S-3

As filed with the Securities and Exchange Commission on July 8, 2003.

Registration No. 333-               

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

STARWOOD HOTELS & RESORTS WORLDWIDE, INC. (Exact name of registrant as specified in its charter)	STARWOOD HOTELS & RESORTS (Exact name of registrant as specified in its charter)	SHERATON HOLDING CORPORATION (Exact name of registrant as specified in its charter)
Maryland (State or other jurisdiction of incorporation or organization)	Maryland (State or other jurisdiction of incorporation or organization)	Nevada (State or other jurisdiction of incorporation or organization)
52-1193298 (I.R.S. Employer Identification No.)	52-0901263 (I.R.S. Employer Identification No.)	88-0340591 (I.R.S. Employer Identification No.)

1111 Westchester Avenue

White Plains, NY 10604

(914) 640-8100

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Kenneth S. Siegel, Esq.

Executive Vice President, General Counsel and Secretary

Starwood Hotels & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, NY 10604

(914) 640-8100

(Name and address including zip code, and telephone number,

including area code, of agent for service)

Copy to:

Michael A. Gordon, Esq.

Sidley Austin Brown & Wood LLP

Bank One Plaza

10 South Dearborn Street

Chicago, IL 60603

(312) 853-7000

(Cover continued on next page)

		Proposed Maximum	Proposed Maximum	Amount of
Title of Each Class of	Amount to be	Offering Price	Aggregate	Registration
Securities To Be Registered	Registered	Per Unit	Offering Price(1)	Fee
3.50% Convertible Senior Notes due 2023	$360,000,000	100%	$360,000,000	$29,124
Common Stock, par value $0.01 per share, of Starwood Hotels & Resorts Worldwide, Inc. (the “Corporation”), the Class B shares of beneficial interest, par value $0.01 per share, of Starwood Hotels & Resorts (the “Trust”), and Preferred Stock Purchase Rights of the Corporation, all of which are attached and trade together as Shares	7,200,000	—	—	—
Limited Conversion Guarantee of Starwood Hotels & Resorts	(2)	—	(2)	—
Guarantee of 3.50% Convertible Senior Notes due 2023	(3)	—	(3)	—

(1)	Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.
(2)	The Trust has guaranteed the issuance of the Class B shares of beneficial interest upon conversion of the notes in those situations where a Share includes a share of common stock of the Corporation and a Class B Share if the Corporation fails to direct the Trust to issue the Class B shares of beneficial interest.
(3)	The notes are guaranteed by Sheraton Holding Corporation.

     THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

(Continued from front cover)

     Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.    o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.    þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

The information in this prospectus is not complete and may be changed. The selling securityholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 8, 2003

PROSPECTUS

$360,000,000

STARWOOD HOTELS &

RESORTS WORLDWIDE, INC.

(Issuer)

STARWOOD HOTELS &

RESORTS

(Conversion Guarantor)

SHERATON HOLDING CORPORATION

(Note Guarantor)

3.50% CONVERTIBLE SENIOR NOTES,

SHARES ISSUABLE UPON CONVERSION THEREOF,

LIMITED CONVERSION GUARANTEE OF

STARWOOD HOTELS & RESORTS AND

GUARANTEE OF SHERATON HOLDING CORPORATION

      On May 16, 2003 we issued and sold $300,000,000 aggregate principal amount of our 3.50% Convertible Senior Notes due 2023 and on May 28, 2003 we issued and sold an additional $60,000,000 aggregate principal amount of our notes.

      The selling securityholders named in this prospectus may offer and sell from time to time up to $360,000,000 aggregate principal amount of the notes and the Shares issuable upon conversion of the notes. The notes are senior unsecured obligations of Starwood Hotels & Resorts Worldwide, Inc. and are fully and unconditionally guaranteed by Sheraton Holding Corporation, our wholly owned subsidiary. The notes are effectively junior to our secured indebtedness and to all existing and future indebtedness and other liabilities, including trade payables, of our subsidiaries other than Sheraton Holding Corporation. Starwood Hotels & Resorts, our subsidiary, has guaranteed the issuance of the Class B shares of beneficial interest upon conversion of the notes in those situations where a Share includes a Corporation Share and a Class B Share if Starwood Hotels & Resorts Worldwide, Inc. fails to direct Starwood Hotels & Resorts to issue the Class B shares of beneficial interest.

      The notes bear interest at a rate of 3.50% per annum. Commencing with the six-month period beginning on May 16, 2006, we will also pay contingent interest on the notes during any six-month period following a six-month period in which the average trading price of a note is above the specified levels described in this prospectus. Interest on the notes is payable on May 16 and November 16 of each year, beginning November 16, 2003. The notes mature on May 16, 2023, unless earlier converted, redeemed or purchased by us.

      Each $1,000 principal amount of the notes is convertible at the option of the holder at a conversion rate of 20 Shares per $1,000 principal amount, or $50.00 per Share, subject to adjustments described herein, only in the following circumstances:

•   if the trading price of our Shares is more than 120% of the conversion price per Share as described in this prospectus;

•   if we call the notes for redemption;

•   if the credit ratings assigned to the notes decline below the levels described in this prospectus; or

•   upon the occurrence of specified corporate transactions described in this prospectus.

      In lieu of delivering Shares upon a conversion of all or a portion of the notes, we may choose to deliver cash or a combination of cash and Shares. The Shares are listed on the New York Stock Exchange under the symbol “HOT”. On July 7, 2003, the last reported sale price for the Shares on the New York Stock Exchange was $29.95 per Share. Each Share consists of one share of our common stock and one Class B share of beneficial interest of our subsidiary, Starwood Hotels & Resorts.

      We may redeem the notes for cash at any time on or after May 23, 2006. Holders of the notes may require us to purchase all or a portion of their notes on May 16 of each of 2006, 2008, 2013 and 2018 at 100% of their principal amount, plus any accrued and unpaid interest (including contingent interest, if any) to, but not including, the purchase date. We may choose to pay the purchase price in cash or Shares or any combination of cash and Shares, as described herein. The holders of the notes may also require us to repurchase the notes in cash in the event of a change in control occurring on or before May 16, 2006.

      The notes are subject to special United States federal income tax rules. For a summary of certain United States federal income tax considerations of the purchase, ownership and disposition of the notes, see “Certain United States Federal Income Tax Considerations” beginning on page 43.

       Investing in the notes involves risks. See “Risk Factors” beginning on page 6.

      We will not receive any of the proceeds from the sale by the selling securityholders of the notes or the Shares issuable upon conversion of the notes.

      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

This prospectus is dated                     , 2003.

TABLE OF CONTENTS

Indenture dated May 16, 2003

Registration Rights Agreement

Security

Opinion of Sidley Austin Brown & Wood LLP

Opinion of Vernable, Baetjer and Howard LLP

Opinion of Lionel Sawyer & Collins

Opinion of Sidley Austin Brown & Wood LLP

Cal. of Ratio of Earnings to Total Fixed Charges

Consent of Ernst & Young LLP

Form T-1 Statement of Eligibility

      We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus as if we had authorized it. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy any securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate as of the date hereof.

TABLE OF CONTENTS

Where You Can Find More Information	1
Summary	2
Risk Factors	6
Forward-Looking Statements	10
Use of Proceeds	11
Ratios of Earnings to Fixed Charges	11
Price Range of the Shares and Dividend Policy	12
Description of the Notes	14
Description of Capital Stock	35
Certain United States Federal Income Tax Considerations	43
Selling Securityholders	54
Plan of Distribution	56
Legal Matters	58
Experts	58

WHERE YOU CAN FIND MORE INFORMATION

      We file annual, quarterly and special reports and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You may also read and copy those documents at the offices of The New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. Our SEC filings are also available to the public over the Internet on the SEC’s web site at http://www.sec.gov. Our filings are also available on our website at http://www.starwood.com as soon as reasonably practicable following the time that they are filed with or furnished to the SEC. The contents of our website are not a part of this prospectus.

      The SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the following documents we filed with the SEC (file number 1-7959) and any future filings that we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) after the date of this prospectus until all of the securities covered by this prospectus are sold by the selling securityholders:

•   our Joint Annual Report on Form 10-K for the year ended December 31, 2002, as amended by our Joint Annual Report on Form 10-K/A for the year ended December 31, 2002, filed with the SEC on July 7, 2003;

•   our Joint Quarterly Report on Form 10-Q for the quarter ended March 31, 2003;

•   our Joint Current Reports on Form 8-K filed with the SEC on January 30, 2003, May 6, 2003, May 9, 2003, June 12, 2003 and July 7, 2003;

•   the descriptions of our Shares contained in our Registration Statements on Form 8-A filed with the SEC on October 3, 1986, January 4, 1999, March 15, 1999, and any amendments or reports we may file with the SEC for purposes of updating such descriptions; and

•   the description of our Series A Participating Preferred Stock and related rights contained in our Registration Statement on Form 8-A filed with the SEC on March 15, 1999, and any amendments or reports we may file with the SEC for purposes of updating such descriptions.

      You may request a copy of these filings (other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing) by writing or telephoning us at the following address:

Starwood Hotel & Resorts Worldwide, Inc.

1111 Westchester Avenue

White Plains, New York 10604

Attention: General Counsel

(914) 640-8100

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SUMMARY

      This summary contains a general summary of the information contained in this prospectus. The summary may not contain all of the information that is important to you, and it is qualified in its entirety by the more detailed information and historical consolidated financial statements, including the notes to those financial statements, that are part of our Joint Annual Report on Form 10-K for the year ended December 31, 2002, as amended by our Joint Annual Report on Form 10-K/A for the year ended December 31, 2002 and our Joint Quarterly Report on Form 10-Q for the period ended March 31, 2003, as filed with the SEC and incorporated by reference in this prospectus. You should carefully consider the information contained in and incorporated by reference in the entire prospectus including the information set forth under the heading “Risk Factors”, beginning on page 6 of this prospectus. Except as the context may otherwise require, references to “Starwood”, “the Corporation”, “we”, “us” and “our” are to Starwood Hotels & Resorts Worldwide, Inc., references to “the Trust” are to our subsidiary, Starwood Hotels & Resorts, references to a “Share” are to, collectively, the attached unit consisting of one share of our common stock and one Class B share of beneficial interest, par value $0.01 per share (Class B Shares), of the Trust, and references herein to properties we “own” or our “owned hotels” include wholly owned properties, consolidated joint-venture properties and properties we lease from third parties.

General

      We are one of the world’s largest hotel and leisure companies. Our status as one of the leading hotel and leisure companies resulted from the 1998 acquisition of Westin Hotels & Resorts Worldwide, Inc. and certain of its affiliates (Westin) (the Westin Merger) and the 1998 acquisition of ITT Corporation (the ITT Merger), renamed Sheraton Holding Corporation (Sheraton Holding) and the acquisition of Vistana Inc. (renamed Starwood Vacation Ownership, Inc. or SVO) in October 1999. We conduct our hotel and leisure business both directly and through our subsidiaries. Our brand names include St. Regis®, The Luxury Collection®, Sheraton®, Westin®, W® and Four Points® by Sheraton. Through these brands, we are well represented in most major markets around the world. Our operations are grouped into two business segments, hotels and vacation ownership operations.

      Our revenue and earnings are derived primarily from hotel operations, which include the operation of our owned hotels; management and other fees earned from hotels that we manage pursuant to management contracts; and the receipt of franchise and other fees.

      Our hotel business emphasizes the global operation of hotels and resorts primarily in the luxury and upscale segment of the lodging industry. We seek to acquire interests in, or management or franchise rights with respect to, properties in this segment. At March 31, 2003, our hotel portfolio included owned, leased, managed and franchised hotels totaling 745 hotels with approximately 228,000 rooms in 79 countries, and is comprised of 163 hotels that we own or lease or in which we have a majority equity interest (substantially all of which hotels we also manage), 278 hotels managed by us on behalf of third-party owners (including entities in which we have a minority equity interest) and 304 hotels for which we receive franchise fees.

      Our revenues and earnings are also derived from the development, ownership and operation of vacation ownership resorts, marketing and selling vacation ownership interests, which we refer to as VOIs, in the resorts and providing financing to customers who purchase such interests. At March 31, 2003, we had 18 vacation ownership resorts in the United States and the Bahamas.

      The Trust was organized in 1969, and Starwood was incorporated in 1980, both under the laws of Maryland. Sheraton Hotels & Resorts and Westin Hotels & Resorts, our largest brands, have been serving guests for more than 60 years. SVO (and its predecessor, Vistana, Inc.) has been selling VOIs for more than 20 years.

      Our principal executive offices are located at 1111 Westchester Avenue, White Plains, New York 10604, and our telephone number is (914) 640-8100.

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THE OFFERING

Issuer	Starwood Hotels & Resorts Worldwide, Inc.
Note Guarantor	Sheraton Holding Corporation.
Securities Offered	$360,000,000 aggregate principal amount of 3.50% Convertible Senior Notes due 2023.
Maturity	May 16, 2023.
Interest	3.50% per year on the principal amount payable semi-annually in arrears on May 16 and November 16 of each year, beginning November 16, 2003.
Ranking	The notes rank equal in right of payment with all our other senior unsecured indebtedness. The notes are effectively junior to our secured indebtedness and to all existing and future obligations, including trade payables, of each of our subsidiaries other than Sheraton Holding Corporation, the guarantor of the notes.
Conversion Rights	Holders may surrender notes for conversion into Shares on or after August 14, 2003, but prior to the maturity date, only if any of the following conditions is satisfied:
	•  the closing sale price per Share for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter preceding the calendar quarter in which the conversion occurs is more than 120% of the conversion price per Share on that 30th trading day;
	•  if we have called the notes for redemption;
	•  during such period, if any, that the credit rating assigned to the notes by both Moody’s Investors Service, Inc. and Standard & Poor’s Rating Group is reduced below ba3 and BB-, respectively, if the credit rating assigned to the notes is suspended or withdrawn by both such rating agencies or if neither rating agency is rating the notes; or
	•  upon the occurrence of specified corporate transactions as described herein.
	Holders may convert any outstanding notes (or portions of outstanding notes) into Shares at the initial conversion rate of approximately 20.0000 Shares per $1,000 principal amount of notes (which represents an initial conversion price of $50.00 per Share). The conversion rate may be adjusted for certain reasons. In general, we will not pay accrued interest on any notes that are converted into Shares. In lieu of delivering Shares upon conversion of all or any portion of the notes, we may elect to pay holders surrendering notes for conversion cash or any combination of cash and Shares as described herein. See “Description of the Notes — Conversion Rights”.
Contingent Interest	We will pay contingent interest to the holders of the notes during any six-month period from, and including, May 16 to but excluding November 16 and from, and including, November 16 to but excluding May 16, commencing with the six-month period

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	beginning on May 16, 2006 if the average market price of a note for the five trading days ending on the second trading day immediately preceding the relevant six-month period equals 120% or more of the principal amount of such note. The amount of contingent interest payable per note in respect of any six-month period will equal the greater of (i) a per annum rate equal to 0.4125% (which equals 5.0% of our per annum borrowing rate on May 9, 2003 for senior nonconvertible fixed rate indebtedness with a maturity comparable to the notes, estimated in good faith by us), multiplied by the principal amount of such note and (ii) a per annum rate of .25% multiplied by the average market price of a note for the five trading days ending on the second trading day immediately preceding the relevant six-month period.
Sinking Fund	None.
Optional Redemption by Starwood	We may redeem all or a portion of the notes for cash at any time on or after May 23, 2006 for a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, including contingent interest, if any, to but not including the redemption date. We will give not less than 30 days nor more than 60 days notice of redemption by mail to holders of notes. See “Description of Notes — Optional Redemption by Starwood”.
Purchase of the Notes at the Option of the Holder	Each holder of the notes may require us to purchase all or a portion of its notes on May 16 of each of 2006, 2008, 2013 and 2018, at a purchase price equal to 100% of the principal amount of the notes so required to be purchased plus accrued and unpaid interest, including contingent interest, if any, to, but not including, the date of purchase. We may elect to pay the purchase price in cash, Shares or any combination of cash and Shares. See “Description of the Notes — Purchase of the Notes at the Option of the Holder”.
Purchase at the Option of the Holder Upon Change in Control	Upon a change in control of Starwood occurring on or prior to May 16, 2006, each holder of the notes may require us to purchase all or a portion of its notes in cash at a price equal to 100% of the principal amount of the notes so required to be purchased plus accrued and unpaid interest, including contingent interest, if any, to, but not including the date of purchase. See “Description of the Notes — Purchase at the Option of the Holder Upon Change in Control”.
Use of Proceeds	We will not receive any of the proceeds from the sale by the selling securityholders of the notes or the Shares issuable upon conversion of the notes.
Registration Rights	We, the Trust and Sheraton Holding Corporation have filed with the SEC this registration statement, of which this prospectus is a part, pursuant to a registration rights agreement among us, Sheraton Holding Corporation and Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities

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	Inc., the initial purchasers. We and Sheraton Holding Corporation each agreed to use reasonable efforts to cause the registration statement to become effective within the time periods specified in the agreement and to use our reasonable efforts to keep the registration statement effective until the earliest of: (i) one year after the last date of original issuance of any notes and (ii) the date on which all the notes and Shares issuable upon conversion of the notes that are registered under the shelf registration statement and owned by holders that complete and deliver in a timely manner the selling securityholder notice and questionnaire are sold pursuant to the registration statement. See “Description of the Notes — Registration Rights”.
Taxation	The notes and Shares issuable upon conversion of the notes are subject to special and complex United States federal income tax rules. Prospective investors are strongly urged to consult their own tax advisors with respect to the federal, state, local and foreign tax consequences of purchasing, owning and disposing of the notes and Shares. See “Certain United States Federal Income Tax Considerations”.
Certain Covenants	Except for the limitations on liens, sale and lease-back transactions, and consolidation, merger and sale of assets described below under “Description of Notes — Certain Covenants”, the indenture and the terms of the notes do not contain any covenants or other provisions designed to afford holders of notes protection in the event of a highly leverage transaction involving Starwood.
Risk Factors	You should read carefully the “Risk Factors”, beginning on page 6 of this prospectus to ensure that you understand the risks associated with an investment in the notes.

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RISK FACTORS

      You should carefully consider the following risk factors, in addition to the other information contained or incorporated in this prospectus, including the information under “Risk Relating to Hotel, Resort and Vacation Ownership Operations”, “Tax Risks”, and “Risk Relating to Ownership of Our Shares”, each contained in our Joint Annual Report on Form 10-K for the year ended December 31, 2002, as amended by our Joint Annual Report on Form 10-K/A for the year ended December 31, 2002, before purchasing the securities offered hereby. We believe these are all the material risks currently facing our business, but additional risks we are not presently aware of or that we currently believe are immaterial may also impair our business operations.

Risks Relating to the Notes

      You should consider the special United States federal income tax consequences of owning the notes and Shares. In general, you will be required to accrue interest on the notes as income for United States federal income tax purposes, regardless of whether you use the cash or accrual method of tax accounting. You will be deemed to have agreed, for United States federal income tax purposes, to treat the notes as indebtedness that is subject to the regulations governing contingent payment debt instruments, and to treat the amount of cash and the fair market value of any Shares received upon a conversion of the notes as a contingent payment. Therefore, you will be required, in general, to accrue interest based on the rate at which we would issue a fixed rate nonconvertible debt instrument with terms and conditions similar to the notes (8.25%), rather than at a lower rate based on the accruals on the notes for non-tax purposes. Accordingly, owners of the notes will be required to include interest in taxable income in each year in excess of the accruals on the notes for non-tax purposes. Furthermore, upon a sale, exchange, conversion or redemption of a note, you will recognize gain or loss equal to the difference between your amount realized and your adjusted tax basis in the notes. The amount realized by you effectively will include, in the case of a conversion, the amount of cash and the fair market value of the Shares you receive. Any gain on the sale, exchange, conversion or redemption of a note will be treated as ordinary interest income. You are strongly urged to consult your own tax advisors as to the United States federal, state, local or other tax consequences of acquiring, owning and disposing of the notes and Shares. For a summary of certain United States federal income tax consequences of the purchase, ownership and disposition of the notes and Shares, see “Certain United States Federal Income Tax Considerations”.

      If you are not a United States person for United States federal income tax purposes, a 30% withholding tax may be imposed on a portion of the cash and Shares deliverable upon conversion of a note, and an investment in the notes or Shares might have other adverse United States federal income tax consequences to you. Non-United States persons must consult with their own tax advisors and carefully consider the adverse tax consequences of an investment in the notes and Shares. For a summary of certain United States federal income tax consequences of the purchase, ownership and disposition of the notes and Shares by non-United States persons, see “Certain United States Federal Income Tax Considerations”, including the discussion under “Certain United States Federal Income Tax Considerations — Non-U.S. Holders”.

      The indenture permits us to designate at will subsidiaries to be unrestricted. The indenture contains provisions that permit our board of directors to designate a restricted subsidiary as an unrestricted subsidiary at any time. Any subsidiary that is designated unrestricted will not be subject to the covenants in the indenture, and as a result, will be able to create mortgages, pledges or other liens upon its principal property and engage in sale and lease-back transactions. We have declared all of our subsidiaries unrestricted subsidiaries and do not presently contemplate that we will have any restricted subsidiaries.

      We may not be in compliance with our leverage covenants under our senior credit facility in future quarters which could result in an event of default if we are not able to obtain a waiver from the lenders or amend the senior credit facility. Our senior credit facility requires us to be below a maximum leverage ratio, that is, consolidated indebtedness to consolidated EBITDA, at the end of each quarter. If our leverage ratio were above the maximum leverage ratio at the end of any quarter and the lenders do not

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waive such non-compliance or amend the leverage ratio requirement, we would be in default under the senior credit facility and the lenders under the senior credit facility would have the right to terminate their commitments under the senior credit facility and declare all outstanding amounts under the senior credit facility due and payable. For the quarters ended March 31, 2003 and June 30, 2003, we would not have been in compliance with the original leverage ratio covenant and were required to amend the credit facility in order to avoid an event of default. The amendments adjusted the leverage ratio covenant for the first quarter of 2003 and the next nine quarters (through June 30, 2005), and we now expect to be in compliance with the covenant for the remaining term of the senior credit facility. However, there can be no assurance that we will continue to be in compliance with the covenant or that we will be able to obtain any waivers or amendments to the senior credit facility in the event that we are not in compliance with the covenant.

      The trading market for the notes may be limited. The notes are a new issue of securities for which there is currently no trading market, except for limited trading on the PORTAL Market. Although the notes that were sold to qualified institutional buyers pursuant to Rule 144A are eligible for trading on the PORTAL Market, the notes resold pursuant to this prospectus will no longer trade on the PORTAL Market. As a result, there may be limited trading for the notes. We have no plans to list the notes on a securities exchange or automated quotation system.

      The liquidity of any market for the notes will depend upon the number of holders of the notes, our results of operations and financial condition, the price of our Shares, the market for similar securities, the interest of securities dealers in making a market in the notes and other factors. An active or liquid trading market may not develop for the notes. The price at which you may be able to sell the notes, if at all, may be less than the price you pay for them, particularly if an active trading market does not develop.

      If you hold notes, you will not be entitled to any rights with respect to our Shares, but you will be subject to all changes made with respect to our Shares. If you hold notes, you will not be entitled to any rights with respect to our Shares (including, without limitation, voting rights and rights to receive any dividends or other distributions on our Shares), but you will be subject to all changes affecting the Shares. You will only be entitled to rights on the Shares if and when we deliver Shares to you in exchange for your notes and in limited cases under the anti-dilution adjustments of the notes. For example, in the event that an amendment is proposed to our charter or bylaws requiring shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs prior to delivery of the Shares, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our Shares.

      Holders of the notes are effectively junior to the indebtedness and other obligations of our subsidiaries other than Sheraton Holding Corporation. Only Sheraton Holding Corporation guarantees the notes. Our non-guarantor subsidiaries include, but are not limited to, the Trust which owns a substantial amount of our real estate, our operating subsidiaries other than Sheraton Holding Corporation, our foreign subsidiaries, joint venture entities and non-wholly-owned subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of their indebtedness and trade collectors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. On March 31, 2003 the notes would have been effectively junior to $1.537 billion of indebtedness of our non-guarantor subsidiaries.

      Any decrease in the price of our Shares will negatively affect the trading value of the notes. The market price of the notes is expected to be significantly affected by the market price of our Shares. This may result in greater volatility in the trading value of the notes than would be expected for nonconvertible debt securities we issue. In particular, decreases in the market price of our Shares are likely to result in decreases in the trading value of the notes.

      The notes are not protected by many restrictive covenants. The indenture governing the notes does not contain any financial covenants or restrictions on the payment of dividends. The indenture does not restrict the issuance or repurchase of securities by us or our subsidiaries. Except for the limitations on liens, sale and leaseback transactions and consolidation, merger and sale of assets described below under “Description of Notes — Certain Covenants” and the right to require us to purchase the notes upon a

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change in control as described under “Description of the Notes — Purchase at the Option of the Holder Upon Change in Control”, the indenture and the notes do not contain any covenants or other provisions designed to afford holders of notes protection in the event of a highly leveraged transaction or a change in control. Neither we nor our subsidiaries are restricted from incurring additional debt, including senior indebtedness, under the indenture. If we or our subsidiaries were to incur additional debt or liabilities, our ability to pay our obligations on the notes could be adversely affected.

      We may be unable to meet the requirements under the indenture to purchase your notes. Upon a change in control, as defined in the indenture, you may require us to purchase all or a portion of your notes. In addition, you may require us to purchase all or a portion of your notes on May 16 of each of 2006, 2008, 2013 and 2018. If a change in control were to occur or if you elect to require us to purchase your notes, we may not have enough funds to pay the purchase price for all tendered notes. Future credit agreements or other agreements relating to our indebtedness might prohibit the purchase of the notes and provide that a change in control constitutes an event of default. Our current senior credit agreement provides that a change in control (as defined therein) constitutes an event of default. If a change in control occurs at a time when we are prohibited from purchasing the notes, we could seek the consent of our lenders to purchase the notes or could attempt to refinance this debt. If we do not obtain a consent, we could not purchase the notes. Our failure to purchase the notes may constitute an event of default under the terms of our other debt. The term “change in control” is limited to certain specified transactions and may not include other events that might harm our financial condition. Our obligation to offer to purchase the notes upon a change in control would not necessarily afford you protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us.

      To service our Indebtedness, we will require a significant amount of cash. We have a substantial amount of indebtedness and had a working capital deficiency of $1.025 billion at March 31, 2003. Our ability to generate cash depends on many factors beyond our control. Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures and research and development efforts will depend on our future performance and financial results, which, to a certain extent, are subject to general economic, political, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the severity and duration of the current economic downturn.

      We cannot assure you that our business will generate sufficient cash flow from operations at or above historical levels, that currently anticipated results will be achieved, that future borrowings will be available to us under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness, including these notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including these notes on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the notes, on terms favorable to us.

      On May 6, 2003, Standard & Poor’s downgraded our corporate credit rating from BBB- (investment grade on Credit Watch with negative implications) to BB+ (non-investment grade with a stable outlook). For more information see our Current Report on Form 8-K filed with the SEC on May 6, 2003. The downgrade will likely result in higher borrowing costs on future financings.

      Federal and state statutes allow courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors. Under the federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee:

•   received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and

•   was insolvent or rendered insolvent by reason of such incurrence;

•   was engaged in a business or transaction for which the guarantor’s remaining assets constituted unreasonably small capital; or

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•   intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

      In addition, any payment by that guarantor pursuant to its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor.

      The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

•   the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets;

•   if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

•   it could not pay its debts as they become due.

      On the basis of financial information, operating history and other factors, we believe that Sheraton Holding Corporation, after giving effect to its guarantee of these notes, was not insolvent, did not have unreasonably small capital for the business in which it was engaged and did not incur debts beyond its ability to pay such debts as they mature. We cannot assure you, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.

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FORWARD-LOOKING STATEMENTS

      Certain information included or incorporated by reference in this prospectus may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements may include, but are not limited to, statements relating to our objectives, strategies and plans, and all statements (other than historical fact) that address actions, events or circumstances that we or management expect, believe or intend to occur in the future. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made, including, without limitation, risks and uncertainties associated with the following:

•   the continued ability of the Trust to qualify for taxation as a real estate investment trust (“REIT”);

•   our ability to attract and retain personnel;

•   identification, completion, terms and timing of future acquisitions and dispositions;

•   the availability of capital for acquisitions and for renovations;

•   execution of hotel renovation and expansion programs;

•   the ability to maintain existing management, franchise or representation agreements and to obtain new agreements on favorable terms;

•   competition within the lodging and leisure industry and from emerging technologies;

•   the cyclicality of the real estate business and the hotel business;

•   foreign exchange fluctuations and exchange control restrictions;

•   general real estate, travel and national and international economic conditions, including the duration and severity of the current global economic downturn;

•   the hospitality industry’s pace of recovery from the continuing war on terrorism and the situation in the Middle East;

•   traveler fear of contagious disease;

•   political, financial and economic conditions and uncertainties in countries in which we own property or operate;

•   the impact of Internet reservation channels;

•   our reliance on technology;

•   changes in current laws, rules or regulations of governmental or other regulatory bodies; and

•   the other risks and uncertainties set forth in the annual, quarterly and current reports and proxy statements of the Trust and the Corporation.

      We disclaim any duty to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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USE OF PROCEEDS

      We will not receive any of the proceeds from the sale by the selling securityholders of the notes or the Shares issuable upon conversion of the notes.

RATIOS OF EARNINGS TO FIXED CHARGES

      Our consolidated ratios of earnings to fixed charges for each of the periods indicated are as set forth in the table below.

Fiscal

Quarter

Ended

Fiscal Year Ended December 31,

March 31,

1998(a)

1999

2000

2001

2002

2003

Ratios of Earnings to Fixed Charges

1.25x

1.83x

2.24x

1.44x

1.68x

(b)

(a)	Represents the results of ITT Corporation (now Sheraton Holding Corporation) and our results (inclusive of Westin Hotels & Resorts Worldwide, Inc.) for the period from the closing of the ITT Corporation merger (February 23, 1998) through December 31, 1998.
(b)	Earnings were not sufficient to cover fixed charges by $168 million.

     “Earnings” consist of income (loss) from continuing operations before income taxes, minority equity in net income, amortization of interest capitalized, distributions in excess of equity earnings and losses and fixed charges. “Fixed Charges” consist of interest expense (including interest costs capitalized) and other financing charges.

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PRICE RANGE OF THE SHARES AND DIVIDEND POLICY

Price Range

      The Shares are listed and traded on the New York Stock Exchange under the symbol “HOT”. The following table provides, for the calendar quarters indicated, the high and low sales prices per Share on the New York Stock Exchange Composite Tape.

Period	High		Low
2001
First Quarter	$	39.55	$	31.75
Second Quarter		40.89		31.30
Third Quarter		37.34		17.10
Fourth Quarter		30.59		20.80
2002
First Quarter	$	39.84	$	29.31
Second Quarter		39.94		32.50
Third Quarter		33.50		21.50
Fourth Quarter		26.01		19.00
2003
First Quarter	$	26.95	$	21.68
Second Quarter		30.65		23.44
Third Quarter (through July 7)		30.06		28.31

Distributions Made/Declared

      The following table sets forth the frequency and per Share amount of distributions made by the Trust to holders of Shares for the years ended December 31, 2002 and 2001:

	Distributions
Period	Made
2001
First Quarter	$	0.20
Second Quarter		0.20
Third Quarter		0.20
Fourth Quarter		0.20	(a)
2002
Annual distribution		0.84	(a)

(a)  We switched from a quarterly distribution to an annual distribution in 2002 and the Trust declared distributions in the fourth quarter of 2002 and 2001 to shareholders of record on December 21, 2002 and 2001, respectively. The distributions were paid in January 2003 and 2002, respectively.

     The Corporation has not paid any cash dividends since its organization and does not anticipate that it will pay any such dividends in the foreseeable future.

      As a consequence of our reorganization in 1999, pursuant to which the Trust became a subsidiary of Starwood, holders of Class B shares of the Trust are entitled, subject to certain conditions, to receive a noncumulative annual distribution, which was set at an initial rate of $0.60 per Share for 1999, to the extent the distribution is authorized by the board of trustees of the Trust. The distribution was increased to an annual rate of $0.80 per Share in 2001. In the beginning of 2002, we shifted from paying a quarterly distribution to holders of Shares to paying an annual distribution (and intend to continue distributions on an annual basis for 2003). For 2002, the Trust paid a distribution of $0.84 per Share. Unless distributions

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for the then current distribution period have been paid on the Class B shares of the Trust, the Trust is not permitted to pay a distribution on its Class A shares (except in certain circumstances). We anticipate the 2003 distribution will be $0.84 per Share. The final determination of the amount of the distributions will be subject to economic and financial consideration, as well as approval by the board of trustees of the Trust.

      The Corporation’s ability to pay dividends and the Trust’s ability to pay distributions are subject to contractual restrictions contained in our senior credit facility.

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DESCRIPTION OF THE NOTES

      The notes were issued under the indenture described below, dated May 16, 2003, among Starwood, Sheraton Holding Corporation, our wholly owned subsidiary, as guarantor, the Trust and U.S. Bank National Association, as trustee. The notes and the Shares issuable upon the conversion of the notes are covered by a registration rights agreement. The indenture and the registration rights agreement are exhibits to the registration statement of which this prospectus is a part. The following summary of certain provisions of the indenture does not purport to be complete and is qualified in its entirety by reference to the indenture, copies of which are available as set forth below under “Where You Can Find More Information”. All capitalized terms have the meanings specified in the indenture unless otherwise defined herein. In this description, references to a “Share” refer collectively to the attached unit consisting of one Corporation Share and one Class B Share as described under “Description of Capital Stock”.

Brief Description of the Notes

      The notes

•   are limited in aggregate principal amount to $360,000,000;

•   bear interest at a per annum rate of 3.50%, payable semi-annually in arrears on each May 16 and November 16, beginning November 16, 2003;

•   accrue contingent interest, which may be payable as set forth below under “— Contingent Interest”;

•   are general senior unsecured obligations of Starwood;

•   are fully and unconditionally guaranteed by the subsidiary guarantor, Sheraton Holding Corporation, for so long as such subsidiary guarantor also guarantees our senior credit facility;

•   are convertible into Shares as described below under “— Conversion Rights”;

•   are redeemable at our option on or after May 23, 2006, upon the terms and at the redemption prices set forth below under “— Optional Redemption by Starwood”;

•   are subject to repurchase by us at the holder’s option upon the terms and at the purchase prices set forth below under “— Purchase of the Notes at the Option of the Holder” and “— Purchase at the Option of the Holder Upon Change in Control”; and

•   are due on May 16, 2023, the maturity date, unless earlier converted, redeemed by us at our option or purchased by us at the holder’s option.

      Except for the limitations on liens, sale and leaseback transactions and consolidation, merger and sale of assets of Starwood described below, the indenture and the terms of the notes do not contain any covenants or other provisions designed to afford holders of notes protection in the event of a highly leveraged transaction involving Starwood.

      For information regarding conversion, registration of transfer and exchange of global notes, see “— Global Notes; Book Entry Form” below.

Interest

      The notes bear interest at a rate of 3.50% per annum from May 16, 2003. We also will pay contingent interest on the notes in the circumstances described under “— Contingent Interest”. We will pay interest semi-annually in arrears on May 16 and November 16 of each year beginning November 16, 2003, to the holders of record at the close of business on the preceding May 1 and November 1, respectively. There are two exceptions to the preceding sentence:

•   In general, we will not pay accrued interest on any notes that are converted into Shares. See “— Conversion Rights”. If a holder of notes converts after a record date for an interest payment but prior to the corresponding interest payment date, the holder on the record date will receive on

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that interest payment date accrued interest on those notes, notwithstanding the conversion of those notes prior to that interest payment date, because that holder will have been the holder of record on the corresponding record date. However, at the time that the holder surrenders notes for conversion, the holder must pay to us an amount equal to the interest that has accrued on the notes and that will be paid to the holder on the related interest payment date. The preceding sentence does not apply, however, to a holder that converts notes that are called by us for redemption after a record date for an interest payment but prior to the corresponding interest payment date. Accordingly, if we elect to redeem notes on a date that is after a record date for the payment of interest on notes of any holder but prior to the corresponding interest payment date, and such holder chooses to convert those notes, the holder will not be required to pay us, at the time that holder surrenders those notes for conversion, the amount of interest it will receive on the interest payment date.

•

We will pay interest to a person other than the holder of record on the record date if we elect to redeem the notes on a date that is after the record date but on or prior to the corresponding interest payment date. In this instance, we will pay accrued interest on the notes being redeemed to, but not including, the redemption date to the same person to whom we will pay the principal of those notes.

      Except as provided below, we will pay interest on:

•   the global note to DTC in immediately available funds; and

•   any definitive notes by check mailed to the holders of those notes.

      At maturity, interest on the definitive notes will be payable at the office of the trustee as set forth above. Interest generally will be computed on the basis of a 360-day year comprised of twelve 30-day months.

      Under the indenture governing the notes, we agreed, and by acceptance of a beneficial interest in the notes each beneficial owner of a note will be deemed to have agreed, for United States federal income tax purposes, to treat the notes as indebtedness that is subject to the regulations governing contingent payment debt instruments and, for purposes of those regulations, to treat, without limitation, the amount of cash and the fair market value of any Shares received upon a conversion of a note as a contingent payment. In accordance with the foregoing, beneficial owners will be required, in general, to accrue interest based on the rate at which we would issue a fixed rate nonconvertible debt instrument with terms and conditions similar to the notes (8.25%), rather than at a lower rate based on the accruals on the notes for non-tax purposes. Accordingly, owners of the notes will be required to include interest in taxable income in each year in excess of the accruals on the notes for non-tax purposes. See “Certain United States Federal Income Tax Considerations”.

Ranking; The Guarantee

      The notes rank equal in right of payment with all our other senior unsecured indebtedness. The notes are effectively junior to our secured indebtedness and to all existing and future obligations, including trade payables, of our subsidiaries other than Sheraton Holding Corporation. See “Risk Factors — Holders of the notes are effectively junior to the indebtedness and other obligations of our subsidiaries other than Sheraton Holding Corporation”.

      The guarantee of the notes is a senior unsecured obligation of Sheraton Holding Corporation, the subsidiary guarantor, and is equal in right of payment with the obligations of the subsidiary guarantor as the subsidiary guarantor of our senior credit facility, our senior secured notes facility, our Series B Convertible Notes and as issuer under Sheraton Holding Corporation’s public debt. To the extent that the subsidiary guarantor is released under our senior credit facility, or our senior credit facility is refinanced without the subsidiary guarantor or is otherwise terminated, the subsidiary guarantor will also be released from its guarantee of the notes. The obligations of Sheraton Holding Corporation will be limited as necessary to prevent the subsidiary guarantee from constituting a fraudulent conveyance under applicable law.

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Conversion Rights

      Subject to restrictions described under “— Share Separation” below, you may convert any outstanding notes (or portions of outstanding notes) into Shares at the initial conversion rate of approximately 20.0000 Shares per $1,000 principal amount of notes (which represents an initial conversion price of $50.00 per Share).

      The conversion rate is, however, subject to adjustment as described below. We will not issue fractional Shares upon conversion of notes. Instead, we will pay a cash adjustment based upon the closing sale price of the Shares on the trading day immediately preceding the conversion date. You may convert notes only in denominations of $1,000 and integral multiples of $1,000.

      The Trust has guaranteed the issuance of Class B Shares upon conversion of the notes under those circumstances where a Share includes both a Corporation Share and a Class B Share if the Corporation fails to direct the Trust to issue Class B Shares to the holders.

General

      Subject to the restrictions described below under “— Share Separation”, holders may surrender notes for conversion into Shares on or after August 14, 2003, the date 90 days after the date of original issuance of the notes, but prior to the maturity date, only if any of the following conditions is satisfied:

•   the closing sale price per Share for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter preceding the calendar quarter in which the conversion occurs is more than 120% of the conversion price per Share on that 30th trading day;

•   if we have called the notes for redemption;

•   during such period, if any, that the credit rating assigned to the notes by both Moody’s Investors Service, Inc. and Standard & Poor’s Rating Group is below a specified level (as specified below under “Conversion Upon Credit Rating Event”), if the credit rating assigned to the notes is suspended or withdrawn by both such rating agencies or if neither rating agency is rating the notes; or

•   upon the occurrence of specified corporate transactions as described below.

Conversion Upon Satisfaction of Market Price Condition

      A holder may surrender any of its notes for conversion into Shares during any calendar quarter if the closing sale price per Share on the principal national securities exchange on which the Shares are listed, for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter, exceeds 120% of the conversion price per Share on that 30th trading day. The conversion agent, which is currently the trustee, will, on our behalf, determine at the end of each quarter if the notes are convertible as a result of the market price of the Shares and notify us.

Conversion Upon Notice of Redemption

      A holder may surrender for conversion any note called for redemption at any time prior to the close of business on the day that is two business days prior to the redemption date, even if it is not otherwise convertible at such time. If a holder has already delivered a purchase notice or a change in control purchase notice with respect to a note, however, the holder may not surrender that note for conversion until the holder has withdrawn the notice in accordance with the indenture. Upon conversion after a redemption call, we may, at our option, in lieu of delivering Shares to the holder, elect to pay an amount in cash as described herein. We will give notice of our election to pay cash in lieu of Shares upon a conversion in the notice of redemption.

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Conversion Upon Credit Rating Event

      A holder may surrender any of its notes for conversion during any period in which the respective credit ratings assigned to the notes by both Moody’s Investors Service, Inc. and Standard & Poor’s Rating Group are reduced below ba3 and BB-, respectively, if the credit rating assigned to the notes is suspended or withdrawn by both such rating agencies or if neither rating agency is rating the notes.

Conversion Upon Specified Corporate Transactions

      Even if the market price condition described above has not occurred, if we elect to:

•   distribute to all holders of Shares certain rights entitling them to purchase, for a period expiring within 60 days, Shares at a per Share price less than the market price per Share at the time;

•   distribute to all holders of Shares our assets, debt securities or certain rights to purchase our securities, which distribution has a per share value as determined by our board of directors exceeding 15% (20% upon a Trust Assumption Event (as defined below)) of the closing sale price per Share on the day preceding the declaration for such distribution; or

•   effect a Share Separation, as described below under “— Share Separation”,

we must notify the holders of notes at least 20 days prior to the ex-dividend date for such distribution. Once we have given such notice, holders may surrender their notes for conversion at any time on or after August 14, 2003, the date 90 days after the date of original issuance of the notes, until the earlier of the close of business on the business day prior to the ex-dividend date or our announcement that such distribution will not take place. No adjustment to the ability of a holder to convert will be made if the holder will otherwise participate in the distribution without conversion.

      In addition, if we are party to a consolidation, merger or binding share exchange pursuant to which the Shares would be converted into cash, securities or other property, a holder may surrender notes for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of the transaction until 15 days after the actual date of such transaction. If we are a party to a consolidation, merger or binding share exchange pursuant to which Shares are converted into cash, securities or other property, then at the effective time of the transaction, the right to convert a note into Shares will be changed into a right to convert it into the kind and amount of cash, securities or other property which the holder would have received if the holder had converted its note immediately prior to the transaction. If the transaction also constitutes a “change in control”, as defined below, the holder can require us to purchase all or a portion of its notes as described under “— Purchase at the Option of the Holder Upon Change in Control”.

      The “market price” of the Shares means the average sale prices of the Shares for the five-day trading period ending on the third trading day prior to the applicable purchase date or conversion date. We will adjust the market price to take into account the occurrence, during the period commencing on the first of such trading days during such five-day trading period and ending on such purchase date, of certain events that would result in an adjustment of the conversion rate with respect to the Shares.

      The “sale price” of the Shares on any date means the closing sale price per Share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date as reported in composite transactions for the principal United States securities exchange on which the Shares are traded or, if the Shares are not listed on a United States national or regional securities exchange, as reported by the National Association of Securities Dealers Automated Quotation system or by the National Quotation Bureau Incorporated. In the absence of such a quotation, our board of directors will make a good faith determination of the sale price.

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Conversion Procedures

      By delivering to the holder the Shares issuable upon conversion, together with a cash payment, if any, in lieu of fractional Shares, we will satisfy our obligation with respect to the notes. That is, accrued but unpaid interest, if any, will be deemed to be paid in full rather than canceled, extinguished or forfeited.

      You will not be required to pay any transfer taxes or duties relating to the issuance or delivery of the Shares if you exercise your conversion rights, but you will be required to pay any transfer taxes or duties which may be payable relating to any transfer involved in the issuance or delivery of the Shares in a name other than yours. Shares will be issued or delivered in a name other than yours only after all applicable transfer taxes and duties, if any, payable by you have been paid.

      To convert a global note, you must deliver to DTC the appropriate instruction form for conversion pursuant to DTC’s conversion program. To convert a definitive note, you must:

•   complete the conversion notice on the back of the note (or a facsimile thereof);

•   deliver the completed conversion notice and the note to be converted to the specified office of the conversion agent;

•   pay all funds required, if any, relating to interest on the note to be converted to which you are not entitled; and

•   pay all transfer taxes or duties, if any, as described in the preceding paragraph.

      In lieu of delivering Shares upon conversion of all or any portion of the notes, we may elect to pay holders surrendering notes for conversion an amount in cash per note equal to the average closing sale price per Share for the five consecutive trading days (a) immediately following the date of our notice of our election to deliver cash as described below if we have not given notice of redemption, or (b) ending on the third trading day prior to the conversion date, in the case of a conversion following our notice of redemption specifying that we intend to deliver cash upon conversion, in either case multiplied by the conversion rate in effect on the conversion date.

      We will inform the holders through the trustee no later than two business days following the conversion date of our election to deliver Shares or to pay cash in lieu of delivery of the Shares, unless we have already informed holders of our election in connection with our optional redemption of the notes as described below under “— Optional Redemption by Starwood”. If we elect to deliver all of such payment in Shares, the Shares will be delivered through the trustee no later than the fifth business day following the conversion date. If we elect to pay all or a portion of such payment in cash, the payment, including any delivery of Shares, will be made to holders surrendering notes no later than the tenth business day following the conversion date. If an event of default, as described below under “— Events of Default” (other than a default in a cash payment upon conversion of the notes), has occurred and is continuing, we may not pay cash upon conversion of any notes (other than cash in lieu of fractional shares).

      Our ability to pay holders cash in lieu of Shares upon a conversion of the notes may be limited by the terms of our then existing borrowing agreements.

      The conversion date will be the date on which all the foregoing requirements have been satisfied. The note will be deemed to have been converted immediately prior to the close of business on the conversion date.

Adjustments to the Conversion Rate

      We will adjust the initial conversion rate for:

•   dividends or distributions to the holders of Shares payable in Shares or other capital stock of Starwood;

•   subdivisions, combinations or certain reclassifications of the Shares (or any component of the Shares);

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•   distributions to all holders of Shares of certain rights to purchase Shares for a period expiring within 60 days at less than the market price per Share at the time;

•   distributions to all holders of Shares of our assets, debt securities or certain rights to purchase our securities, which distribution has a per Share value as determined by our board of directors exceeding 15% (20% upon a Trust Assumption Event (as defined below)) of the closing sale price per Share on the day preceding the declaration for such distribution; and

•   a Share Separation, as described below under “— Share Separation”.

      However, no adjustment need be made if holders may participate in the transaction or in certain other cases. In cases where the fair market value of assets, debt securities or certain rights, warrants or options to purchase our securities, applicable to one Share, distributed to the holders of Shares:

•   equals or exceeds the average quoted price of the Share, or

•   such average quoted price exceeds the fair market value of such assets, debt securities or rights, warrants or options so distributed by less than $1.00,

rather than being entitled to an adjustment in the conversion rate, the holder of a note will be entitled to receive upon conversion, in addition to the Shares, the kind and amount of assets, debt securities or rights, warrants or options comprising the distribution that such holder would have received if such holder had converted such note immediately prior to the record date for determining holders of Shares entitled to receive the distribution.

      In the event that we distribute shares of capital stock of a subsidiary of ours, the conversion rate will be adjusted, if at all, based on the market value of the subsidiary stock so distributed relative to the market value of the Shares, in each case over a measurement period following the distribution.

