividend on Common Stock
payable in shares of Common Stock, (y) subdivide the outstanding Common Stock or (z) combine the
outstanding Common Stock into a smaller number of shares, then in each case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to such event under
clause (b)(i) of the next preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.




          (B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock
as provided in paragraph (A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock); provided, however, that, in
the event no dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, subject to the prior and superior rights of the holders of any shares of any series
of Preferred Stock ranking prior to and superior to the shares of Series A Preferred Stock with
respect to dividends, a dividend of $.01 per share on the Series A Preferred Stock shall
nevertheless by payable on such subsequent Quarterly Dividend Payment Date.




          (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may
fix a record date for the determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon, which record date shall be no
more than 60 days prior to the date fixed for the payment thereof.




          Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall
have the following voting rights:




A-2









 








          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 1000 votes on all matters submitted to a vote
of the stockholders of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare and pay any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.




          (B) Except as otherwise provided herein, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock shall vote collectively as one class on all matters submitted
to a vote of stockholders of the Corporation.





     (C) (i) If at any time dividends on any Series A Preferred Stock shall be in arrears in
an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a “default period”) which shall extend until
such time when all accrued and unpaid dividends for all previous quarterly dividend periods
and for the current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the Series A Preferred Stock)
with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect two Directors.




     (ii) During any default period, such voting right of the holders of Series A
Preferred Stock may be exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders,
and thereafter at annual meetings of stockholders, provided that such voting right
shall not be exercised unless the holders of 10% in number of shares of Preferred
Stock outstanding shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the holders of
Preferred Stock of such voting rights. At any meeting at which the holders of
Preferred Stock shall exercise such voting rights initially during an existing
default period, they shall have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors as may then exist up to two
Directors or, if such right is exercised at an annual meeting, to elect two
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any default
period and during the continuance of such period, the number of Directors shall not
be increased or decreased except by vote of the holders of Preferred Stock as



A-3









 






herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Preferred Stock.




     (iii) Unless the holders of Preferred Stock shall, during an existing default
period, have previously exercised their right to elect Directors, the Board of
Directors may order, or any stockholder or stockholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting of the holders
of Preferred Stock, which meeting shall thereupon be called by the Chairman of the
Board, the Chief Executive Officer, the President, a Vice President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of such
notice to him or her at his or her last address as the same appears on the books of
the Corporation. Such meeting shall be called for a time not earlier than 10 days
and not later than 50 days after such order or request, or in default of the calling
of such meeting within 50 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders owning in the aggregate
not less than 10% of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting
shall be called during the period within 50 days immediately preceding the date
fixed for the next annual meeting of the stockholders.




     (iv) In any default period, the holders of Common Stock, and, if applicable,
other classes of stock of the Corporation, shall continue to be entitled to elect
the whole number of Directors until the holders of Preferred Stock shall have
exercised their right, voting as a class, to elect two Directors, after the exercise
of which right (x) the Directors so elected by the holders of Preferred Stock shall
continue in office until their successors shall have been elected by such holders or
until the expiration of the default period and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled
by vote of a majority of the remaining Directors theretofore elected by the holders
of the class of stock that elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of a
particular class of stock shall include Directors appointed by such Directors to
fill vacancies as provided in clause (y) of the foregoing sentence.




     (v) Immediately upon the expiration of a default period, (x) the right of the
holders of Preferred Stock as a class to elect Directors shall cease, (y) the term
of any Directors elected by the holders of Preferred Stock as a class shall
terminate and (z) the number of Directors shall be such number as may be provided
for in the Charter or by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the Charter or
by-laws). Any vacancies in the Board of Directors effected by the provisions of



A-4









 







clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.



          (D) Except as set forth herein, holders of Series A Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate action (including
any merger or any issuance of Preferred Stock senior in right of payment or otherwise to the Series
A Preferred Stock).




          Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:





     (i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;




     (ii) declare or pay dividends on or make any other distributions on any shares
of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;




     (iii) redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A Preferred
Stock; or




     (iv) purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.



          (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation unless the

A-5









 








Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.





     Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.




     Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation (a “Liquidation Event”), no
distribution shall be made to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received the sum (the “Series
A Liquidation Preference”) of (a) $1000 per share, plus (b) an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of such payment.
Following the payment of the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the sum of (X) $1000 per share plus (Y)
an amount equal to accrued and unpaid dividends and distributions on the Series A Preferred Stock,
whether or not declared, to the date of payment of the Series A Liquidation Preference by (ii) 1000
(as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in
clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A
Preferred Stock and Common Stock, respectively, and the payment of liquidation preferences of all
other shares of stock which rank prior to or on a parity with Series A Preferred Stock, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number
to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. In
determining whether a distribution (other than upon the occurrence of a Liquidation Event), by
dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise, is
permitted under Maryland law, amounts that would be needed, if the Corporation were to be dissolved
at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders
of the Series A Preferred Stock whose preferential rights upon dissolution are senior to those
receiving the distribution shall not be added to the Corporation’s total liabilities.




     (B) In the event, however, that there are not sufficient assets available to permit payment in
full of the Series A Liquidation Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series A Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such remaining assets
shall be distributed ratably to the holders of Common Stock.



A-6









 






     (C) In the event the Corporation shall at any time after the Rights Declaration Date (i)
declare and pay any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to such
event.




     Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 1000 times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, that would be held or receivable upon the consummation of
such consolidation, merger, combination or other transaction by a holder of a share of Common
Stock. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare
and pay any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.




     Section 8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.




     Section 9. Ranking. The Series A Preferred Stock shall rank junior to all other
series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of
assets, whether or not upon the dissolution, liquidation or winding up of the Corporation, unless
the terms of any such series shall provide otherwise.




     Section 10. Amendment. The Charter shall not be amended in any manner that would
materially alter or change the powers, preferences or special rights of the Series A Preferred
Stock, as set forth herein, so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting
separately as a class.




     Section 11. Fractional Shares. Series A Preferred Stock may be issued in fractions
of a share which shall entitle the holder, in proportion to such holder’s fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred Stock.



A-7









 






     SECOND: The Shares have been classified and designated by the Board of Directors under the
authority contained in the Charter.




     THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner
and by the vote required by law.




     FOURTH: The undersigned of the Corporation acknowledges these Articles Supplementary to be the
corporate act of the Corporation and, as to all matters or facts required to be verified under
oath, the undersigned acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is made under the
penalties for perjury.



A-8









 






     IN WITNESS WHEREOF, Starwood Hotels & Resorts Worldwide, Inc. has caused its corporate seal to
be hereunto affixed and these Articles Supplementary to be signed by its Senior Vice President &
Treasurer, and the same to be attested to by its Assistant Secretary, this 7th day of April, 2006.



	 	 	 
	Attest:

	 	STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
	 
	 	 
	By:

	 	By:
	/s/ Michael Dojlidko

	 	/s/ Jeff Drew
	Name: Michael Dojlidko

	 	Name: Jeff Drew
	Title: Assistant Secretary

	 	Title: Senior Vice President & Treasurer






A-9









 





Exhibit B




[Form of Rights Certificate]




          Certificate No. R-                      Rights




          NOT EXERCISABLE AFTER APRIL 5, 2009 OR EARLIER IF REDEEMED OR EXCHANGED BY THE CORPORATION.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $.01 PER RIGHT, AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*








 


*           The portion of the legend in brackets shall be inserted only if applicable and shall
replace the preceding sentence.




Rights Certificate




STARWOOD HOTELS & RESORTS WORLDWIDE, INC.




          This certifies that                     , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Amended and Restated Rights Agreement dated as of April 7, 2006
(the “Rights Agreement”), between Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
(the “Corporation”), and American Stock Transfer and Trust Company, a New York banking corporation,
as Rights Agent (the “Rights Agent”), to purchase from the Corporation at any time prior to 5:00
P.M. (New York City time) on April 5, 2009 at the office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-thousandth of a fully paid,
nonassessable share of Series A Junior Participating Preferred Stock, par value $.01 per share (the
“Preferred Stock”), of the Corporation, at a purchase price of $125 per one one-thousandth of a
share (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The number of Rights
represented by this Rights Certificate (and the number of shares that may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of March 15, 1999, based on the Preferred Stock as constituted at such date.
The Corporation reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that, upon any exercise of Rights, a number of Rights
be exercised so that only whole shares of Preferred Stock will be issued.




B-1









 








          Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights represented by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person or an Affiliate or Associate of such
Person, such Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.




          As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities that may be purchased upon the exercise of the Rights
represented by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events.




          This Rights Certificate is subject to all the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Corporation and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written request to the
Rights Agent.




