EX-4.10 4 c78061exv4w10.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4.10 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. $300,000,000 3.50% CONVERTIBLE SENIOR NOTES DUE 2023 REGISTRATION RIGHTS AGREEMENT May 16, 2003 BANC OF AMERICA SECURITIES LLC DEUTSCHE BANK SECURITIES INC. J.P. MORGAN SECURITIES INC. As Initial Purchasers c/o Banc of America Securities LLC 600 Montgomery Street San Francisco, California 94111 Dear Sirs: Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation (the "COMPANY"), proposes to issue and sell to the several Initial Purchasers named in Schedule 1 (the "INITIAL PURCHASERS"), upon the terms set forth in a purchase agreement, dated as of May 9, 2003 (the "PURCHASE AGREEMENT"), $300,000,000 in aggregate principal amount of its 3.50% Convertible Senior Notes due 2023 ($360,000,000 in aggregate principal amount if the Initial Purchasers exercise in full their option pursuant to the Purchase Agreement) (the "NOTES"). The Notes will be convertible into Shares (the "SHARES"), each consisting of one share of common stock of the Company and one Class B share of Starwood Hotels & Resorts, a Maryland real estate investment trust (the "TRUST"), at the conversion price set forth in the Offering Memorandum dated May 9, 2003 (the "OFFERING MEMORANDUM"). The Notes will be issued pursuant to an Indenture, dated as of May 16, 2003 (the "INDENTURE"), among the Company, Sheraton Holding Corporation (the "GUARANTOR"), the Trust and U.S. Bank National Association, as trustee (the "TRUSTEE"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantor agree with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders of the Notes and the Shares issuable upon conversion of the Notes (collectively, the "SECURITIES" and, each a "SECURITY") from time to time until such time as such Securities have been sold pursuant to a Shelf Registration Statement (as defined below) (each of the foregoing a "HOLDER" and, together, the "HOLDERS"), as follows: 1. Shelf Registration. The Company and the Guarantor, as applicable, shall take the following actions: (a) The Company, the Trust and the Guarantor shall use their reasonable efforts to file with the Securities and Exchange Commission (the "COMMISSION") not later than August 14, 2003, the date 90 days after the earliest date of original issuance of any of the Notes, and thereafter use their reasonable efforts to cause to be declared effective as promptly as practicable but in no event later than November 12, 2003, the date 180 days after the earliest date of original issuance of any of the Notes (the "EFFECTIVENESS TARGET DATE"), a shelf registration statement or statements or an amendment to an existing shelf registration statement or statements (each a "SHELF REGISTRATION STATEMENT") on such form or forms under the Securities Act of 1933, as amended (the "SECURITIES ACT") as the Company, the Trust and the Guarantor deem appropriate relating to the offer and sale of the Transfer Restricted Securities (as defined herein) from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "SHELF REGISTRATION"); provided, however, that no Holder (other than the Initial Purchasers) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) Subject to Section 2(c) hereof, the Company, the Trust and the Guarantor shall use their reasonable efforts to keep each Shelf Registration Statement continuously effective in order to permit the related prospectus to be lawfully delivered by the Holders of the relevant Securities, until the earliest of the date one year (or for such longer period if extended pursuant to Section 2(i) below) from the last date of original issuance of any of the Notes and the date when all the Transfer Restricted Securities covered by such Shelf Registration Statement and owned by Holders that complete and deliver in a timely manner the Notice and Questionnaire (as defined herein) have been sold pursuant to such Shelf Registration Statement (in any case, such period being called the "SHELF REGISTRATION PERIOD"). (c) Notwithstanding any other provision of this Agreement to the contrary, the Company, the Trust and the Guarantor shall cause each Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of such Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (d) The Company shall deliver a notice of registration statement and selling securityholder notice and questionnaire, in substantially the form attached as Annex A to the Offering Memorandum (a "NOTICE AND QUESTIONNAIRE"), to each Holder to obtain certain information regarding such Holder for use in connection with a Shelf Registration Statement and the related prospectus. To be named as a selling securityholder in a Shelf Registration Statement and the related prospectus at the time of such Shelf Registration Statement's effectiveness, Holders must complete and deliver to the Company the completed Notice and Questionnaire at least three (3) Business Days prior to the intended distribution of Transfer Restricted Securities pursuant to such Shelf Registration Statement. Thereafter, any Holder wishing to sell Transfer Restricted Securities pursuant to any Shelf Registration Statement and the related prospectus shall deliver a properly completed Notice and Questionnaire to the Company. From and after the date a Shelf Registration Statement is declared effective, the Company shall, as promptly as practicable but in any event within five (5) Business Days of receipt of a properly completed Notice and Questionnaire is delivered (i) if required by applicable law, file with the Commission a post-effective amendment to such Shelf Registration Statement or prepare and, if required by applicable law, file a supplement to