      In the event we elect to make a distribution described in the third, fourth or fifth bullet of the third preceding paragraph above, we will be required to give notice to the holders of the notes at least 20 days prior to the ex-dividend date for such distribution and, upon the giving of such notice, the notes may be surrendered for conversion at any time until the close of business on the business day prior to the ex-dividend date or until we announce that such distribution will not take place. No adjustment to the conversion rate or the ability of a holder of a note to convert will be made if the holder would otherwise participate in the distribution without conversion or in certain other cases.

      The indenture permits us to increase the conversion rate from time to time.

      In the event of:

•   a taxable distribution to holders of Shares which results in an adjustment of the conversion rate, or

•   an increase in the conversion rate at our discretion,

the holders of the notes may, in certain circumstances, be deemed to have received a distribution subject to federal income tax as a dividend. See “Certain United States Federal Income Tax Considerations — United States Holders — Constructive Distributions”.

      Notes surrendered for conversion by a holder during the period from the close of business on any record date for an interest payment but prior to the opening of business on the corresponding interest payment date, unless such notes have been called for redemption, must be accompanied by payment of an amount equal to the interest that has accrued on the notes and that will be paid to the holder on the related interest payment date. Except where notes are surrendered for conversion after a record date as described above, we will not pay accrued interest on any notes converted into Shares.

Contingent Interest

      Subject to the accrual and record date provisions described below, we will pay contingent interest to the holders of notes during any six-month period from, and including, May 16 to, but not including,

19

November 16 and from, and including, November 16 to, but not including, May 16, commencing May 16, 2006, if the average market price of a note for the five trading days ending on the second trading day immediately preceding the relevant six-month period equals 120% or more of the principal amount of such note.

      The amount of contingent interest payable per note in respect of any six-month period will equal the greater of (i) a per annum rate equal to 0.4125% (which equals 5.0% of our per annum borrowing rate on May 9, 2003 for senior non-convertible fixed rate indebtedness with a maturity date comparable to the notes, estimated in good faith by us), multiplied by the principal amount of such note, and (ii) a per annum rate of 0.25% multiplied by the average market price of a note for the five trading days ending on the second day immediately preceding the relevant six-month period. Contingent interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

      We will pay contingent interest, if any, in the same manner as we will pay interest described above for regular interest payment and your obligations in respect of the payment of contingent interest in connection with the conversion of any notes will also be the same as described above under “— Conversion Procedures”. The market price of a note on any date of determination means the average of the secondary market bid quotations per note obtained by the bid solicitation agent for $10 million principal amount of notes at approximately 4:00 p.m., New York City time, on such determination date from two unaffiliated securities dealers we select, provided that if:

•   at least two such bids are not obtained by the bid solicitation agent, or

•   in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the notes,

then the market price of a note will equal (a) the then applicable conversion rate of such note multiplied by (b) the average closing price of the Shares on the five trading days ending on such determination date, appropriately adjusted.

      The bid solicitation agent is currently the trustee. We may change the bid solicitation agent, but the bid solicitation agent will not be our affiliate. The bid solicitation agent will solicit bids from securities dealers that are believed by us to be willing to bid for the notes.

      Upon determination that noteholders will be entitled to receive contingent interest which may become payable during a relevant six-month period, on or prior to the start of such six-month period we will issue a press release and publish such information on our web site at www.starwoodhotels.com.

      In the event contingent interest is payable, we will not pay contingent interest accrued and unpaid on any note that is converted into Shares, except under certain limited circumstances. See “— Conversion Rights” above. If a holder of notes converts after a record date for an interest payment but prior to the corresponding interest payment date, it will receive on the interest payment date contingent interest accrued and paid on such notes, notwithstanding the conversion of such notes prior to such interest payment date, because such holder will have been the holder of record on the corresponding record date. However, at the time such holder surrenders such notes for conversion, it must pay us an amount equal to the contingent interest that has accrued and will be paid on the interest payment date. The preceding sentence does not apply, however, to a holder that converts, after a record date for an interest payment but prior to the corresponding interest payment date, notes that are called by us for redemption. Accordingly, if we redeem notes on a date after a record date for an interest payment but prior to the corresponding interest payment date, and prior to the redemption date the holder of such notes chooses to convert such notes, the holder will not be required to pay us, at the time it surrenders such notes for conversion, the amount of contingent interest on such notes it will receive on the interest payment date.

      We will pay contingent interest, if any, to a person other than the holder of record on the record date if we redeem the notes on a date that is after the record date and prior to the corresponding interest payment date. In this instance, we will pay contingent interest accrued and unpaid on the notes being

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redeemed to but not including the redemption date to the same person to whom we will pay the principal of such notes.

      Except as provided below, we will pay contingent interest on:

•   the global notes to DTC in immediately available funds;

•   definitive notes having an aggregate principal amount of $5,000,000 or less by check mailed to the holders of these notes; and

•   definitive notes having an aggregate principal amount of more than $5,000,000 by wire transfer in immediately available funds at the election of the holders of these notes.

Optional Redemption by Starwood

      No sinking fund is provided for the notes. Prior to May 23, 2006, the notes will not be redeemable at our option. Beginning on May 23, 2006, we may redeem the notes for cash as a whole at any time, or from time to time in part for a price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest (including contingent interest, if any), to, but not including the redemption date. We will give not less than 30 days nor more than 60 days notice of redemption by mail to holders of notes.

      Notes or portions of notes called for redemption will be convertible by the holder until the close of business on the second business day prior to the redemption date. Upon conversion after a redemption call, we may, at our option, in lieu of delivering Shares to the holder, elect to pay an amount in cash equal to the average closing sale price per Share for the five consecutive trading days ending on the third trading day prior to the conversion date multiplied by the then applicable conversion rate. We will give notice of our election to pay cash in lieu of Shares upon a conversion in the notice of redemption.

      If we redeem less than all the outstanding notes, the trustee shall select the notes to be redeemed on a pro rata basis in principal amounts of $1,000 or integral multiples of $1,000. If a portion of a holder’s notes is selected for partial redemption and the holder converts a portion of the notes, the converted portion shall be deemed to be the portion selected for redemption.

Purchase of the Notes at the Option of the Holder

      On May 16 of each of 2006, 2008, 2013, and 2018, each holder will have the right, at the holder’s option, subject to terms and conditions of the indenture, to require us to purchase notes for which the holder has properly delivered and not withdrawn a written purchase notice. Holders may submit their notes for purchase to the paying agent at any time from the opening of business on the date that is 20 business days prior to the purchase date until the close of business on the third business day prior to the purchase date.

      The purchase price of the notes will be 100% of the principal amount of the notes so required to be purchased plus accrued and unpaid interest thereon (including contingent interest, if any) to, but not including, the purchase date.

      We may, at our option, elect to pay the purchase price in cash, Shares or any combination of cash and Shares.

      We will be required to give notice on a date not less than 20 business days prior to each purchase date to the trustee and to all holders of notes at their addresses shown in the register of the registrar, and to beneficial owners as required by applicable law, stating among other things:

•   whether we will pay the purchase price of notes in cash, Shares or any combination of cash and Shares, specifying the percentages of each;

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•   if we elect to pay in Shares, the number of Shares will be equal to the purchase price divided by the average closing price per Share for the five consecutive trading days ending on the third trading day prior to the purchase date; and

•   the procedures that holders must follow to require us to purchase their notes, as described below.

      The purchase notice given by each holder electing to require us to purchase notes shall be given so as to be received by the paying agent no later than the close of business on the third business day prior to the purchase date and must state:

•   if certificated notes, the certificate numbers of the notes to be delivered by the holder for purchase;

•   the portion of the principal amount of notes to be purchased, which portion must be $1,000 or an integral multiple of $1,000;

•   we are to purchase such notes pursuant to the applicable provisions of the indenture; and

•   in the event we elect, pursuant to the notice that we are required to give, to pay the purchase price in Shares, in whole or in part, but the purchase price is ultimately to be paid to the holder entirely in cash because any of the conditions to payment of the purchase price or portion of the purchase price in Shares is not satisfied prior to the close of business on the purchase date, as described below, whether the holder elects:

      (i) to withdraw the purchase notice as to some or all the notes to which it relates; or

      (ii) to receive cash in such event in respect of the entire purchase price for all notes or portions of notes subject to such purchase notice.

      If the holder fails to indicate the holder’s choice with respect to the election described in the final bullet point above, the holder shall be deemed to have elected to receive cash in respect of the entire purchase price for all notes subject to the purchase notice in these circumstances.

      If the notes are not in certificated form, the holder must comply with applicable DTC procedures.

      A holder may withdraw any purchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the purchase date. The notice of withdrawal shall state:

•   the principal amount being withdrawn;

•   if certificated notes, the certificate numbers of the notes being withdrawn; and

•   the principal amount, if any, of the notes that remain subject to the purchase notice.

      If we elect to pay the purchase price, in whole or in part, in Shares, the number of Shares to be delivered by us shall be equal to the portion of the purchase price to be paid in Shares divided by the market price of the Shares.

      Because the market price of the Shares is determined prior to the applicable purchase date, holders of notes bear the market risk with respect to the value of the Shares to be received from the date such market price is determined to such purchase date. We may pay the purchase price or any portion of the purchase price in Shares only if the information necessary to calculate the market price is published in a daily newspaper of national circulation.

      In addition to the above conditions, our right to purchase notes, in whole or in part, with Shares is subject to our satisfying the following conditions:

•   listing such Shares on the principal United States securities exchange on which then-listed Shares are listed or, if there are no then-listed Shares, on the Nasdaq National Market;

•   the registration of the Shares under the Securities Act and the Exchange Act, if required; and

•   any necessary qualification or registration under applicable state securities law or the availability of an exemption from such qualification and registration.

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      If these conditions are not satisfied with respect to a holder prior to the close of business on the purchase date, we will pay the purchase price of the notes to the holder entirely in cash. We may not change the form or components or percentages of components of consideration to be paid for the notes once we have given the notice that we are required to give to holders of notes, except as described in the first sentence of this paragraph.

      In connection with any purchase offer, we will:

•   comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable; and

•   file Schedule TO, if required, or any other required schedule under the Exchange Act.

      Our obligation to pay the purchase price for a note for which a purchase notice has been delivered and not validly withdrawn is conditioned upon the holder delivering the note, together with necessary endorsements, to the paying agent at any time after delivery of the purchase notice. We will cause the purchase price for the note to be paid promptly following the later of the purchase date and the time of delivery of the note.

      If the paying agent holds money or securities sufficient to pay the purchase price of the note on the business day following the purchase date in accordance with the terms of the indenture, then, immediately after the purchase date, interest (including contingent interest, if any) on such note will cease to accrue, whether or not the note is delivered to the paying agent. Thereafter, the note will cease to be outstanding and all other rights of the holder shall terminate, other than the right to receive the purchase price upon delivery of the note.

      Our ability to purchase notes with cash may be limited by the terms of our then existing borrowing agreements.

      We may not purchase any notes at the option of holders if there has occurred and is continuing an event of default with respect to the notes other than a default in the payment of the purchase price with respect to such notes.

Purchase at the Option of the Holder Upon Change in Control

      In the event of a change in control occurring on or prior to May 16, 2006, each holder will have the right, at the holder’s option, subject to the terms and conditions of the indenture, to require us to purchase for cash all or any portion of the holder’s notes in integral multiples of $1,000 principal amount, at a price equal to 100% of the principal amount of the notes so required to be purchased plus accrued and unpaid interest thereon (including contingent interest, if any) to, but not including, the purchase date. We will be required to purchase the notes no later than 35 business days after the occurrence of such change in control. We refer to this date in this prospectus as the “change in control purchase date”.

      Under the indenture, a “change in control” of Starwood is deemed to have occurred at such time as:

•   any person, including its affiliates and associates, other than us, our subsidiaries or our or their employee benefit plans, or any excluded person, files a Schedule TO (or any schedule, form or report under the Exchange Act) disclosing that such person has become the direct or indirect beneficial owner of 50% or more of the voting power of the Shares or other capital stock into which the Shares are reclassified or changed, with certain exceptions; or

•   there shall be consummated any Share exchange, consolidation or merger of Starwood pursuant to which the Shares will be converted into cash, securities or other property, in each case other than a Share exchange, consolidation or merger of Starwood in which the holders of the Shares immediately prior to the Share exchange, consolidation or merger of Starwood have, directly or indirectly, at least a majority of the total voting power in the aggregate of all classes of capital stock of the continuing or surviving corporation immediately after the Share exchange, consolidation or merger. See “— Certain Covenants — Consolidation, Merger or Sale”.

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An “excluded person” is Barry S. Sternlicht or any of his affiliates in which he beneficially owns more voting securities than any other person.

      Within 15 business days after the occurrence of a change in control, we must mail to the trustee and to all holders of notes at their addresses shown in the register of the registrar and to beneficial owners as required by applicable law, a notice regarding the change in control, which notice must state, among other things:

•   the events causing a change in control;

•   the date of such a change in control;

•   the last date on which a holder may exercise the purchase right;

•   the change in control purchase price;

•   the change in control purchase date;

•   the name and address of the paying agent and the conversion agent;

•   the conversion rate and any adjustments to the conversion rate;

•   that notes with respect to which a change in control purchase notice is given by the holder may be converted, if otherwise convertible, only if the change in control purchase notice has been withdrawn in accordance with the terms of the indenture; and

•   the procedures that holders must follow to exercise these rights.

      To exercise this right, the holder must deliver a written notice so as to be received by the paying agent no later than the close of business on the third business day prior to the change in control purchase date. The required purchase notice upon a change in control must state:

•   if certificated notes, the certificate numbers of the notes to be delivered by the holder for purchase;

•   the portion of the principal amount of notes to be purchased, which portion must be $1,000 or an integral multiple of $1,000; and

•   that we are to purchase such notes pursuant to the applicable provisions of the indenture.

      A holder may withdraw any change in control purchase notice by delivering to the paying agent a written notice of withdrawal prior to the close of business on the change in control purchase date. The notice of withdrawal must state:

•   the principal amount of the notes being withdrawn;

•   if certificated notes, the certificate numbers of the notes being withdrawn; and

•   the principal amount, if any, of the notes that remain subject to a change in control purchase notice.

      Our obligation to pay the change in control purchase price for a note for which a change in control purchase notice has been delivered and not validly withdrawn is conditioned upon delivery of the note, together with necessary endorsements, to the paying agent at any time after the delivery of such change in control purchase notice. We will cause the change in control purchase price for such note to be paid in cash promptly following the later of the change in control purchase date and the time of delivery of such note.

      If the paying agent holds money sufficient to pay the change in control purchase price of the note on the change in control purchase date in accordance with the terms of the indenture, then, immediately after the change in control purchase date, interest (including contingent interest, if any) on such note will cease to accrue, whether or not the note is delivered to the paying agent. Thereafter, the note will cease to be outstanding and all other rights of the holder shall terminate, other than the right to receive the change in control purchase price upon delivery of the note.

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      The indenture does not permit our board of directors to waive our obligation to purchase notes at the option of holders in the event of a change in control.

      In connection with any purchase offer in the event of a change in control, we will:

•   comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act which may then be applicable; and

•   file Schedule TO, if required, or any other required schedule under the Exchange Act.

      The change in control purchase feature of the notes may in certain circumstances make more difficult or discourage a takeover of Starwood. The change in control purchase feature, however, is not the result of our knowledge of any specific effort:

•   to accumulate Shares;

•   to obtain control of Starwood by means of a merger, tender offer, solicitation or otherwise; or

•   by management to adopt a series of anti-takeover provisions.

      Instead, the change in control purchase feature is a standard term contained in securities similar to the notes.

      Our ability to purchase notes with cash may be limited by the terms of our then existing borrowing agreements.

      We could, in the future, enter into certain transactions, including certain recapitalizations, that would not constitute a change in control with respect to the change in control purchase feature of the notes but that would increase the amount of our (or our subsidiaries’) outstanding indebtedness.

      We may not purchase any notes at the option of holders upon a change in control if there has occurred and is continuing an event of default with respect to the notes, other than a default in the payment of the change in control purchase price with respect to such notes.

Share Separation

      Subject to the next paragraph, the indenture provides that in the event of a transaction that results in the Corporation Shares trading on a national securities exchange separately from the Class B Shares, whether or not the Class B Shares continue to trade (a “Share Separation”), the notes will become convertible solely into Corporation Shares at a conversion price equal to the conversion price in effect immediately prior to the Share Separation multiplied by a percentage equal to one hundred percent minus the Trust Percentage. The “Trust Percentage” is the percentage derived by dividing the aggregate value of all the Class B Shares outstanding immediately after the Share Separation by the sum of (i) the aggregate value of all such Class B Shares and (ii) the aggregate value of all the Corporation Shares outstanding immediately after the Share Separation. All such values shall be based on the average closing prices on the applicable principal trading market of the Corporation Shares or the Class B Shares, as the case may be, over the first five consecutive trading days after the effective date of the Share Separation; provided that if the Class B Shares are not then traded on a national securities exchange, the aggregate value of the Class B Shares shall be determined in good faith by our board of directors based upon the valuation opinion of a nationally recognized investment bank. No conversions will be permitted from the record date for such Share Separation until the first business day after such five consecutive trading days. “Corporation Shares” and “Class B Shares” are described herein under “Description of Capital Stock”.

      In the event (a “Trust Assumption Event”) that (i) the Trust Percentage is greater than 50% and (ii) a Rating Event occurs, then the Trust shall assume all obligations of the Corporation under the notes and the indenture and the notes will be convertible solely into Class B Shares at a conversion price equal to the conversion price in effect immediately prior to the Share Separation multiplied by the Trust Percentage. A “Rating Event” means that, after the first public announcement by the Corporation of a Share Separation and before the effective date thereof, either Moody’s Investors Service, Inc. or

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Standard & Poor’s Rating Group (or, in either case, if such person ceases to rate the notes for reasons outside of our control, any other “nationally recognized statistical rating organization” (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) selected by us as a replacement agency) rates the long-term senior debt of the Corporation below the rating of the notes in effect immediately prior to such public announcement. Upon the assumption of the Corporation’s obligations by the Trust in such circumstances, the Corporation will be discharged from all obligations under the notes and the indenture.

      Any Share Separation that would otherwise require adjustment of the conversion price under another provision of the indenture described under “— Conversion Rights — Adjustments to the Conversion Rate” above will not result in any such adjustment other than as described in the preceding two paragraphs.

      Following a Share Separation, but only where appropriate (as set out in the indenture governing the notes), the term “Share” shall mean a Corporation Share or, if a Trust Assumption Event occurs, a Class B Share.

      Upon the occurrence of a Trust Assumption Event, (i) either the Corporation or the Trust shall have the right for the next 60 days to redeem all the notes for cash in an amount equal to 100% of the principal amount of the notes plus accrued and unpaid interest (including contingent interest, if any) to, but not including, the redemption date notes as described above and (ii) the holders of the notes shall have the right for the next 60 days to require the Trust to repurchase the notes for cash in an amount equal to 100% of the principal amount of the notes plus accrued and unpaid interest (including contingent interest, if any) to, but not including, the purchase date.

      Upon a Trust Assumption Event, it is likely that beneficial owners of notes would be treated for United States federal income tax purposes as exchanging their existing notes for new notes issued by the Trust and required to recognize gain or loss on the deemed exchange. Potential owners must consult their own tax advisors in this regard.

Certain Covenants

      The indenture requires Starwood to comply with certain restrictive covenants as described below. The indenture does not require Starwood to maintain any Restricted Subsidiaries and Starwood does not intend to maintain any Restricted Subsidiaries. Accordingly, if Starwood elects not to maintain any Restricted Subsidiaries, the indenture will not provide any limitations on the activity of any Starwood subsidiary. However, the indenture does contain certain provisions applicable to both Starwood and to any companies maintained as Restricted Subsidiaries, and such provisions are described below.

Certain Definitions Used In the Covenants.

      Set forth below are certain definitions used in the indenture.

      “Capitalized Lease-Back Obligation” is defined to mean the total net rental obligations of Starwood or a Restricted Subsidiary under any lease entered into as part of a sale and lease-back transaction involving a Principal Property discounted to present value at the rate of 9% per annum.

      “Consolidated Net Tangible Assets” is defined to mean the total of all assets appearing on a consolidated balance sheet of Starwood and its Restricted Subsidiaries prepared in accordance with accounting principles generally accepted in the United States as of a date not more than 90 days prior to the date as of which Consolidated Net Tangible Assets are to be determined, but excluding

      (i) the book amount of all segregated intangible assets;

      (ii) all depreciation, valuation and other reserves;

      (iii) current liabilities;

      (iv) any minority interest in the stock and surplus of Restricted Subsidiaries;

      (v) investments in subsidiaries which are not Restricted Subsidiaries;

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      (vi) deferred income and deferred liabilities; and

      (vii) other items deductible under generally accepted accounting principles.

      “Principal Property” is defined to mean any single property owned by Starwood or any Restricted Subsidiary having a gross book value in excess of 2% of Consolidated Net Tangible Assets, except any such property or portion thereof which the Starwood board of directors by resolution declares is not of material importance to the total business conducted by Starwood and its Restricted Subsidiaries as an entirety.

      “Restricted Subsidiary” is defined to mean any subsidiary other than an Unrestricted Subsidiary.

      “Unrestricted Subsidiary” is defined to mean:

      (i) any subsidiary 50% or less of the voting stock of which is owned directly by Starwood and/or one or more Restricted Subsidiaries; or

      (ii) any subsidiary designated as an Unrestricted Subsidiary by the Starwood board of directors.

Designation of Restricted Subsidiaries and Unrestricted Subsidiaries.

      A Restricted Subsidiary may at any time be designated as an Unrestricted Subsidiary and an Unrestricted Subsidiary’s designation as such may at any time be rescinded by the Starwood board of directors, and any subsidiary may be the subject of a series of such designations and rescissions thereof, without limitation, except that:

      (i) a subsidiary may not become an Unrestricted Subsidiary if, upon the effectiveness thereof, it would own any capital stock of, or hold any indebtedness of, any Restricted Subsidiary; and

      (ii) an Unrestricted Subsidiary may not become a Restricted Subsidiary unless such subsidiary has outstanding no liens upon its property which such subsidiary would be prohibited, under the restriction on liens described below, from creating immediately after it becomes a Restricted Subsidiary and, with certain exceptions, such subsidiary is not a party to any lease which it would have been prohibited, under the restriction on sale and lease-back transactions described below, from entering into had it been a Restricted Subsidiary at the time it entered into such lease.

      All of our subsidiaries have been designated Unrestricted Subsidiaries.

Sale and Lease-Back.

      The indenture provides that neither Starwood nor any Restricted Subsidiary may enter into any sale and lease-back transaction (except for temporary leases of a term of not more than three years and except for leases between Starwood and a Restricted Subsidiary or between Restricted Subsidiaries) involving the leasing by Starwood or any Restricted Subsidiary of any Principal Property, more than 120 days after the acquisition thereof or the completion of construction and commencement of full operation thereof, unless either:

      (i) Starwood applies an amount equal to the greater of the fair value (as determined by the Starwood board of directors) of such property and the net proceeds of such sale, within 120 days, to the retirement of the notes or other indebtedness ranking equal in right of payment with the notes, or to the acquisition, construction, development or improvement of properties, facilities or equipment used for operating purposes which are, or upon such acquisition, construction, development or improvement will be, a Principal Property or a part thereof; or

      (ii) at the time of entering into such transaction, such Principal Property could have been subjected to a mortgage-securing indebtedness in a principal amount equal to the Capitalized Lease-Back Obligation with respect to such Principal Property under clause (xiii) of the provision for limitations on liens referred to below without securing the notes as contemplated by that provision.

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Liens.

      The indenture prohibits Starwood and its Restricted Subsidiaries from creating any mortgages, pledges or other liens upon any Principal Property (without securing the notes equally and ratably with all other indebtedness secured thereby), with the following exceptions:

      (i) mortgages or other liens on any such property acquired, constructed or improved by Starwood or a Restricted Subsidiary to secure or provide for the payment of any part of the purchase price of such property or the cost of such construction or improvement or any mortgage or other lien on any such property existing at the time of acquisition thereof;

      (ii) any mortgage or other lien on any property of another company existing at the time it is acquired by merger, consolidation or acquisition of substantially all of its stock or its assets;

      (iii) pledges or deposits to secure payment of workers’ compensation or insurance premiums, or relating to tenders, bids, contracts (except contracts for the payment of money) or leases;

      (iv) pledges or liens in connection with tax assessments or other governmental charges, or as security required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or right;

      (v) pledges or liens to secure a stay of process in proceedings to enforce a contested liability, or required in connection with the institution of legal proceedings or in connection with any other order or decree in any such proceeding or in connection with any contest of any tax or other governmental charge, or deposits with a governmental agency entitling Starwood or a Restricted Subsidiary to maintain self-insurance or to participate in other specified insurance arrangements;

      (vi) mechanics’, carriers’, workmen’s and other like liens;

      (vii) encumbrances in favor of the U.S. Government to secure progress or advance payments;

      (viii) mortgages, pledges or other liens securing any indebtedness incurred to finance the cost of property leased to the U.S. Government at a rental rate sufficient to pay the principal of and interest on such indebtedness;

      (ix) mortgages or other liens securing indebtedness of a Restricted Subsidiary to Starwood or to a Restricted Subsidiary;

      (x) mortgages, pledges or other liens affecting property securing indebtedness of a governmental authority issued to finance the cost of a pollution control program with respect to operations of Starwood or a Restricted Subsidiary;

      (xi) renewals, extensions and replacements of any permitted mortgage, lien, deposit or encumbrance, provided the amount secured is not increased;

      (xii) mortgages or other liens on any such property existing on the date of the indenture; and

      (xiii) the creation of any other mortgage, pledge or other lien, if, after giving effect to the creation thereof, the total of (i) the aggregate principal amount of indebtedness of Starwood and its Restricted Subsidiaries secured by all mortgages, pledges or other liens created under the provisions referred to in this clause (xiii), plus (ii) the aggregate amount of Capitalized Lease-Back Obligations of Starwood and its Restricted Subsidiaries under the entire unexpired terms of all leases entered into in connection with sale and lease-back transactions which would have been precluded by the provision for limitations on such transactions described above, but for the satisfaction of the condition referred to in clause (ii) of the description of such provision, will not exceed an amount equal to 15% of Consolidated Net Tangible Assets.

      The lease of any property and rental obligations thereunder (whether or not involving a sale and leaseback and whether or not capitalized) shall not be deemed to create a lien. The sale or other transfer of (a) timber or other natural resources in place for a period of time until, or in an amount such that, the

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purchaser will realize therefrom a specified amount of money (however determined) or a specified amount of such resources, or (b) any other interest in property of the character commonly referred to as a “production payment”, shall not be deemed to create a lien.

Consolidation, Merger or Sale.

      The indenture provides that, except as otherwise provided under “— Share Separation” above, we may consolidate with or merge into any other person or convey, transfer or lease our properties and assets substantially as an entirety to another person, if among other things,

      (i) the resulting, surviving or transferee person (if other than us) assumes all our obligations under the notes and the indenture; and

      (ii) we or such successor person is not immediately thereafter in default under the indenture.

Upon the assumption of our obligations by such a person upon the sale of all or substantially all of the assets in compliance with the indenture, we shall be discharged from all obligations under the notes and the indenture. Although such transactions are permitted under the indenture, certain of the foregoing transactions could constitute a “change in control”, as described above under “— Purchase at the Option of the Holder upon Change in Control”, permitting each holder to require us to purchase the notes of such holder as described above.

Modification and Waiver

      The indenture (including the terms and conditions of the notes) may be modified or amended by us and the trustee, with respect to the notes, without the consent of the holders of the notes, for the purposes of, among other things:

•   adding to our covenants for the benefit of the holders of the notes;

•   surrendering any right or power conferred upon us in respect of the notes;

•   providing for the assumption of our obligations to the holders of the notes in the case of a permitted merger, consolidation, conveyance, transfer or lease;

•   complying with the requirements of the SEC in connection with the registration of the notes under the Securities Act and the qualification of the indenture under the Trust Indenture Act of 1939, as amended, provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of the notes in any material respect; and

•   curing any ambiguity or correcting or supplementing any defective provision contained in the indenture; provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of the notes in any material respect.

      Modifications and amendments to the indenture or to the terms and conditions of the notes may also be made, and past defaults by us may be waived, either:

•   with the written consent of the holders of at least a majority in aggregate principal amount of the notes at the time outstanding; or

•   by the adoption of a resolution at a meeting of holders by at least a majority in aggregate principal amount of the notes represented at such meeting.

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      However, no such modification, amendment or waiver may, without the written consent or the affirmative vote of the holder of each note so affected:

•   change the stated maturity of such note;

•   reduce the principal amount, redemption price or purchase price (including change in control purchase price) on such note;

•   change the currency of payment of such note or interest thereon;

•   alter the manner of calculation or rate of interest (including contingent interest) on such note or extend the time of payment of any such amount;

•   except as otherwise permitted or contemplated by provisions concerning corporate reorganizations, adversely affect the repurchase option of such holder, or adversely affect the conversion rights of such holder;

•   reduce the percentage in aggregate principal amount of any note outstanding necessary to modify or amend the indenture or to waive any past default; or

•   impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, such note.

Events of Default

      The indenture provides that the following are “Events of Default” thereunder with respect to the notes issued thereunder:

•   default in the payment of the principal of (or premium, if any, on) any notes when and as the same shall be due and payable;

•   default for 30 days in the payment of any installment of interest (including contingent interest) or liquidated damages on any notes;

•   default for 60 days after notice in the performance of any other covenant in respect of the notes contained in the indenture;

•   acceleration of certain debt instruments of at least $100,000,000 aggregate principal amount of Starwood, which acceleration shall not have been rescinded or annulled within 30 days after notice; or

•   certain events in bankruptcy, insolvency or reorganization of Starwood or of any significant subsidiary that is then a guarantor of the notes.

      The trustee may withhold notice to the holders of any notes of any default (except in the payment of principal or interest) if it considers such withholding in the interests of such holders.

      If an Event of Default with respect to the notes shall have occurred and be continuing, the trustee or the holders of not less than 25% in aggregate principal amount of the notes may declare the principal of all the notes to be due and payable immediately; provided, however, that, subject to certain conditions, any such declaration and its consequences may be rescinded and annulled by the holders of not less than a majority in aggregate principal amount of the notes.

      The indenture requires Starwood to file annually with the trustee a certificate, signed by a specified officer, stating whether or not such officer has obtained knowledge of any default by Starwood, as the case may be, in the performance, observance or fulfillment of any condition or covenant of such indenture, and, if so, specifying each such default and the nature thereof.

      Subject to provisions relating to its duties in case of default, a trustee shall be under no obligation to exercise any of its rights or powers under the indenture at the request, order or direction of any holders, unless such holders shall have offered to such trustee reasonable indemnity.

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      Subject to such provisions for indemnification, the holders of a majority in principal amount of the notes may direct the time, method and place of conducting any proceeding or any remedy available to the appropriate trustee, or exercising any trust or power conferred upon such trustee, with respect to the notes.

Governing Law

      The indenture and the notes are governed by, and construed in accordance with, the laws of the State of New York.

Information Concerning the Trustee

      U.S. Bank National Association as trustee under the indenture, has been appointed by us as paying agent, conversion agent, registrar and custodian with regard to the notes. Mellon Investor Services, L.L.C. is the transfer agent and registrar for the Shares. The trustee or its affiliates may from time to time in the future provide banking and other services to us in the ordinary course of their business.

Registration Rights

      On May 16, 2003, we and the subsidiary guarantor entered into a registration rights agreement with the initial purchasers of the notes for the benefit of the holders of the notes. Pursuant to the agreement, we and the subsidiary guarantor will, at our expense:

•  use reasonable efforts to file with the SEC a shelf registration statement or statements, or an amendment to an existing shelf registration statement or statements (a “shelf registration statement”), not later than August 14, 2003, the date 90 days after the earliest date of original issuance of any of the notes (the “issue date”), on such form or forms as we deem appropriate covering resales by holders of the notes and the Shares issuable upon conversion of the notes;

•  use reasonable efforts to cause each such shelf registration statement to become effective as promptly as is practicable, but in no event later than November 12, 2003, the date 180 days after the issue date;

•  use our reasonable efforts to keep each shelf registration statement effective until the earliest of:

•  one year after the last date of original issuance of any of the notes; and

•  the date on which all the notes and the Shares issuable upon conversion of the notes that are registered under each shelf registration statement and owned by holders that complete and deliver in a timely manner the selling securityholder notice and questionnaire described below are sold pursuant to the applicable shelf registration statement.

      If,

•  with respect to the notes and Shares, a shelf registration statement has not been filed prior to or on the 90th day following the earliest date of original issuance of any of the notes;

•  with respect to the notes and Shares, a shelf registration statement has not been declared effective prior to or on the 180th day following the earliest date of original issuance of any of the notes (the “effectiveness target date”); or

•  at any time after the effectiveness target date, a shelf registration statement, with respect to the notes and Shares, ceases to be effective or fails to be usable and (1) we do not cure the shelf registration statement, with respect to the notes or Shares, within five business days by a post-effective amendment or a report filed pursuant to the Exchange Act or (2) if applicable, we do not terminate the suspension period described above, by the 45th or 75th day, as the case may be (each, a “registration default”),

additional interest as liquidated damages will accrue on the notes, from and including the day following the registration default to, but excluding, the earlier of the day on which the registration default has been

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cured and the first anniversary of the last date of original issuance of the notes. Liquidated damages will be paid semi-annually in arrears on each May 16 and November 16, with the first semi-annual payment due on the first interest payment date, as applicable, following the date on which such liquidated damages begin to accrue, and will accrue at a rate per year equal to:

•  0.25% of the principal amount of the note to and including the 90th day following such registration default; and

•  0.50% of the principal amount of the note from and after the 91st day following such registration default.

      In no event will liquidated damages accrue at a rate per year exceeding 0.50%. If a holder has converted some or all of its notes into Shares, the holder will be entitled to receive liquidated damages as provided above based on the principal amount of the notes converted except to the extent such Shares have been registered. A holder will not be entitled to liquidated damages unless it has provided all information requested by the notice and questionnaire prior to the deadline. The sole and exclusive remedy of a holder with respect to any registration default shall be liquidated damages as provided above.

Global Notes; Book Entry Form

      The notes are evidenced by one or more permanent global notes in definitive, fully registered book-entry form. We have deposited the notes with the trustee as custodian for the DTC, and registered the notes in the name of a nominee of DTC.

      DTC has advised us that it is:

•  a limited-purpose trust company organized under New York Banking Law;

•  a “banking organization” within the meaning of the New York Banking Law;

•  a member of the Federal Reserve System;

•  a “clearing corporation” within the meaning of the New York Uniform Commercial Code;

•  a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act;

•  owned by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc.; and

•  was created to hold securities that participants deposit and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers (which may include the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s book-entry system is also available to others such as banks, security brokers and dealers and trust companies that clear through or maintain a custodial relationship with a participant, whether directly or indirectly.

      Ownership of beneficial interests in each global note is limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in each global note is shown on, and the transfer of those ownership interests will be effected only through, records maintained by DTC (with respect to participants’ interests) and such participants (with respect to the owners of beneficial interests in the global note other than participants).

      So long as DTC or its nominee is the registered holder and owner of a global note, DTC or such nominee, as the case may be, will be considered the sole legal owner of the notes represented by the global note for all purposes under the indenture, the notes and applicable law. Except as set forth below, owners of beneficial interests in a global note will not be entitled to have notes represented by a global note registered in their names, will not be entitled to receive physical delivery of certificated notes and will not be considered to be the owners or holders of any notes under the global note, including with respect to the

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giving of any directions instruction or approval to the trustee. We understand that under existing industry practice, in the event an owner of a beneficial interest in a global note desires to take any actions that DTC, as the holder of the global note, is entitled to take, DTC would authorize the participants to take such action, and that participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

      All payments on the notes represented by a global note registered in the name of and held by DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner and holder of the global note.

      We expect that payments by participants to owners of beneficial interests in the global note held through such participants will be governed by standing instructions and customary practices as is now the case with securities held for accounts of customers registered in the names of nominees for such customers. We will make payments of principal of and interest (including any contingent interest and additional interest) on the notes represented by the global note registered in the name of and held by DTC or its nominee to DTC or its nominee, as the case may be, as the registered owner and holder of the global note. Neither we, the trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests.

      Unless and until it is exchanged in whole or in part for definitive notes in definitive form, each global note may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds.

      We expect that DTC will take any action permitted to be taken by a holder of notes (including the presentation of notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in a global note is credited and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction.

      Although we expect that DTC will agree to the foregoing procedures in order to facilitate transfers of interests in the global note among participants of DTC, DTC is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither we, the initial purchasers, nor the trustee have any responsibility for the performance or nonperformance by DTC, or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

      Notes represented by a global note will be exchangeable for registered certificated notes with the same terms only if:

•  DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under the Exchange Act and a successor depositary is not appointed by us within 90 days;

•  we decide to discontinue the use of book-entry transfer through DTC (or any other depositary); or

•  a default under the indenture occurs and continues for 30 days.

      The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we do not take responsibility for the accuracy thereof.

Same-Day Settlement and Payment

      So long as DTC continues to make its settlement system available to us, all payments on the notes will be made by us in immediately available funds.

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Discharge of the Indenture

      We may satisfy and discharge our obligations under the indenture by delivering to the trustee for cancellation all outstanding notes or by depositing with the trustee, the paying agent, the conversion agent or bid solicitation agent, if applicable, after the notes have become due and payable, whether at stated maturity, or any redemption date, or any purchase date, or a change in control purchase date, or upon conversion or otherwise, cash or the Shares (as applicable under the terms of the indenture) sufficient to pay all of the outstanding notes and paying all other sums payable under the indenture by us.

Calculations in Respect of the Notes

      We are responsible for making all calculations called for under the notes. These calculations include, but are not limited to, determination of the market prices of the notes and of the Shares and amounts of contingent interest payments, if any, payable on the notes. We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of notes. We will provide a schedule of our calculations to the trustee, and the trustee is entitled to rely upon the accuracy of our calculations without independent verification.

Limitations of Claims in Bankruptcy

      If a bankruptcy proceeding is commenced in respect of Starwood, the claim of the holder of a note is, under Title 11 of the United States Code, limited to the principal amount of the note plus unpaid interest that has accrued to the commencement of the proceeding. In addition, the holders of the notes are effectively junior to the indebtedness and other obligations of our subsidiaries that are not guarantors. See “Risk Factors — Holders of the notes are effectively junior to the indebtedness and other obligations of our subsidiaries other than Sheraton Holding Corporation”.

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DESCRIPTION OF CAPITAL STOCK

Equity Capitalization of the Corporation and the Trust

      The Corporation. The Corporation is authorized to issue one billion shares of common stock, $0.01 par value per share (“Corporation Shares”). The Corporation is also authorized to issue:

•   50 million shares of excess common stock, par value $0.01 per share (“Excess Corporation Common Stock”);

•   200 million shares of preferred stock, par value $0.01 per share (“Corporation Preferred Shares”) which are issuable in classes or series with such rights, preferences, privileges and restrictions as our board of directors may determine, including voting rights, redemption provisions, dividend rates, liquidation preferences and conversion rights; and

•   100 million shares of excess preferred stock, par value $0.01 per share (“Excess Corporation Preferred Stock” and, together with the Excess Corporation Common Stock, the “Excess Corporation Stock”).

      As of March 31, 2003, 200,547,758 Corporation Shares were issued and outstanding, and no shares of Corporation Preferred Shares or Excess Corporation Stock had been issued.

      The Trust. The Trust is authorized to issue one billion Class B Shares. The Trust is also authorized to issue:

•   five thousand Class A shares of beneficial interest, par value $0.01 per share (“Class A Shares”);

•   200 million Excess Trust Shares, par value $0.01 per share (“Excess Common Trust Shares”);

•   30 million Class A Exchangeable Preferred Shares, par value $0.01 per share (“Class A EPS”);

•   15 million Class B Exchangeable Preferred Shares, par value $0.01 per share (“Class B EPS”);

•   55 million Trust Preferred Shares, par value $0.01 per share (“Trust Preferred Shares”) which are issuable in classes or series with such rights, preferences, privileges and restrictions as the Trust’s board of trustees may determine, including voting rights, redemption provisions, dividend rates, liquidation preferences and conversion rights; and

•   50 million Excess Preferred Shares, par value $0.01 per share (“Excess Preferred Trust Shares” and, together with the Excess Common Trust Shares, the “Excess Trust Shares”).

      As of March 31, 2003, 100 Class A Shares, 200,547,758 Class B Shares, 493,775 Class A EPS and 715,247 Class B EPS were issued and outstanding, and no Excess Trust Shares had been issued.

Shares

      General. Each Corporation Share is attached to and is traded on the New York Stock Exchange with one Class B Share. We refer to such attached shares as “Shares”. Shares are listed for trading on the New York Stock Exchange under the symbol “HOT”.

      Voting Rights. Each Corporation Share is entitled to one vote in the election of directors and other matters; Class B Shares are not entitled to vote, except upon any amendment, alteration or repeal of any provision of the declaration of trust of the Trust that materially and adversely affects the rights of holders of Class B Shares disproportionately to the effect on holders of Class A Shares. Holders of Shares are not entitled to cumulative voting rights in the election of directors.

      Dividends. Subject to certain conditions and to the prior rights of holders of preferred shares of the Trust (including Class A EPS and Class B EPS), holders of Shares will be entitled to receive a noncumulative dividend on the Class B Share component of their Shares if and when the dividend is authorized by the board of trustees of the Trust. In 2002, the annual rate for the dividend was $0.84. The dividend may not be paid under certain circumstances. Holders of Shares may receive dividends on the

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Corporation Shares component of their Shares if and when authorized by our board of directors. Certain of our debt instruments restrict the ability of the Trust to declare and pay cash dividends.

      Other Rights. Holders of Shares have no conversion, sinking fund, redemption or preemptive rights to subscribe for any securities of the Trust or the Corporation, as the case may be. Subject to the rights of Class A EPS, Class B EPS, Class A Shares and any other preferred shares and/or excess shares, Shares will have equal dividend, distribution, and other rights, and will have a liquidation preference equal to 10% of the assets of the Trust legally available for liquidating distributions subject to certain adjustments. The Shares will have no preference, exchange, or appraisal rights except as expressly required by the Maryland REIT laws governing real estate investment trusts formed under Maryland law and the Maryland General Corporation Law (the “MGCL”).

Intercompany Agreement

      The Trust and the Corporation have entered into an Amended and Restated Intercompany Agreement dated as of January 6, 1999, pursuant to which all outstanding Class B Shares and Corporation Shares are attached on a one-to-one basis and trade as Shares. The following is a summary of certain provisions of the Intercompany Agreement. This summary is not complete. We have filed the Intercompany Agreement as an exhibit to the Trust’s Registration Statement on Form 8-A filed with the SEC on December 31, 1998, which is incorporated by reference into this prospectus. You should not rely on this summary, because the Intercompany Agreement and not this summary defines your rights as a holder of Shares.

      Transfer of Shares. Under the Intercompany Agreement, Class B Shares are transferable only with an equal number of Corporation Shares, and Corporation Shares are transferable only with an equal number of Class B Shares. Certificates evidencing Class B Shares and Corporation Shares are required by the Intercompany Agreement to include a reference to this transfer restriction. The declaration of trust of the Trust and the charter of the Corporation contain similar restrictions on the transfer of Class B Shares and Corporation Shares, as well as other restrictions on the transfer and ownership of Class B Shares and Corporation Shares. The Intercompany Agreement also provides that all Excess Trust Shares and all shares of Excess Corporation Stock that may be issued in respect of Class B Shares and Corporation Shares will be attached in the same manner as the Class B Shares and Corporation Shares are attached.

      Issuance of Shares. Under the Intercompany Agreement, the Trust may not issue Class B Shares and the Corporation may not issue Corporation Shares unless provision is made for the acquisition by the same person of the same number of shares of the other entity.

      Share Dividends, Reclassifications and other Similar Events. Neither the Trust nor the Corporation may issue any securities convertible into Class B Shares or Corporation Shares or issue any rights or warrants to purchase Class B Shares or Corporation Shares, unless the other entity concurrently takes the same action. If the Trust or the Corporation declares or pays a distribution payable in Class B Shares or Corporation Shares or subdivides, combines or reclassifies such shares, the number and class of securities that are attached to and trade with one another will be appropriately adjusted.

      Exchange Rights. After January 6, 2004, or earlier if certain events occur and are continuing, the Corporation has the right to exchange Class B Shares for cash, Corporation Shares or other property. After exercising this right, the Corporation may transfer the Class B Shares it has received in the exchange without requiring the transferee to acquire any Corporation Shares and may amend the Intercompany Agreement to adjust the number and classes of securities comprising a Share without the consent of the board of trustees.

      Amendment. The Intercompany Agreement may be amended by the board of trustees and the board of directors, provided that an amendment materially and adversely affecting the exchange rights pertaining to the Class B Shares must be approved by a majority of the outstanding Class B Shares.

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Class A Shares

      Starwood Hotels & Resorts Holdings, Inc., a wholly-owned subsidiary of the Corporation, is the sole holder of all outstanding Class A Shares, which are not registered with the SEC and do not trade on any exchange.

      Dividends. Subject to the prior rights of Class B Shares, Class A EPS and Class B EPS and other preferred shares of the Trust, holders of Class A Shares may receive dividends if and when authorized by the board of trustees of the Trust. Dividends on Class A Shares may be paid in cash, shares or other form.

      Voting Rights. Each Class A Share is entitled to one vote in the election of trustees and other matters and has the right to vote on any amendment, alteration or repeal of any provision of the declaration of trust of the Trust that materially and adversely affects the rights of the holders of the Class A Shares. Holders of Class A Shares are not entitled to cumulative voting rights in the election of trustees. Accordingly, Starwood Hotels & Resorts Holdings, Inc., as the sole holder of the Class A Shares, will be the only person entitled to vote in the election of trustees of the Trust.

      Fully Paid. All outstanding Class A Shares are fully paid and nonassessable.

      Other Rights. Holders of Class A Shares have no conversion, sinking fund, redemption or preemptive rights to subscribe for any securities of the Trust. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Trust, and after the payment in full of any liquidation preference of any outstanding shares of beneficial interest in the Trust (other than shares that do not entitle the holders to a liquidation preference with respect to the Class A Shares), including the Class A EPS and Class B EPS, holders of Class A Shares will be able to receive certain preferential liquidating distributions.

Trust Preferred Shares

      The following sets forth certain general terms and provisions of our outstanding Trust Preferred Shares.

Class A EPS

      Voting Rights. Except as required by law, the holders of Class A EPS are entitled to vote on any matter on which the holders of Class B Shares are entitled to vote. Each share of Class A EPS will entitle the holder to cast a number of votes equal to the largest whole number of Class A Underlying Trust Shares (as defined below) for which such shares of Class A EPS could be exchanged at such time.

      Dividend Rights. The holders of Class A EPS are entitled to receive a preferred dividend based on the payment (with certain exceptions) of any dividend on the Corporation Shares or any liquidating distribution in respect of the Corporation Shares, and participate in any dividend paid on the Class B Shares (with certain exceptions). These dividends accrue automatically and are cumulative from the date on which they accrue. No dividend on the Class B Shares may be declared unless each share of Class A EPS receives a corresponding dividend.

      Liquidation Rights. If the Trust liquidates, dissolves or winds up its business, either voluntarily or involuntarily, the holders of Class A EPS will be entitled to receive a liquidating distribution in an amount equal to the Class A liquidation preference described below and to participate on the basis described below in any liquidating distribution to holders of Class B Shares. Holders of Class A EPS have the right to receive these distributions prior to any distribution or payment to holders of Class B Shares or any other class or series of shares of beneficial interest in the Trust ranking junior to the Class A EPS. The “Class A liquidation preference” of a share of Class A EPS as of any date equals the sum of (x) the fair market value of the number of Class A Underlying Corporation Shares (as defined below) for which each Class A EPS is exchangeable as of such date plus (y) the amount of any accrued but unpaid preferred dividends in respect of each share of Class A EPS as of such date. In addition, the holders of Class A EPS will be entitled to participate ratably with the holders of Class B Shares in any liquidating distributions to such holders. For such purpose, each share of Class A EPS will be deemed to represent a

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number of Class B Shares equal to the number of Class A Underlying Trust Shares (as defined below) for which each share of Class A EPS is then exchangeable.