          This Rights Certificate, with or without other Rights Certificates, upon surrender at the
principal office or offices of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date representing Rights
entitling the holder to purchase a like aggregate number of one one-thousandths of a share of
Preferred Stock as the Rights represented by the Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.




          Subject to the provisions of the Rights Agreement, the Rights represented by this Certificate
may, in each case at the option of the Corporation, be (i) redeemed by the Corporation at its
option at a redemption price of $.01 per Right or (ii) exchanged in whole or in part for shares of
common stock, par value $.01 per share, of the Corporation, or other securities of the Corporation.




          Immediately upon the action of the Board of Directors of the Corporation authorizing
redemption, the Rights will terminate and the only right of the holders of Rights will be to
receive the redemption price.




          No fractional shares of Preferred Stock will be issued upon the exercise of any Right or
Rights represented hereby (other than fractions that are integral multiples of one one-thousandth
of a share of Preferred Stock, which may, at the election of the Corporation, be




B-2









 







evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.




          No holder of this Rights Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the
Corporation that may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of
the rights of a stockholder of the Corporation or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights represented by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.




          This Rights Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned manually or by facsimile signature by the Rights Agent.




          WITNESS the facsimile signature of the proper officers of the Corporation and its corporate
seal.




Dated as of                           ,           




	 	 	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	 	 	STARWOOD
	 	HOTELS & RESORTS WORLDWIDE, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 
	Secretary	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:	 	 
	Countersigned:	 	 	 	 	 	 
	 
	American Stock Transfer and Trust Company	 	 	 	 	 	 
	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 






B-3









 





[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if

such holder desires to transfer the Rights

Certificate.)




	 	 	 	 	 	 	 
	FOR VALUE RECEIVED
	 	 	 	 	 	 
	 	 	 	 	 
	hereby sells, assigns and transfers unto	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	(Please print name and address of transferee)






this Rights Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                      Attorney, to transfer the within Rights Certificate
on the books of the within-named Corporation, with full power of substitution.




	 	 	 
	Dated:                     ,

	 	 
	 
	 	Signature
	Signature Guaranteed:
	 	
 
	 
	 	 
	 

	 	Certificate







     The undersigned hereby certifies by checking the appropriate boxes that:




     (1) this Rights Certificate [ ] is [ ] is not being sold, assigned or transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined pursuant to the Rights Agreement);




     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not acquire the Rights represented by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.



	 	 	 	 	 
	Dated:                     ,

	 	 	 	 
	 
	 	 	 	
Signature
	 
	Signature Guaranteed:
	 	 	 	 






B-4









 






NOTICE




          The signature to the foregoing Assignment and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.




FORM OF ELECTION TO PURCHASE




(To be executed if holder desires to exercise Rights represented by

the Rights Certificate.)



TO: STARWOOD HOTELS & RESORTS WORLDWIDE, INC.




          The undersigned hereby irrevocably elects to exercise ___Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or
such other securities of the Corporation or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares (or other securities) be
issued in the name of and delivered to:




Please insert social security or

other identifying number:                                         




	 	 	 	 	 
	 
	(Please print name and address)

	 
	 








          If such number of Rights shall not be all the Rights represented by this Rights Certificate, a
new Rights Certificate for the balance of such Rights shall be registered in the name of and
delivered to:



Please insert social security or

other identifying number:                                         




	 	 	 	 	 
	 
	(Please print name and address)

	 
	 
	 	 	 	 	 

	Dated:                     ,

	 	 	 	 
	 	 	 	 	 

	

	 	 	 	Signature 
	 
	 	 	 	 
	Signature Guaranteed:
	 	 	 	 






B-5









 






Certificate





     The undersigned hereby certifies by checking the appropriate boxes that:




     (1) the Rights represented by this Rights Certificate [ ] are [ ] are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);




     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not acquire the Rights represented by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.



	 	 	 	 	 
	Dated:                     ,

	 	 	 	 
	 
	 	 	 	Signature

	Signature Guaranteed:
	 	 	 	 






NOTICE




          The signature to the foregoing Election to Purchase and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.