the related prospectus or a supplement or amendment to any document incorporated therein by reference or file any other document required under the Securities Act so that the Holder delivering such Notice and Questionnaire is named as a selling securityholder in such Shelf Registration Statement and the related prospectus in such a manner as to permit such Holder to deliver such prospectus to purchasers of the Transfer Restricted Securities in accordance with applicable law and, if the Company, the Trust and the Guarantor shall file a post-effective amendment to such Shelf Registration Statement, use reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is practicable, but in any event by the date (the "AMENDMENT EFFECTIVENESS DEADLINE DATE") that is thirty (30) days after the date such post-effective amendment is required by this clause to be filed and (ii) notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to clause (i) above; provided, however, notwithstanding the foregoing, if such Notice and Questionnaire is delivered during a Deferral Period (as defined in Section 2(c)), the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (i) and (ii) above upon expiration of the Deferral Period in accordance with Section 2(b). Each Holder that delivers, at any time, a duly completed Notice and Questionnaire together with such other information as may be reasonably requested of such Holder pursuant to this Agreement, and that is named as a selling 2 securityholder in an effective Shelf Registration Statement or post-effective amendment thereto, is hereafter referred to as a "NOTICE HOLDER" with respect to such Shelf Registration Statement. Notwithstanding anything contained herein to the contrary, (x) the Company, the Trust and the Guarantor shall be under no obligation to name any Holder as a selling securityholder in any Shelf Registration Statement or related prospectus unless and until such Holder shall have timely delivered a completed Notice and Questionnaire, together with such other information regarding such Holder and the intended distribution as may be reasonably requested by the Company and (y) the Amendment Effectiveness Deadline Date shall be extended by up to ten (10) days from the expiration of a Deferral Period (and the Company, the Trust and the Guarantor shall incur no obligation to pay Additional Interest during such extension) if such Deferral Period is in effect on the Amendment Effectiveness Deadline Date; and provided further, however, that the Company, the Trust and the Guarantor shall not be obligated to file more than one (1) post-effective amendment or supplement in any thirty (30) day period following the date the applicable Shelf Registration Statement is declared effective for the purpose of naming Holders as selling securityholders who were not named in such Shelf Registration Statement at the time of effectiveness. Each Holder of Transfer Restricted Securities agrees that if such Holder wishes to sell Transfer Restricted Securities pursuant to any Shelf Registration Statement and related prospectus, it will do so only in accordance with this Section 1(d) and Section 2(c) hereof. 2. Registration Procedures. In connection with any Shelf Registration required by Section 1 hereof, the following provisions shall apply: (a) The Company, the Trust and the Guarantor shall furnish to the Initial Purchasers, prior to the filing thereof with the Commission, a copy of each Shelf Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein, and in the event that the Initial Purchasers (with respect to any portion of an unsold allotment from the original offering) are participating in any Shelf Registration Statement, the Company, the Trust and the Guarantor shall use their reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as the Initial Purchasers reasonably may propose within a reasonable period of time. (b) Subject to Section 2(c), upon the occurrence of any change or event, as a result of which any Shelf Registration Statement or prospectus contained therein shall (i) contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) otherwise not be effective or usable for resale of Transfer Restricted Securities during the period required by this Agreement (a "MATERIAL EVENT"), the Company, the Trust and the Guarantor shall file as promptly as practicable an appropriate amendment to such Shelf Registration Statement or a supplement to the related prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Shelf Registration Statement and prospectus curing such defect and, in the case of an amendment to the Shelf Registration Statement, use their reasonable efforts to cause such amendment to be declared effective as soon as practicable. (c) Upon (A) the issuance by the Commission of a stop order suspending the effectiveness of any Shelf Registration Statement or the initiation of proceedings with respect to any Shelf Registration Statement under Section 8(d) or 8(c) of the Securities Act or (B) the occurrence of a Material Event or a prospective Material Event and the general counsel of the Company reasonably determines that the disclosure of material non-public information pursuant to Section 2(b) would have a material adverse effect on the Company and its subsidiaries taken as a whole, the Company (on behalf of itself, the Trust and the Guarantor) shall give notice to the Notice Holders that the availability of such Shelf Registration Statement is suspended (a "DEFERRAL NOTICE") and, upon receipt of any Deferral Notice, each Notice Holder agrees not to sell any Transfer Restricted Securities pursuant to such Shelf Registration Statement until such Notice Holder is advised in writing by the Company and the Guarantor that the prospectus may be used, and has received copies of the amended or supplemented prospectus or of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such prospectus. 