      Exchange Rights. Shares of Class A EPS are exchangeable for Shares at any time at the option of the holder based on a one-to-one exchange ratio; provided, however, that we may instead, at our option, deliver the cash equivalent of some or all of such Shares. In addition, under some circumstances we may either deliver a promissory note in lieu of cash, or may publicly offer and sell Shares and deliver the proceeds of the offering; if we elect either of these options the holder of Class A EPS may elect to withdraw its exchange request. The exchange ratio of shares of Class A EPS for Shares is subject to adjustment from time to time based on the occurrence of stock dividends, stock splits, reverse stock splits and other similar events in respect of the Shares. The number of Shares for which each share of Class A EPS is exchangeable at any given time has two components: the Corporation Share component is referred to as the “Class A Underlying Corporation Share” and the Class B Share component is referred to as the “Class A Underlying Trust Share” In addition, if holders of Class B Shares or Corporation Shares should be entitled to receive securities or other assets with respect to or in exchange for Class B Shares or Corporation Shares as a result of:

•   a capital reorganization or reclassification of the Class B Shares or the Corporation Shares;

•   a consolidation or merger of the Trust or the Corporation with another entity; or

•   the sale, transfer, or lease of assets of the Trust or the Corporation to another person,

then, as a condition of such transaction, the Class A EPS will become exchangeable for the kind and amount of securities or other assets which such holders would have been entitled to receive if they had exchanged their Class A EPS immediately prior to the effective date of such transaction. If there are any accrued but undeclared dividends on any Class A EPS being exchanged, the number of Shares to be delivered will be increased accordingly.

Class B EPS

      Voting Rights. Except as required by law and as described below with respect to the designation of additional trustees, the holders of Class B EPS are entitled to vote on any matter on which the holders of Class B Shares are entitled to vote. Each share of Class B EPS will entitle the holder to cast a number of votes equal to the largest whole number of Class B Underlying Trust Shares (as defined below) for which such shares of Class B EPS could be exchanged at such time.

      Dividend Rights. The holders of Class B EPS are entitled to receive a preferred dividend based on the payment (with certain exceptions) of any dividend on the Corporation Shares or any liquidating distributions in respect of the Corporation Shares, and participate in any dividend paid on the Class B Shares (with certain exceptions). These dividends accrue automatically and are cumulative from the date on which they accrue. No dividend on the Class B Shares may be declared unless each share of Class B EPS receives a corresponding dividend.

      Liquidation Rights. If the Trust liquidates, dissolves or winds up its business, either voluntarily or involuntarily, the holders of Class B EPS will be entitled to receive a liquidating distribution in an amount equal to the Class B liquidation preference described below and to participate in any liquidating distribution to holders of Class B Shares. Holders of Class B EPS have the right to receive these distributions prior to any distribution or payment to holders of Class B Shares or any other class or series of shares of beneficial interest in the Trust ranking junior to the Class B EPS. The “Class B liquidation preference” of a share of Class B EPS as of any date equals the sum of (x) $38.50 plus (y) the amount of any accrued but unpaid dividends in respect of each share of Class B EPS as of such date. In addition, the holders of Class B EPS will be entitled to participate ratably with the holders of Class B Shares in any liquidating distributions to such holders. For such purpose, each share of Class B EPS will be deemed to represent a number of Class B Shares equal to the number of Class B Underlying Trust Shares (as defined below) for which each share of Class B EPS is then exchangeable.

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      Exchange or Redemption of Class B EPS at the Option of the Holders. Holders of Class B EPS have the option, at any time prior to January 2, 2004, to exchange their shares for a like number of shares of Class A EPS, subject to adjustment. At any time and from time to time, a holder of Class B EPS may require us to do one of two things:

•   redeem the Class B EPS for cash equal to $38.50 plus accrued but unpaid dividends; or

•   convert each share of Class B EPS into a number of shares of Class A EPS equal to (x) $38.50 plus accrued but unpaid dividends, divided by (y) the Underlying Share Value of one share of Class A EPS. As used in this prospectus, “Underlying Share Value” as of a given date means the product of (A) the average closing price of the Shares on the principal national securities exchange on which the Shares are listed during the five trading days preceding such date multiplied by (B) the number of Shares for which each share of Class A EPS is then exchangeable.

      Prior to January 2, 2004, an exchanging holder may elect whether to receive cash or shares; after this date, we will have the right to elect whether to deliver cash or Shares.

      Exchange or Redemption of Class B EPS at the Option of the Trust. At any time and from time to time we have the option to:

•   redeem the Class B EPS, in whole or in part, for cash; or

•   exchange the Class B EPS, in whole or in part, for Class A EPS.

      Exchange or Redemption of Class B EPS at the Option of the Trust. Prior to January 2, 2004, we must redeem such shares of Class B EPS for cash and not shares of Class A EPS. The number of Shares for which each share of Class B EPS is indirectly exchangeable at any given time has two components: the Corporation Share component is referred to as the “Class B Underlying Corporation Share” and the Class B Share component is referred to as the “Class B Underlying Trust Share.” In addition, if holders of Class A EPS should be entitled to receive securities or other assets with respect to or in exchange for Class A EPS as a result of:

•   a capital reorganization or reclassification of the Class A EPS;

•   a consolidation or merger of the Trust or the Corporation with another entity; or

•   the sale, transfer, or lease of assets of the Trust or the Corporation to another person,

then, as a condition of such transaction, the Class B EPS will become exchangeable for the kind and amount of securities or other assets which such holders would have been entitled to receive if they had exchanged their Class B EPS immediately prior to the effective date of such transaction. If there are any accrued by undeclared dividends on any Class B EPS being exchanged, the number of shares of Class A EPS to be delivered will be increased accordingly.

      Special Default Rights. If we default in our exchange or redemption obligations and do not cure such default within 30 days, then:

•   the holders of the Class B EPS will have the right to designate two additional trustees for the Trust;

•   the dividend rate on the Class B EPS will be increased;

•   the holders of Class B EPS will have certain registration rights; and

•   certain redemption or exchange dates will be extended.

Upon the occurrence and during the continuation of any default that remains uncured for 30 days, cumulative dividends will accrue (with certain exceptions) on the $38.50 stated value of the Class B EPS at a rate per annum equal to LIBOR plus 4% and will be payable quarterly.

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Ownership Limits; Restrictions on Transfer; Repurchase and Redemption of Shares

      Our governing documents provide (subject to certain exceptions) that no one person or group may own or be deemed to own more than 8% of our outstanding stock or shares of beneficial interest, whether measured by vote, value or number of shares. There is an exception for shareholders who owned more than 8% as of February 1, 1995, who may not own or be deemed to own more than the lesser of 9.9% and the percentage of shares they held on that date, provided, that if the percentage of shares beneficially owned by such a holder decreases after February 1, 1995, such a holder may not own or be deemed to own more than the greater of 8% and the percentage owned after giving effect to the decrease. We may waive this limitation if we are satisfied that such ownership will not jeopardize the Trust’s status as a REIT. In addition, if shares which would cause the Trust to be beneficially owned by fewer than 100 persons are issued or transferred to any person, such issuance or transfer shall be null and void. Any ownership of our capital stock constitutes an on-going agreement to comply with this limitation and to give us written notice of any event that would violate it.

      If a transfer or other event occurs that would, if effective, result in someone owning our capital stock in violation of this 8% limitation, such transfer will be deemed void with respect to the number of shares that would be owned in violation of the 8% limitation. The shares that exceed the limit would automatically be exchanged for Excess Trust Shares or Excess Corporation Stock, as applicable (collectively, “Excess Stock”), to the extent necessary to ensure that the transfer or other event would not result in ownership of our capital stock in excess of the 8% limitation.

      Any Excess Trust Shares and Excess Corporation Stock that we may issue in exchange for Shares will be “attached” in the same manner that the Class B Shares and the Corporation Shares are currently attached. While outstanding, Excess Stock will be held in trust. We will appoint the trustees of the trust, who shall be independent of the Trust, the Corporation and the holder of Excess Stock. The beneficiary of the trust shall be one or more charitable organizations selected by the trustee. If, after the transfer or other event resulting in an exchange of shares in the Trust or the stock of the Corporation for Excess Stock and prior to our discovery of such exchange, dividends or distributions are paid with respect to the capital stock that was exchanged for Excess Stock, then such dividends or distributions are to be repaid to the trustee upon demand.

      While Excess Stock is held in trust, an interest in that trust may be transferred by the trustee only to a person whose ownership of shares in the Trust or the stock of the Corporation will not violate the 8% limitation. At the time of this transfer the Excess Stock will be automatically exchanged for the same number of shares in the Trust or the stock of the Corporation of the same type and class as the shares in the Trust or the stock of the Corporation for which the Excess Stock was originally exchanged. Our governing documents provide that holders of Excess Stock may not receive an amount that reflects any appreciation in the shares in the Trust or the stock of the Corporation for which such Excess Stock was exchanged during the period that such Excess Stock was outstanding. Any excess amount so received must be turned over to the charitable beneficiary of the trust.

      Our governing documents further provide that we may purchase, for a period of 90 days during the time the Excess Stock is held in trust, all or any portion of the Excess Stock from the original transferee shareholder at the lesser of the price paid for the shares in the Trust or the stock of the Corporation by the purported transferee and the closing market price for the shares in the Trust or the stock of the Corporation on the date we exercise our option to purchase. The 90-day period begins on the date of the violative transfer if the original transferee-shareholder gives us notice of the transfer or, if no notice is given, on the date we determine that a violative transfer has been made.

      All persons who own or are deemed to own 5% or more, or such other percentage as may be applicable, of our outstanding capital stock must file an affidavit with us before January 30 of each year. In addition, each shareholder upon demand must disclose to us in writing such information with respect to the direct, indirect and constructive ownership of shares as we deem necessary to comply with our governing documents or applicable laws and regulations.

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Anti-Takeover Provisions

      In addition to those described above, certain provisions in our governing documents may have the effect of encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with us rather than pursue non-negotiated takeover attempts.

Classified Board; Removal of Directors.

      Our board of directors is divided into three classes as nearly equal as possible. Each class is elected for a three-year term. At each annual meeting of shareholders, approximately one-third of the members of the board of directors are elected for a three-year term and the other directors remain in office until their three-year terms expire. Furthermore, our governing documents provide that no director may be removed without cause. Any removal for cause requires the affirmative vote of the holders of at least two-thirds of all the votes entitled to be cast for the election of directors.

      Thus, control of the board of directors cannot be changed in one year without removing the directors for cause as described above. Consequently, at least two annual meetings must be held before a majority of the members of the board of directors can be changed. Our charter provides that the charter cannot be amended without the approval of the holders of at least a majority of the outstanding shares entitled to vote thereon.

Preferred Stock Purchase Rights.

      In order to protect our shareholders from coercive or unfair takeover tactics, on March 15, 1999, we adopted a Rights Agreement. Pursuant to the Rights Agreement, our board of directors declared a distribution of one right to purchase a Share consisting of 1/1000th of one share (a “Preferred Fraction”) of Series A Junior Participating Preferred Stock at an exercise price of $125 per Share, subject to certain antidilution adjustments, for each outstanding Corporation Share. The board of directors also authorized the issuance of one Right for each Corporation Share issued after the record date and before the earliest of:

•   the Distribution Date (as defined below);

•   redemption or exchange of the Rights; and

•   April 5, 2009.

      As of the date of this prospectus, the Rights (1) are attached to and can be transferred only with the Corporation Shares, (2) are not exercisable, and (3) are represented by the certificates representing the Corporation Shares. The Rights will separate from the Corporation Shares and become exercisable, and the “Distribution Date” will occur upon the earlier of:

•   10 days following a public announcement that there is an “acquiring person”, which may be a single person or a group of affiliated persons who have acquired beneficial ownership of 15% or more of the Corporation Shares; and

•   10 business days (which we may extend under certain circumstances) after a tender or exchange offer commences that, if consummated, would result in a person or group beneficially owning 15% or more of the Corporation Shares.

      Once a person or group has become an acquiring person, each holder of a Right other than the acquiring person has the right to receive, upon exercise of the Right, Shares having a market value of twice the then current exercise price of the Right, or, in some cases, cash, property or other of our

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securities. Similarly, unless specific conditions are met, if after a person or group has become an acquiring person:

•   we engage in a merger or other business combination in which we are not the surviving corporation,

•   we are acquired in a merger or other business combination in which we are the surviving corporation but as a result of the merger or combination, all or a part of the Corporation Shares are converted into securities of another entity, cash or other property, or

•   50% or more of the Corporation’s assets or earning power are sold or otherwise transferred,

then, in any of these events, the Rights will become exercisable for stock of the acquiror having a market value of twice the then-current exercise price of the Rights, or, in some cases, cash or other property.

      We may redeem all the Rights, but not less than all the Rights, at a price of $0.01 per Right at any time before the earlier of:

•   10 days after a person or group first becomes an acquiring person; and

•   April 5, 2009.

      We may, at our option, pay the redemption price in cash, Shares or any other form of consideration that we determine is appropriate. Immediately upon our election to redeem the Rights, the right to exercise the Rights will terminate and the only right that a holder of Rights will have will be to receive payment of the redemption price.

      Until a Right is exercised, the holder of a Right, as such, has no rights as a shareholder, including the right to vote or to receive dividends or other distributions.

      The purchase price payable, and the number of Preferred Fractions or other securities issuable, upon exercise of the Rights and the redemption price are subject to adjustment from time to time to prevent dilution under circumstances specified in the Rights Agreement.

      The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire us without conditioning the offer on a substantial number of Rights being acquired or approval of our board of directors. The Rights should not interfere with any merger or other business combination approved by our board of directors. A full description of all the terms and conditions of the Rights is contained in a Rights Agreement, which is incorporated into this prospectus by reference and a copy of which was filed with the SEC on March 15, 1999 as an exhibit to our Joint Current Report on Form 8-K filed with the SEC on that date. Because this is a summary, it is not a complete description of the provisions governing the Rights. For a complete description of all the terms of the Rights, you should carefully read the complete Rights Agreement.

Maryland Takeover Legislation

      Under the MGCL, certain “business combinations” (including mergers, consolidations, share exchanges, or, in certain circumstances, asset transfers or issuances or reclassifications of equity securities) between a Maryland corporation or a Maryland real estate investment trust and any person who beneficially owns 10% or more of the voting power of the corporation’s or trust’s shares or an affiliate of the corporation or trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting shares of the corporation or trust or an affiliate thereof, are prohibited or restricted unless exempted. We have exempted all “business combinations” involving any party from the business combination provisions of the MGCL.

      Under Maryland law, under certain circumstances “control shares” of a Maryland corporation or a Maryland real estate investment trust acquired in a “control share acquisition” may have no voting rights. We have exempted all control share acquisitions involving any person from the MGCL.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

      The following is a summary of certain United States federal income tax considerations relating to the purchase, ownership, and disposition of notes, and to the extent set forth below the Shares, as of the date hereof. Except where noted, this summary deals only with notes and Shares held as capital assets by a beneficial owner of the notes or Shares (a “Holder”). Unless otherwise noted, this summary deals only with a Holder who purchased the notes on original issue at their “original issue price” (as defined below) and it does not deal with special situations. For example, this summary does not address:

•   tax consequences to Holders who may be subject to special tax treatment, such as dealers in securities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, financial institutions, regulated investment companies, real estate investment trusts, tax-exempt entities or insurance companies;

•   tax consequences to Holders who own notes or Shares as part of a hedging, constructive sale, conversion, straddle or other risk-reducing transaction;

•   tax consequences to Holders whose “functional currency” is not the United States dollar;

•   tax consequences, if any, under the alternative minimum tax rules; or

•   tax consequences under any state, local or foreign tax law.

      The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”), and Treasury Regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income tax consequences different from those discussed below.

      If an entity or arrangement treated as a partnership for United States federal income tax purposes holds notes or Shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partnership holding notes or Shares, or a partner of a partnership holding notes or Shares, it is very important that you consult your own tax advisor. The following summary does not address the United States federal income tax treatment of partnerships or their partners.

      If you are considering the purchase of notes, you should consult your own tax advisor concerning the United States federal income tax consequences to you of the purchase in light of your particular situation and any consequences arising under the laws of any other taxing jurisdiction.

Classification of the Notes

      Under the indenture governing the notes, we have agreed, and by acceptance of a beneficial interest in the notes each Holder of the notes will be deemed to have agreed, for United States federal income tax purposes, to treat the notes as indebtedness that is subject to the Treasury Regulations governing contingent payment debt instruments (the “Contingent Debt Regulations”) and, for purposes of the Contingent Debt Regulations, to treat, without limitation, the amount of cash and the fair market value of any Shares received upon a conversion of a note as a contingent payment. The remainder of this discussion assumes that such treatment is correct and does not address any possible differing treatment of the notes. The Internal Revenue Service has issued an administrative pronouncement, in the form of a revenue ruling, concluding that the Contingent Debt Regulations apply to convertible debt instruments having terms similar to those of the notes and that, in applying those regulations, interest accrues on the debt instruments using a methodology similar to that described herein. Nonetheless, the United States federal income tax treatment of the notes is uncertain in certain respects and no rulings have been sought from the Internal Revenue Service with respect to any of the tax consequences discussed below. Accordingly, no assurance can be given that the Internal Revenue Service or a court will agree with the treatment described herein. Any treatment different from that described herein could affect the amount, timing, character and treatment of income, gain or loss in respect of an investment in the notes. Holders should

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consult their tax advisors concerning the United States federal income tax classification of, and the treatment of Holders holding and disposing of, the notes.

United States Holders

      The following discussion is a summary of certain United States federal income tax consequences that will apply to you if you are a United States Holder of notes or, to the extent set forth below, Shares.

      For purposes of this discussion, a “United States Holder” is a beneficial owner of a note or Share who or that is, for United States federal income tax purposes:

•   a citizen or resident of the United States;

•   a corporation created or organized in or under the laws of the United States or any political subdivision of the United States;

•   an estate the income of which is subject to United States federal income taxation regardless of its source; or

•   a trust described in Section 7701(a)(30) of the Code (taking into account any applicable transition rules and elections).

Accrual of Interest Income

      As stated above under “— Classification of the Notes,” we have agreed, and by acceptance of a beneficial interest in the notes each Holder of the notes will be deemed to have agreed, for United States federal income tax purposes, to treat the notes as indebtedness that is subject to the Contingent Debt Regulations and, for purposes of the Contingent Debt Regulations, to treat, without limitation, the amount of cash and the fair market value of any Shares received upon a conversion of a note as a contingent payment. In accordance with such treatment, the Contingent Debt Regulations will generally require a United States Holder to accrue interest income on the notes in the amounts described below, regardless of whether the Holder uses the cash or accrual method of tax accounting. Furthermore, United States Holders will be required to accrue interest based on the rate, as of the initial issue date of the notes, at which we would issue a fixed rate nonconvertible debt instrument with no contingent payments but with terms and conditions otherwise similar to the notes (the so-called “comparable yield,” as discussed more fully below), rather than at a lower rate based on the accruals on the notes for non-tax purposes. Accordingly, United States Holders will be required to include interest in taxable income each year in excess of the accruals on the notes for non-tax purposes and generally in excess of any contingent interest payments received in the year.

      More specifically, you will generally accrue an amount of interest for United States federal income tax purposes, for each accrual period prior to and including the maturity date of the notes, that equals:

•   the product of the “adjusted issue price” (as defined below) of the notes as of the beginning of the accrual period and the “comparable yield” (as defined below) of the notes, properly adjusted for the length of the accrual period;

•   divided by the number of days in the accrual period; and

•   multiplied by the number of days during the accrual period that you held the notes.

      The “adjusted issue price” of a note will be its original issue price increased by any interest previously accrued under the foregoing rules (determined without regard to any adjustments to interest accruals described below) and decreased by the amount of any noncontingent payment and the projected amount of any contingent payments (in accordance with the projected payment schedule described below) previously made with respect to the notes. The “original issue price” of a note will be the first price at which a substantial amount of the notes was initially sold to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. As referred to above, the “comparable yield” is generally the rate, as of the original issue date of the notes, at

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which we would issue a fixed rate nonconvertible debt instrument with no contingent payments but with terms and conditions otherwise similar to the notes. We determined that the comparable yield of the notes, based on the annual rate, as of the initial issue date, at which we would issue a fixed-rate non-convertible debt instrument with terms and conditions similar to the notes, is an annual rate of 8.25% compounded semi-annually. If our determination of the comparable yield were successfully challenged by the Internal Revenue Service, the redetermined yield could be materially greater or less than the comparable yield determined by us.

      We are required to furnish to the Internal Revenue Service and to you the comparable yield. We are also required to furnish to the Internal Revenue Service and to you, solely for tax purposes, a “projected payment schedule” that includes the actual noncontingent interest payments on the notes, and estimates the amount and timing of contingent interest payments on, and payment upon maturity of, the notes, taking into account as a payment the fair market value of any Shares that might be paid upon a conversion of the notes. The projected payment schedule must produce the comparable yield. The comparable yield and projected payment schedule are included as an exhibit to the indenture relating to the notes, and you may also obtain the comparable yield and projected payment schedule by submitting a written request for it to us at the following address: Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester Avenue, White Plains, New York, 10604, Attention: General Counsel. Under the indenture governing the notes, we have agreed, and by acceptance of a beneficial interest in the notes each Holder of the notes will be deemed to have agreed, for United States federal income tax purposes, to be bound by our determination of the comparable yield and projected payment schedule.

      The comparable yield and the projected payment schedule are not provided for any purpose other than the determination, for United States federal income tax purposes, of your interest income and adjustments thereof in respect of the notes and do not constitute a representation regarding the actual amount of the payments on a note.

Adjustment to Interest Accruals on the Notes

      If the actual contingent payments made on the notes (i.e., the contingent interest payments and amounts payable at maturity, taking into account as a payment the amount of cash and the fair market value of any Shares that might be paid upon any conversion of a note) differ from the projected contingent payments, adjustments will be made to account for the difference. A net positive adjustment for a taxable year, which is the net amount by which actual contingent payments in that year exceed the projected contingent payments in that year, will be treated as additional interest income in the current year. For this purpose, the payments in a taxable year include the fair market value of stock or property received in that year. A net negative adjustment for a taxable year, which is the net amount by which the projected payments in that year exceed the actual payments in that year, will be treated in the following manner:

•   first, the net negative adjustment will reduce the amount of interest required to be accrued in the current year (determined before any adjustment);

•   second, any remaining net negative adjustment will be treated as ordinary loss to the extent that, with respect to prior years, your total interest income with respect to the notes exceeds net negative adjustments treated as ordinary loss; and

•   third, any remaining net negative adjustments generally will be treated as a regular negative adjustment in the following taxable year (with any net negative adjustment in the taxable year of a disposition of a note reducing the Holder’s amount realized).

      By acceptance of a beneficial interest in the notes you will be deemed to have agreed, for United States federal income tax purposes, to treat, without limitation, the amount of cash and the fair market value of any Shares received upon a conversion of a note as a contingent payment. Under such treatment, the actual contingent payments realized by you for purposes of the interest adjustment rules stated above will include the amount of cash and the fair market value of the Shares you receive upon conversion at the

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note’s maturity. Therefore, to the extent you do not convert your note, or to the extent you convert a note at its maturity and the actual amount realized by you upon conversion differs from the amount rejected on the projected payment schedule, adjustments under the foregoing rules would generally be required. Although not entirely clear, it appears that somewhat different rules apply if you convert a note other than at the note’s maturity. In that case, the amount of cash and the fair market value of any Shares received upon conversion will be included in the amount realized for purposes of the rules set forth below under “— Sale, Exchange or Conversion of a Note”.

Rules Applicable to Holders Purchasing their Notes other than at the Adjusted Issue Price

      A Holder acquiring a note for an amount other than its “adjusted issue price”, as defined above under “— Accrual of Interest Income” (for example, because the Holder purchases the note other than at its original issuance, or because the Holder purchases the note at its original issuance but at a price other than the first price at which a substantial amount of the notes was initially sold to the public) will generally accrue interest and make adjustments to such accruals in accordance with the rules described above under “— Accrual of Interest Income” and “— Adjustment to Interest Accruals on the Notes.” However, to the extent that a Holder’s basis in the note differs from the note’s adjusted issue price, the Holder must reasonably allocate any such difference among the daily portions of interest accruing over the remaining term of the note and/or the remaining projected payments. Amounts so allocated will be treated as a positive or negative adjustment, as the case may be, on the date of accrual or payment and the Holder’s basis in the note will be increased or decreased, as the case may be, to reflect such adjustment. Holders are encouraged to consult with their own tax advisors concerning the proper application of these rules.

Sale, Exchange or Conversion of a Note

      Upon the sale, exchange, conversion, redemption or retirement of a note, you will recognize gain or loss equal to the difference between your amount realized and your adjusted tax basis in the notes. Any such gain generally will be treated as ordinary interest income. Loss from the disposition of a note will be treated as ordinary loss to the extent of your prior interest income on the note in excess of prior negative adjustments treated as ordinary loss. Any loss in excess of that amount will be treated as capital loss. Upon a conversion, redemption or retirement of a note at the note’s maturity, you will be treated as realizing the amount projected to be received at such time (rather than the amount actually received) and, if the amount of cash and the fair market value of Shares actually received by you is different from the projected amount, such difference will be subject to the rules summarized under “— Adjustment to Interest Accruals on the Notes”. Although not entirely clear, it appears that somewhat different rules apply upon a conversion, redemption or retirement of a note other than at the note’s maturity. In that case, in computing the amount realized in the sale or exchange transaction you will take into account the amount of cash and the fair market of Shares actually received at such time.

      Special rules apply in determining the tax basis of a note. Your basis in a note is generally increased by interest you previously accrued on the notes (before taking into account any adjustments), and reduced by the amount of any noncontingent payments and the projected amount of any contingent payments previously scheduled to be made.

      Under the treatment described above, your tax basis in the Shares received upon any put, conversion or redemption of a note will equal the then current fair market value of such Shares. Your holding period for the Shares received will commence on the day after conversion.

      Given the uncertain tax treatment of instruments such as the notes, you should contact your tax advisors concerning the proper United States federal income tax treatment of a sale, exchange, conversion, redemption or retirement of a note.

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Constructive Distributions

      The conversion price of the notes will be adjusted in certain circumstances. Under Section 305(c) of the Code, adjustments (or failures to make adjustments) that have the effect of increasing your proportionate interest in the assets or earnings of us or the Trust may in some circumstances result in a deemed distribution to you. Any deemed distributions will be taxable as a dividend, return of capital, or capital gain in accordance with the earnings and profits rules under the Code. In this regard, if adjustments to the conversion ratio upon a Share Separation alter your proportionate interest in our assets or earnings, such adjustments could result in deemed distributions to you.

Share Separation

      As described above under “Description of the Notes — Share Separation”, upon a Trust Assumption Event resulting from a Share Separation, it is likely that beneficial owners of notes would be treated for United States federal income tax purposes as exchanging their existing notes for new notes issued by the Trust and would be required to recognize gain or loss on the deemed exchange. Potential owners of notes must consult their own tax advisors in this regard.

Corporation Shares

      Distributions made to a United States Holder with respect to Corporation Shares up to the amount of the Corporation’s current or accumulated earnings and profits, as determined for United States federal income tax purposes, will be taxable as dividends. Provided certain conditions are met, United States Holders that are corporations should be entitled to the dividends-received deduction with respect to amounts so treated. To the extent in excess of the Corporation’s current or accumulated earnings and profits, such distributions will first be treated as a tax-free return of capital to the extent of the United States Holder’s tax basis in the Corporation Shares with respect to which the distribution was made, and thereafter as gain from the sale or exchange of such Corporation Shares.

      Under recently enacted United States federal income tax legislation, distributions to individual United States Holders with respect to Corporation Shares that are treated as dividends for United States federal income tax purposes under the foregoing rules may be subject to United States federal income taxation at reduced rates applicable to long-term capital gains. This tax relief is available for “qualified dividend income” received in tax years beginning after December 31, 2002 and on or before December 31, 2008. Unless this tax reduction is extended by future legislation, qualified dividend income received in tax years beginning on or after January 1, 2009 will be taxed at the rates applicable to ordinary income. “Qualified dividend income” generally includes dividends received from domestic corporations. However, it does not include dividends on stock (1) with respect to which the holder does not meet a minimum holding-period requirement or (2) to the extent the holder is obligated to make related payments with respect to substantially similar or related property (e.g., pursuant to a short sale of such stock).

      In general, a United States Holder will recognize capital gain or loss on the disposition of Corporation Shares in an amount equal to the difference between the amount realized on such disposition and the United States Holder’s adjusted basis in the Corporation Shares. The gain or loss generally will constitute long-term capital gain or loss if the United States Holder’s holding period for the Corporation Shares is more than one year. All or a portion of any loss realized upon a taxable disposition of Corporation Shares may be disallowed if other Corporation Shares are purchased within 30 days before or after such disposition.

Class B Shares

      The Trust has elected to be treated for United States federal income tax purposes as a “real estate investment trust”, or REIT. As long as the Trust qualifies as a REIT, distributions made by the Trust to United States Holders with respect to Class B Shares out of the Trust’s current or accumulated earnings and profits, as determined for United States federal income tax purposes, and not designated as capital gain dividends, will be taxable to United States Holders as ordinary dividend income (although possibly

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subject to special rules, as described in the second succeeding paragraph) and will not be eligible for the dividends-received deduction otherwise available to corporations. To the extent they do not exceed the Trust’s actual net capital gain for the taxable year, distributions that are properly designated by the Trust as capital gain dividends will generally be taxed to United States Holders as long-term capital gain without regard to the period the United States Holders have held their Class B Shares. Any dividend declared by the Trust in October, November or December of any year payable to a United States Holder of record on a specified date in any such month will be treated as both paid by the Trust and received by the United States Holders on December 31 of such year, provided that the dividend is actually paid by the Trust during January of the following calendar year.

      If the Trust elects to retain and pay tax on its net capital gains, United States Holders of Class B Shares will be required to include their proportionate share of the undistributed long-term capital gains in income and will receive a credit for their respective shares of the tax paid by the Trust. The United States Holders’ tax basis in their Class B Shares will be increased by the amount of the undistributed long-term capital gains (less the amount of tax paid by the Trust) included in the United States Holders’ income.

      Under recently enacted United States federal income tax legislation, corporate distributions that are treated as dividends for United States federal income tax purposes may be subject to United States federal income taxation at reduced rates applicable to long-term capital gains. This tax relief is available for “qualified dividend income” received by individuals in tax years beginning after December 31, 2002 and on or before December 31, 2008. Although, under the legislation, dividends paid by REITs (other than those dividends properly designated as capital gain dividends) generally are not treated as qualified dividend income and therefore continue to be taxed at rates applicable to ordinary income, dividends received by an individual United States Holder with respect to Class B Shares will be treated as qualified dividend income eligible for the reduced rates to the extent such dividends are attributable to (1) qualified dividend income (including dividends received from non-REIT corporations) received by the Trust in the taxable year in which the dividend on the Class B Shares is paid, (2) the excess of the REIT’s “real estate investment trust taxable income” for the preceding tax year, which would typically include any income that the REIT did not distribute to stockholders, over the tax payable by the REIT on any such income, and (3) the excess of the REIT’s income for the preceding tax year subject to the built-in gain tax on certain assets acquired from C corporations over the tax payable by the REIT on any such income in the preceding tax year, in each case provided that the REIT properly designates such dividends as qualified dividend income.

      In general, a United States Holder will recognize capital gain or loss on the disposition of Class B Shares in an amount equal to the difference between the amount realized on such disposition and the United States Holder’s adjusted basis in the Class B Shares disposed of. The gain or loss will generally constitute long-term capital gain or loss if the United States Holder’s holding period for the Class B Shares is more than one year. However, any loss upon a sale or exchange of Class B Shares by a United States Holder who has held those shares for six months or less, after applying certain holding period rules, will be treated as a long-term capital loss to the extent of distributions from the Trust that are required to be treated by the United States Holder as long-term capital gain. All or a portion of any loss realized upon a taxable disposition of Class B Shares may be disallowed if other Class B Shares are purchased within 30 days before or after such disposition.

      The foregoing is only a brief overview of certain United States federal income tax rules applicable to United States Holders of Class B Shares and does not purport to be complete. Potential investors in the notes are expected to consult their own tax advisors in that regard.

Non-U.S. Holders

      The following is a summary of certain United States federal income tax consequences that may be relevant to you if you are a Non-U.S. Holder of notes or Shares. The term “Non-U.S. Holder” means a Holder of a note or Share that is not a United States Holder.

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      Special rules may apply to certain Non-U.S. Holders such as “controlled foreign corporations”, “passive foreign investment companies” and “foreign person holding companies”. Such entities should consult their own tax advisors to determine the United States federal, state, local and other tax consequences that might be relevant to them.

      The United States federal income tax consequences to Non-U.S. Holders of owning the notes and Shares will be affected significantly to the extent either the Corporation or the Trust is treated as a “United States real property holding corporation” (“USRPHC”) for purposes of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) and, if so, the extent to which the notes, the Corporation Shares or Class B Shares are treated as “United States real property interests” (“USRPIs”). In general, Non-U.S. Holders otherwise not subject to United States federal income tax will be subject to tax under special rules applicable to investments in USRPIs.

      The Trust is and is expected to remain a USRPHC. Although it is uncertain whether the Corporation is a USRPHC, there can be no assurances that the Corporation is not or will not become a USRPHC. Except to the extent otherwise noted, this discussion assumes that both the Trust and the Corporation will be treated as USRPHCs at all times relevant to Non-U.S. Holders.

      Certain consequences summarized below are not clear, and the applicable rules are subject to differing interpretations. Each Non-U.S. Holder is expected to rely on its own tax advisor.

The Notes

      Although the applicable rules are not entirely clear, and subject to the discussion below, the Corporation currently intends to take the position that a 30% United States federal withholding tax will apply to the amount of any cash and the fair market value of any Shares delivered to you upon any conversion of a note, to the extent of any accrued interest income on the note, determined for United States federal income tax purposes under the rules set forth above under “— United States Holders”. As discussed above, under the Contingent Debt Regulations, interest income will generally accrue on the notes for United States federal income tax purposes based on the “comparable yield”, rather than at a lower rate based on the accruals on the notes for non-tax purposes. Each Non-U.S. Holder is strongly urged to consult with, and is expected to rely on, the Holder’s own tax advisor regarding the 30% United States federal withholding tax that may be imposed upon a conversion of a note.

      The 30% United States federal withholding tax will not apply to (i) any payment to you on the notes of stated interest at a fixed rate as described above under “Description of the Notes — Interest” and (ii) any payment to you on the notes of contingent interest described above under “Description of the Notes — Contingent Interest”, in each such case provided that:

•   you do not actually or constructively own 10% or more of the total combined voting power of all classes of our stock that are entitled to vote within the meaning of Section 871(h)(3) of the Code;

•   you are not a controlled foreign corporation that is related to us through stock ownership;

•   you are not a bank whose receipt of interest on a note is described in Section 881(c)(3)(A) of the Code; and

•   either you provide your name and address, and certify, under penalties of perjury, that you are a Non-U.S. Holder (which certification may be made on an IRS Form W-8BEN or successor form) or you hold your notes through certain foreign intermediaries or certain foreign partnerships, and you and the intermediary or partnership satisfy the certification requirements of applicable Treasury Regulations.

      If under the foregoing rules you are otherwise subject to the 30% United States federal withholding tax, the 30% United States federal withholding tax can be reduced or eliminated if you provide us with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under the benefit of an applicable tax treaty or (2) as described more fully below, IRS Form W-8ECI (or successor form) stating that amounts paid on the notes are not subject to withholding

49

tax because such amounts are effectively connected with your conduct of a trade or business in the United States.

      Any gain realized by a Non-U.S. Holder upon the sale or exchange of a note generally will be subject to United States federal income tax if:

•   that gain is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder;

•   the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale or disposition, and certain other conditions are met; or

•   at the time of the sale or disposition, the note constitutes a USRPI (in which case such gain would, in general, be treated as if it were effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States and withholding at a rate of 10% of the proceeds may also apply). For purposes of the USRPI rules:

•   During any period in which the notes are not regularly traded on an established securities market but the Shares are so traded, the notes will be treated as a USRPI with respect to a Non-U.S. Holder where, on the date of such Holder’s acquisition of the notes, the notes actually or constructively owned by such Non-U.S. Holder had a fair market value greater than the fair market value on that date of 5% of the outstanding Shares. It is unclear whether this rule should be applied by reference to the value of the notes relative to the aggregate value of the Shares, or whether this rule should be applied by treating the notes as being issued in part by the Corporation and in part by the Trust (based on some reasonable allocation method) and then comparing the value of each part to the value of the outstanding Corporation Shares and Class B Shares, as appropriate. In the event that a Non-U.S. Holder actually or constructively acquires additional notes at a later date, such Non-U.S. Holder’s interests in the notes must be aggregated and valued as of the date of the subsequent acquisition, with the effect that previously acquired notes may become USRPIs at such later date.

•   For any period during which the notes are regularly traded on an established securities market, the notes will be treated as USRPIs only with respect to a Non-U.S. Holder who, actually or constructively, beneficially owned more than 5% of the total fair market value of the notes at any time during the five-year period ending either on the date of the note’s disposition or other date of determination.

      In addition, even if gain on the sale or exchange of a note is not subject to taxation under the rules summarized above, it may nonetheless be subject to United States taxation because any gain realized upon the sale or disposition of a note is generally treated as interest income under the rules described above under “— United States Holders — Sale, Exchange or Conversion of a Note.” The application of the 30% federal withholding tax discussed above with respect to such gain which is treated as interest income is not clear, and consequently Non-U.S. Holders are urged to consult with their own tax advisors with respect to the United Sates federal income tax treatment of any gain realized on the sale, exchange or other disposition of a note, as well as the application of United States federal income tax to the amount of interest accrued on the notes and not previously included in United States federal taxable income. Non-U.S. Holders are expected to rely on the advice of their own tax advisors with respect to the United States federal income tax treatment of any gain realized upon the sale or exchange of a note.

      United States federal withholding taxes described above may be refundable or creditable provided required forms are filed with the Internal Revenue Service on a timely basis. Non-U.S. Holders are urged to consult with their own tax advisors as to the possibility of claiming a refund or credit for any United States federal income taxes withheld.

      If a Non-U.S. Holder of the notes is engaged in a trade or business in the United States, and if interest on the notes, or income or gain realized on the sale, exchange or conversion of the notes, is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt

50

from the withholding tax discussed above, will generally be subject to regular United States federal income tax on such interest and on any such income or gain in the same manner as if it were a United States Holder and will be required to provide the withholding agent with a properly executed IRS Form W-8ECI (or successor form) in order to claim an exemption from withholding tax. In addition, if such a Non-U.S. Holder is a foreign corporation, such Holder may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.

Corporation Shares

      Distributions made to a Non-U.S. Holder with respect to Corporation Shares up to the amount of the Corporation’s current or accumulated earnings and profits, as determined for United States federal income tax purposes, will be taxable as ordinary dividend income. The Corporation, in accordance with applicable Treasury Regulations, will withhold United States income tax at the rate of 30% on the gross amount of any such distributions made to a Non-U.S. Holder unless (i) a lower rate is provided for under an applicable tax treaty and the Non-U.S. Holder files the required form evidencing eligibility for that reduced rate with the Corporation or (ii) the Non-U.S. Holder files an IRS Form W-8ECI (or successor form) with the Corporation claiming that the distribution is effectively connected with the conduct of a United States trade or business.

      If it cannot be determined at the time a distribution is made whether or not such distribution will be in excess of current or accumulated earnings and profits of the Corporation, the distribution will generally be treated as a dividend for withholding purposes. However, amounts thus withheld are generally refundable if it is subsequently determined that such distribution was, in fact, in excess of current or accumulated earnings and profits of the Corporation.

      If you are a Non-U.S. Holder, any gain realized by you upon the sale, exchange, redemption or other disposition of Corporation Shares generally will not be subject to United States federal income tax unless:

•   that gain is effectively connected with the conduct of a trade or business in the United States by you;

•   you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or

•   we are, or have been during the shorter of the five-year period ending on the date of disposition and your holding period, a USRPHC for United States federal income tax purposes, unless the Corporation Shares are “regularly traded” on an “established securities market” (within the meaning of applicable Treasury Regulations) at the time of the sale or other disposition and you did not beneficially or constructively own more than 5% of the aggregate fair market value of the outstanding Corporation Shares at any time within the shorter of such five-year period and your holding period. As indicated above, this discussion assumes that we will at all times be a USRPHC. Although no assurances can be given in this regard, we currently expect that the Corporation Shares will continue to be “regularly traded” on an “established securities market” within the meaning of existing and temporary Treasury Regulations.

      If a dividend on a Corporation Share, or gain recognized with respect to a sale or exchange of a Corporation Share, is effectively connected with the conduct of a United States trade or business of a Non-U.S. Holder, such dividends or gain will be subject to United States federal income tax in the same manner as if the Non-U.S. Holder were a United States Holder and, in the case of a non-U.S. Holder that is a corporation, the Non-U.S. Holder might be subject to an additional 30% branch profits tax on the amount of the dividend or gain.

      Non-U.S. Holders should consult applicable tax treaties, which may result in United States federal income tax treatment different from that described above.

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Class B Shares

      Distributions made by the Trust to a Non-U.S. Holder that are not attributable to gain from sales or exchanges by the Trust of USRPIs and not designated by the Trust as capital gains dividends (as described above under “— United States Holders — Class B Shares”) will be treated as dividends of ordinary income, to the extent of the current or accumulated earnings and profits of the Trust. The Trust is generally required to withhold United States federal income tax at a rate of 30% on the gross amount of any such distributions made to a Non-U.S. Holder unless (i) a lower rate is provided for under an applicable tax treaty and the Non-U.S. Holder files the required form evidencing eligibility for that reduced rate with the Trust or (ii) the Non-U.S. Holder files an IRS Form W-8ECI (or successor form) with the Trust claiming that the distribution is effectively connected with the Non-U.S. Holder’s United States trade or business.

      If it cannot be determined at the time a distribution is made whether or not such distribution will be in excess of current or accumulated earnings and profits of the Trust, the distribution will generally be treated as a dividend for withholding purposes. However, amounts thus withheld are generally refundable if it is subsequently determined that such distribution was, in fact, in excess of current or accumulated earnings and profits of the Trust.

      Distributions to a Non-U.S. Holder that are attributable to gain from sales or exchanges by the Trust of USRPIs will cause the Non-U.S. Holder to be treated as recognizing such gain as income effectively connected with a United States trade or business. Non-U.S. Holders will thus generally be taxed at the same rates applicable to United States Holders. Also, such gain might be subject to a 30% branch profits tax in the hands of a Non-U.S. Holder that is a corporation and that is not entitled to a reduction or an exemption under a tax treaty.

      The Trust is required to withhold and remit to the Internal Revenue Service 35% of any distributions that are or could be designated as capital gains dividends. That amount is creditable against the Non-U.S. Holder’s United States federal income tax liability.

      If you are a Non-U.S. Holder, gain realized by you upon a sale or other disposition of Class B Shares generally will not be subject to United States federal income tax if:

•   the Trust qualifies as a “domestically controlled REIT”; or

•   the Class B Shares are “regularly traded” on an “established securities market” (within the meaning of applicable Treasury Regulations) at the time of the sale or other disposition and you did not beneficially or constructively hold more than 5% of the aggregate fair market value of the outstanding Class B Shares at any time during a specified period;

provided that, such gain will be subject to United States federal income tax if (i) you are a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of that disposition and certain other conditions are met or (ii) that gain is effectively connected with the conduct of a trade or business in the United States by you.

      For purposes of the foregoing, a “domestically controlled REIT” is defined generally as a REIT in which at all times during a specified testing period less than 50% in value of the stock was held directly or indirectly by foreign persons. The Corporation believes that the Trust currently qualifies as a domestically controlled REIT.

      If a dividend on a Class B Share, or gain recognized with respect to a sale or exchange of a Class B Share, is effectively connected with the conduct of a United States trade or business of a Non-U.S. Holder, such dividends or gain will be subject to United States federal income tax in the same manner as if the Non-U.S. Holder were a United States Holder and, in the case of a Non-U.S. Holder that is a corporation, the Non-U.S. Holder might be subject to an additional 30% branch profits tax on the amount of the dividend or gain.

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      The foregoing is only a brief overview of certain United States federal income tax rules applicable to Non-U.S. Holders of Class B Shares and does not purport to be a complete discussion of those rules. Potential investors in the notes are expected to consult their own tax advisors in that regard.

Information Reporting and Backup Withholding

      If you are a United States Holder of notes or Shares, information reporting requirements will generally apply to all payments made by us with respect to the notes or Shares and to the cash proceeds arising from a sale or exchange of the notes or Shares, in each case unless you are an exempt recipient such as a corporation. A backup withholding tax will apply to those payments at a current rate of 28% if you fail to provide a taxpayer identification number, or a certification of exempt status, or if you fail to report in full interest or dividend income.

      If you are a Non-U.S. Holder, in general you will not be subject to backup withholding and information reporting with respect to payments that we make to you provided that we do not have actual knowledge or reason to know that you are a United States Holder and you have given us the statement described above under “— Non-U.S. Holders — The Notes”. In addition, if you are a Non-U.S. Holder, you will not be subject to backup withholding or information reporting with respect to the proceeds arising from the sale of a note or Share within the United States or conducted through certain United States-related financial intermediaries if (1) the payor receives the statement described above and does not have actual knowledge or reason to know that you are a United States Holder or (2) you otherwise establish an exemption. However, we may be required to report annually to the Internal Revenue Service and to Non-U.S. Holders the amount of any interest or dividends paid to you as well as the amount of tax withheld (if any) from such amounts. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which you reside.

      Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished to the Internal Revenue Service.

Disclosure Authorization

      Effective as of the date of this prospectus, you and each of your employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the notes and all materials of any kind, relating to such tax treatment and tax structure.

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SELLING SECURITYHOLDERS

      The selling securityholders identified in the following table, including their respective donees, transferees, pledgees or other successors-in-interest, are offering for sale up to $360,000,000 aggregate principal amount of our notes and Shares issuable upon conversion of such notes. The aggregate proceeds to the selling securityholders from the sale of the notes and Shares offered hereby will be the purchase price of such notes or Shares, less any commissions or discounts. We will not receive any proceeds from the sale of the notes or Shares by the selling securityholders. We are registering the notes and Shares on behalf of the selling securityholders pursuant to a registration rights agreement entered into by us in connection with the original issuance, in a transaction not requiring registration under the Securities Act of 1933, to Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.

      The following table sets forth information, as of the date of this prospectus, relating to the beneficial ownership of the notes and Shares, without taking into account any adjustments in the conversion price of the notes, by each selling securityholder. This information is based upon information provided to us by the selling securityholders. The selling securityholders may have sold, transferred or otherwise disposed of all or any portion of their notes or Shares or acquired additional notes since the date on which they provided this information to us.

      Because the selling securityholders may offer all or any portion of the notes and/or Shares, we cannot estimate the number of notes and/or Shares that will be held by the selling securityholders upon termination of such sales.