B-6









 








Exhibit C




          SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK




          On March 15, 1999, Starwood Hotels & Resorts Worldwide, Inc. (the “Corporation”) declared a
dividend distribution of one Right for each outstanding share of the Company’s common stock, par
value $.01 per share (“Common Stock”), to stockholders of record at the Close of Business on April
5, 1999. Each Right entitles the registered holder to purchase from the Corporation one
one-thousandth of a share (a “Preferred Fraction”) of Series A Junior Participating Preferred
Stock, par value $.01 per share (the “Preferred Stock”), at a Purchase Price of $125 per Preferred
Fraction, subject to adjustment. The description and terms of the Rights are set forth in an
Amended and Restated Rights Agreement dated as of April 7, 2006 (the “Rights Agreement”), between
the Corporation and American Stock Transfer and Trust Company, as Rights Agent.




          Initially, the Rights will be attached to all Common Stock certificates representing shares
then outstanding, and no separate Rights certificates will be distributed. The Rights will separate
from the Common Stock and the Distribution Date will occur upon the earlier of (i) 10 days
following a public announcement that a person or group of affiliated or associated persons (an
“Acquiring Person”) has acquired, or obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding shares of Common Stock (the “Stock Acquisition Date”) or (ii) 10 business
days (or such later date as may be determined by action of the Board of Directors prior to such
time as any person or group becomes an Acquiring Person) following the commencement of a tender
offer or exchange offer which, if consummated, would result in a person or group beneficially
owning 15% or more of the outstanding shares of Common Stock.




          Until the Distribution Date, (i) the Rights will be represented by the Common Stock
certificates and will be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after April 5, 1999, will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.




          Pursuant to the Rights Agreement, the Corporation reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock will be issued.




          The Rights are not exercisable until the Distribution Date and will expire at the Close of
Business on April 5, 2009, unless earlier redeemed by the Corporation as described below.




          As soon as practicable after the Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the Close of Business on the Distribution Date and,
thereafter, the separate Rights certificates alone will represent the Rights. Except as otherwise
provided in the Rights Agreement, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.




B-7









 








          In the event that, at any time following the Distribution Date, a person or group becomes an
Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise,
one share of Common Stock having a value equal to two times the exercise price of the Right. If an
insufficient number of shares of Common Stock is authorized for issuance, then the Board of
Directors would be required to substitute cash, property or other securities of the Corporation for
the shares of Common Stock. Notwithstanding any of the foregoing, following the occurrence of the
event set forth in this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person (or by certain related
parties) will be null and void. However, Rights are not exercisable following the occurrence of the
event set forth in this paragraph until such time as the Rights are no longer redeemable by the
Corporation as set forth below.




          For example, at an exercise price of $125 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $250 worth of shares of Common Stock (or other consideration,
as noted above) for $125. Assuming that each share of Common Stock had a value of $50 at such time,
the holder of each valid Right would be entitled to purchase 5 shares of Common Stock for $125.




          In the event that, at any time following the Stock Acquisition Date, (i) the Corporation is
acquired in a merger or other business combination transaction in which the Corporation is not the
surviving corporation, (ii) the Corporation is acquired in a merger or other business combination
transaction in which the Corporation is the surviving corporation and all or part of the Common
Stock is converted into securities of another entity, cash or other property or (iii) 50% or more
of the Corporation’s assets or earning power is sold or transferred, each holder of a Right (except
Rights that previously have been voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company having a value equal to two times the
exercise price of the Right. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the “Triggering Events.”




          The purchase price payable, and the number of Preferred Fractions or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights, options or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock or (iii) upon the distribution to holders
of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to above).




          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase Price. No fractional Preferred Fractions will be
issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading day prior to the date of exercise.




          At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding shares of Common Stock, the Corporation
may exchange the Rights (other than Rights owned by such person or

C-2









 








group, which will have become void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-thousandth of a share of Preferred Stock (or of a share of a class or
series of the Corporation’s preferred stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).




          In general, the Corporation may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (subject to adjustment and payable in cash, shares of Common Stock or other
consideration deemed appropriate by the Board of Directors) at any time until ten days following
the Stock Acquisition Date.




          Immediately upon the action of the Board of Directors authorizing any redemption, the Rights
will terminate and the only right of the holders of Rights will be to receive the redemption price.




          Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Corporation, including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not result in the recognition of taxable income by stockholders
or the Corporation, stockholders may, depending upon the circumstances, recognize taxable income
after a Triggering Event.




          The terms of the Rights may be amended by the Board of Directors of the Corporation without
the consent of the holders of the Rights, except that from and after such time as any person or
group of affiliated or associated persons becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights.




          A copy of the Rights Agreement is available free of charge from the Rights Agent. This
description of the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.





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