3 The Company , the Trust and the Guarantor will use reasonable efforts to ensure that the use of the prospectus may be resumed (x) in the case of clause (A) above, as promptly as is practicable or (y) in the case of clause (B) above, as soon as, in the sole judgment of the general counsel of the Company, public disclosure of such Material Event would not be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter. The Company shall be entitled to exercise its right under this Section 2(c) to suspend the availability of the Shelf Registration Statement or any prospectus, without incurring or accruing any obligation to pay Additional Interest pursuant to Section 6, for one or more periods not to exceed 45 days (or 75 days if a previously undisclosed proposed or pending material business transaction was required to be disclosed and such disclosure would, in the good faith judgment of the general counsel of the Company, impede the Company's ability to consummate such transaction) in any 90-day period and not to exceed, in the aggregate, 90 days in any 360-day period (such period, during which the availability of any Shelf Registration Statement and any prospectus is suspended being a "DEFERRAL PERIOD"). (d) The Company, the Trust and the Guarantor shall make every reasonable effort to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of any Shelf Registration Statement. (e) The Company (on behalf of itself, the Trust and the Guarantor) shall furnish to each Notice Holder included within the coverage of any Shelf Registration, upon request and without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules. (f) The Company (on behalf of itself, the Trust and the Guarantor) shall, during the Shelf Registration Period, deliver to each Notice Holder included within the coverage of any Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. Subject to the provisions of this Agreement, the Company, the Trust and the Guarantor consent to the use of the prospectus or any amendment or supplement thereto by each Notice Holder of the Transfer Restricted Securities in connection with the offering and sale of the Transfer Restricted Securities covered by the prospectus, or any amendment or supplement thereto, included in any Shelf Registration Statement. (g) Prior to any public offering of the Transfer Restricted Securities pursuant to any Shelf Registration Statement, the Company, the Trust and the Guarantor shall register or qualify or cooperate with the Notice Holders and their respective counsel in connection with the registration or qualification of the Transfer Restricted Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Notice Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Transfer Restricted Securities covered by any Shelf Registration Statement; provided, however, that the Company, the Trust and the Guarantor shall not be required to (i) qualify generally to do business in any jurisdiction where they are not then so qualified or (ii) take any action which would subject them to general service of process or to taxation in any jurisdiction where they are not then so subject. (h) In connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, the Company, the Trust and the Guarantor shall cooperate with the Notice Holders to facilitate the timely preparation and delivery of certificates representing the Transfer Restricted Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Notice Holders may request in writing a reasonable period of time prior to sales of the Transfer Restricted Securities pursuant to such Shelf Registration Statement. (i) If the Company (on behalf of itself, the Trust and the Guarantor) delivers a Deferral Notice, then the Initial Purchasers and the Notice Holders shall suspend use of the applicable 4 prospectus, and the period of effectiveness of any Shelf Registration Statement provided for in Section 1(b) above shall be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers and the Notice Holders shall have received an amended or supplemented prospectus pursuant to Section 2(f). (j) Not later than the effective date of any Shelf Registration Statement, the Company and the Guarantor will provide a CUSIP number for the Transfer Restricted Securities registered under such Shelf Registration Statement, and provide the trustee with printed certificates for such Transfer Restricted Securities, in a form eligible for deposit with The Depository Trust Company. (k) The Company, the Trust and the Guarantor will use their reasonable best efforts to comply with all rules and regulations of the Commission to the extent and so long as they are applicable to any Shelf Registration and will make generally available to its security holders with respect to any Shelf Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of such Shelf Registration Statement; provided, that if the information required by this Section 3(k) is filed with the Commission and is publicly available, it shall be deemed to have satisfied its obligation to furnish such information to its securityholders pursuant to this Section 3(k). (l) The Company, the Trust and the Guarantor shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and, in connection therewith, shall cooperate with the Trustee and Holders to effect such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company and the Guarantor shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. (m) The Company, the Trust and the Guarantor may require each Holder that proposes to sell Transfer