	Aggregate
	Principal		Percentage			Number of		Percentage of
	Amount That		of Notes			Shares That		Shares
Name	May Be Sold		Outstanding			May Be Sold(1)		Outstanding(2)
AIG DKR Sound Shore Opportunity Holding Fund Ltd. c/o DKR Capital Partners Ltd.	$	2,500,000		*			50,000		*
Akela Capital Master Fund, Ltd.		5,000,000		1.39	%		100,000		*
Argent Classic Convertible Arbitrage Fund (Bermuda) Ltd.		3,700,000		1.03	%		74,000		*
Argent Classic Convertible Arbitrage Fund Ltd.		9,800,000		2.72	%		196,000		*
Argent LowLev Convertible Arbitrage Fund LLC		1,700,000		*			34,000		*
BBT Fund, L.P.		10,000,000		2.78	%		200,000		*
Bank Austria Cayman Island, Ltd. c/o Ramius Capital Group, LLC		1,000,000		*			20,000		*
BNP Paribas Equity Strategies, SNC		2,790,000		*			55,800		*
Concentrated Alpha Partners, L.P.		5,000,000		1.39	%		100,000		*
Continental Assurance Company		1,100,000		*			22,000		*
Continental Casualty Company		8,900,000		2.47	%		178,000		*
Cooperneff Convertible Strategies (Cayman) Master Fund L.P.		2,340,000		*			46,800		*
Gala Offshore Master Fund Ltd.		9,600,000		2.67	%		192,000		*
Guggenheim Portfolio Co. XV, LLC c/o Ramius Capital Group, LLC		700,000		*			14,000		*
JMG Capital Partners, LP		4,000,000		1.11	%		80,000		*
JMG Triton Offshore Fund, Ltd.		4,000,000		1.11	%		80,000		*
KBC Convertible Mac28 Ltd.		1,800,000		*			36,000		*
KBC Convertible Opportunities Fund		10,800,000		3.00	%		216,000		*
Lyxor/Gala II Fund Ltd.		2,700,000		*			54,000		*
Lyxor Master Fund c/o Argent		2,800,000		*			56,000		*
Man Convertible Bond Master Fund, Ltd. c/o Marin Capital Partners, LP		3,520,000		*			70,400		*
McMahan Securities Co. L.P.		2,000,000		*			40,000		*
Melody IAM Ltd.		1,500,000		*			30,000		*

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	Aggregate
	Principal		Percentage			Number of		Percentage of
	Amount That		of Notes			Shares That		Shares
Name	May Be Sold		Outstanding			May Be Sold(1)		Outstanding(2)
Nomura Securities Intl. Inc.(3)		18,500,000		5.14	%		370,000		*
Ramius MasterFund, Ltd. c/o Ramius Capital Group, LLC		2,350,000		*			47,000		*
Ramius Partners II, LP c/o Ramius Capital Group, LLC		200,000		*			4,000		*
RBC Alternative Assets, L.P. c/o Sage Capital		300,000		*			6,000		*
RCG Halifax Master Fund, Ltd. c/o Ramius Capital Group, LLC		500,000		*			10,000		*
RCG Latitude Master Fund, Ltd. c/o Ramius Capital Group, LLC		2,350,000		*			47,000		*
RCG Multi Strategy Master Fund, Ltd. c/o Ramius Capital Group, LLC		400,000		*			8,000		*
S.A.C. Capital Associates, LLC(4) c/o S.A.C. Capital Advisors LLC		6,000,000		1.67	%		120,000		*
Sage Capital		6,200,000		1.72	%		124,000		*
Singlehedge US Convertible Arbitrage Fund		468,000		*			9,360		*
St. Thomas Trading, Ltd. c/o Marin Capital Partners, LP		6,480,000		1.80	%		129,600		*
Sturgen Limited		396,000		*			7,920		*
Sunrise Limited Partnership		7,500,000		2.08	%		150,000		*
Wachovia Securities International Ltd. (5)		11,500,000		3.19	%		230,000		*
Xavex Convertible Arbitrage Fund 2 c/o Argent		500,000		*			10,000		*
Xavex Convertible Arbitrage Fund 5 c/o Ramius Capital Group, LLC		500,000		*			10,000		*
Zurich Institutional Benchmark Master Fund Ltd. c/o Argent		700,000		*			14,000		*
All other holders (6)		197,906,000		54.97	%		3,958,120		1.69	%
Total	$	360,000,000		100	%		7,200,000		3.58	%

*	Less than one percent.
(1)	The numbers of Shares beneficially owned and being offered, as set forth in the table, have been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, include the Shares into which the notes are convertible, and assume a conversion price of $50.00 per Share and the payment of cash in lieu of fractional shares. In addition, the conversion price of the notes may be adjusted under certain circumstances which will change the number of Shares received upon their conversion. See “Description of the Notes — Conversion Rights.”
(2)	Calculated based on Rule 13d-3(d)(i) of the Exchange Act, using 201,016,041 Shares outstanding as of June 30, 2003. In calculating this amount for each holder, we treated as outstanding the number of Shares issuable upon conversion of all of that holder’s notes, but we did not assume conversion of any other holder’s notes. Does not include Shares that may be issued by us upon redemption or purchase of the notes by us at the option of the holder.
(3)	Nomura Securities International, Inc. (“Nomura”) and affiliates have held positions in Starwood equity securities during the past three years which, in Nomura’s view, have not created a material relationship with Starwood regarding the control, management or policies of Starwood. Without expressing a view as to the materiality of this information, Nomura Corporate Research and Asset Management, Inc., an affiliate of Nomura Securities International, Inc. manages the Nomura Bond & Loan Fund, which held $750,000 face value of a loan issued by Starwood Hotels & Resorts.
(4)	S.A.C. Capital Associates, LLC is the beneficial owner of 20,600 Shares.
(5)	Affiliates of Wachovia Securities International Ltd. are currently performing and have in the past performed various investment banking, general financing and advisory services for us and our affiliates for which they receive customary fees and expenses.
(6)	Information concerning other selling securityholders, including current holders of the notes for which we have not received information regarding their holdings, will be included in supplements to the accompanying prospectus, if required. For the purposes of this table, we have assumed that such holders do not beneficially own any other Shares, other than the Shares issuable upon conversion of the notes.

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PLAN OF DISTRIBUTION

      The selling securityholders and their transferees, pledgees, donees and successors may sell the notes and the underlying Shares to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling securityholders or the purchasers. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or agent may be in excess of those customary in the types of transactions involved.

      The notes and the Shares may be sold in one or more transactions at:

•   fixed prices;

•   prevailing market prices at the time of sale;

•   prices related to the prevailing market prices;

•   varying prices determined at the time of sale; or

•   negotiated prices.

      In the case of the Shares, these sales may be effected in transactions:

•   on any national securities exchange or quotation service on which our Shares may be listed or quoted at the time of sale, including the New York Stock Exchange;

•   in the over-the-counter market;

•   otherwise than on such exchanges or services or in the over-the-counter market;

•   through the writing of options, whether the options are listed on an options exchange or otherwise; or

•   through the settlement of short sales.

      These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as agent on both sides of the trade.

      In connection with the sale of the notes and the underlying Shares or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers or other financial institutions. These broker-dealers or financial institutions may in turn engage in short sales of the Shares in the course of hedging the positions they assume with the selling securityholders. The selling securityholders may also sell the notes and the underlying Shares short and deliver these securities to close out such short positions, or loan or pledge the notes or the underlying Shares to broker-dealers that in turn may sell these securities.

      Selling securityholders may not sell any, or may not sell all, of the notes and Shares offered by them pursuant to this prospectus. In addition, we cannot assure you that a selling securityholder will not transfer, devise or gift the notes and underlying Shares by other means not described in this prospectus. Moreover, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A under the Securities Act may be sold thereunder, rather than pursuant to this prospectus.

      The aggregate proceeds to the selling securityholders from the sale of the notes or the underlying Shares offered pursuant to this prospectus will be the purchase price of such securities less discounts and commissions, if any. Each of the selling securityholders reserves the right to accept and, together with their agents from time to time, reject, in whole or in part, any proposed purchase of notes or Shares to be made directly or through their agents. We will not receive any of the proceeds from this offering.

      Our Shares are listed for trading on the New York Stock Exchange. We do not intend to list the notes for trading on any national securities exchange or automated quotation system and can give no assurance as to the development of any trading market for the notes.

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      In order to comply with the securities laws of some states, if applicable, the notes and the underlying Shares may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the notes may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and complied with.

      The selling securityholders and any broker-dealers, agents or underwriters that participate in the distribution of the notes and the underlying Shares may be deemed to be “underwriters” within the meaning of the Securities Act. In this case, any profits realized by the selling securityholders and any discounts, commissions or concessions received by these broker-dealers, agents or underwriters may be deemed to be underwriting discounts or commissions under the Securities Act. In addition, selling securityholders who are deemed to be “underwriters” will be subject to the prospectus delivery requirements of the Securities Act and may be subject to statutory liabilities, including, but not limited to, liabilities under Sections 11, 12 and 17 of the Securities Act.

      The selling securityholders and any other persons participating in the distribution of the notes and the underlying Shares will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder. Regulation M of the Exchange Act may limit the timing of purchases and sales of the notes and underlying Shares by the selling securityholders and any such other person. In addition, Regulation M may restrict the ability of any person participating in the distribution to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days prior to the commencement of the distribution. This may affect the marketability of the notes and the underlying Shares.

      With respect to a particular offering of the notes and the underlying Shares, to the extent required, an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement, of which this prospectus is a part, will set forth the following information:

•   the specific notes or Shares to be offered or sold;

•   the names of the selling securityholders;

•   the respective purchase prices and public offering prices and other material terms of the offering;

•   the names of any participating agents, broker-dealers or underwriters; and

•   any applicable commissions, discounts, concessions and other items constituting compensation from the selling securityholders.

      We entered into the registration rights agreement for the benefit of the holders of the notes to register their notes and the underlying Shares under applicable federal and state securities laws under certain circumstances and at certain times. The registration rights agreement provides that we and the selling securityholders will indemnify each other and our respective directors, officers and controlling persons against specific liabilities in connection with the offer and sale of the notes and underlying Shares, including liabilities under the Securities Act, or will be entitled to contribution in connection with those liabilities. We will pay all of our expenses and specified expenses incurred by the selling securityholders incidental to the registration, offering and sale of the notes and underlying Shares to the public, but each selling securityholder will be responsible for the payment of commissions, concessions, fees and discounts of underwriters, broker-dealers and agents. We estimate that the total expenses of this offering payable by us will be approximately $156,000.

      We will use our reasonable best efforts to keep the registration statement, of which this prospectus is a part, effective until the earlier of:

•   May 16, 2004, the date one year after the original issuance of the notes; and

•   the date all the notes and Shares covered by this prospectus have been sold.

      We are permitted to suspend the use of this prospectus under specified circumstances relating to pending corporate developments, public filings with the SEC and similar events for a period not to exceed

57

45 days in any 90-day period, but not to exceed an aggregate of 90 days for all periods in any 360-day period. In addition, notwithstanding the foregoing, we are permitted to suspend the use of this prospectus for up to 75 days in any 90-day period under certain circumstances relating to possible acquisitions, financings or other similar transactions. We will pay predetermined liquidated damages if this prospectus is unavailable for periods in excess of those permitted as described above.

LEGAL MATTERS

      Certain legal matters relating to the validity of the securities offered hereby have been passed upon for us by Sidley Austin Brown & Wood LLP, Chicago, Illinois, Venable, Baetjer and Howard, LLP, Baltimore, Maryland and Lionel Sawyer & Collins, Las Vegas, Nevada.

EXPERTS

      The consolidated financial statements and schedules of Starwood Hotels & Resorts Worldwide, Inc. and Starwood Hotels & Resorts (collectively, the “Company”) appearing in the Company’s Joint Annual Report on Form 10-K for the year ended December 31, 2002, as amended by the Company’s Joint Annual Report on Form 10-K/A for the year ended December 31, 2002, have been audited by Ernst & Young LLP, independent auditors, as set froth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements and schedules are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

58

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.      Other Expenses of Issuance and Distribution.

      The following table sets forth the expenses in connection with the distribution of the securities covered by this Registration Statement. All of the amounts, except the SEC registration Fee and the New York Stock Exchange subsequent listing fee, are estimated. All of the expenses will be borne by the Corporation and the Trust except as otherwise indicated.

SEC registration fee	$	29,124
New York Stock Exchange subsequent listing fee		1,900
Fees and expenses of legal counsel		50,000
Accounting fees and expenses		20,000
Fees and expenses of Trustee and counsel		10,000
Printing fees and expenses		40,000
Miscellaneous		5,000
Total	$	156,024

Item 15. Indemnification of Directors and Officers of the Corporation and the Trust.

      The Corporation’s charter requires the Corporation to indemnify its directors and officers to the fullest extent required or permitted by law and to indemnify other employees and agents to such extent as may be authorized by the board of directors. The Declaration of Trust of the Trust obligates the Trust to indemnify its trustees, officers, employees and other agents to the fullest extent permitted by Maryland law for the indemnification of corporate directors, officers, agents or employees. The Maryland General Corporation Law (the “MGCL”) requires a corporation and permits a Maryland real estate investment trust (a “Maryland REIT”) (unless its charter or declaration provides otherwise, which the charter of the Corporation and the Declaration of Trust of the Trust do not) to indemnify a director, trustee or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he is made a party by reason of his service in that capacity. The MGCL permits a corporation or Maryland REIT to indemnify its present and former directors, trustees and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director, trustee or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director, trustee or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director, trustee or officer had reasonable cause to believe that the act or omission was unlawful. However, under the MGCL, a Maryland corporation or a Maryland REIT may not indemnify for an adverse judgment in a suit by or in the right of the corporation or the Maryland REIT or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition, the MGCL permits a corporation or a Maryland REIT to advance reasonable expenses to a director, trustee or officer upon the receipt by the corporation or the Maryland REIT of (a) a written affirmation by the director, trustee or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by or on his behalf to repay the amount paid or reimbursed by the corporation or the Maryland REIT if it shall ultimately be determined that the standard of conduct was not met.

      The Corporation and the Trust have entered into indemnification agreements with their directors, trustees and executive officers providing for the maintenance of directors, trustees and officers liability

II-1

insurance, subject to certain conditions, and the indemnification of and advancement of expenses to such directors, trustees and executive officers.

Indemnification of Directors and Officers of the Guarantor.

      Sheraton Holding Corporation (f/k/a ITT Corporation) is organized under the laws of the State of Nevada. The Nevada General Corporation Law (the “NGCL”) authorizes Nevada corporations to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation), by reason of the fact that he is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director or officer of another corporation or other entity, against liability incurred in connection with such proceeding, including any appeal thereof, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In the case of an action by or on behalf of a corporation, indemnification may not be made if the person seeking indemnification is adjudged liable, unless the court in which such action was brought determines such person is fairly and reasonably entitled to indemnification.

      The indemnification provisions of the NGCL require indemnification if a director or officer has been successful on the merits or otherwise in defense of any action, suit or proceeding to which he was a party by reason of the fact that he is or was a director or officer of the corporation. The indemnification authorized under the NGCL is not exclusive and is in addition to any other rights granted to officers and directors under the Articles of Incorporation or By-laws of a corporation or any agreement between officers and directors and the corporation. A corporation may purchase and maintain insurance or furnish similar protection on behalf of any officer or director against any liability asserted against the officer or director and incurred by the officer or director in such capacity, or arising out of the status of officer or director of the corporation, whether or not the corporation would have the power to indemnify him against such liability under the NGCL.

      Article IV of the by-laws of Sheraton Holding Corporation require the Corporation, to the fullest extent permitted by applicable law as then in effect, to indemnify officers and directors against all expenses (including attorneys’ fees), judgments, fines, amounts paid in settlement actually and reasonably incurred in connection with any claim, action, suit or proceeding, whether civil, criminal, administrative or investigative. The right of indemnification provided in Article IV is not exclusive of any other rights to which any indemnified person may otherwise be entitled.

Item 16.      Exhibits.

      See Index to Exhibits.

Item 17.      Undertakings.

      (a) Each of the undersigned Registrants hereby undertakes that insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of such Registrant pursuant to the foregoing provisions, or otherwise, such Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-2

      (b) The undersigned Registrants hereby further undertake:

      (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

      (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

      (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

      (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;

provided, however, that paragraphs (b)(1)(i) and (b)(1)(ii) do not apply if the Registration Statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement.

      (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

      (c) The undersigned Registrants hereby further undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrants’ annual reports pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (d) The undersigned Registrants further undertake that:

      (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrants pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

      (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (e) The undersigned Registrants further undertake to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture

II-3

Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.

II-4

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of White Plains, State of New York, on this 8th day of July, 2003.

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

By:  /s/ RONALD C. BROWN

Ronald C. Brown

Executive Vice President

and Chief Financial Officer

POWERS OF ATTORNEY

      Each person whose signature to this Registration Statement appears below hereby appoints Barry S. Sternlicht, Ronald C. Brown and Kenneth S. Siegel, and each of them, as his or her attorneys-in-fact, with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in the capacity stated below, and to file, all further amendments to this Registration Statement, which amendments may make such further changes in and additions to this Registration Statement as such attorneys-in-fact may deem necessary or appropriate.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ BARRY S. STERNLICHT Barry S. Sternlicht	Chairman, Chief Executive Officer and Director (Principal Executive Officer)	July 8, 2003
/s/ RONALD C. BROWN Ronald C. Brown	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	July 8, 2003
/s/ CHARLENE BARSHEFSKY Charlene Barshefsky	Director	June 18, 2003
/s/ JEAN-MARIE CHAPUS Jean-Marc Chapus	Director	June 24, 2003
/s/ BRUCE W. DUNCAN Bruce W. Duncan	Director	July 8, 2003
/s/ ERIC HIPPEAU Eric Hippeau	Director	July 8, 2003

II-5

Signature	Title	Date
/s/ GEORGE J. MITCHELL George J. Mitchell	Director	July 8, 2003
/s/ STEPHEN R. QUAZZO Stephen R. Quazzo	Director	July 8, 2003
/s/ THOMAS O. RYDER Thomas O. Ryder	Director	June 16, 2003
/s/ DANIEL W. YIH Daniel W. Yih	Director	July 8, 2003
/s/ DR. KNEELAND C. YOUNGBLOOD Dr. Kneeland C. Youngblood	Director	July 8, 2003

II-6

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of White Plains, State of New York, on this 8th day of July, 2003.

STARWOOD HOTELS & RESORTS

By:  /s/ RONALD C. BROWN

Ronald C. Brown

Vice President, Chief Financial

Officer and Chief Accounting Officer

POWERS OF ATTORNEY

      Each person whose signature to this Registration Statement appears below hereby appoints Barry S. Sternlicht, Ronald C. Brown and Kenneth S. Siegel, and each of them, as his or her attorneys-in-fact, with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in the capacity stated below, and to file, all further amendments to this Registration Statement, which amendments may make such further changes in and additions to this Registration Statement as such attorneys-in-fact may deem necessary or appropriate.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ BARRY S. STERNLICHT Barry S. Sternlicht	Chairman, Chief Executive Officer and Trustee (Principal Executive Officer)	July 8, 2003
/s/ RONALD C. BROWN Ronald C. Brown	Vice President, Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer)	July 8, 2003
/s/ CHARLENE BARSHEFSKY Charlene Barshefsky	Trustee	June 18, 2003
/s/ JEAN-MARC CHAPUS Jean-Marc Chapus	Trustee	June 24, 2003
/s/ BRUCE W. DUNCAN Bruce W. Duncan	Trustee	July 8, 2003
/s/ ERIC HIPPEAU Eric Hippeau	Trustee	July 8, 2003
/s/ GEORGE J. MITCHELL George J. Mitchell	Trustee	July 8, 2003

II-7

Signature	Title	Date
/s/ STEPHEN R. QUAZZO Stephen R. Quazzo	Trustee	July 8, 2003
/s/ THOMAS O. RYDER Thomas O. Ryder	Trustee	June 16, 2003
/s/ DANIEL W. YIH Daniel W. Yih	Trustee	July 8, 2003
/s/ DR. KNEELAND C. YOUNGBLOOD Dr. Kneeland C. Youngblood	Trustee	July 8, 2003

II-8

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of White Plains, State of New York, on this 8th day of July, 2003.

SHERATON HOLDING CORPORATION

By:  /s/ ALAN M. SCHNAID

Alan M. Schnaid

Vice President and Assistant Treasurer

POWERS OF ATTORNEY

      Each person whose signature to this Registration Statement appears below hereby appoints Barry S. Sternlicht, Ronald C. Brown and Kenneth S. Siegel, and each of them, as his or her attorneys-in-fact, with full power of substitution and resubstitution, to execute in the name and on behalf of such person, individually and in the capacity stated below, and to file, all further amendments to this Registration Statement, which amendments may make such further changes in and additions to this Registration Statement as such attorneys-in-fact may deem necessary or appropriate.

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ THEODORE W. DARNALL Theodore W. Darnall	President (Principal Executive Officer)	July 8, 2003
/s/ ALAN M. SCHNAID Alan M. Schnaid	Vice President and Assistant Treasurer (Principal Financial and Accounting Officer)	July 8, 2003
/s/ BARRY S. STERNLICHT Barry S. Sternlicht	Director	July 8, 2003

II-9

INDEX TO EXHIBITS

Exhibit
No.			Description of Exhibit
	4	.1	Charter of the Corporation, amended and restated as of February 1, 1995, as amended through March 26, 1999 (incorporated by reference to Exhibit 3.2 to the Corporation’s and the Trust’s Joint Annual Report on Form 10-K for the year ended December 31, 1998, as amended by the Form 10-K/A filed May 17, 1999).
	4	.2	Amended and Restated Declaration of Trust of the Trust, as amended and restated through April 16, 1999 (incorporated by reference to Exhibit 3.1 to the Corporation’s and the Trust’s Joint Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
	4	.3	Restated Articles of Incorporation, as amended through October 13, 2000, of Sheraton Holding Corporation (incorporated by reference to Exhibit 3.3 of the Corporation’s and Sheraton Holding Corporation’s Registration Statement on Form S-4 filed with the SEC on November 19, 2002 (Registration Nos. 333-101310 and 333-333-101310-01) (the “2002 S-4”).
	4	.4	Bylaws of the Corporation, as amended through April 15, 1999 (incorporated by reference to Exhibit 3 to the Corporation’s and the Trust’s Joint Current Report on Form 8-K dated March 15, 1999).
	4	.5	Bylaws of the Trust, as amended through April 16, 1999 (incorporated by reference to Exhibit 3.3 to the Corporation’s and the Trust’s Joint Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1999).
	4	.6	Amended and Restated By-laws, as amended through July 23, 1996, of Sheraton Holding Corporation (incorporated by reference to Exhibit 3.4 to the 2002 S-4).
	4	.7	Amended and Restated Intercompany Agreement, dated as of January 6, 1999, between the Corporation and the Trust (incorporated by reference to Exhibit 3 to the Trust’s Registration Statement on Form 8-A filed with the Commission on December 21, 1998, except that on January 6, 1999, the Intercompany Agreement was executed and dated as of January 6, 1999).
	4	.8	Rights Agreement, dated as of March 15, 1999, between the Corporation and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (incorporated by reference to Exhibit 4 to the Corporation’s and the Trust’s Joint Current Report on Form 8-K dated March 15, 1999).
	4	.9	Indenture dated May 16, 2003 between the Corporation, the Trust, the Guarantor and U.S. Bank National Association as trustee.
	4	.10	Registration Rights Agreement, dated May 16, 2003, among the Corporation, the Guarantor and the Initial Purchasers.
	4	.11	Form of Convertible Note.
	5	.1	Opinion of Sidley Austin Brown & Wood LLP.
	5	.2	Opinion of Venable, Baetjer and Howard LLP.
	5	.3	Opinion of Lionel Sawyer & Collins.
	8	.1	Opinion of Sidley Austin Brown & Wood LLP.
	12	.1	Computation of Consolidated Ratios of Earnings to Fixed Charges.
	23	.1	Consent of Ernst & Young LLP.
	23	.2	Consent of Sidley Austin Brown & Wood LLP (included in Exhibit 5.1).
	23	.3	Consent of Venable, Baetjer and Howard LLP (included in Exhibit 5.2).
	23	.4	Consent of Lionel Sawyer & Collins (included in Exhibit 5.3).
	24	.1	Powers of Attorney (included in the signature pages of this Registration Statement).
	25	.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of the trustee under the Indenture.

EX-4.9

                                                                     Exhibit 4.9

                   STARWOOD HOTELS & RESORTS WORLDWIDE, INC.,

                                   AS ISSUER,

                           STARWOOD HOTELS & RESORTS,

                          SHERATON HOLDING CORPORATION,

                                  AS GUARANTOR,

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION

                                   AS TRUSTEE

                                    INDENTURE

                            Dated as of May 16, 2003

             $300,000,000 3.50% CONVERTIBLE SENIOR NOTES DUE 2023(1)

- -----------------------------------
(1)      Plus an option to purchase up to $60,000,000 additional Principal
         Amount of such 3.50% Convertible Senior Notes due 2023 from the Issuer.



                                                                                                             
                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.   Definitions...................................................................................   1
SECTION 1.02.   Intentionally Omitted.........................................................................   9
SECTION 1.03.   Incorporation by Reference of Trust Indenture Act.............................................   9
SECTION 1.04.   Rules of Construction.........................................................................   9

                                    ARTICLE 2

                                 THE SECURITIES

SECTION 2.01.   Form of Securities............................................................................  10
SECTION 2.02.   Title and Terms...............................................................................  10
SECTION 2.03.   Denominations.................................................................................  11
SECTION 2.04.   Forms Generally...............................................................................  11
SECTION 2.05.   Execution, Authentication and Delivery........................................................  11
SECTION 2.06.   Registrar and Paying Agent....................................................................  12
SECTION 2.07.   Transfer and Exchange.........................................................................  13
SECTION 2.08.   Replacement Securities........................................................................  14
SECTION 2.09.   Outstanding Securities........................................................................  14
Section 2.10.   Temporary Securities; Exchange of Global Security for Definitive Securities...................  14
SECTION 2.11.   Book-entry Provisions for Global Securities...................................................  15
SECTION 2.12.   Cancellation..................................................................................  16
SECTION 2.13.   Special Transfer Provisions...................................................................  16
SECTION 2.14.   CUSIP Numbers.................................................................................  19
SECTION 2.15.   Legend on Restricted Securities...............................................................  19
SECTION 2.16.   Tax Treatment of Securities...................................................................  20
SECTION 2.17.   Payment of Interest; Interest Rights Preserved................................................  20

                                    ARTICLE 3

                                   REDEMPTION

SECTION 3.01.   Notices to Trustee............................................................................  21
SECTION 3.02.   Selection of Securities To Be Redeemed........................................................  22
SECTION 3.03.   Notice of Redemption..........................................................................  22
SECTION 3.04.   Effect of Notice of Redemption................................................................  23
SECTION 3.05.   Deposit of Redemption Price...................................................................  23
SECTION 3.06.   Securities Redeemed in Part...................................................................  23
SECTION 3.07.   Intentionally Omitted.........................................................................  24
SECTION 3.08.   Purchase of Securities at Option of the Holder................................................  24
SECTION 3.09.   Repurchase of Securities at Option of the Holder upon Change in Control.......................  29
SECTION 3.10.   Effect of Purchase Notice or Change in Control Purchase Notice................................  32
SECTION 3.11.   Deposit of Purchase Price or Change in Control Purchase Price.................................  33



                                        i



                               TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                             
SECTION 3.12.   Securities Purchased or Repurchased in Part...................................................   33
SECTION 3.13.   Covenant to Comply With Securities Laws Upon Purchase or Repurchase of Securities.............   33
SECTION 3.14.   Repayment to the Issuer.......................................................................   33
SECTION 3.15.   Redemption or Repurchase Upon Trust Assumption Event..........................................   34

                                    ARTICLE 4

                                    COVENANTS

SECTION 4.01.   Payment of Securities.........................................................................   37
SECTION 4.02.   Financial Information; SEC Reports............................................................   38
SECTION 4.03.   Corporate Existence...........................................................................   38
SECTION 4.04.   Restrictions on Liens.........................................................................   38
SECTION 4.05.   Sale and Leaseback Transaction................................................................   40
SECTION 4.06.   [Intentionally Omitted].......................................................................   40
SECTION 4.07.   [Intentionally Omitted].......................................................................   40
SECTION 4.08.   Compliance Certificate........................................................................   40
SECTION 4.09.   Further Instruments and Acts..................................................................   41
SECTION 4.10.   [Intentionally Omitted].......................................................................   41
SECTION 4.11.   [Intentionally Omitted].......................................................................   41
SECTION 4.12.   Designation of Subsidiaries...................................................................   41

                                    ARTICLE 5

                               SUCCESSOR COMPANIES

SECTION 5.01.   Merger and Consolidation......................................................................   41

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

SECTION 6.01.   Events of Default.............................................................................   42
SECTION 6.02.   Acceleration..................................................................................   43
SECTION 6.03.   Other Remedies................................................................................   44
SECTION 6.04.   Waiver of Past Defaults.......................................................................   44
SECTION 6.05.   Control by Majority...........................................................................   44
SECTION 6.06.   Limitation on Suits...........................................................................   44
SECTION 6.07.   Rights of Holders to Receive Payment..........................................................   45
SECTION 6.08.   Collection Suit by Trustee....................................................................   45
SECTION 6.09.   Trustee May File Proofs of Claim..............................................................   45
SECTION 6.10.   Priorities....................................................................................   45
SECTION 6.11.   Undertaking for Costs.........................................................................   46
SECTION 6.12.   Waiver of Stay or Extension Laws..............................................................   46

                                    ARTICLE 7

                                     TRUSTEE

SECTION 7.01.   Duties of Trustee.............................................................................   46


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                               TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                             
SECTION 7.02.   Rights of Trustee.............................................................................   47
SECTION 7.03.   Individual Rights of Trustee..................................................................   48
SECTION 7.04.   Trustee's Disclaimer..........................................................................   48
SECTION 7.05.   Notice of Defaults............................................................................   48
SECTION 7.06.   Reports by Trustee to Holder..................................................................   48
SECTION 7.07.   Compensation and Indemnity....................................................................   49
SECTION 7.08.   Replacement of Trustee........................................................................   49
SECTION 7.09.   Successor Trustee by Merger...................................................................   50
SECTION 7.10.   Eligibility; Disqualification.................................................................   50
SECTION 7.11.   Preferential Collection of Claims Against Issuer..............................................   51

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

SECTION 8.01.   Discharge of Liability on Securities..........................................................   51
SECTION 8.02.   Application of Trust Money....................................................................   51
SECTION 8.03.   Repayment to Issuer...........................................................................   52

                                    ARTICLE 9

                                   AMENDMENTS

SECTION 9.01.   Without Consent of Holders....................................................................   52
SECTION 9.02.   With Consent of Holders.......................................................................   52
SECTION 9.03.   Compliance with Trust Indenture Act...........................................................   53
SECTION 9.04.   Revocation and Effect of Consents and Waivers.................................................   53
SECTION 9.05.   Notation on or Exchange of Securities.........................................................   54
SECTION 9.06.   Trustee To Sign Amendments....................................................................   54
SECTION 9.07.   Waiver of Certain Conditions..................................................................   54

                                   ARTICLE 10

                             [INTENTIONALLY OMITTED]

                                   ARTICLE 11

                                   CONVERSION

SECTION 11.01.   Conversion Privilege.........................................................................   55
SECTION 11.02.   Conversion Procedure.........................................................................   57
SECTION 11.03.   Fractional Shares............................................................................   59
SECTION 11.04.   Taxes on Conversion..........................................................................   59
SECTION 11.05.   Issuer to Provide Stock......................................................................   59
SECTION 11.06.   Adjustment for Change In Capital Stock.......................................................   59
SECTION 11.07.   Adjustment for Rights Issue..................................................................   60
SECTION 11.08.   Adjustment for Other Distributions...........................................................   61
SECTION 11.09.   When Adjustment May Be Deferred..............................................................   62
SECTION 11.10.   When No Adjustment Required..................................................................   62
SECTION 11.11.   Notice of Adjustment.........................................................................   63


                                      iii



                               TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                             
SECTION 11.12.   Voluntary Increase...........................................................................   63
SECTION 11.13.   Notice of Certain Transactions...............................................................   63
SECTION 11.14.   Reorganization of Issuer; Special Distributions..............................................   63
SECTION 11.15.   Issuer Determination Final...................................................................   64
SECTION 11.16.   Trustee's Adjustment Disclaimer..............................................................   64
SECTION 11.17.   Simultaneous Adjustments.....................................................................   64
SECTION 11.18.   Successive Adjustments.......................................................................   65
SECTION 11.19.   Rights Issued in Respect of Shares Issued Upon Conversion....................................   65
SECTION 11.20.   Restriction on Shares Issued Upon Conversion.................................................   65
SECTION 11.21.   Conversion Adjustments Upon Share Separation.................................................   66

                                   ARTICLE 12

                               SECURITY GUARANTEES

SECTION 12.01.   Security Guarantee...........................................................................   68
SECTION 12.02.   Limitation on Guarantor Liability............................................................   69
SECTION 12.03.   Delivery of Guarantee........................................................................   69
SECTION 12.04.   Guarantor May Consolidate, etc. on Certain Terms.............................................   69
SECTION 12.05.   Release......................................................................................   70
SECTION 12.06.   Trust Guarantee..............................................................................   70

                                   ARTICLE 13

                                  MISCELLANEOUS

SECTION 13.01.   Trust Indenture Act Controls.................................................................   71
SECTION 13.02.   Notices......................................................................................   71
SECTION 13.03.   Communication by Holders with Other Holders..................................................   72
SECTION 13.04.   Certificate and Opinion as to Conditions Precedent...........................................   72
SECTION 13.05.   Statements Required in Certificate or Opinion................................................   72
SECTION 13.06.   When Securities Disregarded..................................................................   73
SECTION 13.07.   Rules by Trustee, Paying Agent and Registrar.................................................   73
SECTION 13.08.   Legal Holidays...............................................................................   73
SECTION 13.09.   Governing Law................................................................................   73
SECTION 13.10.   No Recourse Against Others...................................................................   73
SECTION 13.11.   Successors...................................................................................   73
SECTION 13.12.   Multiple Originals...........................................................................   73
SECTION 13.13.   Table of Contents;  Headings.................................................................   73
SECTION 13.14.   Severability.................................................................................   73

EXHIBIT A:  FORM OF SECURITY..................................................................................  A-1
EXHIBIT B:  FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM GLOBAL SECURITY OR DEFINITIVE SECURITY TO
         DEFINITIVE SECURITY..................................................................................  B-1


                                     iv



                               TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                             
EXHIBIT C: FORM OF NON-DISTRIBUTION LETTER FOR INSTITUTIONAL ACCREDITED INVESTORS.............................   C-1
EXHIBIT D: FORM OF PURCHASE NOTICE............................................................................   D-1
EXHIBIT E: FORM OF CHANGE IN CONTROL PURCHASE NOTICE..........................................................   E-1
EXHIBIT F: FORM OF TRANSFER CERTIFICATE FOR TRANSFER OF RESTRICTED SHARES.....................................   F-1
EXHIBIT G: ISSUER'S PROJECTED PAYMENT SCHEDULE ...............................................................   G-1


                                       v



                  INDENTURE, dated as of May 16, 2003, by and among, STARWOOD
HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation (the "Issuer" or the
"Company"), STARWOOD HOTELS & RESORTS, a Maryland real estate investment trust
and a subsidiary of the Issuer (the "Trust"), SHERATON HOLDING CORPORATION (the
"Guarantor") and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
as trustee (the "Trustee").

                  Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Issuer's
3.50% Convertible Senior Notes due 2023 (the "Securities"):

                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

                  SECTION 1.01.  Definitions.

                  "Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

                  "Agent Members" has the meaning specified in Section 2.11.

                  "Average Quoted Price" has the meaning specified in Section
11.01.

                  "Bankruptcy Law" has the meaning specified in Section 6.01.

                  "Bid Solicitation Agent" means a bid solicitation agent
appointed by the Issuer to act in such capacity pursuant to the paragraph
entitled "Contingent Interest" of the Securities, which initially shall be the
Trustee.

                  "Board of Directors" means the Board of Directors of the
Issuer or any committee thereof duly authorized to act on behalf of the Board of
Directors of the Issuer.

                  "Business Day" means each day which is not a Legal Holiday.

                  "Capitalized Lease-Back Obligation" means the total net rental
obligations of the Issuer or a Restricted Subsidiary under any lease entered
into as part of a Sale and Lease-Back Transaction involving a Principal Property
discounted to present value at the rate of 9% per annum.

                  "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities convertible
into such equity.

                                       1


                  "Change in Control" has the meaning specified in Section 3.09.

                  "Change in Control Notice" has the meaning specified in
Section 3.09.

                  "Change in Control Notice Date" has the meaning specified in
Section 3.09.

                  "Change in Control Purchase Date" has the meaning specified in
Section 3.09.

                  "Change in Control Purchase Notice" has the meaning specified
in Section 3.09.

                  "Change in Control Purchase Price" has the meaning specified
in Section 3.09.

                  "Class B Shares" means Class B Shares, $.01 par value per
share, of the Trust as such shares exist on the date of this Indenture or any
other shares of Capital Stock of the Trust into which the Class B Shares shall
be reclassified or changed.

                  "Clearstream" has the meaning specified in Section 2.01.

                  "Closing Date" means the date of this Indenture.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Company" means Starwood Hotels & Resorts Worldwide, Inc., a
Maryland corporation, until a successor Person shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
instead mean such successor Person.

                  "Consolidated Net Tangible Assets" means the total of all
assets appearing on a consolidated balance sheet of the Issuer and its
Restricted Subsidiaries prepared in accordance with accounting principles
generally accepted in the United States as of a date not more than 90 days prior
to the date as of which Consolidated Net Tangible Assets are to be determined,
but excluding (i) the book amount of all segregated intangible assets, (ii) all
depreciation, valuation and other reserves, (iii) current liabilities, (iv) any
minority interest in the stock and surplus of Restricted Subsidiaries, (v)
investments in subsidiaries which are not Restricted Subsidiaries, (vi) deferred
income and deferred liabilities, and (vii) other items deductible under
generally accepted accounting principles.

                  "Contingent Debt Regulations" has the meaning specified in
Section 2.16.

                  "Contingent Interest" has the meaning specified in the
paragraph entitled "Contingent Interest" of the Securities.

                  "Conversion Agent" means the Trustee or such other office or
agency designated by the Issuer where Securities may be presented for
conversion.

                  "Conversion Date" has the meaning specified in Section 11.02.

                                       2


                  "Conversion Price" means with respect to a Security, as of the
date of determination, the quotient of (i) the Principal Amount divided by (ii)
the Conversion Rate in effect on such date.

                  "Conversion Rate" has the meaning specified in Section 11.01.

                  "Corporate Trust Office" means the office of the Trustee
specified in Section 13.02.

                  "Corporation Note" means a Security, exclusive of any rights
of the guarantee of the Guarantor provided for in Section 12.01 and the Trust
Guarantee.

                  "Corporation Shares" means shares of common stock, $.01 par
value per share, of the Issuer as such shares exist on the date of this
Indenture or any other shares of Capital Stock of the Issuer into which the
Corporation Shares shall be reclassified or changed.

                  "Custodian" has the meaning specified in Section 6.01.

                  "Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.

                  "Defaulted Interest" has the meaning specified in Section
2.17.

                  "Definitive Securities" has the meaning specified in Section
2.01.

                  "Depositary" means, with respect to the Securities issuable in
whole or in part in global form, the Person specified pursuant to Section 2.01
hereof as the initial Depositary with respect to the Securities, until a
successor shall have been appointed and become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall instead mean or
include such successor.

                  "Dollar" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debt.

                  "Euroclear" has the meaning specified in Section 2.01.

                  "Event of Default" has the meaning specified in Section 6.01.

                  "Ex-Dividend Time" has the meaning specified in Section 11.01.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Excluded Person" has the meaning specified in Section 3.09.

                  "Extraordinary Cash Dividend" has the meaning specified in
Section 11.08.

                  "Funded Debt" as applied to any corporation means all
indebtedness incurred, created, assumed or guaranteed by such corporation, or
upon which it customarily pays interest charges, which matures, or is renewable
by such corporation to a date, more than one year after

                                       3


the date as of which Funded Debt is being determined; provided, however, that
the term "Funded Debt" shall not include (i) indebtedness incurred in the
ordinary course of business representing borrowings, regardless of when payable,
of such corporation from time to time against, but not in excess of the face
amount of, its installment accounts receivable for the sale of appliances and
equipment sold in the regular course of business or (ii) advances for
construction and security deposits received by such corporation in the ordinary
course of business.

                  "GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, including those
principles set forth in (i) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants, (ii)
statements and pronouncements of the Financial Accounting Standards Board, (iii)
such other statements by such other entity as approved by a significant segment
of the accounting profession and (iv) the rules and regulations of the SEC
governing the inclusion of financial statements (including pro forma financial
statements) in periodic reports required to be filed pursuant to Section 13 of
the Exchange Act, including opinions and pronouncements in staff accounting
bulletins and similar written statements from the accounting staff of the SEC.
All computations based on GAAP contained in this Indenture shall be computed in
conformity with GAAP.

                  "Global Security" has the meaning specified in Section 2.01.

                  "Guarantor" means Sheraton Holding Corporation, a Nevada
corporation, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Guarantor" shall
instead mean such successor Person.

                  "Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.

                  "Indebtedness" means bonds, debentures, notes and other
instruments representing obligations created or assumed by such Person for the
repayment of money borrowed (other than unamortized debt discount or premium).
All indebtedness secured by a lien upon property owned by such Person or any
Subsidiary and upon which indebtedness such Person customarily pays interest,
although such Person has not assumed or become liable for the payment of such
indebtedness, shall for all purposes hereof be deemed to be indebtedness of such
Person. All indebtedness for money borrowed incurred by other persons which is
directly guaranteed as to payment of principal by such Person shall for all
purposes hereof be deemed to be indebtedness of, but no other contingent
obligation of any such Person in respect of indebtedness incurred by other
Persons shall for any purpose be deemed indebtedness of such Person.

                  "Indenture" means this Indenture as amended or supplemented
from time to time and includes the terms of Securities established as
contemplated by Section 2.01.

                  "Initial Purchasers" means Banc of America Securities LLC,
Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.

                  "Interest Payment Date" has the meaning specified in Section
2.02.

                                       4


                  "Issue Date" means the date the Securities are originally
issued or deemed issued as set forth on the face of the Security under this
Indenture.

                  "Issue Price" of any Security means, in connection with the
original issuance of such Security, the issue price as set forth on the face of
the Security.

                  "Issuer" means the party named as such in this Indenture until
a successor replaces it and, thereafter, instead means the successor and, for
purposes of any provision contained herein and required by the Trust Indenture
Act, each other obligor on the indenture securities.

                  "Issuer's Notice" has the meaning specified in Section 3.08.

                  "Issuer's Notice Date" has the meaning specified in Section
3.08.

                  "Legal Holiday" has the meaning specified in Section 13.08.

                  "Market Price" has the meaning specified in Section 3.08.

                  "Maturity", when used with respect to any Security, means the
date on which the principal, Purchase Price or Change in Control Purchase Price
of such Security becomes due and payable as therein or herein provided, whether
at the Stated Maturity, on a Redemption Date, Purchase Date or Change in Control
Purchase Date, or by declaration of acceleration or otherwise.

                  "Non-Global Purchasers" has the meaning specified in Section
2.01.

                  "Notice of Default" has the meaning specified in Section 6.01.

                  "Offering Memorandum" means the offering memorandum relating
to the Securities dated May 9, 2003.

                  "Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer, an Assistant or Deputy Treasurer or the Secretary or an Assistant
Secretary of the Issuer.

                  "Officers' Certificate" means a certificate signed by two
Officers.

                  "Opinion of Counsel" means a written opinion from legal
counsel. The counsel may be an employee of or counsel to the Issuer or the
Trustee.

                  "Paying Agent" has the meaning specified in Section 2.06.

                  "Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.

                  "Principal Amount" of any Security means the Principal Amount
as set forth on the face of the Security.

                                       5


                  "Principal Property" means any single property owned by the
Issuer or any Restricted Subsidiary having a gross book value in excess of 2% of
Consolidated Net Tangible Assets, except any such property or portion thereof
which the Board of Directors by resolution declares is not of material
importance to the total business conducted by the Issuer and its Restricted
Subsidiaries as an entirety.

                  "protected purchaser" has the meaning specified in Section
2.08.

                  "Purchase Agreement" means the Purchase Agreement dated May 9,
2003, among the Issuer and the Initial Purchasers.

                  "Purchase Date" has the meaning specified in Section 3.08.

                  "Purchase Notice" has the meaning specified in Section 3.08.

                  "Purchase Price" has the meaning specified in Section 3.08.

                  "QIBs" has the meaning specified in Section 2.01.

                  "Rating Event" has the meaning specified in Section 11.21.

                  "Redemption Date" shall mean the date specified for redemption
of the Securities in accordance with the terms of the Securities and Article 3
hereof.

                  "Redemption Price" has the meaning specified in the
Securities.

                  "Registrar" has the meaning specified in Section 2.06.

                  "Registration Rights Agreement" means the Registration Rights
Agreement dated May 16, 2003, among the Issuer, the Guarantor and the Initial
Purchasers.

                  "Regular Record Date" has the meaning specified in Section
10.01.

                  "Regulation S" means Regulation S under the Securities Act.

                  "Restricted Security" has the meaning specified in Section
2.15.

                  "Restricted Securities Legend" means the legend labeled as
such and that is set forth in Exhibit A hereto.

                  "Restricted Subsidiary" means any subsidiary other than an
Unrestricted Subsidiary.

                  "Rights" has the meaning specified in Section 11.19.

                  "Rights Agreement" has the meaning specified in Section 11.19.

                  "Rule 144A" has the meaning specified in Section 2.01.

                                       6


                  "Sale and Lease-Back Transaction" has the meaning specified in
Section 4.05.

                  "Sale Price" has the meaning specified in Section 3.08.

                  "SEC" means the Securities and Exchange Commission.

                  "Securities" has the meaning specified in the second paragraph
of this Indenture.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depositary) or any successor thereto, who
shall initially be the Trustee.

                  "Security Conversion Tax Interest" has the meaning specified
in Section 11.02.

                  "Senior Credit Facility" means the Credit Agreement, dated
October 9, 2002, among the Company, certain additional alternative currency
revolving loan borrowers and various lenders, Deutsche Bank, AG, New York
Branch, as Administrative Agent, JP Morgan Chase Bank, as Syndication Agent,
Bank of America, N.A., Fleet National Bank and Societe Generale, as
Co-Documentation Agents, and Deutsche Bank Securities Inc. and JP Morgan
Securities Inc. as Co-Lead Arrangers and joint Book Running Managers, as such
agreement has been or hereafter may be amended in accordance with its terms.

                  "Share" means an attached unit consisting of one Corporation
Share and one Class B Share; provided that upon the occurrence of a Share
Separation, the term "Share" shall mean a Corporation Share; provided further
that upon the occurrence of a Trust Assumption Event, the term "Share" shall
mean a Class B Share.

                  "Share Separation" has the meaning specified in Section 11.21.

                  "Shelf Registration" shall have the meaning set forth in the
Registration Rights Agreement.

                  "Significant Subsidiary" means any subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.

                  "Special Record Date" has the meaning specified in Section
2.17.

                  "Stated Maturity," when used with respect to any Security,
means the date specified in such Security as the fixed date on which an amount
equal to Principal Amount thereof or any installment of interest thereon is due
and payable.

                  "Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof

                                       7


is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.

                  "Successor Company" has the meaning specified in Section 5.01.

                  "trading day" has the meaning specified in Section 11.01.

                  "Time of Determination" has the meaning specified in Section
11.01.

                  "Trust" has the meaning specified in the first paragraph of
this Indenture.

                  "Trust Assumption Event" has the meaning specified in Section
11.21.

                  "Trust Assumption Event Notice" has the meaning specified in
Section 3.15(d).

                  "Trust Assumption Event Notice Date" has the meaning specified
in Section 3.15(d).

                  "Trust Assumption Event Purchase Date" has the meaning
specified in Section 3.15(b).

                  "Trust Assumption Event Purchase Price" has the meaning
specified in Section 3.15(b).

                  "Trust Assumption Event Redemption Date" has the meaning
specified in Section 3.15(a).

                  "Trust Assumption Event Redemption Price" has the meaning
specified in the paragraph entitled "Redemption at Option of Issuer" of the
Securities.

                  "Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, instead means the successor.

                  "Trust Guarantee" has the meaning specified in Section 12.06.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bb) in effect on the Closing Date.

                  "Trust Officer" means any Vice President, Assistant Vice
President or any other officer or assistant officer of the Trustee assigned by
the Trustee to administer its corporate trust matters.

                  "Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.

                  "United States National Securities Exchange" means the Nasdaq
National Market System, the New York Stock Exchange or the American Stock
Exchange, or any successor securities exchange thereto.

                                       8


                  "Unrestricted Subsidiary" mean (i) any subsidiary 50% or less
of the voting stock of which is owned directly by the Issuer and/or one or more
Restricted Subsidiaries or (ii) any Subsidiary designated as an Unrestricted
Subsidiary by the Board of Directors.

                  SECTION 1.02. Intentionally Omitted.

                  SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the Trust
Indenture Act, which are incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms have the following meanings:

                  "indenture securities" means the Securities.

                  "indenture security holder" means a Holder or Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture trustee" or "institutional trustee" means the
Trustee.

                  "obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.

                  All other terms used in this Indenture that are defined by the
Trust Indenture Act, defined by Trust Indenture Act reference to another statute
or defined by SEC rule have the meanings assigned to them by such definitions.

                  SECTION 1.04. Rules of Construction.

                  Unless the context otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  (3) "or" is not exclusive;

                  (4) "including" means including without limitation;

                  (5) words in the singular include the plural and words in the
         plural include the singular; and

                  (6) Section references are to Sections of this Indenture
         unless the context otherwise requires; and

                  (7) the principal amount of any non-interest bearing or other
         discount security at any date shall be the principal amount thereof
         that would be shown on a balance sheet of the issuer dated such date
         prepared in accordance with GAAP.

                                       9


                                   ARTICLE 2

                                 THE SECURITIES

                  SECTION 2.01. Form of Securities. The Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A which is hereby incorporated in and expressly made a part of this
Indenture.

                  The Securities offered and sold to "qualified institutional
buyers" as defined in Rule 144A ("QIBs") in reliance on Rule 144A under the
Securities Act ("Rule 144A"), as provided in the Purchase Agreement, shall be
issued in the form of one or more permanent global securities in definitive,
fully registered form without interest coupons with the Global Securities Legend
and Restricted Securities Legend set forth in Exhibit A hereto (a "Global
Security"). Any Global Security shall be deposited on behalf of the purchasers
of the Securities represented thereby with the Trustee, as custodian for the
Depositary, and registered in the name of the Depositary or a nominee of the
Depositary for the accounts of participants in the Depositary (and, in the case
of Securities held in accordance with Regulation S, registered with the
Depositary for the accounts of designated agents holding on behalf of the
Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") or
Clearstream Banking, societe anonyme ("Clearstream")), duly executed by the
Issuer and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of a Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.

                  Except as provided in Section 2.10 and 2.13, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of Securities in definitive form. Transferees of Securities
who are not QIBs and did not purchase Securities sold in reliance on Regulation
S under the Securities Act (referred to herein as the "Non-Global Purchasers")
will receive certificated Securities in definitive form bearing the Restricted
Securities Legend set forth in Exhibit A hereto ("Definitive Securities").
Definitive Securities will bear the Restricted Securities Legend set forth on
Exhibit A unless removed in accordance with Section 2.13(b).

                  SECTION 2.02. Title and Terms. The aggregate Principal Amount
of Securities which may be authenticated and delivered under this Indenture is
limited to $300,000,000 (subject to increase to $360,000,000 in the event the
Initial Purchasers exercise their option to purchase additional Securities under
the Purchase Agreement), except for replacement Securities authenticated and
delivered upon registration or transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 2.08.

                  The Securities shall bear interest at a rate of 3.50% per
annum from May 16, 2003. Interest on the Securities shall be payable
semi-annually on May 16 and November 16 of each year (each an "Interest Payment
Date") beginning November 16, 2003, to Holders of record at the close of
business on the preceding May 1 and November 1, respectively. In the event of
the maturity, conversion, purchase by the Issuer at the option of a Holder or
redemption of a Security, interest (including Contingent Interest, if any) shall
cease to accrue on such Security, under the terms and subject to the conditions
of this Indenture. Securities surrendered for conversion during the period from
the close of business on any Regular Record Date next

                                       10


preceding any Interest Payment Date to the opening of business on such Interest
Payment Date (except Securities to be redeemed purchased or repurchased on a
date within such period) must be accompanied by payment of an amount equal to
the interest (including Contingent Interest) thereon that the registered Holder
is entitled to receive. Except where Securities surrendered for conversion must
be accompanied by payment as described above, no interest on converted
Securities shall be payable by the Issuer on any Interest Payment Date
subsequent to the date of conversion.

                  The Securities shall be known and designated as the "3.50%
Convertible Senior Notes due 2023" of the Issuer with a Stated Maturity on May
16, 2023.

                  The Issue Price and accrued interest on the Securities shall
be payable at (i) the office or agency of the Issuer in The City of New York
maintained for such purpose, which initially shall be the principal corporate
trust office of the Trustee in The City of New York, (ii) the Corporate Trust
Office and (iii) at any other office or agency maintained by the Issuer for such
purpose; provided, however, that at the option of the Issuer payments may be
made by wire transfer or by check mailed to the address of the Person entitled
thereto as such address shall appear in the security register.

                  The Securities shall not have the benefit of a sinking fund.

                  The Securities shall be general senior obligations of the
Issuer.

                  SECTION 2.03. Denominations. The Securities shall be issuable
only in registered form without coupons and in denominations of $1,000 Principal
Amount and any integral multiple of $1,000 above that amount.

                  SECTION 2.04. Forms Generally. The Securities may have such
letters, notations, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required by law, securities exchange rule,
the Code and regulations thereunder, agreements to which the Issuer is subject,
if any, or usage (provided that any such notation legend or endorsement is in a
form acceptable to the Issuer). Each Security shall be dated the date of its
authentication.

                  The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the Officers executing such Securities, as evidenced by their
execution thereof.

                  SECTION 2.05. Execution, Authentication and Delivery. One or
more Officers of the Issuer shall sign the Securities on behalf of the Issuer by
manual or facsimile signature. The Issuer's seal, if any, may, but need not, be
impressed, affixed, imprinted or reproduced on the Securities and, if it is,
then it may be in facsimile form.

                  If an Officer of the Issuer whose signature is on a Security
no longer holds that office at the time the Trustee authenticates the Security,
the Security shall be valid nevertheless.

                                       11


                  A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.

                  The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuer to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by a Trust Officer, a copy of which
shall be furnished to the Issuer. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.

                  SECTION 2.06. Registrar and Paying Agent. The Issuer shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuer may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent, and the
term "Registrar" includes any co-registrars. The Issuer initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian with respect to the Global Securities.

                  The Issuer shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the Trust Indenture Act. The agency agreement shall
implement the provisions of this Indenture that relate to such agent. The Issuer
shall notify the Trustee of the name and address of any such agent. If the
Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07. The Issuer or any of its domestically organized Subsidiaries may
act as Paying Agent or Registrar.

                  The Issuer may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee; provided,
however, that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Issuer and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above. The Registrar or Paying Agent may resign at
any time upon written notice; provided, however, that the Trustee may resign as
Paying Agent or Registrar only if the Trustee also resigns as Trustee in
accordance with Section 7.08.

                  Prior to 11 a.m. (New York City time) on the Interest Payment
Date, the Issuer shall deposit with the Paying Agent (or if the Issuer or a
Subsidiary of the Issuer is acting as Paying Agent, segregate and hold in trust
for the benefit of the Persons entitled thereto) a sum sufficient to pay
interest (including Contingent Interest, if any) when due. The Issuer shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal or
interest on the Securities and shall notify the Trustee of any

                                       12


default by the Issuer in making any such payment. If the Issuer or a Subsidiary
of the Issuer acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Issuer at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Issuer
shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at
least five Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.

                  SECTION 2.07. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer and in compliance with this Indenture.
When a Security is presented to the Registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if the
requirements of Section 8-401(a)(1) of the Uniform Commercial Code are met. When
Securities are presented to the Registrar with a request to exchange them for
Securities of other denominations and of a like aggregate Principal Amount and
tenor, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Issuer shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Issuer may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any such
transfer or exchange pursuant to this Section. The Issuer shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or any Securities for a period of
15 days before a selection of Securities to be redeemed.

                  Prior to the due presentation for registration of transfer of
any Security, the Issuer, the Trustee, the Paying Agent and the Registrar may
deem and treat the Person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving any payment on such Security
(including interest and Contingent Interest and Defaulted Interest, if any) and
for all other purposes whatsoever, whether or not such Security is overdue, and
none of the Issuer, the Trustee, the Paying Agent or the Registrar shall be
affected by notice to the contrary.

                  Any Holder of a Global Security shall, by acceptance of such
Global Security, agree that transfers of a beneficial interest in such Global
Security may be effected only through a book-entry system maintained by (i) the
Holder of such Global Security (or its agent) or (ii) any Holder of a beneficial
interest in such Global Security, and that ownership of a beneficial interest in
such Global Security shall be required to be reflected in a book-entry.

                  All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such transfer or exchange.

                                       13


                  SECTION 2.08. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuer shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i)
satisfies the Issuer or the Trustee within a reasonable time after such Holder
has notice of such loss, destruction or wrongful taking, and the Registrar does
not register a transfer prior to receiving such notification, (ii) requests the
Issuer or the Trustee to issue a new replacement Security, prior to the Security
being acquired by a protected purchaser as defined in Section 8-303 of the
Uniform Commercial Code (a "protected purchaser") and (iii) satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Issuer, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Trustee to protect the Issuer, the Trustee, the Paying Agent and the
Registrar from any loss that any of them may suffer if a Security is replaced.
The Issuer and the Trustee may charge the Holder for the costs and expenses they
incur in replacing a Security. In the event any such mutilated, lost, destroyed
or wrongfully taken Security has become or is about to become due and payable or
has been called for redemption in full, the Issuer in its discretion may pay
such Security instead of issuing a new Security in replacement thereof.

                  Every replacement Security is an additional obligation of the
Issuer.

                  The provisions of this Section 2.08 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.

                  SECTION 2.09. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. Subject to Section 13.06, a Security does not
cease to be outstanding because the Issuer or an Affiliate of the Issuer holds
the Security.

                  If a Security is replaced pursuant to Section 2.08, the
Security so replaced ceases to be outstanding unless and until the Trustee and
the Issuer receive proof satisfactory to them that the replaced Security is held
by a protected purchaser.

                  If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, at Maturity, money or securities sufficient to
pay all amounts payable on that date with respect to the Securities (or portions
thereof) to be redeemed, purchased or repurchased or maturing, as the case may
be, then on and after that date, such Securities (or portions thereof) shall
cease to be outstanding and interest on them or Contingent Interest and
Defaulted Interest, if any, shall cease to accrue.

                  SECTION 2.10. Temporary Securities; Exchange of Global
Security for Definitive Securities.

                  (a) In the event that Definitive Securities are to be issued
under the terms of this Indenture, until such Definitive Securities are ready
for delivery, the Issuer may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in

                                       14


the form of Definitive Securities but may have variations that the Issuer
considers appropriate for temporary Securities. Without unreasonable delay, the
Issuer shall prepare and the Trustee shall authenticate Definitive Securities
and deliver them in exchange for temporary Securities upon surrender of such
temporary Securities at the office or agency of the Issuer, without charge to
the Holder.

                  (b) Except for transfers made in accordance with Section
2.13(a), a Global Security deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.11 shall be transferred to
the beneficial owners thereof in the form of certificated Securities in
definitive form only if such transfer complies with Section 2.13 and (i) the
Depositary notifies the Issuer that it is unwilling or unable to continue as
Depositary for such Global Security or if at any time such Depositary ceases to
be a "clearing agency" registered under the Exchange Act and a successor
Depositary is not appointed by the Issuer within 90 days of such notice, (ii)
the Issuer elects to discontinue the use of book-entry transfer through the
Depository (or any other depository) or (iii) a default under the indenture
occurs and continues for 30 days.

                  (c) Any Global Security or interest thereon that is
transferable to the beneficial owners thereof in the form of certificated
Securities in definitive form shall, if held by the Depository, be surrendered
by the Depositary to the Trustee, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Securities of authorized
denominations in the form of certificated Securities in definitive form. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any Securities in the form of certificated Securities in definitive form
delivered in exchange for an interest in the Global Security shall, except as
otherwise provided by Section 2.13(b), bear the Restricted Securities Legend set
forth in Exhibit A hereto.

                  (d) Prior to any transfer pursuant to Section 2.10(b), the
registered holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a holder is entitled to take under this
Indenture or the Securities.

                  The Issuer will make available to the Trustee a reasonable
supply of certificated Securities in definitive form.

                  SECTION 2.11. Book-entry Provisions for Global Securities.
This Section 2.11 shall apply only to a Global Security deposited with or on
behalf of the Depositary.

                  The Issuer shall execute and the Trustee shall, in accordance
with this Section 2.11 and the written order of the Issuer, authenticate and
deliver initially one or more Global Securities that (i) shall be registered in
the name of Cede & Co. or other nominee of such Depositary and (ii) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary pursuant to
a FAST Balance Certificate Agreement between the Depositary and the Trustee.

                                       15


                  Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Issuer, the Trustee and any agent of the Issuer or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.

                  The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the
"Management Regulations and Instructions to Participants" of Clearstream shall
be applicable to interests in any Global Securities that are held by
participants through Euroclear or Clearstream. The Trustee shall have no
obligation to notify holders of any such procedures or to monitor or enforce
compliance with the same.

                  SECTION 2.12. Cancellation. The Issuer at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
purchase, repurchase, redemption, conversion (pursuant to Article 11 hereof) or
cancellation and deliver canceled Securities to the Issuer pursuant to written
direction by an Officer of the Issuer. In the absence of any such direction, the
Trustee may treat canceled Securities in accordance with its document retention
policies. The Issuer may not issue new Securities to replace Securities they
have redeemed, paid in full or delivered to the Trustee for cancellation. The
Trustee shall not authenticate Securities in place of canceled Securities other
than pursuant to the terms of this Indenture.

                  SECTION 2.13. Special Transfer Provisions. (a) (a)
Notwithstanding any provision to the contrary herein, so long as a Global
Security remains outstanding and is held by or on behalf of the Depositary,
transfers of a Global Security, in whole or in part, or of any beneficial
interest therein, shall only be made in accordance with Sections 2.10 and 2.11
and this Section 2.13(a); provided, however, that beneficial interests in a
Global Security may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in the Global Security in accordance with the
transfer restrictions set forth under the heading "Notice to Investors" in the
Offering Memorandum and, if applicable, in Exhibit C.

                  Except for transfers or exchanges made in accordance with
paragraphs (1) through (4) of this Section 2.13(a) and Section 2.10, transfers
of a Global Security shall be limited to transfers of such Global Security in
whole, but not in part, to nominees of the Depositary or to a successor of the
Depositary or such successor's nominee.

                  (1) Global Security to Definitive Security. If an owner of a
         beneficial interest in a Global Security deposited with the Depositary
         or with the Trustee as custodian for the Depositary wishes at any time
         to transfer its interest in such Global Security to a Person

                                       16


         who is required to take delivery thereof in the form of a Definitive
         Security, such owner may, subject to the rules and procedures of
         Euroclear or Clearstream, if applicable, and the Depositary, cause the
         exchange of such interest for one or more Definitive Securities of any
         authorized denomination or denominations and of the same aggregate
         principal amount. Upon receipt by the Registrar of (A) instructions
         from Euroclear or Clearstream, if applicable, and the Depositary
         directing the Trustee to authenticate and deliver one or more
         Definitive Securities of the same aggregate principal amount as the
         beneficial interest in the Global Security to be exchanged, such
         instructions to contain the name or names of the designated transferee
         or transferees, the authorized denomination or denominations of the
         Definitive Securities to be so issued and appropriate delivery
         instructions, (B) a certificate substantially in the form of Exhibit B
         attached hereto given by the owner of such beneficial interest, (C) a
         certificate substantially in the form of Exhibit C attached hereto
         given by the person acquiring the Definitive Securities for which such
         interest is being exchanged, to the effect set forth therein, and (D)
         such other certifications or other information and, in the case of
         transfers pursuant to Rule 144 under the Securities Act, legal opinions
         as the Issuer may reasonably require to confirm that such transfer is
         being made pursuant to an exemption from, or in a transaction not
         subject to, the registration requirements of the Securities Act, then
         Euroclear or Clearstream, if applicable, or the Registrar, as the case
         may be, will instruct the Depositary to reduce or cause to be reduced
         such Global Security by the aggregate principal amount of the
         beneficial interest therein to be exchanged and to debit or cause to be
         debited from the account of the Person making such transfer the
         beneficial interest in the Global Security that is being transferred,
         and concurrently with such reduction and debit the Issuer shall
         execute, and the Trustee shall authenticate and deliver, one or more
         Definitive Securities of the same aggregate principal amount in
         accordance with the instructions referred to above.

                  (2) Definitive Security to Definitive Security. If a holder of
         a Definitive Security wishes at any time to transfer such Definitive
         Security (or portion thereof) to a Person who is required to take
         delivery thereof in the form of a Definitive Security, such holder may,
         subject to the restrictions on transfer set forth herein and in such
         Definitive Security, cause the transfer of such Definitive Security (or
         any portion thereof in a principal amount equal to an authorized
         denomination) to such transferee. Upon receipt by the Registrar of (A)
         such Definitive Security, duly endorsed as provided herein, (B)
         instructions from such holder directing the Trustee to authenticate and
         deliver one or more Definitive Securities of the same aggregate
         principal amount as the Definitive Security (or portion thereof) to be
         transferred, such instruction to contain the name or names of the
         designated transferee or transferees, the authorized denomination or
         denominations of the Definitive Securities to be so issued and
         appropriate delivery instructions, (C) a certificate from the holder of
         the Definitive Security to be transferred in substantially the form of
         Exhibit B attached hereto, (D) a certificate substantially in the form
         of Exhibit C attached hereto given by the person acquiring the
         Definitive Securities (or portion thereof), to the effect set forth
         therein, and (E) such other certifications or other information and, in
         the case of transfers pursuant to Rule 144 under the Securities Act,
         legal opinions as the Issuer may reasonably require to confirm that
         such transfer is being made pursuant to an exemption from, or in a
         transaction not subject to, the registration requirements of the
         Securities Act, then the Registrar, shall cancel or cause to

                                       17


         be canceled such Definitive Security and concurrently therewith, the
         Issuer shall execute, and the Trustee shall authenticate and deliver,
         one or more Definitive Securities in the appropriate aggregate
         principal amount, in accordance with the instructions referred to above
         and, if only a portion of a Definitive Security is transferred as
         aforesaid, concurrently therewith the Issuer shall execute and the
         Trustee shall authenticate and deliver to the transferor a Definitive
         Security in a principal amount equal to the principal amount which has
         not been transferred. A holder of a Definitive Security may at any time
         exchange such Definitive Security for one or more Definitive Securities
         of other authorized denominations and in the same aggregate principal
         amount and registered in the same name by delivering such Definitive
         Security, duly endorsed as provided herein, to the Trustee together
         with instructions directing the Trustee to authenticate and deliver one
         or more Definitive Securities in the same aggregate principal amount
         and registered in the same name as the Definitive Security to be
         exchanged, and the Registrar thereupon shall cancel or caused to be
         canceled such Definitive Security and concurrently therewith the Issuer
         shall execute and Trustee shall authenticate and deliver, one or more
         Definitive Securities in the same aggregate principal amount and
         registered in the same name as the Definitive Security being exchanged.

                  (3) Definitive Security to Global Security. If a holder of a
         Definitive Security wishes at any time to transfer such Definitive
         Security (or portion thereof) to a Person who is not required to take
         delivery thereof in the form of a Definitive Security, such holder
         shall, subject to the restrictions on transfer set forth herein and in
         such Definitive Security and the rules of the Depositary and Euroclear
         and Clearstream, as applicable, cause the exchange of such Definitive
         Security for a beneficial interest in the Global Security. Upon receipt
         by the Registrar of (A) such Definitive Security, duly endorsed as
         provided herein, (B) instructions from such holder directing the
         Trustee to increase the aggregate principal amount of the Global
         Security deposited with the Depository or with the Trustee as custodian
         for the Depository by the same aggregate Principal Amount as the
         Definitive Security to be exchanged, such instructions to contain the
         name or names of a member of, or participant in, the Depository that is
         designated as the transferee, the account of such member or participant
         and other appropriate delivery instructions, (C) the assignment form on
         the back of the Definitive Security completed in full (certifying in
         effect that such transfer complies with Rule 144A or Regulation S under
         the Securities Act or is otherwise being made to a Person who is not
         required to take delivery of the Securities in the form of a Definitive
         Security) and (D) such other certifications or other information and,
         in the case of transfers pursuant to Rule 144 under the Securities Act,
         legal opinions as the Issuer may reasonably require to confirm that
         such transfer is being made pursuant to an exemption from, or in
         transaction not subject to, the registration requirements of the
         Securities Act, then the Trustee shall cancel or cause to be canceled
         such Definitive Security and concurrently therewith shall increase the
         aggregate principal amount of the Global Security by the same aggregate
         principal amount as the Definitive Security canceled.

                  (4) Other Exchanges. In the event that a Global Security is
         exchanged for Securities in definitive registered form pursuant to
         Section 2.10 prior to the effectiveness of a Shelf Registration
         contemplated by and in accordance with the terms of the Registration
         Rights Agreement with respect to such Securities, such Securities may
         be

                                       18


         exchanged only in accordance with such procedures as are substantially
         consistent with the provisions of clauses (2) and (3) above (including
         the certification requirements intended to ensure that such transfers
         comply with Rule 144A or Regulation S under the Securities Act, as the
         case may be) and such other procedures as may from time to time be
         adopted by the Issuer.

                  (b) Except in connection with a Shelf Registration
contemplated by and in accordance with the terms of the Registration Rights
Agreement, if Securities are issued upon the registration of transfer, exchange
or replacement of Securities bearing a Restricted Securities Legend, or if a
request is made to remove such a Restricted Securities Legend on Securities, the
Securities so issued shall bear the Restricted Securities Legend, or a
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Issuer such satisfactory evidence, which, in the case
of a transfer made pursuant to Rule 144 under the Securities Act, may include an
opinion of counsel, as may be reasonably required by the Issuer, that neither
the legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144
or Regulation S under the Securities Act or that such Securities are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision to the Issuer of such satisfactory evidence, the Trustee, at the
written direction of the Issuer, shall authenticate and deliver Securities that
do not bear the legend. The Issuer shall not otherwise be entitled to require
the delivery of a legal opinion in connection with any transfer or exchange of
Securities.

                  (c) Neither the Trustee nor any Agent shall have any
responsibility for any actions taken or not taken by the Depositary.

                  (d) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Securities (including any transfers between or among
Depositary's participants or beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation as is expressly required by, and to do so if and when expressly
required by, the terms of this Indenture and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

                  SECTION 2.14. CUSIP Numbers. The Issuer in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities and any such redemption shall not be affected by any defect in or
omission of such numbers.

                  SECTION 2.15. Legend on Restricted Securities. During the
period beginning on May 16, 2003 (or such later date on which any Securities may
be originally issued pursuant to the Initial Purchasers' exercise of their
option to purchase additional Securities under the Purchase Agreement) and
ending on the date one year from such date, any Security (including any Security
issued in exchange therefor or in lieu thereof), shall be deemed a "Restricted

                                       19


Security" and shall be subject to the restrictions on transfer provided in the
legends set forth on the face of the form of Security in Exhibit A; provided,
however, that the term "Restricted Security" shall not include any Securities as
to which restrictions have been terminated in accordance with the terms of this
Indenture, including, without limitation, Section 2.13(b). All Securities shall
bear the applicable legends set forth on the face of the form of Security in
Exhibit A. Except as provided in Section 2.13, the Trustee shall not issue any
unlegended Security until it has received an Officers' Certificate from the
Issuer directing it to do so.

                  SECTION 2.16. Tax Treatment of Securities.

The Issuer agrees, and by acceptance of a beneficial interest in the Securities,
each beneficial holder of the Securities will be deemed to have agreed, for
United States federal income tax purposes (1) to treat the Securities as
indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Debt
Regulations") and, for purposes of the Contingent Debt Regulations, to treat,
without limitation, the amount of cash and the fair market value of any Shares
beneficially received by a beneficial holder upon any conversion of the
Securities as a contingent payment and (2) to be bound by the Issuer's
determination of the "comparable yield" and "projected payment schedule," within
the meaning of the Contingent Debt Regulations, with respect to the Securities.
For purposes of the foregoing, the Issuer's determination of the "comparable
yield" is 8.25% per annum, compounded semi-annually, and the Issuer's
determination of the "projected payment schedule" is as set forth in Exhibit G
attached hereto. A Holder of Securities may also obtain the comparable yield and
projected payment schedule by submitting a written request to the Issuer at the
following address: Starwood Hotels & Resorts Worldwide, Inc., 1111 Westchester
Avenue, White Plains, New York, 10604, Attention: General Counsel.

                  SECTION 2.17. Payment of Interest; Interest Rights Preserved.
(a) Interest (including Contingent Interest, if any) on any Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security is registered at
the close of business on the Regular Record Date for such interest at the office
or agency of the Issuer maintained for such purpose. Each installment of
interest on any Security shall be paid in same-day funds by transfer to an
account maintained by the Holder located inside the United States, provided that
with respect to any Holder, such Holder shall have furnished to the Paying Agent
all required wire payment instructions no later than the related Regular Record
Date, or if no such instructions have been furnished, by check payable to such
Holder. In the case of a Global Security, interest payable on any Interest
Payment Date will be paid to the Depositary, with respect to that portion of
such Global Security held for its account by Cede & Co. for the purpose of
permitting such party to credit the interest received by it in respect of such
Global Security to the accounts of the beneficial owners thereof.

                  (a) Any interest (including Contingent Interest, if any) on
any Security that is payable, but is not punctually paid or duly provided for,
within 30 days following any Interest Payment Date (herein called "Defaulted
Interest", which term shall include any accrued and unpaid interest that has
accrued on such defaulted amount in accordance with the paragraph of the
Securities captioned "Interest"), shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Issuer,
at its election in each case, as provided in clause (1) or (2) below:

                                       20


                  (1) The Issuer may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Securities are registered at
         the close of business on a date (the "Special Record Date") for the
         payment of such Defaulted Interest, which shall be fixed in the
         following manner. The Issuer shall notify the Trustee in writing of the
         amount of Defaulted Interest proposed to be paid on the Securities and
         the date of the proposed payment (which shall not be less than 20 days
         after such notice is received by the Trustee), and at the same time the
         Issuer shall deposit with the Trustee an amount of money equal to the
         aggregate amount proposed to be paid in respect of such Defaulted
         Interest or shall make arrangements satisfactory to the Trustee for
         such deposit on or prior to the date of the proposed payment, such
         money when deposited to be held in trust for the benefit of the Persons
         entitled to such Defaulted Interest as in this clause provided.
         Thereupon the Trustee shall fix a Special Record Date for the payment
         of such Defaulted Interest which shall be not more than 15 days and not
         less than 10 days prior to the date of the proposed payment and not
         less than 10 days after the receipt by the Trustee of the notice of the
         proposed payment. The Trustee shall promptly notify the Issuer of such
         Special Record Date and, in the name and at the expense of the Issuer,
         shall cause notice of the proposed payment of such Defaulted Interest
         and the Special Record Date therefor to be mailed, first-class postage
         prepaid, to each Holder of Securities at his address as it appears on
         the list of Securityholders maintained pursuant to this Indenture not
         less than 10 days prior to such Special Record Date. Notice of the
         proposed payment of such Defaulted Interest and the Special Record Date
         therefor having been mailed as aforesaid, such Defaulted Interest shall
         be paid to the Persons in whose names such Securities are registered at
         the close of business on such Special Record Date and shall no longer
         be payable pursuant to the following clause (2).

                  (2) The Issuer may make payment of any Defaulted Interest on
         the Securities in any other lawful manner not inconsistent with the
         requirements of any securities exchange on which the Securities may be
         listed, and upon such notice as may be required by such exchange, if,
         after notice given by the Issuer to the Trustee of the proposed payment
         pursuant to this clause, such manner of payment shall be deemed
         practicable by the Trustee.

                  Subject to the foregoing provisions, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest (including
Contingent Interest, if any) accrued and unpaid, and to accrue, which were
carried by such other Security.

                                    ARTICLE 3

                                   REDEMPTION

                  SECTION 3.01. Notices to Trustee. Subject to Section 3.15,
prior to May 23, 2006, Securities shall not be redeemable. Beginning on May 23,
2006, the Issuer, at its option, may elect to redeem Securities in accordance
with the provisions thereof and of this Indenture. If the Issuer elects to
redeem Securities, it shall notify the Trustee in writing of the date of
redemption (the "Redemption Date"), the Principal Amount of Securities to be
redeemed and the Redemption Price.

                                       21


                  The Issuer shall give each notice to the Trustee provided for
in this Section at least 30 days but not more than 60 days before the Redemption
Date unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate from the Issuer to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Issuer and given to the Trustee, which record date shall be
not fewer than 15 days after the date of notice to the Trustee. Any such notice
may be canceled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.

                  SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities held in definitive form are to be redeemed, the Trustee
shall select the Securities to be redeemed on a pro rata basis in accordance
with the Principal Amounts. The Trustee shall make the selection at least 30
days but not more than 60 days before the Redemption Date from outstanding
Securities not previously called for redemption. Securities and portions thereof
that the Trustee selects shall be in Principal Amounts of $1,000 or integral
multiples of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall promptly notify the Issuer of the Securities or
portions thereof to be redeemed.

                  If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed shall
be treated by the Trustee as outstanding for the purpose of such selection.

                  SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a Redemption Date of Securities, the Issuer shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.

         The notice shall identify the Securities to be redeemed and shall
state:

                  (1)      the Redemption Date;

                  (2)      the Redemption Price and the Conversion Rate;

                  (3)      the name and address of the Paying Agent and
         Conversion Agent;

                  (4)      that Securities called for redemption must be
         surrendered to the Paying Agent to collect the Redemption Price;

                  (5)      that Securities called for redemption may be
         converted at any time before the close of business on the second
         Business Day immediately preceding the Redemption Date;

                  (6)      that Holders who want to convert Securities must
         satisfy the requirements set forth therein and in this Indenture;

                                       22


                  (7)      if fewer than all the outstanding Securities are to
         be redeemed, the certificate numbers and Principal Amounts of the
         particular Securities to be redeemed;

                  (8)      that, unless the Issuer defaults in making payment of
         such Redemption Price or the Paying Agent is prohibited from making
         such payment pursuant to the terms of this Indenture, interest
         (including Contingent Interest and Defaulted Interest), if any, will
         cease to accrue on and after the Redemption Date;

                  (9)      the CUSIP number, if any, printed on the Securities
         being redeemed;

                  (10)     that no representation is made as to the correctness
         or accuracy of the CUSIP number, if any, listed in such notice or
         printed on the Securities; and

                  (11)     the election of the Issuer (which, subject to the
         provisions of Article 11 hereof, shall be irrevocable) to deliver
         Shares or to pay cash in lieu of delivery of such Shares with respect
         to any Securities that may be converted after the mailing of such
         notice and prior to the Redemption Date.

                  At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at the Issuer's expense. In such event, the
Issuer shall provide the Trustee with the information required by this Section.

                  SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed to the Holders, Securities called for redemption become due
and payable on the Redemption Date and at the Redemption Price stated in the
notice except for Securities which are converted in accordance with the terms of
this Indenture. Upon surrender to the Paying Agent, such Securities shall be
paid at the Redemption Price stated in the notice. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.

                  SECTION 3.05. Deposit of Redemption Price. Prior to 11:00 a.m.
(New York City time) on the Redemption Date, the Issuer shall deposit with the
Paying Agent (or, if the Issuer or a Subsidiary of the Issuer is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the Redemption
Price of all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption that have been delivered by the
Issuer to the Trustee for cancellation or have been converted. The Paying Agent
shall as promptly as practicable return to the Issuer any money, not required
for that purpose because of conversion of Securities pursuant to Article 11. If
such money is then held by the Issuer in trust and is not required for such
purpose it shall be discharged from such trust. The Issuer at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.

                  SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuer shall execute and the Trustee
shall authenticate for the Holder (at the Issuer's expense) a new Security equal
in Principal Amount to the unredeemed portion of the Security surrendered.

                                       23


                  SECTION 3.07. Intentionally Omitted.

                  SECTION 3.08. Purchase of Securities at Option of the Holder.

                  (a) General. The Securities shall be purchased by the Issuer
pursuant to the terms thereof as of May 16, 2006, May 16, 2008, May 16, 2013 and
May 16, 2018 (each, a "Purchase Date"), at the purchase price of 100% of
Principal Amount plus accrued but unpaid interest (including Contingent
Interest, if any), to, but not including the Purchase Date (the "Purchase
Price"), at the option of the Holder thereof, upon:

                  (1) delivery to the Paying Agent by the Holder of a written
         notice of purchase (a "Purchase Notice"), substantially in the form of
         Exhibit D hereto, at any time from the opening of business on the date
         that is at least 20 Business Days prior to a Purchase Date until the
         close of business on the third Business Day prior to the Purchase Date
         stating:

                           (A)      the certificate number of the Security which
                  the Holder will deliver to be purchased,

                           (B)      the portion of the Principal Amount of the
                  Security which the Holder will deliver to be purchased, which
                  portion must be in a Principal Amount of $1,000 or integral
                  multiples thereof,

                           (C)      that such Security shall be purchased as of
                  the Purchase Date pursuant to the terms and conditions
                  specified in the Securities and in this Indenture, and

                           (D)      in the event the Issuer elects, pursuant to
                  Section 3.08(b), to pay the Purchase Price to be paid as of
                  such Purchase Date, in whole or in part, in Shares, but such
                  portion of the Purchase Price shall ultimately be payable to
                  such Holder entirely in cash because any of the conditions to
                  payment of the Purchase Price in Shares is not satisfied prior
                  to the close of business on such Purchase Date, as set forth
                  in Section 3.08(d), whether such Holder elects (i) to withdraw
                  such Purchase Notice as to some or all of the Securities to
                  which such Purchase Notice relates (stating the Principal
                  Amount and certificate numbers of the Securities as to which
                  such withdrawal shall relate), or (ii) to receive cash in
                  respect of the entire Purchase Price for all Securities (or
                  portions thereof) to which such Purchase Notice relates; and

                  (2)      delivery of such Security to the Paying Agent for
         cancellation prior to, on or after the Purchase Date (together with all
         necessary endorsements) at the offices of the Paying Agent, such
         delivery being a condition to receipt by the Holder of the Purchase
         Price therefor; provided, however, that such Purchase Price shall be so
         paid pursuant to this Section 3.08 only if the Security so delivered to
         the Paying Agent shall conform in all respects to the description
         thereof in the related Purchase Notice.

                  If a Holder, in such Holder's Purchase Notice, fails to
indicate such Holder's choice with respect to the election set forth in clause
(D) of Section 3.08(a)(1), such Holder shall

                                       24


be deemed to have elected to receive cash in respect of the Purchase Price for
all Securities subject to such Purchase Notice in the circumstances set forth in
such clause (D).

                  The Issuer shall purchase from the Holder thereof, pursuant to
this Section 3.08, a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000 if so requested by the
Holder. Provisions of this Indenture that apply to the purchase of all of a
Security also apply to the purchase of such portion of such Security.

                  Any purchase by the Issuer contemplated pursuant to the
provisions of this Section 3.08 shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of the
Purchase Date and the time of delivery of the Security.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.08(a) shall have the right to withdraw such Purchase Notice at any time prior
to the close of business on the Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

                  The Paying Agent shall promptly notify the Issuer of the
receipt by it of any Purchase Notice or written notice of withdrawal thereof.

                  (b) Issuer's Right to Elect Manner of Payment of Purchase
Price. The Securities to be purchased pursuant to Section 3.08(a) may be paid
for, at the election of the Issuer, in cash or in Shares valued at the Market
Price, or in any combination of cash and Shares, subject to the conditions set
forth in Sections 3.08(c) and (d). The Issuer shall designate, in the Issuer's
Notice delivered pursuant to Section 3.08(e), whether the Issuer will purchase
the Securities for cash or Shares, or, if a combination thereof, the percentages
of the Purchase Price of Securities in respect of which it will pay in cash or
Shares; provided that the Issuer shall pay cash for fractional Shares. For
purposes of determining the existence of potential fractional Shares, all
Securities subject to purchase by the Issuer held by a Holder shall be
considered together (no matter how many separate certificates are to be
presented). Each Holder whose Securities are purchased pursuant to this Section
3.08 shall receive the same percentage of cash or Shares in payment of the
Purchase Price for such Securities, except (i) as provided in Section 3.08(d)
with regard to the payment of cash in lieu of fractional Shares and (ii) in the
event that the Issuer is unable to purchase the Securities of a Holder or
Holders for Shares because any necessary qualifications or registrations of the
Shares under applicable state or foreign securities laws cannot be obtained, the
Issuer may purchase the Securities of such Holder or Holders for cash. The
Issuer may not change its election with respect to the consideration (or
components or percentages of components thereof) to be paid once the Issuer has
given the Issuer's Notice to Securityholders except pursuant to this Section
3.08(b) or pursuant to Section 3.08(d) in the event of a failure to satisfy,
prior to the close of business on the Purchase Date, any condition to the
payment of the Purchase Price, in whole or in part, in Shares.

                  If the Issuer elects to pay all or part of the Purchase Price
in Shares, the portion of interest attributable to the period from the later of
the Issue Date and the date on which interest was last paid through the Purchase
Date and with respect to the surrendered Security and (except

                                       25


as provided in the Security) accrued Contingent Interest and Defaulted Interest,
if any, with respect to the surrendered Security shall not be cancelled,
extinguished or forfeited, but rather shall be deemed to be paid in full to the
Holder thereof through the delivery of the Shares (together with cash payment,
if any, in lieu of fractional Shares) and cash, if any, in exchange for the
Security being purchased pursuant to the terms hereof; and such cash and the
fair market value of such Shares (together with any such cash payment in lieu of
fractional Shares) shall be treated as delivered pro rata, to the extent
thereof, first in exchange for interest accrued through the Purchase Date and
accrued Contingent Interest and Defaulted Interest, if any, and the balance, if
any, of such cash and the fair market value of such Shares (and any such cash
payment) shall be treated as delivered in exchange for the Issue Price of the
Security being purchased pursuant to the provisions hereof.

                  (c) Purchase with Cash. On each Purchase Date, at the option
of the Issuer, the Purchase Price of Securities in respect of which a Purchase
Notice pursuant to Section 3.08(a) has been given, or a specified percentage
thereof, may be paid by the Issuer with cash equal to the aggregate Purchase
Price of such Securities.

                  (d) Payment by Issuance of Shares. On each Purchase Date, at
the option of the Issuer, the Purchase Price of Securities in respect of which a
Purchase Notice pursuant to Section 3.08(a) has been given, or a specified
percentage thereof, may be paid by the Issuer by the issuance of a number of
Shares equal to the quotient obtained by dividing (i) the amount of cash to
which the Securityholders would have been entitled had the Issuer elected to pay
all or such specified percentage, as the case may be, of the Purchase Price of
such Securities in cash by (ii) the Market Price of a Share, subject to the next
succeeding paragraph.

                  The Issuer may not issue a fractional Share in payment of the
Purchase Price. Instead the Issuer shall pay cash for the current market value
of the fractional Share. The current market value of a fraction of a Share shall
be determined, to the nearest 1/1,000th of a Share, by multiplying the Market
Price by such fraction and rounding the product to the nearest whole cent. It is
understood that if a Holder elects to have more than one Security purchased, the
number of Shares shall be based on the aggregate amount of Securities to be
purchased.

                  The Issuer's right to exercise its election to purchase the
Securities pursuant to Section 3.08 through the issuance of Shares shall be
conditioned upon:

                  (i)      the Issuer's not having given its Issuer's Notice of
         an election to pay entirely in cash and its giving of a timely Issuer's
         Notice of election to purchase all or a specified percentage of the
         Securities with Shares as provided herein;

                  (ii)     the listing of the Shares to be issued in respect of
         the payment of the Purchase Price on the principal United States
         National Securities Exchange on which the Shares are then listed or
         quoted;

                  (iii)    the registration of the Shares to be issued in
         respect of the payment of the Purchase Price under the Securities Act
         and the Exchange Act, if required; and

                  (iv)     any necessary qualification or registration under
         applicable state securities laws or the availability of an exemption
         from such qualification and registration.

                                       26


                  The Issuer may pay the Purchase Price (or any portion thereof)
in Shares only if the information necessary to calculate the Market Price is
published in a daily newspaper of national circulation. If the foregoing
conditions are not satisfied with respect to a Holder or Holders prior to the
close of business on the Purchase Date and the Issuer has elected to purchase
the Securities pursuant to this Section 3.08 through the issuance of Shares, the
Issuer shall pay the entire Purchase Price of the Securities of such Holder or
Holders in cash.

                  The "Market Price" means the average of the Sale Prices of the
Shares for the five day trading period ending on the third trading day prior to
the applicable Purchase Date, Change in Control Purchase Date or Conversion
Date, as the case may be, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five trading day period and ending on such Purchase Date, Change in
Control Purchase Date or Conversion Date, as the case may be, of any event
described in Section 11.06, 11.07 or 11.08; subject, however, to the conditions
set forth in Sections 11.09 and 11.10.

                  The "Sale Price" of the Shares on any date means the closing
per Share sale price (or, if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States National Securities Exchange on
which the Shares are then traded or, if the Shares are not listed on a United
States National Securities Exchange or a United States regional securities
exchange, as reported by the National Association of Securities Dealers
Automated Quotation system or by the National Quotation Bureau Incorporated. In
the absence of such a quotation, the Board of Directors shall make a good faith
determination of the Sale Price.

                  (e) Notice. The Issuer's notice of whether it intends to pay
the Purchase Price with cash or Shares or any combination thereof shall be sent
to the Holders (and to beneficial owners as required by applicable law) in the
manner provided herein (the "Issuer's Notice"). The Issuer's Notice shall be
sent to Holders (and to beneficial owners as required by applicable law) not
less than 20 Business Days prior to such Purchase Date (the "Issuer's Notice
Date"). The Issuer's Notice shall state the manner of payment and shall contain
the following information:

                  In the event the Issuer has elected to pay the Purchase Price
(or a specified percentage thereof) with Shares, the Issuer's Notice shall:

                  (1) state that each Holder will receive Shares in respect of
         the specified percentage of the Purchase Price of the Securities held
         by such Holder (except any cash amount to be paid in lieu of fractional
         Shares);

                  (2) state that the total number of Shares to be issued to
         Holders will be equal to the quotient obtained by dividing (i) the
         amount of cash to which the Securityholders would have been entitled
         had the Issuer elected to pay all or such specified percentage, as the
         case may be, of the Purchase Price of such Securities in cash by (ii)
         the Market Price of a Share;

                  (3) set forth the method of calculating the Market Price of a
         Share; and

                                       27


                  (4) state that because the Market Price of a Share will be
         determined prior to the Purchase Date, Holders will bear the market
         risk with respect to the value of a Share to be received from the date
         such Market Price is determined to the Purchase Date.

                  In any case, each Issuer's Notice shall include a form of
Purchase Notice to be completed by a Securityholder and shall state:

                  (i)      the Purchase Price and the Conversion Rate applicable
         on the Issuer's Notice Date;

                  (ii)     the name and address of the Paying Agent and the
         Conversion Agent;

                  (iii)    that Securities as to which a Purchase Notice has
         been given may be converted pursuant to Article 11 hereof only if the
         applicable Purchase Notice has been withdrawn in accordance with the
         terms of this Indenture;

                  (iv)     that Securities must be surrendered to the Paying
         Agent for cancellation to collect payment;

                  (v)      that the Purchase Price for any security as to which
         a Purchase Notice has been given and not withdrawn will be paid
         promptly following the later of the Purchase Date and the time of
         surrender of such Security as described in (iv);

                  (vi)     the procedures the Holder must follow to exercise
         rights under Section 3.08 and a brief description of those rights;

                  (vii)    briefly, the conversion rights of the Securities;

                  (viii)   the procedures for withdrawing a Purchase Notice
         (including, without limitation, for a conditional withdrawal pursuant
         to the terms of Section 3.08(a)(1)(D) or Section 3.10);

                  (ix)     that, unless the Issuer defaults in making payment of
         such Purchase Price, interest (including Contingent Interest or
         Defaulted Interest), if any, on Securities covered by any Purchase
         Notice, will cease to accrue on and after the Purchase Date; and

                  (x)      the CUSIP number of the Securities, if applicable.

                  At the Issuer's request, the Trustee shall give such Issuer's
Notice in the name of the Issuer and at the Issuer's expense; provided, however,
that, in all cases, the text of such Issuer's Notice shall be prepared by the
Issuer.

                  (f) Covenants of the Issuer and the Trust. All Shares
delivered upon purchase of the Securities shall be newly issued Shares, shall be
duly authorized, validly issued, fully paid and nonassessable, and shall be free
from preemptive rights and free of any lien or adverse claim.

                  The Issuer and the Trust (except in the event of a Share
Separation Event) shall use their best efforts to list or cause to have quoted
any Shares to be issued to purchase Securities

                                       28


on each United States National Securities Exchange or automated over-the-counter
trading market in the United States on which the Shares are then listed or
quoted.

                  (g) Procedure upon Purchase. The Issuer shall deposit cash (in
respect of a cash purchase under Section 3.08(c) or for fractional interests, as
applicable) or Shares, or a combination thereof, as applicable, at the time and
in the manner as provided in Section 3.11, sufficient to pay the aggregate
Purchase Price of all Securities to be purchased pursuant to this Section 3.08.
As soon as practicable after the Purchase Date, the Issuer shall deliver to each
Holder entitled to receive Shares through its stock transfer agent, a
certificate for the number of Shares issuable in payment of the Purchase Price.
The Person in whose name the certificate for Shares is registered shall be
treated as a holder of record of Shares on the Business Day following the
Purchase Date. Subject to Section 3.08(d), no payment or adjustment will be made
for dividends on any Shares delivered in payment of the Purchase Price the
record date for which occurred on or prior to the Purchase Date.

                  (h) Taxes. If a Holder of a Security is paid in Shares, the
Issuer shall pay any documentary, stamp or similar issue or transfer tax due on
such issue of Shares. However, the Holder shall pay any such tax which is due
because the Holder requests the Shares to be issued in a name other than the
Holder's name. The Paying Agent may refuse to deliver the certificates
representing the Shares being issued in a name other than the Holder's name
until the Paying Agent receives a sum that the Issuer deems to be sufficient to
pay any tax which will be due because the Shares are to be issued in a name
other than the Holder's name. Nothing herein shall preclude any income tax
withholding required by law or regulations.

                  SECTION 3.09. Repurchase of Securities at Option of the Holder
upon Change in Control.

                  (a) General. If on or prior to May 16, 2006 there shall have
occurred a Change in Control, Securities shall be purchased by the Issuer, at a
purchase price of 100% of Principal Amount plus accrued but unpaid interest
(including Contingent Interest, if any), to, but not including the purchase date
(the "Change in Control Purchase Price"), as of a date that is not later than 35
Business Days after the occurrence of the Change in Control (the "Change in
Control Purchase Date"), at the option of the Holder thereof, upon:

                  (1) delivery to the Paying Agent by the Holder of a written
         notice of purchase (a "Change in Control Purchase Notice"),
         substantially in the form of Exhibit E hereto, at any time until the
         close of business on the third Business Day prior to the Change in
         Control Purchase Date stating:

                           (A) the certificate number of the Security which the
                  Holder will deliver to be purchased,

                           (B) the portion of the Principal Amount of the
                  Security which the Holder will deliver to be purchased, which
                  portion must be in a Principal Amount of $1,000 or integral
                  multiples thereof, and

                                       29


                           (C) that such Security shall be purchased as of the
                  Change in Control Purchase Date pursuant to the terms and
                  conditions specified in the Securities and in this Indenture,
                  and

                  (2) delivery of such Security to the Paying Agent for
         cancellation prior to, on or after the Change in Control Purchase Date
         (together with all necessary endorsements) at the offices of the Paying
         Agent, such delivery being a condition to receipt by the Holder of the
         Change in Control Purchase Price therefor; provided, however, that such
         Change in Control Purchase Price shall be so paid pursuant to this
         Section 3.09 only if the Security so delivered to the Paying Agent
         shall conform in all respects to the description thereof in the related
         Change in Control Purchase Notice.