Restricted Securities pursuant to any Shelf Registration Statement to furnish to the Company and the Guarantor a properly completed Notice and Questionnaire together with such information regarding the Holder and the distribution of the Transfer Restricted Securities as the Company and the Guarantor may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company and the Guarantor may exclude from such Shelf Registration Statement the Transfer Restricted Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request. (n) The Company, the Trust and the Guarantor shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder shall reasonably request in order to facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration. (o) The Company, the Trust and the Guarantor shall (i) make reasonably available for inspection by the Holders, any underwriter participating in any disposition pursuant to any Shelf Registration Statement and any attorney, accountant or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and the Guarantor and (ii) cause the Company's and the Guarantor's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders or any such underwriter, attorney, accountant or agent in connection with any Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 3 hereof; provided, further, the Company and the Guarantor shall have no obligation to provide any information to any person that has not entered into an agreement, in form reasonably satisfactory to the Company, providing that such person shall keep 5 such information confidential and use such information only for the due diligence purposes in connection with the applicable Shelf Registration. (p) The Company, the Trust and the Guarantor, if requested by any Notice Holder covered by any Shelf Registration Statement, shall cause (i) their counsel to deliver an opinion and updates thereof relating to the Transfer Restricted Securities in customary form addressed to such Notice Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company and its subsidiaries; the qualification of the Company and its subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 2(n) hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the Transfer Restricted Securities; the absence, to such counsel's knowledge, of material legal or governmental proceedings involving the Company and its subsidiaries; the absence of governmental approvals required to be obtained in connection with such Shelf Registration Statement, the offering and sale of the Transfer Restricted Securities, or any agreement of the type referred to in Section 2(n) hereof; the compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, at the time the foregoing opinion is delivered, such counsel shall additionally state that in the course of the preparation of such Shelf Registration Statement, it has participated in conferences with officers and other representatives of the Company, the Trust and the Guarantor, including their other counsel and independent public accountants, and your representatives, during the course of which the contents of the Shelf Registration Statement and related matters were discussed and, although it has not independently checked the accuracy or completeness of, or otherwise verified, and is not passing upon, and assumes no responsibility for, the accuracy, completeness or fairness of the statements contained in such Shelf Registration Statement, except to the extent specified therein, and although it has relied as to facts necessary to the determination of materiality, to a certain extent, upon the judgment of officers and representatives of the Company, as a result of such consideration and participation, nothing has come to its attention which causes it to believe that, as of its date and the Closing Date, such Shelf Registration Statement contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no opinion with respect to the financial statements, financial data and supporting schedules included or incorporated by reference in the Shelf Registration Statement); (ii) their officers to execute and deliver all customary documents and certificates and updates thereof reasonably requested by any underwriters of the Transfer Restricted Securities and (iii) their independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in such Shelf Registration Statement to provide to the Notice Holders and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by the applicable Statement of Auditing Standards. (q) The Company will provide promptly to the Initial Purchasers and each Holder, upon request, each document filed by the Company and the Guarantor with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). 3. Registration Expenses. (a) All expenses incident to the Company's and the Guarantor's performance of and compliance with this Agreement will be borne by the Company, regardless of whether any Shelf Registration Statement is ever filed or becomes effective, including without limitation; (i) all registration and filing fees and expenses; 6 (ii) all fees and expenses of compliance with federal securities and state "blue sky" or securities laws; (iii) all expenses of printing (including printing of prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company and the Guarantor; (v) all application and filing fees in connection with listing the Shares on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantor (including the expenses of any special audit and comfort letters required by or incident to such performance). The Company will bear its and the Guarantor's internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company and the Guarantor. (b) In connection with any Shelf Registration Statement required by this Agreement, the Company and the Guarantor will reimburse the Initial Purchasers and the Notice Holders of Transfer Restricted Securities who are selling or reselling Transfer Restricted Securities pursuant to the "Plan of Distribution" contained in such Shelf Registration Statement for the reasonable fees and disbursements (not exceeding $25,000 in the aggregate) of not more than one counsel, who shall be Latham & Watkins LLP unless another firm shall be chosen by the Notice Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Shelf Registration Statement is being prepared. 4. Indemnification. (a) The Company and the Guarantor agree to indemnify and hold harmless each Notice Holder and each person, if any, who controls such Notice Holder within the meaning of the Securities Act or the Exchange Act (each Notice Holder and such controlling persons are referred to collectively as the "INDEMNIFIED PARTIES") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement or the related prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to such Shelf Registration, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (x) the Company and the Guarantor shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any Shelf Registration Statement or the related prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to such Shelf Registration in reliance upon and in conformity with written information pertaining to such Notice Holder and furnished in writing to the Company or the Guarantor by or on behalf of such Notice Holder specifically for inclusion therein and (y) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to any Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Notice Holder from whom the person asserting any such losses, claims, damages or liabilities purchased the Transfer Restricted Securities concerned, to the extent that a prospectus relating to such Transfer Restricted Securities was required to be delivered by such Notice Holder under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Notice Holder results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Transfer Restricted Securities to 7 such person, a copy of the final prospectus if the Company and the Guarantor had previously furnished copies thereof to such Notice Holder. This indemnity agreement will be in addition to any liability which the Company and the Guarantor may otherwise have to such Indemnified Party. The Company and the Guarantor shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Notice Holders of the Transfer Restricted Securities if requested by such Notice Holders. (b) Each Notice Holder, severally and not jointly, will indemnify and hold harmless the Company and the Guarantor and each person, if any, who controls the Company or the Guarantor within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or the Guarantor or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement or the related prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to such Shelf Registration Statement, or (ii) the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Notice Holder and furnished to the Company or the Guarantor by or on behalf of such Notice Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company and the Guarantor for any legal or other expenses reasonably incurred by the Company or the Guarantor or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Notice Holder may otherwise have to the Company, the Guarantor or any of their respective controlling persons. (c) Promptly after receipt by an indemnified party under this Section 4 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 4, notify the indemnifying party in writing of the commencement thereof; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 4 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 4. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnified party). After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 4 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof; provided, however, that the indemnified parties shall have the right to employ one counsel to represent jointly the indemnified parties and their respective officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified parties under this Section 4 if the indemnified parties have been advised by such counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the indemnifying parties, and in that event the fees and expenses of such separate counsel shall be paid by the indemnifying parties. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. 8 (d) If the indemnification provided for in this Section 4 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the offer and sale of the Transfer Restricted Securities, pursuant to the Shelf Registration, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or any Guarantor, as the case may be, on the one hand or such Notice Holder or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantor, and the Holders agree that it would not be just and equitable if contributions pursuant to this Section 4(d) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 4(d), the Notice Holders shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Notice Holders from the sale of the Transfer Restricted Securities pursuant to any Shelf Registration Statement exceeds the amount of damages which such Notice Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company or any Guarantor within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company or any Guarantor. The Notice Holders' obligations to contribute pursuant to this Section 4 are several, and not joint. (e) The agreements contained in this Section 4 shall survive the sale of the Securities pursuant to any Shelf Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. 