                  The Issuer shall purchase from the Holder thereof, pursuant to
this Section 3.09, a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000 if so requested by the
Holder. Provisions of this Indenture that apply to the purchase of all of a
Security also apply to the purchase of such portion of such Security.

                  Any purchase by the Issuer contemplated pursuant to the
provisions of this Section 3.09 shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of the
Change in Control Purchase Date and the time of delivery of the Security.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Change in Control Purchase Notice
contemplated by this Section 3.09(a) shall have the right to withdraw such
Change in Control Purchase Notice at any time prior to the close of business on
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

                  The Paying Agent shall promptly notify the Issuer of the
receipt by it of any Change in Control Purchase Notice or written notice of
withdrawal thereof.

                  A "Change in Control" shall be deemed to have occurred at such
time as any of the following events shall occur:

                  (i)      any Person, including its Affiliates and associates,
         other than the Issuer, its Subsidiaries or its or their employee
         benefit plans, or an Excluded Person, files a Schedule TO (or any
         schedule, form or report under the Exchange Act) disclosing that such
         Person has become the direct or indirect beneficial owner of 50% or
         more of the voting power of the Shares or other Capital Stock into
         which the Shares are reclassified or changed; or

                  (ii)     there shall be consummated any Share exchange,
         consolidation or merger of the Issuer pursuant to which the Shares will
         be converted into cash, securities or other property, in each case
         other than a Share exchange, consolidation or merger of the Issuer in
         which the holders of the Shares immediately prior to the Share
         exchange, consolidation or merger of the Issuer have, directly or
         indirectly, at least a majority of the total voting power in the
         aggregate of all classes of Capital Stock of the continuing or
         surviving corporation immediately after the Share exchange,
         consolidation or merger.

                                       30


         An "Excluded Person" is Barry S. Sternlicht or any of his Affiliates in
which he beneficially owns more voting securities than any other Person.

                  (b) Purchase with Cash. On each Change in Control Purchase
Date, the Change in Control Purchase Price of Securities in respect of which a
Change in Control Purchase Notice pursuant to Section 3.09(a) has been given
shall be paid by the Issuer with cash equal to the aggregate Change in Control
Purchase Price of such Securities.

                  (c) Notice of Change in Control. Within 15 Business Days after
the occurrence of a Change in Control, the Issuer shall mail notice of the
Change in Control (the "Change in Control Notice") by first-class mail to the
Trustee and to each Holder (and to beneficial owners as required by applicable
law). The Change in Control Notice shall be sent to Holders (and to beneficial
owners as required by applicable law) not less than 35 Business Days prior to
such Change in Control Purchase Date (the "Change in Control Notice Date"). The
notice shall include a form of Change in Control Purchase Notice to be completed
by the Securityholder and shall state:

                  (1) briefly, the events causing a Change in Control and the
         date of such Change in Control;

                  (2) the date by which the Change in Control Purchase Notice
         pursuant to this Section 3.09 must be given;

                  (3) the Change in Control Purchase Date;

                  (4) the Change in Control Purchase Price;

                  (5) the name and address of the Paying Agent and the
         Conversion Agent;

                  (6) the Conversion Rate applicable on the Change in Control
         Notice Date and any adjustments to the Conversion Rate;

                  (7) that Securities as to which a Change in Control Purchase
         Notice has been given may be converted pursuant to Article 11 hereof
         only if the Change in Control Purchase Notice has been withdrawn in
         accordance with the terms of this Indenture; and

                  (8) briefly, the procedures the Holder must follow to exercise
         rights under this Section 3.09.

                  At the Issuer's request, the Trustee shall give such Change in
Control Notice in the name of the Issuer and at the Issuer's expense; provided,
however, that, in all cases, the text of such Change in Control Notice shall be
prepared by the Issuer.

                  (d) Procedure upon Purchase. The Issuer shall deposit cash at
the time and in the manner as provided in Section 3.11, sufficient to pay the
aggregate Change in Control Purchase Price of all Securities to be purchased
pursuant to this Section 3.09.

                                       31


                  SECTION 3.10. Effect of Purchase Notice or Change in Control
Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or
Change in Control Purchase Notice specified in Section 3.08(a) or Section
3.09(a) or 3.15(b), as applicable, the Holder of the Security in respect of
which such Purchase Notice or Change in Control Purchase Notice, as the case may
be, was given shall (unless such Purchase Notice or Change in Control Purchase
Notice is withdrawn as specified in the following two paragraphs) thereafter be
entitled to receive solely the Purchase Price or Change in Control Purchase
Price, as the case may be, with respect to such Security. Such Purchase Price or
Change in Control Purchase Price shall be paid to such Holder, subject to
receipts of funds and/or securities by the Paying Agent, promptly following the
later of (x) the Purchase Date, the Change in Control Purchase Date or the Trust
Assumption Event Purchase Date, as the case may be, with respect to such
Security (provided the conditions in Section 3.08(a) or Section 3.09(a) or
3.15(b), as applicable, have been satisfied) and (y) the time of delivery of
such Security to the Paying Agent by the Holder thereof in the manner required
by Section 3.08(a) or Section 3.09(a) or Section 3.15(e), as applicable.
Securities in respect of which a Purchase Notice or Change in Control Purchase
Notice, as the case may be, has been given by the Holder thereof may not be
converted pursuant to Article 11 hereof on or after the date of the delivery of
such Purchase Notice or Change in Control Purchase Notice, as the case may be,
unless such Purchase Notice or Change in Control Purchase Notice, as the case
may be, has first been validly withdrawn as specified in the following two
paragraphs.

                  A Purchase Notice or Change in Control Purchase Notice, as the
case may be, may be withdrawn by means of a written notice of withdrawal
delivered to the office of the Paying Agent in accordance with the Purchase
Notice or Change in Control Purchase Notice, as the case may be, at any time
prior to the close of business on the Purchase Date or the Change in Control
Purchase Date, as the case may be, specifying:

                  (1) the certificate number of the Security in respect of which
         such notice of withdrawal is being submitted,

                  (2) the Principal Amount of the Security with respect to which
         such notice of withdrawal is being submitted, and

                  (3) the Principal Amount, if any, of such Security which
         remains subject to the original Purchase Notice or Change in Control
         Purchase Notice, as the case may be, and which has been or will be
         delivered for purchase or repurchase by the Issuer.

                  A written notice of withdrawal of a Purchase Notice or Change
in Control Purchase Notice may be in the form set forth in the preceding
paragraph or may be in the form of (i) a conditional withdrawal contained in a
Purchase Notice pursuant to the terms of Section 3.08(a)(1)(D) or (ii) a
conditional withdrawal containing the information set forth in Section
3.08(a)(1)(D) and the preceding paragraph and contained in a written notice of
withdrawal delivered to the Paying Agent as set forth in the preceding
paragraph.

                  There shall be no purchase of any Securities pursuant to
Section 3.08 or 3.09 (other than through the issuance of Shares in payment of
the Purchase Price), including cash in lieu of fractional shares if there has
occurred (prior to, on or after, as the case may be, the giving, by the Holders
of such Securities, of the required Purchase Notice or Change in Control
Purchase

                                       32


Notice, as the case may be) and is continuing an Event of Default (other than a
default in the payment of the Purchase Price or Change in Control Purchase
Price, as the case may be, with respect to such Securities) and the Paying Agent
shall promptly return to the respective Holders thereof any Securities (x) with
respect to which a Purchase Notice or Change in Control Purchase Notice, as the
case may be, has been withdrawn in compliance with this Indenture, or (y) held
by it during the continuance of an Event of Default (other than a default in the
payment of the Purchase Price or Change in Control Purchase Price, as the case
may be, with respect to such Securities) in which case, upon such return, the
Purchase Notice or Change in Control Purchase Notice with respect thereto shall
be deemed to have been withdrawn.

                  SECTION 3.11. Deposit of Purchase Price or Change in Control
Purchase Price. Prior to 11:00 a.m. (local time in The City of New York) on the
Business Day following the Purchase Date or the Change in Control Purchase Date,
as the case may be, the Issuer shall deposit with the Trustee or with the Paying
Agent (or, if the Issuer or a Subsidiary of the Issuer is the Paying Agent,
shall segregate and hold in trust) an amount of money (in immediately available
funds if deposited on such Business Day) sufficient to pay the cash portion of
the aggregate Purchase Price or Change in Control Purchase Price, as the case
may be, of all the Securities or portions thereof which are to be purchased as
of the Purchase Date or Change in Control Purchase Date, as the case may be, and
shall instruct its stock transfer agent to deliver the number of Shares issuable
in payment of the remaining portion of the aggregate Purchase Price. The Issuer
shall promptly notify the Trustee in writing of the amount of any deposits of
cash or deliveries of Shares made pursuant to this Section.

                  SECTION 3.12. Securities Purchased or Repurchased in Part. Any
Security which is to be purchased or repurchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Issuer or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Issuer and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing) and the Issuer
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate Principal
Amount equal to, and in exchange for, the portion of the Principal Amount of the
Security so surrendered which is not purchased.

                  SECTION 3.13. Covenant to Comply With Securities Laws Upon
Purchase or Repurchase of Securities. In connection with any offer to purchase
or repurchase or purchase or repurchase of Securities under Section 3.08 or 3.09
hereof (provided that such offer or purchase or repurchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of
such offer or purchase), the Issuer shall (i) comply with Rule 13e-4 and Rule
14e-1 under the Exchange Act, (ii) file the related Schedule TO (or any
successor schedule, form or report) under the Exchange Act, and (iii) otherwise
comply with all Federal and state securities laws so as to permit the rights and
obligations under Sections 3.08 and 3.09 to be exercised in the time and in the
manner specified in Sections 3.08 and 3.09.

                  SECTION 3.14. Repayment to the Issuer. The Trustee and the
Paying Agent shall return to the Issuer any cash that remains unclaimed,
together with interest or dividends, if any, thereon, held by them for the
payment of the Purchase Price or Change in Control Purchase

                                       33


Price, as the case may be; provided, however, that to the extent that the
aggregate amount of cash deposited by the Issuer pursuant to Section 3.11
exceeds the cash portion of the aggregate Purchase Price or Change in Control
Purchase Price, as the case may be, of the Securities or portions thereof which
the Issuer is obligated to purchase as of the Purchase Date or Change in Control
Purchase Date, as the case may be, then on the Business Day following the
Purchase Date or Change in Control Purchase Date, as the case may be, the
Trustee shall return any such excess to the Issuer.

                  SECTION 3.15. Redemption or Repurchase Upon Trust Assumption
Event.

                  (a) By the Issuer or the Trust. If there shall have occurred a
Trust Assumption Event, the Issuer or the Trust, at either the Issuer's or the
Trust's option, may elect to redeem Securities in accordance with the provisions
thereof and of this Indenture. If either the Issuer or the Trust elect to redeem
Securities, it shall notify the Trustee in writing of the date of redemption
(the "Trust Assumption Event Redemption Date"), which date shall be a date not
later than 60 days after the effective date of the Trust Assumption Event, the
Principal Amount of Securities to be redeemed and the Trust Assumption Event
Redemption Price.

         The Issuer or the Trust shall give notice to the Trustee provided for
in this Section at least 30 days but not more than 60 days before the Trust
Assumption Event Redemption Date unless the Trustee consents to a shorter
period. Such notice shall be accompanied by an Officers' Certificate from the
Issuer or the Trust to the effect that such redemption will comply with the
conditions herein. If fewer than all the Securities are to be redeemed, the
record date relating to such redemption shall be selected by the Issuer or the
Trust and given to the Trustee, which record date shall be not fewer than 15
days after the date of notice to the Trustee. Any such notice may be canceled at
any time prior to notice of such redemption being mailed to any Holder and shall
thereby be void and of no effect.

         If fewer than all the Securities held in definitive form are to be
redeemed, the Trustee shall select the Securities to be redeemed on a pro rata
basis in accordance with the Principal Amounts. The Trustee shall make the
selection at least 30 days but no more than 60 days before the Trust Assumption
Event Redemption Date from outstanding Securities not previously called for
redemption. Securities and portions thereof that the Trustee selects shall be in
Principal Amounts of $1,000 or integral multiples of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall promptly notify the
Issuer or the Trust of the Securities or portions thereof to be redeemed.

         If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as outstanding for the purpose of such selection.

         At least 30 days but not more than 60 days before a Trust Assumption
Event Redemption Date, the Issuer or the Trust shall mail a notice of redemption
by first-class mail to each Holder of Securities to be redeemed at such Holder's
registered address.

                                       34


         The notice shall identify the Securities to be redeemed and shall
state:

                  (1)      the Trust Assumption Event Redemption Date;

                  (2)      the Trust Assumption Event Redemption Price;

                  (3)      the name and address of the Paying Agent;

                  (4)      that Securities called for redemption must be
         surrendered to the Paying Agent to collect the Trust Assumption Event
         Redemption Price;

                  (5)      that Holders who want to convert Securities must
         satisfy the requirements set forth therein and in this Indenture;

                  (6)      if fewer than all the outstanding Securities are to
         be redeemed, the certificate numbers and Principal Amounts of the
         particular Securities to be redeemed;

                  (7)      that, unless the Issuer or Trust defaults in making
         payment of such Trust Assumption Event Redemption Price or the Paying
         Agent is prohibited from making such payment pursuant to the terms of
         this Indenture, interest (including Contingent Interest and Defaulted
         Interest), if any, on Securities (or portions thereof) called for
         redemption will cease to accrue on and after the Trust Assumption Event
         Redemption Date;

                  (8)      the CUSIP number, if any, printed on the Securities
         being redeemed; and

                  (9)      that no representation is made as to the correctness
         or accuracy of the CUSIP number, if any, listed in such notice or
         printed on the Securities.

         At the Issuer's or the Trust's request, the Trustee shall give the
notice of redemption in the Issuer's or the Trust's name and at the Issuer's or
Trust's expense. In such event, the Issuer or the Trust shall provide the
Trustee with the information required by this Section.

         Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Trust Assumption Event Redemption Date and at the
Trust Assumption Event Redemption Price stated in the notice except for
Securities which are converted in accordance with the terms of this Indenture.
Upon surrender to the Paying Agent, such Securities shall be paid at the Trust
Assumption Event Redemption Price stated in the notice. Failure to give notice
or any defect in the notice to any Holder shall not affect the validity of the
notice to any other Holder.

                  (b) By the Holder. If there shall have occurred a Trust
Assumption Event, Securities shall be purchased by the Trust at a purchase price
of 100% of Principal Amount plus accrued but unpaid interest (including
Contingent Interest, if any), to, but not including the purchase date (the
"Trust Assumption Event Purchase Price"), as of a date that is not later than 60
days after the date of the Trust Assumption Event (the "Trust Assumption Event
Purchase Date"), at the option of Holder upon:

                                       35


                  (1) delivery to the Trustee by Holder of a Purchase Notice,
         substantially in the form of Exhibit D hereto, at any time until the
         close of business on the third Business Day prior to the Trust
         Assumption Event Purchase Date stating:

                           (A) the certificate number of the Security which the
                  Holder will deliver to be purchased,

                           (B) the portion of the Principal Amount of the
                  Security which the Holder will deliver to be purchased, which
                  portion must be in a Principal Amount of $1,000 or integral
                  multiples thereof, and

                           (C) that such Security shall be purchased as of the
                  Trust Assumption Event Purchase Date pursuant to the terms and
                  conditions specified in the Securities and in this Indenture,
                  and

                  (2) delivery of such Security to the Paying Agent for
         cancellation prior to, on or after the Trust Assumption Event Purchase
         Date (together with all necessary endorsements) at the offices of the
         Paying Agent, such delivery being a condition to receipt by the Holder
         of the Trust Assumption Event Purchase Price therefor; provided,
         however, that such Trust Assumption Event Purchase Price shall be so
         paid pursuant to this Section 3.15(b) only if the Security so delivered
         to the Paying Agent shall conform in all respects to the description
         thereof in the related Purchase Notice.

                  The Trust shall purchase from the Holder thereof, pursuant to
this Section 3.15(b), a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000 if so requested by the
Holder. Provisions of this Indenture that apply to the purchase of all of a
Security also apply to the purchase of such portion of such Security.

                  Any purchase by the Trust contemplated pursuant to the
provisions of this Section 3.15(b) shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of the
Trust Assumption Event Purchase Date and the time of delivery of the Security.

                  Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.15(b) shall have the right to withdraw such Purchase Notice at any time prior
to the close of business on the Trust Assumption Event Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.10.

                  The Paying Agent shall promptly notify the Trust of the
receipt by it of any Purchase Notice or written notice of withdrawal thereof.

                  (c) Purchase with Cash. On each Trust Assumption Event
Redemption Date and Trust Assumption Event Purchase Date, the Trust Assumption
Event Purchase Price of Securities in respect of which a notice of redemption
pursuant to Section 3.15(a) or a Purchase Notice pursuant to Section 3.15(b) has
been given, shall be paid by the Issuer or the Trust, as the case may be, with
cash equal to the aggregate Trust Assumption Event Purchase Price of such
Securities.

                                       36


                  (d) Notice of Trust Assumption Event. Within 15 days after the
occurrence of a Trust Assumption Event, the Issuer or the Trust shall mail
notice of the Trust Assumption Event (the "Trust Assumption Event Notice") by
first-class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law). The Trust Assumption Event Notice shall be sent to
Holders (and to beneficial owners as required by applicable law) not less than
35 days prior to such Trust Assumption Event Redemption Date or Trust Assumption
Event Purchase Date (the "Trust Assumption Event Notice Date"). The notice shall
include a form of Purchase Notice to be completed by the Securityholder and
shall state:

                  (1) briefly, the events causing a Trust Assumption Event and
         the date of such Trust Assumption Event ;

                  (2) the date by which the Purchase Notice pursuant to this
         Section 3.15 must be given;

                  (3) the Trust Assumption Event Redemption Date or Trust
         Assumption Event Purchase Date;

                  (4) the Trust Assumption Event Purchase Price;

                  (5) the name and address of the Paying Agent and the
         Conversion Agent;

                  (6) the Conversion Rate applicable on the Trust Assumption
         Event Notice Date and any adjustments to the Conversion Rate;

                  (7) that Securities as to which a Purchase Notice has been
         given may be converted pursuant to Article 11 hereof only if the
         Purchase Notice has been withdrawn in accordance with the terms of this
         Indenture; and

                  (8) briefly, the procedures the Holder must follow to exercise
         rights under this Section 3.15(b).

                  At the Issuer's or the Trust's request, the Trustee shall give
such Trust Assumption Event Notice in the name of the Issuer or the Trust and at
the Issuer's or the Trust's expense; provided, however, that, in all cases, the
text of such Purchase Notice shall be prepared by the Issuer or the Trust.

                  (e) Procedure upon Purchase. The Issuer or the Trust shall
deposit cash at the time and in the manner as provided in Section 3.11,
sufficient to pay the aggregate Trust Assumption Event Purchase Price of all
Securities to be purchased pursuant to this Section 3.15.

                                    ARTICLE 4

                                    COVENANTS

                  SECTION 4.01. Payment of Securities. The Issuer shall promptly
make all payments in respect of the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Such payments shall be
considered made on the date due if on such date

                                       37


the Trustee or the Paying Agent holds, in accordance with this Indenture, money
sufficient to make all payments with respect of the Securities then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.

                  SECTION 4.02. Financial Information; SEC Reports. At any time
the Issuer is not subject to either Section 13 or 15(d) of the Exchange Act, the
Issuer shall at the request of any Holder (or holders of Shares issued upon
conversion of the Securities) provide to such Holder (or holders of such Shares)
and any prospective purchaser designated by such Holders (or holders of such
Shares), as the case may be, such information, if any, required by Rule
144A(d)(4) under the Securities Act. Further, the Issuer shall file with the
Trustee, within 15 days after it files the same with the SEC, copies of its
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Issuer is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Issuer's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates). The Issuer
also shall comply with any other provisions of Trust Indenture Act Section
314(a).

                  SECTION 4.03. Corporate Existence. The Issuer shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, material rights (charter and statutory) and
material franchises (other than as contemplated by Section 5.01); provided,
however, that the Issuer shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation of
such rights or franchises is no longer desirable in the conduct of the business
of the Issuer.

                  SECTION 4.04. Restrictions on Liens. So long as any of the
Securities are outstanding, the Issuer shall not pledge, mortgage or
hypothecate, or permit to exist, and shall not cause, suffer or permit any
Restricted Subsidiary to pledge, mortgage or hypothecate, or permit to exist,
except in favor of the Issuer or any Subsidiary, any mortgage, pledge or other
lien upon, any Principal Property at any time owned by it, to secure any
indebtedness, without making effective provisions whereby the Securities shall
be equally and ratably secured with any and all such indebtedness and with any
other indebtedness thereby; provided, however, that this restriction shall not
apply to or prevent the creation or existence of:

                  (a) mortgages or other liens on any such property acquired,
constructed or improved by the Issuer or a Restricted Subsidiary to secure or
provide for the payment of any part of the purchase price of such property or
the cost of such construction or improvement or any mortgage or other lien on
any such property existing at the time of acquisition thereof;

                  (b) any mortgage or other lien on any property of another
company existing at the time it is acquired by merger, consolidation or
acquisition of substantially all of its stock or its assets;

                                       38


                  (c) pledges or deposits to secure payment of workers'
compensation or insurance premiums, or relating to tenders, bids, contracts
(except contracts for the payment of money) or leases;

                  (d) pledges or liens in connection with tax assessments or
other governmental charges, or as security required by law or governmental
regulation as a condition to the transaction of any business or the exercise of
any privilege or right;

                  (e) pledges or liens to secure a stay of process in
proceedings to enforce a contested liability, or required in connection with the
institution of legal proceedings or in connection with any other order or decree
in any such proceeding or in connection with any contest of any tax or other
governmental charge, or deposits with a governmental agency entitling the Issuer
or a Restricted Subsidiary to maintain self-insurance or to participate in other
specified insurance arrangements;

                  (f) mechanics', carriers', workmen's and other like liens;

                  (g) encumbrances in favor of the U.S. Government to secure
progress or advance payments;

                  (h) mortgages, pledges or other liens securing any
indebtedness incurred to finance the cost of property leased to the U.S.
Government at a rental rate sufficient to pay the principal of and interest on
such indebtedness;

                  (i) mortgages or other liens securing indebtedness of a
Restricted Subsidiary to the Issuer or to a Restricted Subsidiary;

                  (j) mortgages, pledges or other liens affecting property
securing indebtedness of a governmental authority issued to finance the cost of
a pollution control program with respect to operations of the Issuer or a
Restricted Subsidiary;

                  (k) renewals, extensions and replacements of any permitted
mortgage, lien, deposit or encumbrance, provided the amount secured is not
increased;

                  (l) mortgages or other liens on any such property existing on
the date hereof; and

                  (m) the creation of any other mortgage, pledge or other lien,
if, after giving effect to the creation thereof, the total of (i) the aggregate
principal amount of indebtedness of the Issuer and its Restricted Subsidiaries
secured by all mortgages, pledges or other liens created under the provisions
referred to in this clause (m), plus (ii) the aggregate amount of Capitalized
Lease-Back Obligations of the Issuer and its Restricted Subsidiaries under the
entire unexpired terms of all leases entered into in connection with sale and
lease-back transactions which would have been precluded by the provision for
limitations on such transactions described above, but for the satisfaction of
the condition referred to in clause (ii) of the description of such provision,
will not exceed an amount equal to 15% of Consolidated Net Tangible Assets.

         The lease of any property and rental obligations thereunder (whether or
not involving a Sale and Lease-Back Transaction and whether or not capitalized)
shall not be deemed to create a

                                       39


lien. The sale or other transfer of (a) timber of other natural resources in
place for a period of time until, or in an amount such that, the purchaser will
realize therefrom a specified amount of money (however determined) or a
specified amount of such resources, or (b) any other interest in property of the
character commonly referred to as a "production payment", shall not be deemed to
create a lien.

                  SECTION 4.05. Sale and Leaseback Transaction.

The Issuer shall not, and shall not permit any Restricted Subsidiary to, after
the date hereof, enter into any arrangement with any Person providing for the
leasing by the Issuer or any Restricted Subsidiary of any Principal Property now
owned or hereafter acquired which has been or is to be sold or transferred by
the Issuer or such Restricted Subsidiary to such Person with the intention of
taking back a lease of such Principal Property (a "Sale and Leaseback
Transaction"), unless (i) the Issuer or such Restricted Subsidiary applies or
causes to be applied an amount equal to the greater of the fair value (as
determined by the Board of Directors) of such Principal Property and the net
proceeds of such sale or transfer, within 120 days of receipt thereof, to the
retirement or prepayment of the Securities or of Funded Debt of the Issuer or
any Restricted Subsidiary ranking equal in right of payment with the Securities
or to the acquisition, construction, development or improvement of properties,
facilities or equipment used for operating purposes which are, or upon such
acquisition, construction, development or improvement will be, a Principal
Property or a part thereof, or (ii) at the time of entering into such
transaction, such Principal Property could have been subjected to a
mortgage-securing indebtedness in a principal amount equal to the Capitalized
Lease-Back Obligation with respect to such Principal Property under Section
4.04(m) without securing the Securities pursuant to Section 4.04. The foregoing
restriction shall not apply to any Sale and Leaseback Transaction (i) between
the Issuer and any Restricted Subsidiary or among Restricted Subsidiaries, (ii)
which has a lease of less than three years in length, or (iii) entered into
within 120 days after the later of the acquisition of such Principal Property or
the completion of construction and commencement of full operation of such
Principal Property.

                  SECTION 4.06. [Intentionally Omitted].

                  SECTION 4.07. [Intentionally Omitted].

                  SECTION 4.08. Compliance Certificate. The Issuer shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Issuer
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Issuer they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Issuer is taking or proposes to take
with respect thereto. The Issuer also shall comply with Trust Indenture Act
Section 314(a)(4).

                                       40


                  SECTION 4.09. Further Instruments and Acts. The Issuer shall
execute and deliver to the Trustee such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.

                  SECTION 4.10. [Intentionally Omitted].

                  SECTION 4.11. [Intentionally Omitted].

                  SECTION 4.12. Designation of Subsidiaries.

         The Issuer may at any time designate a Restricted Subsidiary as an
Unrestricted Subsidiary and may at any time rescind the designation of an
Unrestricted Subsidiary, except that:

                  (a) the Issuer shall not designate a subsidiary as an
Unrestricted Subsidiary if, upon the effectiveness of such designation, such
subsidiary would own any Capital Stock of, or hold any Indebtedness of, any
Restricted Subsidiary and

                  (b) the Issuer shall not redesignate an Unrestricted
Subsidiary as a Restricted Subsidiary unless (i) such Unrestricted Subsidiary
has no outstanding liens on its properties that would be prohibited by Section
4.04 if created immediately after such Unrestricted Subsidiary was designated as
a Restricted Subsidiary and (ii) such Unrestricted Subsidiary is not a party to
any lease that would be prohibited by Section 4.05 if at the time such
Unrestricted Subsidiary entered into such lease it was designated as a
Restricted Subsidiary.

                                   ARTICLE 5

                               SUCCESSOR COMPANIES

                  SECTION 5.01. Merger and Consolidation. Except as otherwise
contemplated by Section 11.21, the Issuer shall not consolidate with or merge
with or into, or convey, transfer or lease its properties and assets as, or
substantially as, an entirety to, any Person, unless:

                  (i)      the resulting, surviving or transferee Person (the
         "Successor Company") shall expressly assume, by a supplemental
         indenture, executed and delivered to the Trustee, in form satisfactory
         to the Trustee, all the obligations of the Issuer under the Securities
         and this Indenture; and

                  (ii)     immediately after giving effect to such transaction,
         no Default shall have occurred and be continuing.

                  The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Issuer under this Indenture.
The predecessor Issuer in the case of a transfer or lease of its properties and
assets as, or substantially as, an entirety shall be

                                       41


discharged from its obligations under the Securities and this Indenture, other
than, in the event the predecessor Issuer is not the Successor Company, the
predecessor Issuer's obligation to deliver Shares (or other property) upon
conversion of the Securities in accordance with Article 11.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

                  SECTION 6.01. Events of Default. An "Event of Default" with
respect to any Security, occurs if:

                  (1) the Issuer defaults in any payment of the Principal
         Amount, Redemption Price, Purchase Price, Change in Control Purchase
         Price or Trust Assumption Event Purchase Price on the Securities when
         it becomes due and payable;

                  (2) the Issuer defaults in the payment of interest or
         Contingent Interest or liquidated damages on any Securities when such
         interest or Contingent Interest, if any, or liquidated damages becomes
         due and payable, and such default continues for a period of 30 days;

                  (3) the Issuer fails to comply with any of its covenants or
         agreements contained in the Securities or this Indenture (other than
         those referred to in (1) or (2) above) and such failure continues for
         60 days after the notice specified below;

                  (4) a default occurs under any mortgage, indenture or
         instrument under which there may be issued or by which there may be
         secured or evidenced any Indebtedness for money borrowed by the Issuer,
         whether such Indebtedness or guarantee now exists, or is created after
         the date of this Indenture, which default results in the acceleration
         of such Indebtedness prior to its express maturity and, in each case,
         the principal amount of such Indebtedness, together with the principal
         amount of any other such Indebtedness the maturity of which has been so
         accelerated, aggregates $100 million or more and such acceleration
         continues for 30 days after the notice specified below;

                  (5) the Issuer or the Guarantor, so long as the Guarantor
         constitutes a Significant Subsidiary of the Issuer pursuant to or
         within the meaning of any Bankruptcy Law:

                           (A) commences a voluntary case;

                           (B) consents to the entry of an order for relief
                  against it in an involuntary case;

                           (C) consents to the appointment of a Custodian of it
                  or for any substantial part of its property; or

                           (D) makes a general assignment for the benefit of its
                  creditors or takes any comparable action under any foreign
                  laws relating to insolvency; or

                                       42


                  (6) a court of competent jurisdiction enters an order or
         decree under any Bankruptcy Law that:

                           (A) is for relief against the Issuer or the
                  Guarantor, so long as the Guarantor constitutes a Significant
                  Subsidiary of the Issuer or in an involuntary case;

                           (B) appoints a Custodian of the Issuer or the
                  Guarantor, so long as the Guarantor constitutes a Significant
                  Subsidiary of the Issuer or for any substantial part of its
                  property; or

                           (C) orders the winding up or liquidation of the
                  Issuer or the Guarantor, so long as the Guarantor constitutes
                  a Significant Subsidiary of the Issuer or any similar relief
                  is granted under any foreign laws and the order or decree
                  remains unstayed and in effect for 60 days.

                  The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.

                  The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.

                  A Default under clause (3) or (4) above is not an Event of
Default until the Trustee or the Holders of at least 25% in Principal Amount of
the outstanding Securities notify the Issuer of the Default and the Issuer does
not cure such Default within the time specified in clause (3) or (4), as the
case may be, after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default."

                  SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(5) or (6) with respect to the
Issuer) occurs and is continuing, the Trustee or the Holders of at least 25% in
Principal Amount of outstanding Securities, by notice to the Issuer, may declare
the Issue Price of and accrued but unpaid interest and accrued Contingent
Interest, if any, to the date of declaration on all Securities to be immediately
due and payable. Upon such a declaration, such Issue Price and accrued but
unpaid interest and accrued Contingent Interest, if any, shall be due and
payable immediately. If an Event of Default specified in Section 6.01(5) or (6)
occurs, the Issue Price of and accrued but unpaid interest and accrued
Contingent Interest, if any, to the occurrence of such event on all such series
of Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. The
Holders of a majority in Principal Amount of Securities by notice to the Trustee
may rescind an acceleration of the Securities and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived with respect to the Securities
except nonpayment of the Issue Price or accrued but unpaid interest or accrued
Contingent Interest, if

                                       43


any, that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.

                  SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of the Issue Price of or accrued but unpaid interest or accrued
Contingent Interest, if any, on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

                  The Trustee may institute and maintain a suit or legal
proceeding even if it does not possess any Securities or does not produce any of
them in the proceeding. A delay or omission by the Trustee or any Securityholder
in exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.

                  SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in Principal Amount of Securities by notice to the Trustee may waive an
existing Default of the Securities and its consequences except (i) a Default in
the payment of the Issue Price of, accrued but unpaid interest on or accrued
Contingent Interest, or liquidated damages with respect to the Securities, (ii)
a Default arising from the failure to purchase or repurchase any Securities when
required pursuant to the terms of this Indenture, or (iii) a Default in respect
of a provision that under Section 9.02 cannot be amended without the consent of
each Securityholder affected. When a Default is waived, it is deemed cured, but
no such waiver shall extend to any subsequent or other Default or impair any
consequent right.

                  SECTION 6.05. Control by Majority. The Holders of a majority
in Principal Amount of Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of any other Holder or that would subject the Trustee to personal
liability, unless the Trustee is offered indemnity reasonably satisfactory to
it.

                  SECTION 6.06. Limitation on Suits. Except as provided in
Section 6.07, no Holder of Securities may pursue any remedy with respect to this
Indenture or the Securities unless:

                  (1) the Holder previously gave the Trustee written notice
         stating that an Event of Default is continuing;

                  (2) the Holders of at least 25%, in Principal Amount of
         outstanding Securities make a written request to the Trustee to pursue
         the remedy;

                  (3) such Holder or Holders offer to the Trustee reasonable
         security or indemnity satisfactory to the Trustee against any loss,
         liability or expense;

                                       44


                  (4) the Trustee does not comply with the request within 60
         days after receipt of the request and the offer of security or
         indemnity; and

                  (5) the Holders of a majority in Principal Amount of
         outstanding Securities do not give the Trustee a direction inconsistent
         with the request during such 60-day period.

                  A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.

                  SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of Securities to receive payment of the Issue Price of, and liquidated damages
and accrued but unpaid interest and accrued Contingent Interest, if any, on, the
Securities held by such Holder, on or after their Maturity, or to bring suit for
the enforcement of any such payment on or after their Maturity or the right to
convert the Securities as provided herein, shall not be impaired or affected
without the consent of such Holder.

                  SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Issuer for the whole amount then due and owing (together with
interest on any unpaid interest (including Contingent Interest to the extent
lawful) and the amounts provided for in Section 7.07.

                  SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to any Issuer or any of its
Subsidiaries, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.

                  SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:

                  FIRST: to the Trustee for amounts due under Section 7.07;

                  SECOND: to Securityholders for amounts due and unpaid on the
Securities for the Issue Price and accrued interest and accrued Contingent
Interest, if any, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for the Issue Price and
accrued interest and accrued Contingent Interest, if any; and

                  THIRD: to the Issuer.

                                       45


                  The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Issuer a
notice that states the record date, the payment date and amount to be paid.

                  SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing, by any party litigant in the suit, of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in Principal Amount of Securities.

                  SECTION 6.12. Waiver of Stay or Extension Laws. The Issuer (to
the extent it may lawfully do so) shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law, wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Issuer
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.

                                    ARTICLE 7

                                     TRUSTEE

                  SECTION 7.01. Duties of Trustee. (a) If an Event of Default
with respect to the Securities has occurred and is continuing, the Trustee shall
exercise the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise thereof as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

                  (b) Except during the continuance of an Event of Default:

                  (1) the Trustee undertakes to perform such duties and only
         such duties as are specifically set forth in this Indenture and no
         implied covenants or obligations shall be read into this Indenture
         against the Trustee; and

                  (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, the Trustee shall examine the certificates and
         opinions to determine whether or not they conform to the requirements
         of this Indenture (but need not confirm or investigate the accuracy of
         mathematical calculations or other facts stated therein).

                                       46


                  (c) The Trustee may not be relieved from liability for its own
grossly negligent action, its own grossly negligent failure to act or its own
willful misconduct, except that:

                  (1) this paragraph does not limit the effect of paragraph (b)
         of this Section;

                  (2) the Trustee shall not be liable for any error of judgment
         made in good faith by a Trust Officer unless it is proved that the
         Trustee was grossly negligent in ascertaining the pertinent facts; and

                  (3) the Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance with a direction
         received by it pursuant to Section 6.05.

                  (d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section.

                  (e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.

                  (f) Money held in trust by the Trustee need not be segregated
from funds except to the extent required by law.

                  (g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers.

                  (h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the Trust
Indenture Act.

                  SECTION 7.02. Rights of Trustee. (a) The Trustee may
conclusively rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.

                  (b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.

                  (c) The Trustee may act through agents or attorneys and shall
not be responsible for the misconduct or negligence of any agent or attorney
appointed with due care.

                  (d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute willful misconduct or gross negligence.

                  (e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or

                                       47


suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.

                  (f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document.

                  (g) The Trustee shall not be deemed to have notice of any
Default or Event of Default with respect to any series of Securities, except
Events of Default under Section 6.01(1) or (2), unless a Trust Officer of the
Trustee has actual knowledge thereof or unless written notice of any event which
is in fact such a default is received by the Trustee at the Corporate Trust
Office of the Trustee, and such notice references the Securities and this
Indenture.

                  (h) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to and shall be enforceable by, the Trustee in each of
its capacities hereunder, and to each agent, custodian and other Person employed
to act hereunder.

                  SECTION 7.03. Individual Rights of Trustee. The Trustee in its
commercial banking or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Issuer or its Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.

                  SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuer's
use of the proceeds from the Securities, and it shall not be responsible for any
statement in this Indenture, in the Securities, or in any document executed in
connection with the sale of the Securities, other than those set forth in the
Trustee's certificate of authentication.

                  SECTION 7.05. Notice of Defaults. If a Default with respect to
the Securities occurs and is continuing and if it is actually known to a Trust
Officer of the Trustee, the Trustee shall mail to each Securityholder of such
series of Securities notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of the Issue Price of or accrued
interest or any accrued Contingent Interest (including payments pursuant to the
mandatory purchase or repurchase provisions of the Securities), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.

                  SECTION 7.06. Reports by Trustee to Holder. As promptly as
practicable after each May 15 beginning with the May 15 following the Closing
Date, and in any event prior to July 15 in each year, the Trustee shall mail to
each Securityholder a brief report dated as of such May 15 that complies with
Section 313(a) of the Trust Indenture Act. The Trustee shall also comply with
Section 313(b) of the Trust Indenture Act.

                                       48


                  A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Issuer agrees to notify promptly the
Trustee whenever any series of Securities becomes listed on any stock exchange
and of any delisting thereof.

                  SECTION 7.07. Compensation and Indemnity. The Issuer shall pay
to the Trustee from time to time such compensation for its services as the
Issuer and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Issuer
shall indemnify the Trustee against any and all loss, liability or expense
(including reasonable attorneys' fees) incurred by or in connection with the
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Issuer of any claim for which it may seek indemnity
promptly upon obtaining actual knowledge thereof, provided, however, that any
failure so to notify the Issuer shall not relieve the Issuer of its indemnity
obligations hereunder. The Issuer need not reimburse any expense or indemnify
against any loss, liability or expense incurred by an indemnified party through
such party's own willful misconduct, gross negligence or bad faith.

                  To secure the Issuer's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
make any payment on particular Securities.

                  The Issuer's payment obligations pursuant to this Section
shall survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. When the Trustee incurs expenses after the occurrence of
a Default specified in Section 6.01(5) or (6), the expenses are intended to
constitute expenses of administration under the Bankruptcy Law.

                  SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time with respect to the Securities by so notifying the Issuer. The
Holders of a majority in Principal Amount of Securities may remove the Trustee
with respect to the Securities and may appoint a successor Trustee. The Issuer
shall remove the Trustee if:

                  (1) the Trustee fails to comply with Section 7.10;

                  (2) the Trustee is adjudged bankrupt or insolvent;

                  (3) a receiver or other public officer takes charge of the
         Trustee or its property; or

                  (4) the Trustee otherwise becomes incapable of acting.

                  If the Trustee resigns, is removed by the Issuer or by the
Holders of a majority in Principal Amount of Securities and such Holders do not
reasonably promptly appoint a successor Trustee or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event

                                       49



being referred to herein as the retiring Trustee), the Issuer shall promptly
appoint a successor Trustee.

                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.

                  If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in Principal Amount of Securities that removed such Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

                  If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

                  Notwithstanding the replacement of the Trustee pursuant to
this Section 7.08, the Issuer's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.

                  SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate-trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. As promptly as practicable
thereafter, the Trustee shall notify the Issuer of such succession.

                  In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and if at that time any of the Securities shall not have been
authenticated, any such successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.

                  SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of Trust Indenture Act Section 310(a). The
Trustee shall have a combined capital and surplus of at least $100,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with Trust Indenture Act Section 310(b); provided, however, that
there shall be excluded from the operation of Trust Indenture Act Section
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in Trust Indenture
Act Section 310(b)(1) are met.

                                       50


                  SECTION 7.11. Preferential Collection of Claims Against
Issuer. The Trustee shall comply with Trust Indenture Act Section 311(a),
excluding any creditor relationship listed in Trust Indenture Act Section
311(b). A Trustee who has resigned or has been removed shall be subject to Trust
Indenture Act Section 311(a) to the extent indicated.

                                    ARTICLE 8

                             DISCHARGE OF INDENTURE

                  SECTION 8.01. Discharge of Liability on Securities. This
Indenture shall cease to be of further effect, and the Trustee, on demand of and
at the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when

                  (a) either

                  (1) all Securities theretofore authenticated and delivered
         (other than (A) Securities which have been destroyed, lost or stolen
         and which have been replaced or paid as provided in Section 2.08 and
         (B) Securities for whose payment money has theretofore been deposited
         with the Trustee in trust or segregated and held in trust by the Issuer
         and thereafter repaid to the Issuer have been delivered to the Trustee
         for cancellation; or

                  (2) all such Securities not theretofore delivered to the
         Trustee for cancellation have become due and payable, whether at Stated
         Maturity or upon any Redemption Date, Change in Control Purchase Date,
         Purchase Date or Conversion Date, and the Issuer has deposited or
         caused to be deposited with the Trustee, the Paying Agent or the
         Conversion Agent, as applicable, as trust funds in trust for the
         purpose an amount of money or securities sufficient to pay and
         discharge the entire Indebtedness evidenced by such Securities not
         theretofore delivered to the Trustee for cancellation; and

                  (b) the Issuer has paid or caused to be paid all other sums
payable hereunder by the Issuer.

                  Notwithstanding clauses (a) and (b) above, the Issuer's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and, if
money or securities shall have been deposited with the Trustee pursuant to
subclause (2) of clause (a) of this Section 8.01, shall survive until the
Securities have been paid in full. Thereafter, the Issuer's obligations in
Section 7.07 shall survive. Notwithstanding clauses (a) and (b) above, the
Issuer's and each Holder's obligations under Section 2.16 shall survive the
satisfaction and discharge of the Indenture.

                  SECTION 8.02. Application of Trust Money. The Trustee shall
hold in trust all money deposited with it pursuant to Section 8.01. It shall
apply the deposited money through the Paying Agent and in accordance with this
Indenture to the payment to the Persons entitled thereto.

                                       51


                  SECTION 8.03. Repayment to Issuer. Subject to any applicable
abandoned property law, the Trustee and the Paying Agent shall pay to the Issuer
upon written request any money or securities held by them that remains unclaimed
for two years, and, thereafter, Securityholders entitled to the money or
securities must look to the Issuer for payment as general creditors.

                                   ARTICLE 9

                                   AMENDMENTS

                  SECTION 9.01. Without Consent of Holders. The Issuer and the
Trustee may amend this Indenture with respect to any series of Securities
without notice to or consent of any Securityholder of such series of Securities:

                  (1) to add to the covenants of the Issuer for the benefit of
         the Holders of Securities or to surrender any right or power herein
         conferred upon the Issuer with respect to the Securities;

                  (2) to provide for the assumption of the Issuer's obligations
         to Holders of Securities in the case of a merger, consolidation,
         conveyance, transfer or lease pursuant to Article 5;

                  (3) to comply with any requirements of the SEC in connection
         with the registration of the Securities under the Securities Act and
         qualifying, or maintaining the qualification of, this Indenture under
         the Trust Indenture Act; provided that such modification or amendment
         does not, in the good faith opinion of the Board of Directors and the
         Trustee, adversely affect the interests of the Securityholders of the
         Securities in any material respect; or

                  (4) to cure any ambiguity or correct or supplement any
         defective provision contained in this Indenture; provided that such
         modification or amendment does not, in the good faith opinion of the
         Board of Directors and the Trustee, adversely affect the interests of
         the Securityholders of the Securities in any material respect.

                  SECTION 9.02. With Consent of Holders. The Issuer and the
Trustee may amend this Indenture with respect to any series of Securities
without notice to any Securityholder of such series of Securities but either (i)
with the written consent of the Securityholders of at least a majority in
Principal Amount of such series of Securities then outstanding or (ii) by the
adoption of a resolution at a meeting of Securityholders that is approved by at
least a majority in Principal Amount of such series of Securities then
outstanding represented at such meeting. However, without the consent of each
Securityholder affected, an amendment may not:

                  (1) change the Stated Maturity of the Securities;

                  (2) reduce the Principal Amount, Redemption Price or Purchase
         Price (including Change in Control Purchase Price and Trust Assumption
         Event Purchase Price) of the Securities;

                                       52


                  (3) make the Securities payable in money or securities other
         than that stated in the Securities;

                  (4) alter the manner of calculation or rate of accrual of
         interest (including Contingent Interest, if any) on the Securities or
         extend the time of payment of any interest of any such amount;

                  (5) except as otherwise permitted or contemplated by Article 5
         or 11, (i) adversely affect the right to require the Issuer to
         repurchase or purchase the Securities or (ii) adversely affect the
         right of any Securityholder to convert the Securities;

                  (6) reduce the percentage in aggregate Principal Amount of the
         Securities outstanding the consent of whose Holders is required to
         modify or amend this Indenture, or the consent of whose Holders is
         required to waive any past Default; or

                  (7) impair the right to institute suit for the enforcement of
         any payment with respect to, or conversion of, the Securities.

                  It shall not be necessary for the consent of the Holders of
Securities under this Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the substance
thereof. After an amendment under this Section becomes effective, the Issuer
shall mail to all affected Securityholders a notice briefly describing such
amendment. The failure to give such notice to all such Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.

                  SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the Trust
Indenture Act as then in effect.

                  SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of Securities, shall bind the
Holder and every subsequent Holder of Securities or portion of Securities, that
evidences the same debt as the consenting Holder's Security even if notation of
the consent or waiver is not made on such Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security,
or portion of such Security, if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder of Securities. An
amendment or waiver becomes effective once both (i) the requisite number of
consents have been received by the Issuer or the Trustee and (ii) such amendment
or waiver has been executed by the Issuer and the Trustee.

                  The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders of Securities entitled
to give their consent or take any other action described above or required or
permitted to be taken pursuant to this Indenture. If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to

                                       53


take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.

                  SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of the Securities, the Trustee may require the
Holder of such Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Issuer or the Trustee so determines, the
Issuer in exchange for such Security shall issue and the Trustee shall
authenticate a Security that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Security shall not affect the validity of
such amendment.

                  SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity satisfactory to it
and to receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture and that such
amendment is the legal, valid and binding obligation of the Issuer, enforceable
against it in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 9.03).

                  SECTION 9.07. Waiver of Certain Conditions.

                  The Issuer may in any particular instance, be excused from
failing to comply with any term, provision or condition set forth in Section
4.02, 4.04 or 4.05, if before the time for such compliance the Holders of at
least a majority in Principal Amount of the outstanding Securities shall, by act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Issuer, and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.

                  The Issuer may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to waive compliance
with any covenant or condition hereunder. If a record date is fixed, the Holders
on such record date, or their duly designated proxies, and only such Persons,
shall be entitled to waive any such compliance, whether or not such Holders
remain Holders after such record date; provided that unless the Holders of at
least a majority in Principal Amount of the outstanding Securities affected
shall have waived such compliance prior to the date which is 90 days after such
record date, any such waiver previously given shall automatically and without
further action by any Holder be canceled and of no further effect.

                                   ARTICLE 10

                             [INTENTIONALLY OMITTED]

                                       54


                                   ARTICLE 11

                                   CONVERSION

                  SECTION 11.01. Conversion Privilege. Except as otherwise
provided in this Article 11, a Holder of a Security may convert such Security
into Shares at any time on or after August 14, 2003 and before the close of
business on May 16, 2023 if one of the following conditions is satisfied:

         (a) the Sale Price per Share for at least 20 trading days in the period
of 30 consecutive trading days ending on the last trading day of the calendar
quarter preceding the calendar quarter in which the conversion occurs is more
than 120% of the Conversion Price on such 30th day;

         (b) the Security has been called for redemption by the Issuer pursuant
to Section 3.01;

         (c) the respective credit ratings assigned to the Securities by both
Moody's Investor Service, Inc. and Standard & Poor's Rating Group have been
reduced below ba3 and BB-, respectively, or the respective credit ratings
assigned to the Securities are suspended or withdrawn or neither rating agency
is rating the Securities; or

         (d) (i) a distribution of Capital Stock referred to in Section 11.07
occurs, (ii) a distribution referred to in Section 11.08 occurs or (iii) a Share
Separation occurs.

         In the event the Issuer is a party to a consolidation, merger or
binding share exchange pursuant to which the Shares would be converted into
cash, securities or other property, a Holder of a Security may convert such
Security at any time from and after the date which is 15 days prior to the date
the Issuer announces the anticipated effective date of the transaction until 15
days after the actual effective date of such transaction.

         In the case of the foregoing clauses (d)(i), (ii) and (iii), the Issuer
must notify the Holders of Security at least 20 days prior to the Ex-Dividend
Date for such distribution. Once the Issuer has given such notice, Holders may
surrender their Securities for conversion at any time thereafter until the
earlier of the close of business on the Business Day prior to the Ex-Dividend
Date or the Issuer's announcement that such distribution will not take place.

         If the Security is called for redemption, the Holder may convert it at
any time before the close of business on the second Business Day immediately
preceding the Redemption Date. A Security in respect of which a Holder has
delivered a Purchase Notice or Change in Control Purchase Notice exercising the
option of such Holder to require the Issuer to purchase such Security may be
converted only if such Purchase Notice or Change in Control Purchase Notice is
withdrawn in accordance with the terms of the Indenture.

         The Holders' right to convert Securities into Shares is subject to the
Issuer's right to elect to instead pay such Holder the amount of cash set forth
in the next succeeding sentence, in lieu of delivering such Shares; provided,
however, that if an Event of Default (other than a default in a cash payment
upon conversion of the Securities) shall have occurred and be continuing, the
Issuer shall deliver Shares (and cash in lieu of fractional Shares) in
accordance with this Article 11, whether or not the Issuer has delivered a
notice pursuant to Section 3.03 or 11.02 to the effect

                                       55


that the Securities would be paid in cash. The amount of cash to be paid
pursuant to Section 11.02 for each $1,000 of Principal Amount of a Security upon
conversion shall be equal to the Market Price of Shares multiplied by the
Conversion Rate in effect on such Conversion Date.

         Subject to the next preceding paragraph, the Issuer shall deliver
through the Conversion Agent to Holders surrendering Securities as soon as
practicable after the Conversion Date Shares issuable upon conversion of such
Securities.

         The number of Shares issuable upon conversion of a Security per $1,000
of Principal Amount thereof (the "Conversion Rate") shall be that set forth in
the Securities, subject to adjustment as herein set forth.

               A Holder may convert a portion of the Principal Amount of a
Security if the portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to conversion of all of a Security also apply to
conversion of a portion of a Security.

         In order to exercise conversion rights when a Trust Assumption Event
has not occurred, a Holder shall surrender the applicable Corporation Note or
portion thereof to the Issuer.

                  "Average Quoted Price" means the average of the Sale Prices of
the Shares for the shorter of:

                  (i)      30 consecutive trading days ending on the last full
         trading day prior to the Time of Determination with respect to the
         rights, warrants or options or distribution in respect of which the
         Average Quoted Price is being calculated, or

                  (ii)     the period (x) commencing on the date next succeeding
         the first public announcement of (a) the future issuance of rights,
         warrants or options or (b) the future distribution, in each case, in
         respect of which the Average Quoted Price is being calculated and (y)
         proceeding through the last full trading day prior to the Time of
         Determination with respect to the rights, warrants or options or
         distribution in respect of which the Average Quoted Price is being
         calculated (excluding days within such period, if any, which are not
         trading days), or

                  (iii)    the period, if any, (x) commencing on the later of
         (a) the date of this Indenture and (b) the date next succeeding the
         Ex-Dividend Time with respect to the next preceding issuance of rights,
         warrants or options or distribution, in each case, for which an
         adjustment is required by the provisions of Section 11.06(4), 11.07 or
         11.08 and (y) proceeding through the last full trading day prior to the
         Time of Determination with respect to the rights, warrants or options
         or distribution in respect of which the Average Quoted Price is being
         calculated (excluding days within such period, if any, which are not
         trading days).

                  In the event that the Ex-Dividend Time (or in the case of a
subdivision, combination or reclassification, the effective date with respect
thereto), with respect to a dividend, subdivision, combination or
reclassification to which Section 11.06(1), (2), (3) or (5) applies, occurs
during the period applicable for calculating "Average Quoted Price" pursuant to

                                       56


the definition in the preceding sentence, "Average Quoted Price" shall be
calculated for such period in a manner determined by the Board of Directors to
reflect the impact of such dividend, subdivision, combination or
reclassification on the Sale Price of the Shares during such period.

                  "Time of Determination" means the time and date of the earlier
of (i) the determination of stockholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 11.07 or 11.08 applies
and (ii) the time ("Ex-Dividend Time") immediately prior to the commencement of
"ex-dividend" trading for such rights, warrants or options or distribution on
the New York Stock Exchange or such other national or regional exchange or
market on which the Shares are then listed or quoted.

                  The term "trading day" means a day during which trading in
securities generally occurs on the New York Stock Exchange or, if the applicable
security is not listed on the New York Stock Exchange, on the Nasdaq National
Market System, or if the applicable security is not quoted on the Nasdaq
National Market System, on the principal other national or regional securities
exchange on which the applicable security is then listed or, if the applicable
security is not listed on a national or regional securities exchange, on the
principal other market on which the applicable security is then traded.

                  SECTION 11.02. Conversion Procedure. To convert a Security a
Holder must satisfy the requirements set forth herein and in the Securities. The
date on which the Holder satisfies all those requirements is the conversion date
(the "Conversion Date"). Except as otherwise provided below, the Issuer shall
deliver to the Holder through the Conversion Agent as soon as practicable after
the Conversion Date a certificate for the number of Shares issuable upon the
conversion and cash in lieu of any fractional Share determined pursuant to
Section 11.03. Within two Business Days following the Conversion Date, the
Issuer shall deliver to the Holder, through the Conversion Agent, written notice
of whether such Security shall be converted into Shares or paid in cash, unless
the Issuer shall have delivered such notice previously pursuant to Section 3.03.
If the Issuer shall have notified the Holder that all of such Security shall be
converted into Shares, the Issuer shall deliver to the Holder through the
Conversion Agent no later than the fifth Business Day following the Conversion
Date a certificate for the number of Shares issuable upon the conversion and
cash in lieu of any fractional share determined pursuant to Section 11.03.
Except as provided in the proviso to the fifth paragraph of Section 11.01, if
the Issuer shall have notified the Holder that all or a portion of such Security
shall be paid in cash, the Issuer shall deliver to the Holder surrendering such
Security the amount of cash payable with respect to such Security no later than
the tenth Business Day following such Conversion Date, together with a
certificate for the number of Shares issuable upon the conversion and cash in
lieu of any fractional share determined pursuant to Section 11.03. Except as
provided in the proviso to the fifth paragraph of Section 11.01, the Issuer may
not change its election with respect to the consideration to be delivered upon
conversion of a Security once the Issuer has notified the Holder in accordance
with this paragraph. If Shares are delivered as consideration, then the Person
in whose name the certificate representing the Shares issuable upon conversion
is registered shall be treated as a stockholder of record on and after the
Conversion Date; provided, however, that no surrender of a Security on any date
when the stock transfer books of the Issuer shall be closed shall be effective

                                       57


to constitute the Person or Persons entitled to receive the Shares upon such
conversion as the record holder or holders of such Shares on such date, but such
surrender shall be effective to constitute the Person or Persons entitled to
receive such Shares as the record holder or holders thereof for all purposes at
the close of business on the next succeeding day on which such stock transfer
books are open; such conversion shall be at the Conversion Rate in effect on the
date that such Security shall have been surrendered for conversion, as if the
stock transfer books of the Issuer had not been closed. Upon conversion of a
Security, such Person shall no longer be a Holder of such Security and such
Security shall be cancelled and no longer Outstanding.

                  The delivery by the Issuer to the Holder through the
Conversion Agent of certificates for the number of Shares issuable upon a
conversion of a Security under the circumstances set forth in the preceding
paragraph (together with the surrender of the associated Trust Guarantee) shall
be effected in the manner set forth in this paragraph. Upon the surrender by a
Holder of the applicable Corporation Note or portion thereof to the Issuer in
accordance with Section 11.01, in the circumstances when conversion rights are
exercisable and a Trust Assumption Event has not occurred, the Issuer shall
issue to the Holder the Conversion Number of Corporation Shares and will cause
the Conversion Number of Class B Shares to be issued to the Holder from the
Trust by paying to the Trust the fair value (as such value is determined by the
Issuer and the Trust) of the Conversion Number of Class B Shares issuable upon
exercise of conversion rights and directing the Trust to issue, on behalf of the
Issuer, such Class B Shares to the Holder, subject to the surrender by the
Holder of the Trust Guarantee (insofar as it relates to the portion of the
Holder's Securities being converted), which shall be deemed to be surrendered to
the Trust simultaneously with the receipt of the Conversion Number of Class B
Shares. As between the Holder and the Trust, the Holder need only surrender the
Trust Guarantee to the Trust as provided in the preceding sentence to receive
the Conversion Number of Class B Shares from the Trust, provided that the
conversion rights are then exercisable and the Trust Assumption Event has not
occurred and the Holder has satisfied all requirements for a conversion of a
Security.

                  No payment or adjustment will be made for dividends on, or
other distributions with respect to, any Shares except as provided in this
Article 11. On conversion of a Security, (a) that portion of accrued interest
attributable to the period from the later of the Issue Date and the date on
which interest was last paid through the Conversion Date with respect to the
converted Security and accrued Contingent Interest and accrued Defaulted
Interest with respect to the converted Security and (b) that portion of accrued
but unpaid interest income, as computed for federal income tax purposes, with
respect to the converted Security ("Security Conversion Tax Interest"), shall
not be cancelled, extinguished or forfeited, but rather shall be deemed to be
paid in full to the Holder thereof through delivery of the Shares (together with
the cash payment, if any, in lieu of fractional Shares) and cash, if any, in
exchange for the Security being converted pursuant to the provisions hereof; and
such cash and the fair market value of such Shares (together with any such cash
payment in lieu of fractional Shares) shall be treated as delivered pro rata, to
the extent thereof, first in exchange for interest and Contingent Interest and
Security Conversion Tax Interest accrued through the Conversion Date, and the
balance, if any, of such cash and the fair market value of such Shares shall be
treated as delivered in exchange for the Issue Price of the Security being
converted pursuant to the provisions hereof.

                  If the Holder converts more than one Security at the same
time, the number of Shares issuable or the amount of cash paid upon the
conversion shall be based on the total Principal Amount of the Securities
converted.

                                       58


                  If the last day on which a Security may be converted is a
Legal Holiday in a place where the Conversion Agent is located, the Security may
be surrendered to such Conversion Agent on the next succeeding day that is not a
Legal Holiday.

                  Upon surrender of a Security that is converted in part, the
Issuer shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security in an authorized denomination equal in Principal Amount
to the unconverted portion of the Security surrendered.

                  SECTION 11.03. Fractional Shares. The Issuer will not issue a
fractional Share upon conversion of a Security. Instead, the Issuer will deliver
cash for the current market value of the fractional Share. The current market
value of a fractional Share shall be determined, to the nearest 1/1,000th of a
Share, by multiplying the last reported sale price (determined as set forth in
the definition of Market Price) on the last trading day prior to the Conversion
Date by the fractional amount and rounding the product to the nearest whole
cent. If the Holder converts more than one Security at the same time, the amount
of cash paid for the current market value of the fractional Share upon the
conversion shall be based on the total Principal Amount of the Securities
converted.

                  SECTION 11.04. Taxes on Conversion. If a Holder converts a
Security, the Issuer shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Shares upon the conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Shares being issued in a name other
than the Holder's name until the Conversion Agent receives a sum that the Issuer
deems to be sufficient to pay any tax which will be due because the Shares are
to be issued in a name other than the Holder's name. Nothing herein shall
preclude any tax withholding required by law or regulations.

                  SECTION 11.05. Issuer to Provide Stock. The Issuer and the
Trust shall, prior to issuance of any Securities under this Article 11, and from
time to time as may be necessary, reserve out of their authorized but unissued
or treasury shares a sufficient number of Shares to permit the conversion of the
Securities.

                  All Shares delivered upon conversion of the Securities shall
be newly issued shares or treasury shares, shall be duly and validly issued and
fully paid and nonassessable, and shall be free from preemptive rights and free
of any lien or adverse claim.

                  The Issuer and the Trust shall endeavor promptly to comply
with all federal and state securities laws regulating the offer and delivery of
Shares upon conversion of Securities, if any, including the addition of any and
all restrictive legends that are required to appear on the face of the Shares,
and shall list or cause to have quoted such Shares on each United States
National Securities Exchange or in the automated over-the-counter market in the
United States on which the Shares are then listed or quoted.

                  SECTION 11.06. Adjustment for Change In Capital Stock. Subject
to Section 11.21(d), if, after the Issue Date of the Securities, the Issuer or
the Trust:

                                       59


                  (1) pays a dividend or makes a distribution on its Shares (or
         any component of the Shares) payable in Shares;

                  (2) subdivides its outstanding Shares (or any component of the
         Shares) into a greater number of shares;

                  (3) combines its outstanding Shares into a smaller number of
         shares;

                  (4) pays a dividend or makes a distribution on its Shares
         payable in shares of its Capital Stock (other than Shares or rights,
         warrants or options for its Capital Stock); or

                  (5) issues by reclassification of its Shares (or any component
         of the Shares) any shares of its Capital Stock (other than rights,
         warrants or options for its Capital Stock),

then the Conversion Rate in effect immediately prior to such action shall be
adjusted so that the Holder of a Security thereafter converted may receive the
number of Shares and/or Capital Stock of the Issuer which such Holder would have
owned immediately following such action if such Holder had converted the
Security into Shares immediately prior to such action.

                  The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.

                  If after an adjustment a Holder of a Security upon conversion
of such Security may receive shares of two or more classes of Capital Stock, the
Conversion Rate shall thereafter be subject to adjustment upon the occurrence of
an action taken with respect to any such class of Capital Stock as is
contemplated by this Article 11 with respect to the Shares, on terms comparable
to those applicable to Shares in this Article 11.

                  SECTION 11.07. Adjustment for Rights Issue. Subject to Section
11.21(d), if after the Issue Date of the Securities, the Issuer distributes any
rights, warrants or options to all holders of Shares entitling them, for a
period expiring within 60 days after the record date for such distribution, to
subscribe for or purchase Shares at a price per share less than the Market Price
as of the Time of Determination, the Conversion Rate shall be adjusted, subject
to the provisions of the last paragraph of this Section 11.07, in accordance
with the formula
                                              R x (O + N)
                                      R' = ------------------
                                            O + ((N x P)/M)
where:

                  R' = the adjusted Conversion Rate.

                  R = the current Conversion Rate.

                  O = the number of Shares outstanding on the record date for
the distribution to which this Section 11.07 is being applied.

                                       60


                  N = the number of additional Shares offered pursuant to the
distribution.

                  P = the exercise price per share of such rights, warrants or
options.

                  (1) M = the Average Quoted Price.

                  The Board of Directors shall determine fair market values for
the purposes of this Section 11.07.

                  The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
rights, warrants or options to which this Section 11.07 applies. If all the
Shares subject to such rights, warrants or options have not been issued when
such rights, warrants or options expire, then the Conversion Rate shall promptly
be readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights, warrants or options been made on
the basis of the actual number of Shares issued upon the exercise of such
rights, warrants or options.

                  No adjustment shall be made under this Section 11.07 if the
application of the formula stated above in this Section 11.07 would result in a
value of R' that is equal to or less than the value of R.

                  SECTION 11.08. Adjustment for Other Distributions. Subject to
Section 11.21(d), if, after the Issue Date of the Securities, the Issuer
distributes to all holders of Shares any of its assets or debt securities or any
rights, warrants or options to purchase securities of the Issuer (including
securities or cash, but excluding (x) distributions of Capital Stock referred to
in Section 11.06 and distributions of rights, warrants or options referred to in
Section 11.07 and (y) cash dividends or other cash distributions that are paid
out of current net earnings or earnings retained in the business as shown on the
books of the Issuer unless such cash dividends or other cash distributions are
Extraordinary Cash Dividends), the Conversion Rate shall be adjusted, subject to
the provisions of the last paragraph of this Section 11.08, in accordance with
the formula:
                                           R x M
                                      R' = -----
                                           M - F
where:

                  R' = the adjusted Conversion Rate.

                  R = the current Conversion Rate.

                  M = the Average Quoted Price.

                  F = the fair market value (on the record date for the
distribution to which this Section 11.08 applies) of the assets or securities or
rights, warrants or options to be distributed in respect of each Share in the
distribution to which this Section 11.08 is being applied (including, in the
case of cash dividends or other cash distributions giving rise to an adjustment,
all such cash distributed concurrently).

                                       61


                  The Board of Directors shall determine fair market values for
the purposes of this Section 11.08.

                  The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the
distribution to which this Section 11.08 applies.

                  For purposes of this Section 11.08, the term "Extraordinary
Cash Dividend" shall mean any cash dividend with respect to the Shares the
amount of which exceeds on a per share basis 15% of the Sale Price of the Shares
(20% from and after a Trust Assumption Event pursuant to Section 11.21) on the
last trading day preceding the date of declaration by the Board of Directors of
the cash dividend with respect to which this provision is being applied, then
such cash dividend, shall be deemed to be an Extraordinary Cash Dividend and for
purposes of applying the formula set forth above in this Section 11.08, the
value of "F" shall be equal to the aggregate amount of such cash dividend. In
making the determinations required above, the amount of cash dividends paid on a
per Share basis shall be appropriately adjusted to reflect the occurrence during
such period of any event described in Section 11.06.

                  In the event that, with respect to any distribution to which
this Section 11.08 would otherwise apply, the difference "M-F" as defined in the
above formula is less than $1.00 or "F" is equal to or greater than "M", then
the adjustment provided by this Section 11.08 shall not be made and in lieu
thereof the provisions of Section 11.14 shall apply to such distribution.

                  SECTION 11.09. When Adjustment May Be Deferred. No adjustment
in the Conversion Rate need be made unless the adjustment would require an
increase or decrease of at least 1% in the Conversion Rate. Any adjustments that
are not made shall be carried forward and taken into account in any subsequent
adjustment.

                  All calculations under this Article 11 shall be made to the
nearest cent or to the nearest 1/1,000th of a share, as the case may be.

                  SECTION 11.10. When No Adjustment Required. No adjustment need
be made for a transaction referred to in Section 11.06, 11.07, 11.08 or 11.14 if
Securityholders are to participate in the transaction on a basis and with notice
that the Board of Directors determines to be fair and appropriate in light of
the basis and notice on which holders of Shares participate in the transaction.
Such participation by Securityholders may include participation upon conversion
provided that an adjustment shall be made at such time as the Securityholders
are no longer entitled to participate.

                  No adjustment need be made for rights to purchase Shares
pursuant to an Issuer plan for reinvestment of dividends or interest.

                  No adjustment need be made for a change in the par value or no
par value of the Shares.

                                       62


                  To the extent the Securities become convertible pursuant to
this Article 11 into cash, no adjustment need be made thereafter as to the cash.
Interest (including Contingent Interest) will not accrue on the cash.

                  SECTION 11.11. Notice of Adjustment. Whenever the Conversion
Rate is adjusted, the Issuer shall promptly mail to Securityholders by
first-class mail a notice of the adjustment. The Issuer shall file with the
Trustee and the Conversion Agent such notice and a certificate from the Issuer's
independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct. Neither the Trustee nor any Conversion
Agent shall be under any duty or responsibility with respect to any such
certificate except to exhibit the same to any Holder desiring inspection
thereof.

                  SECTION 11.12. Voluntary Increase. The Issuer from time to
time may increase the Conversion Rate by any amount for any period of time.
Whenever the Conversion Rate is increased, the Issuer shall mail to
Securityholders by first-class mail and file with the Trustee and the Conversion
Agent a notice of the increase. The Issuer shall mail the notice at least 15
days before the date the increased Conversion Rate takes effect. The notice
shall state the increased Conversion Rate and the period it will be in effect.

                  A voluntary increase of the Conversion Rate does not change or
adjust the Conversion Rate otherwise in effect for purposes of Section 11.06,
11.07 or 11.08.

                  SECTION 11.13. Notice of Certain Transactions. If:

                  (1) the Issuer takes any action that would require an
         adjustment in the Conversion Rate pursuant to Section 11.06, 11.07 or
         11.08 (unless no adjustment is to occur pursuant to Section 11.10);

                  (2) there is a liquidation or dissolution of the Issuer; or

                  (3) a Share Separation occurs;

then the Issuer shall mail to Securityholders by first-class mail and file with
the Trustee and the Conversion Agent a notice stating the proposed record date
for a dividend or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, binding share exchange,
transfer, liquidation or dissolution. The Issuer shall file and mail the notice
at least 20 days before such date. Failure to file or mail the notice or any
defect in it shall not affect the validity of the transaction.

                  SECTION 11.14. Reorganization of Issuer; Special
Distributions. Subject to Section 11.21(d), if the Issuer is a party to a
transaction subject to Section 5.01 (other than a transaction in which the
Issuer is the Successor Company) or a binding share exchange which reclassifies
or changes its outstanding Shares, the Person obligated to deliver securities,
cash or other assets upon conversion of Securities shall enter into a
supplemental indenture. If the issuer of securities deliverable upon conversion
of Securities is an Affiliate of the Successor Company, that issuer shall join
in the supplemental indenture.

                                       63


                  The supplemental indenture shall provide that the Holder of a
Security may convert it into the kind and amount of securities, cash or other
assets which such Holder would have received immediately after the
consolidation, merger, binding share exchange, conveyance, transfer or lease if
such Holder had converted the Security into Shares immediately before the
effective date of the transaction, assuming (to the extent applicable) that such
Holder (i) was not a constituent Person or an Affiliate of a constituent Person
to such transaction; (ii) made no election with respect thereto; and (iii) was
treated alike with the plurality of non-electing Holders. The supplemental
indenture shall include provisions for adjustments which shall be as nearly
equivalent as may be practical to the provisions for adjustments included in
this Article 11. The Successor Company shall mail to Securityholders a notice
briefly describing the supplemental indenture.

                  In the event of a transaction subject to the last sentence of
Section 5.01 in which the predecessor Issuer is not the Successor Company, the
Securities shall remain convertible into Shares in accordance with this Article
11.

                  If this Section 11.14 applies, neither Section 11.06 nor
Section 11.07 applies.

                  If the Issuer makes a distribution to all holders of Shares of
any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Issuer that, but for the provisions of the last
paragraph of Section 11.08, would otherwise result in an adjustment in the
Conversion Rate pursuant to the provisions of Section 11.08, then, from and
after the record date for determining the holders of Shares entitled to receive
the distribution, a Holder of a Security that converts such Security in
accordance with the provisions of this Indenture shall upon such conversion be
entitled to receive, in addition to the Shares into which the Security is
convertible, the kind and amount of securities, cash or other assets comprising
the distribution that such Holder would have received if such Holder had
converted the Security into Shares immediately prior to the record date for
determining the holders of Shares entitled to receive the distribution.

                  SECTION 11.15. Issuer Determination Final. Any determination
that the Issuer or the Board of Directors must make pursuant to Section 11.03,
11.06, 11.07, 11.08, 11.09, 11.10, 11.14 or 11.17 is conclusive in the absence
of manifest error.

                  SECTION 11.16. Trustee's Adjustment Disclaimer. The Trustee
has no duty to determine when an adjustment under this Article 11 should be
made, how it should be made or what it should be. The Trustee has no duty to
determine whether a supplemental indenture under Section 11.14 need be entered
into or whether any provisions of any supplemental indenture are correct. The
Trustee shall not be accountable for and makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities. The Trustee shall not be responsible for the Issuer's failure to
comply with this Article 11. Each Conversion Agent shall have the same
protection under this Section 11.16 as the Trustee.

                  SECTION 11.17. Simultaneous Adjustments. In the event that
this Article 11 requires adjustments to the Conversion Rate under more than one
of Sections 11.06(4), 11.07 or 11.08, and the record dates for the distributions
giving rise to such adjustments shall occur on the

                                       64


same date, then such adjustments shall be made by applying, first, the
provisions of Section 11.06, second, the provisions of Section 11.08 and, third,
the provisions of Section 11.07.

                  SECTION 11.18. Successive Adjustments. After an adjustment to
the Conversion Rate under this Article 11, any subsequent event requiring an
adjustment under this Article 11 shall cause an adjustment to the Conversion
Rate as so adjusted.

                  SECTION 11.19. Rights Issued in Respect of Shares Issued Upon
Conversion. Each Share issued upon conversion of Securities pursuant to this
Article 11 shall be entitled to receive the appropriate number of common stock
or preferred stock purchase rights, as the case may be (the "Rights"), if any,
and the certificates representing the Shares issued upon such conversion shall
bear such legends, if any, in each case as may be provided by the terms of any
rights agreement adopted by the Issuer, as the same may be amended from time to
time (in each case, a "Rights Agreement"). Provided that such Rights Agreement
requires that each Share issued upon conversion of Securities at any time prior
to the distribution of separate certificates representing the Rights be entitled
to receive such Rights, then, notwithstanding anything else to the contrary in
this Article 11, there shall not be any adjustment to the Conversion Rate as a
result of the issuance of Rights, the distribution of separate certificates
representing the Rights, the exercise or redemption of such Rights in accordance
with any such Rights Agreement, or the termination or invalidation of such
Rights.

                  SECTION 11.20. Restriction on Shares Issued Upon Conversion.
Shares to be issued upon conversion of Securities prior to the effectiveness of
a Shelf Registration shall be physically delivered in certificated form to the
holders converting such Securities and the certificate representing such Shares
shall bear a legend substantially to the following effect:

                  "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED,
                  SOLD. PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
                  EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
                  APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
                  SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
                  ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE
                  IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
                  LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
                  JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
                  IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
                  EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
                  ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
                  UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED
                  HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
                  SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
                  (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
                  QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
                  THE SECURITIES ACT) IN

                                       65


                  A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A
                  TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
                  SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN
                  PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
                  UNDER THE SECURITIES ACT, OR (D) IN ACCORDANCE WITH ANOTHER
                  EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
                  ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
                  REQUESTS), (2) TO THE COMPANY, (3) PURSUANT TO AN EFFECTIVE
                  REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
                  APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
                  OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL
                  AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
                  FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
                  RESTRICTIONS SET FORTH IN (A) ABOVE."

unless removed in accordance with Section 11.20(b).

                  (a) If (i) Shares to be issued upon conversion of a Security
prior to the effectiveness of a Shelf Registration are to be registered in a
name other than that of the holder of such Security or (ii) Shares represented
by a certificate bearing the above legend are transferred subsequently by such
holder, then, unless the Shelf Registration has become effective and such shares
are being transferred pursuant to the Shelf Registration, the holder must
deliver to the transfer agent for the Shares a certificate in substantially the
form of Exhibit F as to compliance with the restrictions on transfer applicable
to such Shares and neither the transfer agent nor the registrar for the Shares
shall be required to register any transfer of such Shares not so accompanied by
a properly completed certificate.

                  (b) Except in connection with a Shelf Registration, if
certificates representing Shares are issued upon the registration of transfer,
exchange or replacement of any other certificate representing Shares bearing the
above legend, or if a request is made to remove such legend from certificates
representing Shares, the certificates so issued shall bear the above legend, or
the above legend shall not be removed, as the case may be, unless there is
delivered to the Issuer such satisfactory evidence, which, in the case of a
transfer made pursuant to Rule 144 under the Securities Act, may include an
opinion of counsel, as may be reasonably required by the Issuer, that neither
the legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144
or Regulation S under the Securities Act or that such Shares are securities that
are not "restricted" within the meaning of Rule 144 under the Securities Act.
Upon provision to the Issuer of such reasonably satisfactory evidence, the
Issuer shall cause the transfer agent for the Shares to countersign and deliver
certificates representing Shares that do not bear the legend.

                  SECTION 11.21. Conversion Adjustments Upon Share Separation.

                  (a) Notwithstanding anything to the contrary contained in this
Article 11, but subject to Section 11.21(b), in the event of a transaction as a
result of which the Corporation Shares trade on a United States National
Securities Exchange separately from the Class B

                                       66


Shares, whether or not the Class B Shares continue to trade on any United States
National Securities Exchange (a "Share Separation"), the Securities shall not be
convertible into Shares, but shall instead be convertible solely into
Corporation Shares. Upon the occurrence of a Share Separation, the Conversion
Rate of the Securities shall be adjusted and shall equal the Conversion Rate in
effect on the Business Day immediately prior to the effective date of the Share
Separation multiplied by a percentage equal to one hundred percent minus the
Trust Percentage. The "Trust Percentage" shall mean a fraction, the numerator of
which shall equal the aggregate value of all Class B Shares outstanding
immediately after the Share Separation and the denominator of which shall equal
the sum of (i) the aggregate value of all such Class B Shares and (ii) the
aggregate value of all the Corporation Shares outstanding immediately after the
Share Separation. The aggregate value of the Corporation Shares and the Class B
Shares shall be based on the average closing prices on the applicable principal
trading market of the Corporation Shares of the Class B Shares, as the case may
be, over the first five consecutive trading days after the effective date of the
Share Separation; provided that if the Class B Shares are not then traded on a
United States National Securities Exchange, the aggregate value of the Class B
Shares shall be determined in the good faith of the Board of Directors based
upon the valuation opinion of a nationally recognized investment bank.

                  (b) In the event ( a "Trust Assumption Event") that (i) a
Share Separation occurs, (ii) the Trust Percentage, as determined pursuant to
Section 11.21(a), is greater than 50% and (iii) a Rating Event occurs, then the
Trust shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Issuer under the Securities and this Indenture and the
Securities shall be convertible solely into Class B Shares. Upon the occurrence
of a Trust Assumption Event and the execution of such supplemental indenture,
the Trust shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under this Indenture, and the predecessor Issuer shall
be discharged from all of its obligations under the Securities and this
Indenture. Upon the occurrence of a Trust Assumption Event, the Conversion Rate
of the Securities shall be adjusted and shall equal the Conversion Rate in
effect on the Business Day immediately prior to the effective date of the Share
Separation multiplied by the Trust Percentage, as determined pursuant to Section
11.21(a). A "Rating Event" means that after the first public announcement by the
Issuer of a Share Separation and before the effective date of such Share
Separation, either Moody's Investor Service, Inc. or Standard & Poor's Rating
Group (or, in either case, if such Person ceases to rate the Securities for
reasons outside the control of the Issuer, any other "nationally recognized
statistical rating agency organization" (within the meaning of Rule
15c3-1(c)(2)(vi)(F) under the Exchange Act) selected by the Issuer as a
replacement agency) rates the long-term senior debt of the Issuer below the
rating of the Securities in effect immediately prior to such public
announcement.

                  (c) In the event that a Share Separation occurs, Holders of
Securities shall not be entitled to convert their Securities into Shares for the
period beginning on the record date for such Share Separation and ending on the
first Business Day succeeding the first five consecutive trading days after the
effective date of such Share Separation.

                  (d) In the event that a transaction constituting a Share
Separation or a Trust Assumption Event occurs that would require an adjustment
of the Conversion Rate pursuant to

                                       67


the provisions of this Article 11, the Conversion Rate shall not be adjusted
other than as described in Sections 11.21(a) and (b), as the case may be.

                                   ARTICLE 12

                               SECURITY GUARANTEES

                  SECTION 12.01. Security Guarantee.

                  (a) Subject to this Article 12, the Guarantor hereby
unconditionally guarantees to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Issuer hereunder or thereunder, that: (a)
the Issue Price of and accrued interest and Contingent Interest and Defaulted
Interest, if any, on the Securities will be promptly paid in full when due,
whether at maturity, by acceleration, redemption, purchase or otherwise, and
interest on the overdue principal of and interest (including Contingent
Interest) on the Securities, if any, if lawful, and all other obligations of the
Issuer to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Securities
or any of such other obligations, that same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at Stated Maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantor shall be obligated to pay the same immediately. The
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

                  (b) The Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuer, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
guarantor. The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuer, any right to require a proceeding first against the Issuer,
protest, notice and all demands whatsoever and covenant that its guarantee shall
not be discharged except by complete performance of the obligations contained in
the Securities and this Indenture.

                  (c) If any Holder or the Trustee is required by any court or
otherwise to return to the Issuer, the Guarantor or any custodian, trustee,
liquidator or other similar official acting in relation to either the Issuer or
the Guarantor, any amount paid by either to the Trustee or such Holder, the
guarantee of the Guarantor, to the extent theretofore discharged, shall be
reinstated in full force and effect.

                  (d) The Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders of the Securities in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. The Guarantor further agrees that, as

                                       68


between the Guarantor, on the one hand, and the Holders of the Securities and
the Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 hereof for the purposes of
its guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such obligations as
provided in Article 6 hereof, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Guarantor for the purpose of its
guarantee.

                  SECTION 12.02. Limitation on Guarantor Liability.

         The Guarantor, and by its acceptance of Securities, each Holder, hereby
confirms that it is the intention of all such parties that the guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to
such guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantor hereby irrevocably agree that the obligations of the Guarantor
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of the Guarantor that are relevant under such laws result in
the obligations of the Guarantor under its guarantee not constituting a
fraudulent transfer or conveyance.

                  SECTION 12.03. Delivery of Guarantee.

                  (a) To evidence its guarantee set forth in Section 12.01, the
Guarantor hereby agrees that the Securities shall bear a notation stating that
such Securities are guaranteed by the Guarantor in accordance with this Article
12 and may be released upon the terms and conditions set forth in this
Indenture.

                  (b) The Guarantor hereby agrees that its guarantee set forth
in Section 12.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a notation of such guarantee.

                  (c) If an officer of the Guarantor whose signature is on this
Indenture no longer holds that office at the time the Trustee authenticates the
Security, the guarantee shall be valid nevertheless.

                  (d) The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the guarantee
set forth in this Indenture on behalf of the Guarantor.

                  (e) In the event that the Issuer creates or acquires any new
Subsidiaries subsequent to the date of this Indenture and such Subsidiaries
become guarantors under the Senior Credit Facility, then the Issuer shall cause
such Subsidiaries to become Guarantors under this Indenture and to execute a
supplemental indenture to this Indenture.

                  SECTION 12.04. Guarantor May Consolidate, etc. on Certain
Terms.

                                       69


                  (a) Except as otherwise provided in Section 12.05, the
Guarantor may not consolidate with or merge with or into (unless the Guarantor
is the surviving Person) another Person whether or not affiliated with the
Guarantor unless:

         (i)      subject to Section 12.05 hereof, the Person formed by or
surviving any such consolidation or merger unconditionally assumes all the
obligations of the Guarantor, pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Securities and the
Indenture on the terms set forth herein or therein; and

         (ii)     immediately after giving effect to such transaction, no
Default or Event of Default exists.

In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor and such predecessor Guarantor shall be discharged from
its obligations under the Securities and this Indenture.

                  (b) Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clause (a) above, nothing contained in this Indenture or in any
of the Securities shall prevent any consolidation or merger of the Guarantor
with or into the Issuer, or shall prevent any sale or conveyance of the property
of the Guarantor as an entirety or substantially as an entirety to the Issuer.

                  SECTION 12.05. Release.

                  (a) To the extent that the Guarantor is released as a
guarantor under the Senior Credit Facility or the Senior Credit Facility is
refinanced without such Guarantor being a guarantor under the new credit
facility or in the event the Senior Credit Facility is otherwise terminated,
then the Guarantor will be released and relieved of any obligations under its
guarantee to the same extent that such Guarantor was released and relieved of
any obligations under the Senior Credit Facility. Upon delivery by the Issuer to
the Trustee of an Officers' Certificate to the effect that such release has
occurred in accordance with the provisions of this Indenture, the Trustee shall
execute any documents reasonably required in order to evidence the release of
the Guarantor from its obligations under its guarantee.

                  (b) The Guarantor not released from its obligations under its
guarantee shall remain liable for the full amount of the Principal Amount and
interest and Contingent Interest and Defaulted Interest, if any, on the
Securities and for the other obligations of any Guarantor under this Indenture
as provided in this Article 12.

                  SECTION 12.06. Trust Guarantee.

         The Trust hereby unconditionally guarantees to each Holder of a
Security the obligation of the Issuer to cause to be delivered to such Holder,
in accordance with Section 11.02, the Class B Shares required to be delivered
upon a conversion of a Security by such Holder in accordance

                                       70


with Article 11, in circumstances where the Issuer has failed to direct the
Trust to issue on the Issuer's behalf such Class B Shares in accordance with
Section 11.02 after a Holder has satisfied all requirements for a conversion set
forth herein and in the Securities (the "Trust Guarantee"). If the Issuer has
failed to direct the Trust to issue on the Issuer's behalf, such Class B Shares
so required to be delivered in accordance with Section 11.02 after a Holder has
satisfied all requirements for a conversion set forth herein and in the
Securities, such Holder may require the Trust to issue such Class B Shares, on
behalf of the Issuer, under the Trust Guarantee and, upon the Trust doing so,
the Trust shall have the right to be paid by the Issuer (but not by the Holder),
with interest at a rate of 8% per annum from the date of issue of such Class B
Shares by the Trust until the date of payment for such Class B Shares by the
Issuer, the fair value of the Class B Shares so issued under the Trust
Guarantee.

                                   ARTICLE 13

                                  MISCELLANEOUS

                  SECTION 13.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the Trust Indenture Act, the
required provision shall control.

                  SECTION 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail (registered or
certified, return receipt requested), telecopier or overnight air courier
guaranteeing next day delivery, addressed as follows:

                  If to the Issuer, the Trust or the Guarantor:

                  Starwood Hotels & Resorts Worldwide, Inc.
                  1111 Westchester Avenue
                  White Plains, New York 10604
                  Telecopy No.:  (914) 640-8260
                  Attention:  General Counsel

                  If to the Trustee:

                  For payment, registration of transfer and exchange of the
Securities:

                  U.S. Bank National Association
                  180 East Fifth Street
                  St. Paul, Minnesota 55101
                  Telephone:  (651) 244-8677
                  Telecopy No.:  (651) 244-0711
                  Attention: Corporate Trust Department

                                       71


                  The Issuer or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Notices to the Trustee shall be effective only upon receipt.

                  Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is given in the manner provided
above, it is duly given, whether or not the addressee receives it.

                  SECTION 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to Trust Indenture Act Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Issuer, the Trustee, the Registrar and anyone else shall
have the protection of Trust Indenture Act Section 312(c).

                  SECTION 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Issuer to the Trustee to take
or refrain from taking any action under this Indenture, the Issuer shall furnish
to the Trustee:

                  (1) an Officers' Certificate of the Issuer in form and
         substance reasonably satisfactory to the Trustee stating that, in the
         opinion of the signers, all conditions precedent, if any, provided for
         in this Indenture relating to the proposed action have been complied
         with; and

                  (2) an Opinion of Counsel in form and substance reasonably
         satisfactory to the Trustee stating that, in the opinion of such
         counsel, all such conditions precedent have been complied with.

                  SECTION 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:

                  (1) a statement that the individual making such certificate or
         opinion has read such covenant or condition;

                  (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (3) a statement that, in the opinion of such individual, he
         has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such covenant
         or condition has been complied with; and

                  (4) a statement as to whether or not, in the opinion of such
         individual, such covenant or condition has been complied with.

                                       72


                  SECTION 13.06. When Securities Disregarded. In determining
whether the Holders of the required Principal Amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Issuer,
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer, shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
shall be considered in any such determination.

                  SECTION 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.

                  SECTION 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, Sunday or other day on which banking institutions in the State of New
York are authorized or required by law to close. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.

                  SECTION 13.09. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

                  SECTION 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Issuer shall not have any
liability for any obligations of the Issuer under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issuance of the Securities.

                  SECTION 13.11. Successors. All agreements of the Issuer in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.

                  SECTION 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy of the
Indenture is enough to prove this Indenture.

                  SECTION 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.

                  SECTION 13.14. Severability. If any provision in this
Indenture is deemed unenforceable, it shall not affect the validity or
enforceability of any other provision set forth herein, or of the Indenture as a
whole.

                                       73


                     [Rest of page intentionally left blank]

                                       74


                  IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.

                                   STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                                   By: /s/ Kenneth Siegel
                                       ----------------------------------------
                                       Name:
                                       Title:

                                   STARWOOD HOTELS & RESORTS

                                   By: /s/ Kenneth Siegel
                                       ----------------------------------------
                                       Name:
                                       Title:

                                   SHERATON HOLDING CORPORATION

                                   By: /s/ Jared Finkelstein
                                       ----------------------------------------
                                       Name:
                                       Title:

                                   U.S. BANK NATIONAL ASSOCIATION,
                                       as Trustee

                                   By: /s/ Frank Leslie
                                       ----------------------------------------
                                       Name: Frank Leslie
                                       Title:

                                       75


                                   EXHIBIT A-1

                                      A-1-1


                                    EXHIBIT B

                   [FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                   FROM GLOBAL SECURITY OR DEFINITIVE SECURITY
                             TO DEFINITIVE SECURITY]

(Transfers pursuant to Section 2.13(a)(1) or Section 2.13(a)(2) of the
Indenture)

                                                          ______________, _____

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department

Re:      Transfer of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Reference is hereby made to the Indenture dated as of May 16, 2003 (the
"Indenture") between the Issuer and U.S. Bank National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.

         This letter relates to U.S. $___________ aggregate principal amount of
Securities which are held [in the form of a [Definitive] [Global Security (CUSIP
No. ______________)]* in the name of [name of transferor] (the "Transferor") to
effect the transfer of Securities.

         In connection with such request, and in respect of such Securities, the
Transferor does hereby certify that such Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Securities and
the Indenture and (ii) to a transferee that the Transferor reasonably believes
is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the U.S. Securities Act of 1933, as amended)
(an "Institutional Accredited Investor") which is acquiring such Securities for
its own account or for one or more accounts, each of which is an Institutional
Accredited Investor, over which it exercises sole investment discretion and
(iii) in accordance with applicable securities laws of any state of the United
States.

- ---------------------------------
*       Insert, if appropriate

                                       B-1


                                           [Name of Transferor],

                                           By:_________________________________
                                           Name:_______________________________
                                           Title:______________________________
                                           Dated:______________________________

                                       B-2


                                    EXHIBIT C

    [FORM OF NON-DISTRIBUTION LETTER FOR INSTITUTIONAL ACCREDITED INVESTORS]

 (Transfers pursuant to Section 2.13(a)(1) or Section 2.13(a)(2) of the
                                   Indenture)

                                                        ______________, ________

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

Starwood Resorts & Hotels Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604

Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (together with the Shares issuable upon
         conversion thereof, the "Securities") of
         Starwood Resorts & Hotels Worldwide, Inc. (the "Issuer")(2)

Ladies and Gentlemen:

                  In connection with our purchase of the Securities we confirm
that:

                  1. We understand that the Securities are not being and will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.

                  2. We acknowledge that (a) neither the Issuer, nor the Initial
Purchasers (as defined in the Offering Memorandum dated May 9, 2003 relating to
the Securities (the "Offering Memorandum")) nor any person acting on behalf of
the Issuer or the Initial Purchasers has made any representation to us with
respect to the Issuer or the offer or sale of any Securities; and (b) any
information we desire concerning the Issuer and the Securities or any other
matter relevant to our decision to purchase the Securities (including a copy of
the Offering Memorandum) is or has been made available to us.

                  3. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, and we are (or

_________________________

(2)      Each U.S. purchaser, or account for which each U.S. purchaser is
         acting, should purchase at least $250,000 Principal Amount of
         Securities.

                                       C-1


any account for which we are purchasing under paragraph 4 below is) an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act) able to bear the economic
risk of investment in the Securities.

                  4. We are acquiring the Securities for our own account (or for
accounts as to which we exercise sole investment discretion and have authority
to make, and do make, the statements contained in this letter) and not with a
view to any distribution of the Securities, subject, nevertheless, to the
understanding that the disposition of our property will at all times be and
remain within our control.

                  5. We understand that (a) the Securities will be in registered
form only and that any certificates delivered to us in respect of the Securities
will bear a legend substantially to the following effect:

                  "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933 (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED,
                  SOLD. PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
                  EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
                  APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
                  SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
                  ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE
                  IS ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
                  LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
                  JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
                  IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
                  EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
                  ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
                  UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED
                  HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
                  SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
                  (1)(A) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
                  QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
                  THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
                  OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF
                  RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED
                  STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
                  REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (D) IN
                  ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
                  REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
                  OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY,
                  (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
                  EACH CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF
                  ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
                  JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT
                  HOLDER IS REQUIRED TO

                                       C-2


                  NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
                  OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."

                  and (b) the Issuer has agreed to reissue such certificates
without the foregoing legend only in the event of a disposition of the
Securities in accordance with the provisions of paragraph 6 below (provided, in
the case of a disposition of the Securities in accordance with paragraph 6(f)
below, that the legal opinion referred to in such paragraph so permits), or at
our request at such time as we would be permitted to dispose of them in
accordance with paragraph 6(a) below.

                  6. We agree that in the event that at some future time we wish
to dispose of any of the Securities, we will not do so unless such disposition
is made in accordance with any applicable securities laws of any state of the
United States and:

                  (a) the Securities are sold in compliance with Rule 144(k)
         under the Securities Act; or

                  (b) the Securities are sold in compliance with Rule 144A under
         the Securities Act; or

                  (c) the Securities are sold in compliance with Rule 904 of
         Regulation S under the Securities Act; or

                  (d) the Securities are sold pursuant to an effective
         registration statement under the Securities Act; or

                  (e) the Securities are sold to the Issuer or an affiliate (as
         defined in Rule 501(b) of Regulation D) of the Issuer; or

                  (f) the Securities are disposed of in any other transaction
         that does not require registration under the Securities Act, and we
         theretofore have furnished to the Issuer or its designee an opinion of
         counsel experienced in securities law matters to such effect or such
         other documentation as the Issuer or its designee may reasonably
         request.

                                                     Very truly yours,

                                                     By ______________________
                                                          (Authorized Officer)

                                       C-3


                                    EXHIBIT D

                            [FORM OF PURCHASE NOTICE]

                                                        ________________, _____

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

Starwood Resorts & Hotels Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604

Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Certificate No(s). of Securities:   _____________________________

         This is a Purchase Notice as defined in Section [3.08(a)][3.15(b)] of
the Indenture dated as of May 16, 2003 (the "Indenture") between the Issuer and
U.S. Bank National Association, as Trustee. Terms used but not defined herein
shall have the meanings ascribed to them in the Indenture.

         I intend to deliver the following aggregate Principal Amount of
Securities for purchase by the Issuer pursuant to Section [3.08(a)][3.15(b)] of
the Indenture (in multiples of $1,000): $______________________________

         I hereby agree that the Securities will be purchased as of the Purchase
Date pursuant to the terms and conditions thereof and of the Indenture.

         [In the event that the Issuer elects, pursuant to Section 3.08(b) of
the Indenture, to pay the Purchase Price, in whole or in part, in Shares but
such portion of the Purchase Price is ultimately payable entirely in cash
because any of the conditions to payment of the Purchase Price in Shares is not
satisfied prior to the close of business on the Purchase Date, I elect (check
one):

         [ ] (1) to withdraw this Purchase Notice as to all of the Securities to
         which it relates;

         [ ] (2) to withdraw this Purchase Notice as to $___________________
         Principal Amount of Securities (Certificate No(s).
         ____________________); or

                                       D-1


         [ ] (3) to receive cash in respect of the entire Purchase Price for all
         Securities or portions thereof to which this Purchase Notice relates.]