5. Holders Obligations. Each Holder agrees, by acquisition of the Transfer Restricted Securities, that no Holder of Transfer Restricted Securities shall be entitled to sell any of such Transfer Restricted Securities pursuant to any Shelf Registration Statement or to receive a prospectus relating thereto, unless such Holder has furnished the Company, the Trust and the Guarantor with a Notice and Questionnaire as required pursuant to Section 1(d) hereof and the information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the Company, the Trust and the Guarantor all information required to be disclosed in order to make the information previously furnished to the Company, the Trust and the Guarantor by such Notice Holder not misleading and any other information regarding such Notice Holder and the distribution of such Transfer Restricted Securities as the Company and the Guarantor may from time to time reasonably request. Any sale of any Transfer Restricted Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the prospectus delivered by such Holder in connection with such disposition, that such prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or its plan of distribution and that such prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or its 9 plan of distribution necessary to make the statements in such prospectus, in the light of the circumstances under which they were made, not misleading. Each Holder shall notify the Company, the Trust and the Guarantor no later than three (3) business days prior to any proposed sale by such Holder pursuant to a Shelf Registration Statement of such proposed sale which notice shall be effective for five (5) business days. Each Holder agrees that within ten (10) business days of any sale, disposition or other transfer of Transfer Restricted Securities, whether pursuant to a Shelf Registration Statement or exemption from registration under the Securities Act, such Holder shall provide written notice to the Company, the Trust and the Guarantor specifying the amount of Transfer Restricted Securities sold, disposed of or transferred and the name and address of the transferee of such Transfer Restricted Securities. Each Holder acknowledges that such Holder, when it sells Transfer Restricted Securities pursuant to a Shelf Registration Statement, will be required to be named as a selling securityholder in the related prospectus, will be required to deliver a prospectus to the purchaser, and will be subject to certain of the civil liability provisions under the Securities Act in connection with such Holder's sale. 6. Additional Interest as Liquidated Damages Under Certain Circumstances. (a) Additional interest as liquidated damages (the "ADDITIONAL INTEREST") shall accrue on the Notes as provided below if, and only if, any of the following events shall occur (each such event in clauses (i) through (iii) below being herein called a "REGISTRATION DEFAULT"): (i) a Shelf Registration Statement required by this Agreement is not filed with the Commission on or prior to August 14, 2003, the date 90 days after the earliest date of original issuance of any of the Notes; (ii) a Shelf Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the Effectiveness Target Date; or (iii) a Shelf Registration Statement required by this Agreement has been declared effective by the Commission but at any time after the Effectiveness Target Date, (A) such Shelf Registration Statement ceases to be effective or (B) such Shelf Registration Statement or the related prospectus fails to be usable in connection with resales of Transfer Restricted Securities (other than pursuant to Section 2(c) hereof) and (1) the Company fails to cure the Registration Default within five (5) business days by a post-effective amendment or a report filed pursuant to the Exchange Act or (2) if applicable, the Company does not terminate the Deferral Period by the 45th or 75th day, as applicable. Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission. Additional Interest shall accrue daily on the Notes over and above the interest set forth in the title of the Notes from and including the day following the date on which a Registration Default shall occur until, but excluding, the earlier of the day on which all Registration Defaults have been cured and the first anniversary of the last date of original issuance of the Notes at a rate of 0.25% per annum of the principal amount of the Notes to and including the 90th day following such Registration Default and at a rate of 0.50% per annum of the principal amount of the Notes from and after the 91st day following such Registration Default (the "ADDITIONAL INTEREST RATE"); provided, however, that the Company and the Guarantor shall in no event be required to pay Additional Interest in respect of more than one Registration Default at any one time. In the event a Holder has converted some or all of its Notes into Shares, the Holder shall be entitled to receive Additional Interest as provided above calculated on the principal amount of the Notes so converted, except to the extent such Shares have been registered. In no event will Additional Interest accrue at a rate per year in excess of 0.50%. (b) Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash semi-annually in arrears on each May 15 and November 15, with the first semi-annual payment due on the first such payment date after which a Registration Default occurs. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the initial issue price of the Notes 10 plus accrued interest (including contingent interest, if any) with respect to such Notes through the date of determination and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months) and the denominator of which is 360. A Holder will not be entitled to Additional Interest as provided in Section 6 hereof unless such Holder has timely delivered to the Company a duly completed Notice and Questionnaire, together with such other information reasonably requested of such Holder in accordance with this Agreement. (c) "TRANSFER RESTRICTED SECURITIES" means each Security until the earliest to occur of (i) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement and (ii) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act. 7. Rules 144 and 144A. The Company and the Guarantor agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding and for any period in which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resale of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13(g) or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144. 8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("MANAGING UNDERWRITERS") will be selected by the Notice Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering (provided that the Holders of Shares issued upon conversion of Notes shall not be deemed Holders of Shares, but shall be deemed to be Holders of the aggregate principal amount of Notes from which such Shares were converted) and shall be reasonably acceptable to the Company. No Holder may participate in any underwritten registration hereunder unless such person (i) agrees to sell such Holder's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the Holders entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires (including the Notice and Questionnaire), powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 11 9. Miscellaneous. (a) Remedies. The sole and exclusive remedy of a Holder with respect to any Registration Default shall be Additional Interest as provided in Section 6 hereof. (b) No Inconsistent Agreements. The Company and the Guarantor will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or the Guarantor's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company, the Guarantor and the written consent of the Holders of a majority in principal amount of the Notes (provided that the Holders of Shares issued upon conversion of Notes shall not be deemed Holders of Shares, but shall be deemed to be Holders of the aggregate principal amount of Notes from which such Shares were converted) affected by such amendment, modification, supplement, waiver or consents. (d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail (registered or certified, return receipt requested), facsimile transmission, or air courier which guarantees overnight delivery: (1) if to a Holder, that is not a Notice Holder, at the address of such Holder as set forth on the records of the Registrar under the Indenture, with a copy to such Registrar. (2) if to a Notice Holder, at the most current address given by such Holder to the Company in a Notice and Questionnaire or any amendment thereto. (3) if to the Initial Purchasers; Banc of America Securities LLC 9 West 57th Street New York, NY 10019 Fax No.: (212) 933-2217 Attention: Eric Hambleton with a copy to: Latham & Watkins LLP 885 Third Avenue New York, NY 10022-4802 Fax No.: (212) 751-4864 Attention: Raymond Y. Lin (4) if to the Company or the Guarantor, at its address as follows: Starwood Hotels & Resorts Worldwide, Inc. 777 Westchester Avenue White Plains, New York 10604 Fax No.: (914) 640-8260 Attention: General Counsel with a copy to: 12 Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Fax No.: (312) 853-7036 Attention: Michael A. Gordon All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. (e) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and the Guarantor, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. (f) Successors and Assigns. This Agreement shall be binding upon the Company and the Guarantor and their successors and assigns; provided, however, that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of the Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. (j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Securities Held by the Company and Guarantor. Whenever the consent or approval of Holders of a specified percentage of principal amount of Transfer Restricted Securities is required hereunder, Transfer Restricted Securities held by the Company, the Guarantor or their affiliates (other than subsequent Holders of Transfer Restricted Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Transfer Restricted Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 13 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company and the Guarantor a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Initial Purchasers, the Company and the Guarantor in accordance with its terms. Very truly yours, STARWOOD HOTELS & RESORTS WORLDWIDE, INC. By: Kenneth Siegel ------------------------------ Name: Title: SHERATON HOLDING CORPORATION By: Jared Finkelstein ----------------------------------------- Name: Title: The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. BANC OF AMERICA SECURITIES LLC By:/s/ Derek Dillon ----------------------------------------- Name: Derek Dillon Title: Managing Director J.P. MORGAN SECURITIES INC. By:/s/ Paul O'Hern ----------------------------------------- Name: Paul O'Hern Title: Vice President DEUTSCHE BANK SECURITIES INC. By: /s/ Rick Grellier ----------------------------------------- Name: Rick Grellier Title: Director By: /s/ Marty Newburger ----------------------------------------- Name: Marty Newburger Title: Vice President SCHEDULE 1 INITIAL PURCHASERS Banc of America Securities LLC Deutsche Bank Securities Inc. J.P. Morgan Securities Inc.