                                              Signed:  ________________________

                                       D-2


                                    EXHIBIT E

                   [FORM OF CHANGE IN CONTROL PURCHASE NOTICE]

                                                             _____________, ____

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

Starwood Resorts & Hotels Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604

Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2021
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Certificate No(s). of Securities:   _____________________________

         This is a Change in Control Purchase Notice as defined in Section 3.09
of the Indenture dated as of May 25, 2001 (the "Indenture") between the Issuer
and U.S. Bank National Association, as Trustee. Terms used but not defined
herein shall have the meanings ascribed to them in the Indenture.

         I intend to deliver the following aggregate Principal Amount of
Securities for purchase by the Issuer pursuant to Section 3.09 of the Indenture
(in multiples of $1,000): $___________________________

         I hereby agree that the Securities will be purchased as of the Change
in Control Purchase Date pursuant to the terms and conditions thereof and of the
Indenture.

                        Signed: ________________________

                                       E-1


                                    EXHIBIT F

                   [FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                              OF RESTRICTED SHARES]

            (Transfers pursuant to Section 11.20(c) of the Indenture)

[NAME AND ADDRESS OF TRANSFER AGENT OF SHARES]

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

Re:      Shares of Starwood Resorts & Hotels Worldwide, Inc. (the "Issuer")

         Reference is hereby made to the Indenture dated as of May 25, 2001 (the
"Indenture") between the Issuer and U.S. Bank National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.

         This letter relates to__________ Shares represented by the accompanying
certificate(s) that were issued upon conversion of Securities and which are held
in the name of [name of transferor] (the "Transferor") to effect the transfer of
such Shares.

         In connection with the transfer of such Shares, the undersigned
confirms that such Shares are being transferred:

         CHECK ONE BOX BELOW

         (1) [ ]  to the Issuer; or

         (2) [ ]  pursuant to and in compliance with Regulation S under the
                  Securities Act of 1933; or

         (3) [ ]  to an institutional "accredited investor" (as defined in
                  Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
                  1933) that has furnished to the transfer agent a signed letter
                  containing certain representations and agreements (the form of
                  which letter can be obtained from the Issuer or transfer
                  agent); or

         (4) [ ]  pursuant to an exemption from registration under the
                  Securities Act of 1933 provided by Rule 144 thereunder.

         Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Shares evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(2), (3) or (4) is checked, the transfer agent may require,

                                       F-1


prior to registering any such transfer of the Shares such certifications and
other information, and if box (4) is checked such legal opinions, as the Issuer
reasonably requests in writing, by delivery to the transfer agent of a standing
letter of instruction, to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.

                                      [Name of Transferor],

                                      By______________________________________
                                      Name:___________________________________
                                      Title:___________________________________

Dated:

                                       F-2


                                    EXHIBIT G



- ----------------------------------------------------------------------------------------------------------------------------
CONTINGENT INTEREST PAYMENT SCHEDULES
              (PER BOND)
- ----------------------------------------------------------------------------------------------------------------------------
                                      Projected
                                      Contingent                   Regular                  Expected              Total
                                       Interest                    Interest                 Convert              Expected
          Year                         Schedule                    Payment                   Value                Payout
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                     
                                          -                           -                         -                     -
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                                     $1,000.00
- ------------------------------------------------------------------------------------------------------------------------------
          0.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          1.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          1.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          2.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          2.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          3.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          3.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          4.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          4.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          5.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          5.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          6.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          6.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          7.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          7.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          8.0                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          8.5                             -                        (17.50)                                              (17.50)
- ------------------------------------------------------------------------------------------------------------------------------
          9.0                           (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
          9.5                           (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
         10.0                           (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
         10.5                           (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
         11.0                           (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------


                                       F-1


                                                                                                               
- ------------------------------------------------------------------------------------------------------------------------------
          11.5                          (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
          12.0                          (2.06)                     (17.50)                                              (19.56)
- ------------------------------------------------------------------------------------------------------------------------------
          12.5                          (2.07)                     (17.50)                                              (19.57)
- ------------------------------------------------------------------------------------------------------------------------------
          13.0                          (2.16)                     (17.50)                                              (19.66)
- ------------------------------------------------------------------------------------------------------------------------------
          13.5                          (2.26)                     (17.50)                                              (19.76)
- ------------------------------------------------------------------------------------------------------------------------------
          14.0                          (2.37)                     (17.50)                                              (19.87)
- ------------------------------------------------------------------------------------------------------------------------------
          14.5                          (2.48)                     (17.50)                                              (19.98)
- ------------------------------------------------------------------------------------------------------------------------------
          15.0                          (2.59)                     (17.50)                                              (20.09)
- ------------------------------------------------------------------------------------------------------------------------------
          15.5                          (2.71)                     (17.50)                                              (20.21)
- ------------------------------------------------------------------------------------------------------------------------------
          16.0                          (2.83)                     (17.50)                                              (20.33)
- ------------------------------------------------------------------------------------------------------------------------------
          16.5                          (2.96)                     (17.50)                                              (20.46)
- ------------------------------------------------------------------------------------------------------------------------------
          17.0                          (3.09)                     (17.50)                                              (20.59)
- ------------------------------------------------------------------------------------------------------------------------------
          17.5                          (3.23)                     (17.50)                                              (20.73)
- ------------------------------------------------------------------------------------------------------------------------------
          18.0                          (3.38)                     (17.50)                                              (20.88)
- ------------------------------------------------------------------------------------------------------------------------------
          18.5                          (3.54)                     (17.50)                                              (21.04)
- ------------------------------------------------------------------------------------------------------------------------------
          19.0                          (3.69)                     (17.50)                                              (21.19)
- ------------------------------------------------------------------------------------------------------------------------------
          19.5                          (3.87)                     (17.50)                                              (21.37)
- ------------------------------------------------------------------------------------------------------------------------------
          20.0                          (4.04)                     (17.50)                 (3,230.49)                (3,252.03)
- ------------------------------------------------------------------------------------------------------------------------------
          IRR                                                                                                             8.25%
- ------------------------------------------------------------------------------------------------------------------------------



                                       F-2

EX-4.10

                                                                    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.

EX-4.11

                                                                    EXHIBIT 4.11

         THIS SECURITY IS SUBJECT TO REGULATIONS GOVERNING CONTINGENT PAYMENT
DEBT INSTRUMENTS. UNDER SUCH REGULATIONS, THE COMPARABLE YIELD OF THIS SECURITY
IS 8.25%, COMPOUNDED SEMI-ANNUALLY AND THE PROJECTED PAYMENT SCHEDULE IS
ATTACHED AS EXHIBIT G TO THE INDENTURE. A HOLDER OF SECURITIES MAY ALSO OBTAIN
THE PROJECTED PAYMENT SCHEDULE BY SUBMITTING A WRITTEN REQUEST TO THE ISSUER AT
THE FOLLOWING ADDRESS: STARWOOD HOTELS & RESORTS WORLDWIDE, INC., 1111
WESTCHESTER AVENUE, WHITE PLAINS, NEW YORK 10604, ATTENTION: GENERAL COUNSEL.


         THE ISSUER AGREES, AND BY ACCEPTANCE OF A BENEFICIAL INTEREST IN THE
SECURITY, EACH BENEFICIAL OWNER OF ALL OR ANY PORTION OF THE SECURITY EVIDENCED
HEREBY WILL BE DEEMED TO HAVE AGREED, FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES (1) TO TREAT THE SECURITY AS INDEBTEDNESS THAT IS SUBJECT TO TREAS.
REG. SEC. 1.1275-4 (THE "CONTINGENT DEBT REGULATIONS") AND, FOR PURPOSES OF THE
CONTINGENT DEBT REGULATIONS, TO TREAT, WITHOUT LIMITATION, THE AMOUNT OF CASH
AND THE FAIR MARKET VALUE OF ANY SHARES BENEFICIALLY RECEIVED UPON A CONVERSION
OF THE SECURITY AS A CONTINGENT PAYMENT AND (2) TO BE BOUND BY THE ISSUER'S
DETERMINATION OF THE "COMPARABLE YIELD" AND "PROJECTED PAYMENT SCHEDULE", WITHIN
THE MEANING OF THE CONTINGENT DEBT REGULATIONS, WITH RESPECT TO THE SECURITY.


         THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, AS AMENDED (THE "SECURITIES ACT"), AND THIS
NOTE AND THE SHARES ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) IN A TRANSACTION MEETING THE







REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUER SO REQUESTS), AS LONG AS THE REGISTRAR RECEIVES A
CERTIFICATION OF THE TRANSFEROR THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER
FROM IT OF THE SECURITIES EVIDENCED HEREBY OF THE RESALE RESTRICTION SET FORTH
IN (A) ABOVE.

         THE HOLDER OF THIS SECURITY IS SUBJECT TO, AND ENTITLED TO THE BENEFITS
OF, A REGISTRATION RIGHTS AGREEMENT, DATED AS OF MAY 16, 2003, ENTERED INTO BY
THE ISSUER FOR THE BENEFIT OF CERTAIN HOLDERS FROM TIME TO TIME OF SECURITIES.

         THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("DTC"), A NEW YORK CORPORATION, TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

                    STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                     3.50% CONVERTIBLE SENIOR NOTE DUE 2023

CUSIP No. 85590A AH7                           Principal Amount: $300,000,000.00







Issue Date: May 16, 2003                     Issue Price:  100% of the Principal
                                             Amount

         Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
(herein called the "Issuer" or the "Issuer", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay $300,000,000 aggregate Principal Amount (which amount may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary, in accordance with the rules and
procedures of the Depositary) on May 16, 2023, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on May
16 and November 16 of each year, commencing on November 16, 2003, on said
principal sum, in like coin or currency, at the rate of 3.50% per annum, from
May 16, 2003 or the most recent Interest Payment Date to which interest has been
paid or provided for, until the principal hereof has been paid or duly made
available for payment. The interest so payable on any May 16 or November 16
will, except as otherwise provided in the Indenture referred to on the reverse
hereof, be paid to the Person in whose name this Security is registered at the
close of business on the May 1 preceding such May 16 or the November 1 preceding
such November 16, whether or not such May 1 or November 1 is a Business Day.

         Each installment of interest on this Security shall be paid in same-day
funds by transfer to an account maintained by the payee located inside the
United States, provided that with respect to any Holder, such Holder shall have
furnished to the Paying Agent all required wire payment instructions no later
than the related Regular Record Date, or if no such instructions have been
furnished, by check payable to such Holder. In the case of a Global Security,
interest payable on any Interest Payment Date will be paid to the Depositary,
with respect to that portion of such Global Security held for its account by
Cede & Co. for the purpose of permitting such party to credit the interest
received by it in respect of such Global Security to the accounts of the
beneficial owners thereof.

         Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, including, without limitation, provisions giving
the Holder the right to convert this Security on the terms and subject to the
limitations referred to on the reverse hereof and as more fully specified in the
Indenture. Such further provisions shall for all purposes have the same effect
as though fully set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.







         IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.



                                          STARWOOD HOTELS & RESORTS
                                            WORLDWIDE, INC.


                                          By:
                                             -----------------------------------
                                              Name:
                                                    ----------------------------
                                              Title:
                                                      --------------------------







                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

U.S. Bank National Association, as Trustee, certifies that this is one of the
Securities referred to in the Indenture.



By:
     ---------------------------------------------
     Authorized Signatory


Date of authentication:    May 16, 2003












                           [REVERSE SIDE OF SECURITY]

         This Security is one of a duly authorized issue of Securities of the
Issuer designated as its 3.50% Convertible Senior Notes due 2023, limited in
aggregate Principal Amount to $300,000,000 (herein called the "Securities"),
issued and to be issued under an Indenture, dated as of May 16, 2003 (herein
called the "Indenture"), between the Issuer, Sheraton Holding Corporation,
Starwood Hotels & Resorts (the "Trust") and U.S. Bank National Association, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Issuer, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.

         Initially, U.S. Bank National Association, at its corporate trust
facility in the Borough of Manhattan, The City of New York, will act as Paying
Agent, Conversion Agent, Securities Custodian and Registrar. The Issuer may
appoint and change any Paying Agent, Conversion Agent, Securities Custodian,
Registrar or co-registrar without notice.

         Method of Payment - Holders must surrender Securities to the Paying
Agent to collect all payments in respect of the Securities, except for
liquidated damages payable pursuant to the Registration Rights Agreement,
interest thereon and Contingent Interest. The Issuer will pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts.

         Contingent Interest - Subject to the accrual and record date provisions
specified in this paragraph, the Issuer shall pay contingent interest
("Contingent Interest") to the Holders during any six-month period (a
"Contingent Interest Period") from May 16 to but not including November 16 and
from November 16 to but not including May 16, commencing after May 16, 2006, if
the average Security Market Price for the five trading days ending on the second
trading day immediately preceding the relevant six-month period with respect to
such Contingent Interest Period equals 120% or more of the Issue Price of the
Security.

         The amount of Contingent Interest payable per Security in respect of
any Contingent Interest Period shall equal the greater of (x) a rate per annum
of 0.4125%, multiplied by the Issue Price of the Security and (ii) a per annum
rate of .25% multiplied by the average Security Market Price for the five
trading days ending on the second trading day immediately preceding the relevant
Contingent Interest Period. Contingent Interest shall be computed on the basis
of a 360-day year comprised of twelve 30-day months.

"Security Market Price" means, as of any date of determination, the average of
the secondary market bid quotations per Security obtained by the Bid
Solicitation Agent for $10 million Principal Amount at approximately 4:00 p.m.
(New York City time) on such determination date from two recognized securities
dealers in The City of New York (none of which shall be an Affiliate of the
Issuer) selected by the Issuer; provided, however, if (a) at least two such bids
are not obtained by the Bid Solicitation Agent or (b) in the Issuer's reasonable
judgment, the bid quotations are not indicative of the secondary market value of
the Securities as of such determination date, then the Market Price of the
Securities for such determination date







shall equal (i) the Conversion Rate in effect as of such determination date
multiplied by (ii) the average Sale Price for the five trading days ending on
such determination date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such trading days
during such five trading day period and ending on such determination date, of
any event described in Section 11.06, 11.07, 11.08 or 11.21 (subject to the
conditions set forth in Sections 11.09 and 11.10) of the Indenture.

         Upon determination that Holders will be entitled to receive Contingent
Interest which may become payable during a Contingent Interest Period, on or
prior to the first day of such Contingent Interest Period, the Issuer shall
issue a press release and publish such information on its web site at
www.starwoodhotels.com or such other website as the Issuer may from time to time
maintain.

         Redemption at the Option of the Issuer - No sinking fund is provided
for the Securities. The Securities are redeemable as a whole, or from time to
time in part, at any time at the option of the Issuer at a redemption price (the
"Redemption Price") equal to 100% of the Issue Price plus the accrued and unpaid
interest (including Contingent Interest, if any), to, but not including, the
Redemption Date; provided that the Securities are not redeemable prior to May
23, 2006 at the option of the Issuer.

         In addition, if there shall have occurred a Trust Assumption Event, the
Issuer or the Trust, at either the Issuer's or the Trust's option, may elect to
redeem Securities for a period of 60 days following the effective date of such
Trust Assumption Event for cash at a redemption price (the "Trust Assumption
Event Redemption Price") equal to 100% of the Issue Price plus accrued and
unpaid interest (including Contingent Interest, if any) to, but not including,
the Trust Assumption Event Redemption Date.

         In addition to the Redemption Price or Trust Assumption Event
Redemption Price payable with respect to all Securities or portions thereof to
be redeemed as of a Redemption Date or Trust Assumption Event Redemption Date,
as the case may be, the Holders of such Securities (or portions thereof) shall
be entitled to receive accrued and unpaid Defaulted Interest, if any, with
respect thereto, which Defaulted Interest shall be paid in cash on the
Redemption Date or Trust Assumption Event Redemption Date, as the case may be.









         Purchase By the Issuer at the Option of the Holder - Subject to the
terms and conditions of the Indenture, the Issuer shall become obligated to
purchase, at the option of the Holder, the Securities held by such Holder on May
16 of each of 2006, 2008, 2013 and 2018 (each a "Purchase Date") at a purchase
price (the "Purchase Price") equal to 100% of the Issue Price plus accrued and
unpaid interest (including Contingent Interest, if any) to, but not including,
the Purchase Date, upon delivery of a Purchase Notice containing the information
set forth in the Indenture, at any time from the opening of business on the date
that is 20 Business Days prior to such Purchase Date until the close of business
on the third Business Day prior to such Purchase Date and upon delivery of the
Securities to the Paying Agent by the Holder as set forth in the Indenture.

         The Purchase Price may be paid, at the option of the Issuer, in cash or
by the issuance and delivery of Shares of the Issuer valued at the Market Price,
or in any combination of cash and Shares.

         At the option of the Holder and subject to the terms and conditions of
the Indenture, the Issuer shall become obligated to repurchase the Securities if
a Change in Control occurs at any time on or prior to May 16, 2006 for a change
in control purchase price ( the "Change in Control Purchase Price") equal to
100% of the Issue Price plus accrued and unpaid interest (including Contingent
Interest, if any) to, but not including, the Change in Control Purchase Date,
which Change in Control Purchase Price shall be paid in cash.

         At the option of the Holder and subject to the terms and conditions of
the Indenture, the Trust shall become obligated to repurchase the Securities if
a Trust Assumption Event occurs for a trust assumption event purchase price (the
"Trust Assumption Event Purchase Price") equal to 100% of the Issue Price plus
accrued and unpaid interest (including Contingent Interest, if any) to, but not
including, the Trust Assumption Event Purchase Date, which Trust Assumption
Event Purchase Price shall be paid in cash.

         In addition to the Purchase Price, Change in Control Purchase Price or
Trust Assumption Event Purchase Price, as the case may be, payable with respect
to all Securities or portions thereof to be purchased as of the Purchase Date,
the Change in Control Purchase Date or Trust Assumption Event Purchase Date, as
the case may be, the Holders of such Securities (or portions thereof) shall be
entitled to receive accrued and unpaid Defaulted Interest, if any, with respect
thereto, which Defaulted Interest shall be paid in cash promptly following the
later of the Purchase Date, the Change in Control Purchase Date or Trust
Assumption Event Purchase Date, as the case may be, and the time of delivery of
such Securities to the Paying Agent pursuant to the Indenture.

         Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.

         If cash and/or securities sufficient to pay the Purchase Price or cash
sufficient to pay the Change in Control Purchase Price or cash sufficient to pay
the Trust Assumption Event Purchase Price, as the case may be, of all Securities
or portions thereof to be purchased as of the Purchase Date, the Change in
Control Purchase Date or the Trust Assumption Event Purchase Date, as the







case may be, are deposited with the Paying Agent on the Business Day following
the Purchase Date, the Change in Control Purchase Date or Trust Assumption Event
Purchase Date, as the case may be, interest, (including Contingent Interest),
will cease to accrue on such Securities (or portions thereof) immediately after
such Purchase Date, Change in Control Purchase Date or Trust Assumption Event
Purchase Date, as the case may be, and the Holder thereof shall have no other
rights as such (other than the right to receive the Purchase Price, Change in
Control Purchase Price or the Trust Assumption Event Purchase Price, as the case
may be).

         If the Issuer elects to pay all or part of the Purchase Price in
Shares, the portion of interest attributable to the period from the later of (x)
the Issue Date, and (y) the date on which interest was last paid through the
Purchase Date with respect to the surrendered Security and (except as provided
below) accrued Contingent Interest and Defaulted Interest with respect to the
surrendered Security shall not be cancelled, extinguished or forfeited, but
rather shall be deemed to be paid in full to the Holder thereof through the
delivery of the Shares (together with cash payment, if any, in lieu of
fractional Shares) and cash, if any, in exchange for the Security being
purchased pursuant to the terms hereof; and such cash, if any, and the fair
market value of such Shares (together with any such cash payment in lieu of
fractional Shares) shall be treated as delivered pro rata, to the extent
thereof, first in exchange for interest accrued through the Purchase Date and
accrued Contingent Interest and Defaulted Interest, if any, and the balance, if
any, of such cash and the fair market value of such Shares (and any such cash
payment) shall be treated as delivered in exchange for the Issue Price of the
Security being purchased pursuant to the provisions hereof.

         Ranking -- The Securities shall be general senior obligations of the
Issuer.

         Guarantee -- The Securities are guaranteed by Sheraton Holding
Corporation in accordance with Article 12 of the Indenture. The guarantee may be
released upon the terms and conditions set forth in the Indenture.

         Trust Guarantee -- Pursuant to Section 12.06 of the Indenture, the
Trust has unconditionally guaranteed to each Holder of the Securities the
obligation of the Issuer to cause to be delivered to such Holder, in accordance
with Section 11.02 of the Indenture, the Class B Shares required to be delivered
upon a conversion of the Securities by such Holder in accordance with Article
11, in circumstances where the Issuer has failed to direct the Trust to issue on
the Issuer's behalf such Class B Shares in accordance with Section 11.02 of the
Indenture after a Holder has satisfied all requirements for a conversion set
forth herein and in the Indenture (the "Trust Guarantee"). If the Issuer has
failed to direct the Trust to issue on the Issuer's behalf, such Class B Shares
so required to be delivered in accordance with Section 11.02 of the Indenture
after a Holder has satisfied all requirements for a conversion set forth herein
and in the Securities, such Holder may require the Trust to issue such Class B
Shares, on behalf of the Issuer, under the Trust Guarantee and, upon the Trust
doing so, the Trust shall have the right to be paid by the Issuer (but not by
the Holder), with interest at a rate of 8% per annum from the date of issue of
such Class B Shares by the Trust until the date of payment for such Class B
Shares by the Issuer, the fair value of the Class B Shares so issued under the
Trust Guarantee.

         Conversion -- A Holder of a Security may convert it into Shares in
accordance with the terms and conditions set forth in Article 11 of the
Indenture.









         A Holder's right to convert Securities into Shares is subject to the
Issuer's right to elect to instead pay such Holder the amount of cash set forth
in the next succeeding sentence in lieu of delivering all or part of such
Shares; provided, however, that if such payment of cash is not permitted
pursuant to the provisions of the Indenture, the Issuer shall deliver Shares
(and cash in lieu of fractional Shares) in accordance with Article 11 of the
Indenture, whether or not the Issuer has delivered a notice pursuant to Section
11.02 of the Indenture to the effect that the Securities will be paid in cash.
The amount of cash to be paid for each $1,000 Principal Amount of a Security
shall be equal to the Sale Price of per Share for the five consecutive trading
days (a) immediately following the date of the notice of the Issuer pursuant to
Section 11.02 to pay the Conversion Price in cash if the Issuer has not given a
notice of redemption or (b) ending on the third trading day prior to the
Conversion Date, in the case of a conversion following notice by the Issuer
specifying that it intends to deliver cash upon conversion, in either case
multiplied by the Conversion Rate in effect on such Conversion Date. If the
Issuer shall elect to make such payment wholly in Shares, then such Shares shall
be delivered through the Conversion Agent to Holders surrendering Securities no
later than the fifth Business Day following the Conversion Date. If, however,
the Issuer shall elect to make any portion of such payment in cash, then the
payment, including any delivery of Shares, shall be made to Holders surrendering
Securities no later than the tenth Business Day following the Conversion Date.

         The Issuer shall not pay cash in lieu of delivering all or part of such
Shares upon the conversion of any Security pursuant to the terms of Article 11
of the Indenture (other than cash in lieu of fractional shares) if there has
occurred (prior to, on or after, as the case may be, the Conversion Date or the
date on which the Issuer delivers its notice of whether each Security shall be
converted into Shares or cash) and is continuing an Event of Default (other than
a default in such payment on such Securities).

         The initial Conversion Rate is 20.0000 Shares per $1,000 Principal
Amount, subject to adjustment in certain events described in the Indenture. The
Issuer will deliver cash or a check in lieu of any fractional Share.

         Securities surrendered for conversion during the period from the close
of business on any Regular Record Date next preceding any Interest Payment Date
to the opening of business on such Interest Payment Date (except Securities to
be redeemed on a date within such period) must be accompanied by payment in an
amount equal to the interest thereon that the registered Holder is entitled to
receive. Except where Securities surrendered for conversion must be accompanied
by payment as described above, no interest on converted Securities shall be
payable by the Issuer on any Interest Payment Date subsequent to the Conversion
Date.

         Securities surrendered for conversion during the period from the close
of business on any date on which Contingent Interest accrues to the opening of
business on the date on which such Contingent Interest is payable (except
Securities with respect to which the Issuer has mailed a notice of redemption)
must be accompanied by payment in an amount equal to the Contingent Interest and
Defaulted Interest with respect thereto that the registered Holder is to
receive. Except where Securities surrendered for conversion must be accompanied
by payment as described above, no Contingent Interest or Defaulted Interest on
converted Securities will accrue after the Conversion Date.









         To convert a Security, a Holder must (1) complete and manually sign the
conversion notice below (or complete and manually sign a facsimile of such
notice) and deliver such notice to the Conversion Agent, (2) surrender the
Security to the Conversion Agent for cancellation as set forth below, (3)
furnish appropriate endorsements and transfer documents if required by the
Conversion Agent, the Issuer or the Trustee and (4) pay all funds required, if
any, relating to interest (including Contingent Interest) on the Security to be
converted for which the Holder is not entitled and pay any transfer or similar
tax, if required. The delivery by the Issuer to the Holder through the
Conversion Agent of certificates for the number of Shares issuable upon a
conversion of the Security under the circumstances set forth in the preceding
paragraph (together with the surrender of the associated Trust Guarantee) shall
be effected in the manner set forth in this paragraph and in the Indenture. Upon
the surrender by a Holder of the applicable Corporation Note or portion thereof
to the Issuer in accordance with Section 11.01 of the Indenture, in the
circumstances when conversion rights are exercisable and a Trust Assumption
Event has not occurred, the Issuer shall issue to the Holder the Conversion
Number of Corporation Shares and will cause the Conversion Number of Class B
Shares to be issued to the Holder from the Trust by paying to the Trust the fair
value (as such value is determined by the Issuer and the Trust) of the
Conversion Number of Class B Shares issuable upon exercise of conversion rights
and directing the Trust to issue, on behalf of the Issuer, such Class B Shares
to the Holder, subject to the surrender by the Holder of the Trust Guarantee
(insofar as it relates to the portion of the Holder's Securities being
converted), which shall be deemed to be surrendered to the Trust simultaneously
with the receipt of the Conversion Number of Class B Shares. As between the
Holder and the Trust, the Holder need only surrender the Trust Guarantee to the
Trust as provided in the preceding sentence to receive the Conversion Number of
Class B Shares from the Trust, provided that the conversion rights are then
exercisable and the Trust Assumption Event has not occurred and the Holder has
satisfied all requirements for a conversion of the Security.

         A Holder may convert a portion of a Security if the Principal Amount of
such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on, or other distributions with respect
to, any Shares except as provided in the Indenture. On conversion of a Security,
(a) that portion of accrued interest attributable to the period from the later
of (x) the Issue Date and (y) the date on which interest was last paid through
the Conversion Date with respect to the converted Security and (except as
provided below) accrued Contingent Interest and accrued Defaulted Interest with
respect to the converted Security and (b) that portion of Security Conversion
Tax Interest (as defined in Section 11.02 of the Indenture), shall not be
cancelled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the Holder thereof through the delivery of the Shares (together with the
cash payment, if any, in lieu of fractional Shares) and cash, if any, in
exchange for the Security being converted pursuant to the terms hereof; and such
cash and the fair market value of such Shares (together with any such cash
payment in lieu of fractional Shares) shall be treated as delivered pro rata, to
the extent thereof, first in exchange for interest, and accrued Contingent
Interest and Security Conversion Tax Interest accrued through the Conversion
Date and Defaulted Interest, and the balance, if any, of the fair market value
of such cash and such Shares shall be treated as delivered in exchange for the
Issue Price of the Security being converted pursuant to the provisions hereof.

         The Conversion Rate will be adjusted as provided in the Indenture.









         If the Issuer is a party to a consolidation, merger or binding share
exchange or a transfer of its assets as, or substantially as, an entirety, or
upon certain distributions described in the Indenture, the right to convert a
Security into Shares may be changed into a right to convert it into securities,
cash or other assets of the Issuer or another Person.

         In the event of a Share Separation, the Securities shall not be
convertible in Shares, but shall instead be convertible solely into Corporation
Shares except upon a Trust Assumption Event. Upon the occurrence of a Share
Separation, the Conversion Rate of the Securities shall be adjusted in
accordance with the terms of the Indenture. In addition, Holders of Securities
shall not be entitled to convert their Securities into Shares for the period
beginning on the record date for such Share Separation and ending on the first
Business Day succeeding the first five consecutive trading days after the
effective date of such Share Separation.

         In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, repurchase or conversion of this
Security in part only, the Trustee, as custodian of the Depositary, shall make
an adjustment on its records to reflect such deposit or withdrawal in accordance
with the rules and procedures of the Depositary.

         Subject to certain limitations in the Indenture, at any time when the
Issuer is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security, the Issuer shall promptly furnish or cause to be furnished Rule 144A
Information (as defined below) to such Holder of Restricted Securities, or to a
prospective purchaser of any such security designated by any such Holder, to the
extent required to permit compliance by any such Holder with Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). "Rule 144A
Information" shall be such information as is specified pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto).

         If an Event of Default shall occur and be continuing, the Issue Price
plus accrued and unpaid interest (including Contingent Interest, if any) may be
declared due and payable in the manner and with the effect provided in the
Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and of this Security and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Securities under
the Indenture and this Security at any time by the Issuer and the Trustee with
the consent of the Holders of not less than a majority in Principal Amount of
the outstanding Securities. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate Principal Amount of the
outstanding Securities, on behalf of the Holders of all the Securities, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.

         As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the







appointment of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Securities, the Holders of not
less than 25% in Principal Amount of the outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable security or indemnity
satisfactory to the Trustee against any loss, liability or expense, and the
Trustee shall not have received from the Holders of a majority in Principal
Amount of outstanding Securities a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to
any suit instituted by the Holder of this Security for the enforcement of any
payment hereon on or after the respective due dates expressed herein.

         No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the Principal Amount, Purchase Price or
Change in Control Purchase Price of, interest (including Contingent Interest),
if any, on, and liquidated damages on this Security at the times, place and
rate, and in the coin or currency, prescribed in the Indenture.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the security
register, upon surrender of this Security for registration of transfer at the
office or agency of the Issuer established pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Issuer and the Registrar duly executed by, the Holder hereof
or his attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate Principal
Amount will be issued to the designated transferee or transferees.

         The Securities are issuable only in registered form without coupons in
denominations of $1,000 Principal Amount and any integral multiple of $1,000
above that amount. As provided in the Indenture and subject to certain
limitations therein set forth, Securities are exchangeable for a like aggregate
Principal Amount of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.

         No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

         Prior to due presentment of this Security for registration of transfer,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Issuer, the
Trustee nor any such agent shall be affected by notice to the contrary.

         All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.






                   [FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                   FROM GLOBAL SECURITY OR DEFINITIVE SECURITY
                             TO DEFINITIVE SECURITY]

        (Transfers pursuant to Section 2.13(a)(1) or Section 2.13(a)(2)
                                of the Indenture)

                                                           ________________, ___



U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department

Re:      Transfer of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Reference is hereby made to the Indenture dated as of May 16, 2003 (the
"Indenture") among the Issuer, Sheraton Holding Corporation, Starwood Hotels &
Resorts and U.S. Bank National Association, as Trustee. Capitalized terms used
but not defined herein shall have the meanings given them in the Indenture.

         This letter relates to U.S. $              aggregate principal amount
of Securities which are held [in the form of a [Definitive] [Global Security
(CUSIP No.                 )]* in the name of [name of transferor] (the
"Transferor") to effect the transfer of Securities.

         In connection with such request, and in respect of such Securities, the
Transferor does hereby certify that such Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Securities and
the Indenture and (ii) to a transferee that the Transferor reasonably believes
is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the U.S. Securities Act of 1933, as amended)
(an "Institutional Accredited Investor") which is acquiring such Securities for
its own account or for one or more accounts, each of which is an Institutional
Accredited Investor, over which it exercises sole investment discretion and
(iii) in accordance with applicable securities laws of any state of the United
States.


- ---------------------------
*  Insert, if appropriate.







                                               [Name of Transferor],

                                               By:
                                                  ------------------------
                                               Name:
                                                    ----------------------
                                               Title:
                                                     ---------------------
                                               Dated:
                                                     ---------------------











               [FORM OF NON-DISTRIBUTION LETTER FOR INSTITUTIONAL
                             ACCREDITED INVESTORS]

         (Transfers pursuant to Section 2.13(a)(1) or Section 2.13(a)(2)
                               of the Indenture)

                                                           ----------------, ---


U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department


Starwood Resorts & Hotels Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604

Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (together with the Shares issuable upon
         conversion thereof, the "Securities") of
         Starwood Resorts & Hotels Worldwide, Inc. (the "Issuer")(1)

Ladies and Gentlemen:

                  In connection with our purchase of the Securities we confirm
that:

                  1. We understand that the Securities are not being and will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.

                  2. We acknowledge that (a) neither the Issuer, nor the Initial
Purchasers (as defined in the Offering Memorandum dated May 9, 2003 relating to
the Securities (the "Offering Memorandum")) nor any person acting on behalf of
the Issuer or the Initial Purchasers has made any representation to us with
respect to the Issuer or the offer or sale of any Securities; and (b) any
information we desire concerning the Issuer and the Securities or any other
matter relevant to our decision to purchase the Securities (including a copy of
the Offering Memorandum) is or has been made available to us.

                  3. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional "accredited


- -----------------------
(1)     Each U.S. purchaser, or account for which each U.S. purchaser is acting,
should purchase at least $250,000 Principal Amount of Securities.







investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) able to bear the economic risk of investment in the
Securities.

                  4. We are acquiring the Securities for our own account (or for
accounts as to which we exercise sole investment discretion and have authority
to make, and do make, the statements contained in this letter) and not with a
view to any distribution of the Securities, subject, nevertheless, to the
understanding that the disposition of our property will at all times be and
remain within our control.

                  5. We understand that (a) the Securities will be in registered
form only and that any certificates delivered to us in respect of the Securities
will bear a legend substantially to the following effect:

         "THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT, AS AMENDED (THE "SECURITIES ACT"), AND THIS
NOTE AND THE SHARES ISSUABLE UPON CONVERSION HEREOF MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF
ANY, REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER
OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (D)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS),
AS LONG AS THE REGISTRAR RECEIVES A CERTIFICATION OF THE TRANSFEROR THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT (2) TO THE ISSUER OR (3)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER
IS REQUIRED







TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITIES EVIDENCED
HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE."

                  and (b) the Issuer has agreed to reissue such certificates
without the foregoing legend only in the event of a disposition of the
Securities in accordance with the provisions of paragraph 6 below (provided, in
the case of a disposition of the Securities in accordance with paragraph 6(f)
below, that the legal opinion referred to in such paragraph so permits), or at
our request at such time as we would be permitted to dispose of them in
accordance with paragraph 6(a) below.

                  6. We agree that in the event that at some future time we wish
to dispose of any of the Securities, we will not do so unless such disposition
is made in accordance with any applicable securities laws of any state of the
United States and:

                  (a) the Securities are sold in compliance with Rule 144(k)
         under the Securities Act; or

                  (b) the Securities are sold in compliance with Rule 144A under
         the Securities Act; or

                  (c) the Securities are sold in compliance with Rule 904 of
         Regulation S under the Securities Act; or

                  (d) the Securities are sold pursuant to an effective
         registration statement under the Securities Act; or

                  (e) the Securities are sold to the Issuer or an affiliate (as
         defined in Rule 501(b) of Regulation D) of the Issuer; or

                  (f) the Securities are disposed of in any other transaction
         that does not require registration under the Securities Act, and we
         theretofore have furnished to the Issuer or its designee an opinion of
         counsel experienced in securities law matters to such effect or such
         other documentation as the Issuer or its designee may reasonably
         request.

                                Very truly yours,


                                By ______________________
                                   (Authorized Officer)














                            [FORM OF PURCHASE NOTICE]

                                                           ________________, ___


U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department


Starwood Resorts & Hotels Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604


Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Certificate No(s). of Securities:   _____________________________

         This is a Purchase Notice as defined in Section [3.08(a)][3.15(b)] of
the Indenture dated as of May 16, 2003 (the "Indenture") among the Issuer,
Sheraton Holding Corporation, Starwood Hotels & Resorts and U.S. Bank National
Association, as Trustee. Terms used but not defined herein shall have the
meanings ascribed to them in the Indenture.

         I intend to deliver the following aggregate Principal Amount of
Securities for purchase by the Issuer pursuant to Section [3.08(a)][3.15(b)] of
the Indenture (in multiples of $1,000):
$_____________________________

         I hereby agree that the Securities will be purchased as of the Purchase
Date pursuant to the terms and conditions thereof and of the Indenture.

         [In the event that the Issuer elects, pursuant to Section 3.08(b) of
the Indenture, to pay the Purchase Price, in whole or in part, in Shares but
such portion of the Purchase Price is ultimately payable entirely in cash
because any of the conditions to payment of the Purchase Price in Shares is not
satisfied prior to the close of business on the Purchase Date, I elect (check
one):

         [ ] (1) to withdraw this Purchase Notice as to all of the Securities to
         which it relates;

         [ ] (2) to withdraw this Purchase Notice as to $___________________
         Principal Amount of Securities (Certificate No(s).
         ____________________); or

         [ ] (3) to receive cash in respect of the entire Purchase Price for all
         Securities or portions thereof to which this Purchase Notice relates.]











                                              Signed:  ________________________









                   [FORM OF CHANGE IN CONTROL PURCHASE NOTICE]

                                                           ________________, ___


U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department


Starwood Resorts & Hotels Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604


Re:      Purchase of  $________ Principal Amount of
         3.50% Convertible Senior Notes due 2023
         (the "Securities") of Starwood Resorts & Hotels Worldwide, Inc. (the
         "Issuer")

         Certificate No(s). of Securities:   _____________________________

         This is a Change in Control Purchase Notice as defined in Section 3.09
of the Indenture dated as of May 16, 2003 (the "Indenture") among the Issuer,
Sheraton Holding Corporation, Starwood Hotels & Resorts and U.S. Bank National
Association, as Trustee. Terms used but not defined herein shall have the
meanings ascribed to them in the Indenture.

         I intend to deliver the following aggregate Principal Amount of
Securities for purchase by the Issuer pursuant to Section 3.09 of the Indenture
(in multiples of $1,000):
$________________________________

         I hereby agree that the Securities will be purchased as of the Change
in Control Purchase Date pursuant to the terms and conditions thereof and of the
Indenture.

                        Signed: ________________________











                   [FORM OF TRANSFER CERTIFICATE FOR TRANSFER
                              OF RESTRICTED SHARES]

            (Transfers pursuant to Section 11.20(c) of the Indenture)

[NAME AND ADDRESS OF TRANSFER AGENT OF SHARES]

U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention:  Corporate Trust Department


Re:      Shares of Starwood Resorts & Hotels Worldwide, Inc. (the "Issuer")


         Reference is hereby made to the Indenture dated as of May 16, 2003 (the
"Indenture") between the Issuer and U.S. Bank National Association, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.

         This letter relates to ____________ Shares represented by the
accompanying certificate(s) that were issued upon conversion of Securities and
which are held in the name of [name of transferor] (the "Transferor") to effect
the transfer of such Shares.

         In connection with the transfer of such Shares, the undersigned
confirms that such Shares are being transferred:

         CHECK ONE BOX BELOW

         (1) / /  to the Issuer; or

         (2) / /  pursuant to and in compliance with Regulation S under the
                  Securities Act of 1933; or

         (3) / /  to an institutional "accredited investor" (as defined in Rule
                  501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
                  that has furnished to the transfer agent a signed letter
                  containing certain representations and agreements (the form of
                  which letter can be obtained from the Issuer or transfer
                  agent); or

         (4) / /  pursuant to an exemption from registration under the
                  Securities Act of 1933 provided by Rule 144 thereunder.

         Unless one of the boxes is checked, the transfer agent will refuse to
register any of the Shares evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(2), (3) or (4) is checked, the transfer agent may require,







prior to registering any such transfer of the Shares such certifications and
other information, and if box (4) is checked such legal opinions, as the Issuer
reasonably requests in writing, by delivery to the transfer agent of a standing
letter of instruction, to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933.

                                         [Name of Transferor],



                                         By
                                           -------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------


Dated:










                            FORM OF CONVERSION NOTICE

         If you want to convert this Security into Shares of the Issuer, check
the box: / /

         To convert only part of this Security, state the Principal Amount to be
converted (which must be $1,000 or an integral multiple of $1,000):

         $__________________________________

         If you want the stock certificate made out in another person's name,
fill in the form below:

________________________________________________________________________________
              (Insert other person's social security or tax ID no.)
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
           (Print or type other person's name, address and zip code)

         Date: _____________________________         Signed: ___________________

         (Sign exactly as your name appears on the other side of this Security)

         Signature Guarantee:________________________________

EX-5.1

         [SIDLEY AUSTIN BROWN & WOOD LLP, CHICAGO, ILLINOIS LETTERHEAD]



                                                                     Exhibit 5.1


                                  July 8, 2003


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
Sheraton Holding Corporation
1111 Westchester Avenue
White Plains, New York 10604

                  Re:   Registration Statement on Form S-3 of Starwood Hotels &
                        Resorts Worldwide, Inc., Starwood Hotels & Resorts
                        and Sheraton Holding Corporation

Ladies and Gentlemen:

                  We refer to the Registration Statement on Form S-3 (the
"Registration Statement") being filed by Starwood Hotels & Resorts Worldwide,
Inc., a Maryland corporation (the "Corporation"), Starwood Hotels & Resorts, a
Maryland real estate investment trust (the "Trust" and, together with the
Corporation, the "Company") and Sheraton Holding Corporation (the "Notes
Guarantor") with the Securities and Exchange Commission (the "SEC"), relating to
the registration under the Securities Act of 1933, as amended (the "Securities
Act"), of (i) up to $360,000,000 aggregate principal amount of the Corporation's
3.50% Convertible Senior Notes due 2023 (the "Notes"), (ii) the Notes Guarantee
(as defined below), (iii) 7,200,000 Shares, each consisting of one share of
common stock, par value $0.01 per share, of the Corporation and one Class B
share of beneficial interest, par value $0.01 per share, of the Trust, issuable
upon conversion of the Notes and (iv) the limited conversion guarantee by the
Trust (the "Conversion Guarantee") of the issuance of the Class B shares upon
conversion of the Notes under those circumstances set forth in the Indenture (as
defined below) (the Notes, the Notes Guarantee, the Shares and the Conversion
Guarantee are collectively referred to herein as the "Securities").

                  The Notes are guaranteed (the "Notes Guarantee") by the Notes
Guarantor and were issued under an Indenture, dated as of May 16, 2003 (the
"Indenture"), among the Corporation, the Trust, the Notes Guarantor and U.S.
Bank National Association, as Trustee (the "Trustee"). The Notes were issued and
sold to Banc of America Securities, LLC, Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc., the initial purchasers thereof (the "Initial
Purchasers"), without registration under the Securities Act, and were offered
and sold by the Initial Purchasers to qualified institutional buyers in reliance
on Rule 144A under the Securities Act. In connection with the offer and sale of
the Notes, the Corporation and the Notes Guarantor entered into a Registration
Rights Agreement, dated as of May 16,


[SIDLEY AUSTIN BROWN & WOOD LLP LOGO]                             [CHICAGO LOGO]


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
Sheraton Holding Corporation
July 8, 2003
Page 2


2003 (the "Registration Rights Agreement"), with the Initial Purchasers,
providing for the registration of the Securities. The Registration Statement is
being filed pursuant to the Registration Rights Agreement.

                  In rendering the opinions expressed below, we have examined
and relied upon copies of the Registration Statement and the exhibits filed
therewith, the Notes and the Indenture. We have also examined originals, or
copies of originals certified to our satisfaction, of such agreements,
documents, certificates and statements of government officials and other
instruments, and have examined such questions of law and have satisfied
ourselves as to such matters of fact, as we have considered relevant and
necessary as a basis for this letter. We have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of all persons and the conformity with the original documents of
any copies thereof submitted to us for examination.

                  Based on the foregoing and subject to the assumptions,
qualifications and limitations set forth below, it is our opinion that:

                  1. Assuming that (i) the Corporation has been duly
incorporated and is validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) the Corporation has full right, power and
authority to execute, deliver and perform its obligations under the Indenture,
(iii) the Indenture has been duly authorized, executed and delivered by each of
the Corporation, the Trust, Notes Guarantor and the Trustee, (iv) the Notes have
been duly executed, issued and delivered by the Corporation and duly
authenticated by the Trustee as provided in the Indenture and the resolutions of
the Board of Directors of the Company creating and authorizing the Notes, and
were delivered to the Initial Purchasers against payment of the agreed
consideration therefor and (v) the execution, delivery and performance by the
Corporation of each of the Indenture and the Notes do not and will not violate
the organizational documents of the Corporation, the Notes have been legally
issued and constitute binding obligations of the Corporation (except to the
extent enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and by the effect of general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law).

                  2. Assuming that (i) the Notes Guarantor has been duly
incorporated and is validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) the Notes Guarantor has full right, power
and authority to execute, deliver and perform its obligations under the
Indenture, (iii) the Indenture has been duly authorized, executed and delivered
by each of the Corporation, the Trust, the Notes Guarantor and the Trustee, (iv)
the execution, delivery and performance by the Notes Guarantor of the Indenture
does not and will not violate the organizational documents of the Notes
Guarantor, (v) the Notes have been duly executed, issued and delivered by the
Corporation and duly authenticated by the Trustee as provided in the Indenture
and the resolutions of the Board of Directors of the Company creating and
authorizing the Notes, and were delivered to the Initial Purchasers against
payment of the agreed consideration therefor, the Notes Guarantee constitutes a
legal obligation of the Notes Guarantor (except to the extent enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law).



[SIDLEY AUSTIN BROWN & WOOD LLP LOGO]                             [CHICAGO LOGO]


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
Sheraton Holding Corporation
July 8, 2003
Page 3


                  3. Assuming that (i) the Trust has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
organization (ii) the Trust has full right, power and authority to execute,
deliver and perform its obligations under the Indenture, including the
Conversion Guarantee, (iii) the Indenture has been duly authorized, executed and
delivered by each of the Corporation, the Trust, the Notes Guarantor and the
Trustee, (iv) the execution, delivery and performance of the Indenture does not
and will not violate the organizational documents of the Trust, (v) the Notes
have been duly executed, issued and delivered by the Corporation and duly
authenticated and delivered by the Trustee as provided in the Indenture and the
resolutions of the Board of Directors of the Company creating and authorizing
the Notes, and were delivered to the Initial Purchasers against payment of the
agreed consideration therefor, the Conversion Guarantee constitutes a valid and
binding obligation of the Trust (except to the extent enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law).

                  We note that (i) a letter of Venable, Baetjer and Howard, LLP,
Maryland counsel to the Company, delivered to you concurrently herewith,
addresses, among other things, the authorization and execution of the Notes by
the Corporation and the authorization and execution of the Indenture by the
Corporation and the Trust and (ii) a letter of Lionel Sawyer & Collins, Las
Vegas, Nevada, delivered to you concurrently herewith, addresses, among other
things, the authorization and execution of the Indenture by the Notes Guarantor.

                  We do not find it necessary for the purposes of this letter to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various jurisdictions to the issuance of the
Securities. This letter is limited the laws of the State of New York and the
Securities Act.

                  We hereby consent to the filing of this letter as an Exhibit
to the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement. In giving this consent, we do not
hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules or regulations of
the SEC promulgated thereunder.

                                       Very truly yours,


                                       /s/ Sidley Austin Brown & Wood LLP

EX-5.2

                [LETTERHEAD OF VENABLE, BAETJER AND HOWARD, LLP]





                                                                     Exhibit 5.2

                                  July 8, 2003


Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604

Starwood Hotels & Resorts
1111 Westchester Avenue
White Plains, New York 10604

         Re:   Starwood Hotels & Resorts and
               Starwood Hotels & Resorts Worldwide, Inc.


Ladies and Gentlemen:

                  We have served as Maryland counsel to Starwood Hotels &
Resorts Worldwide, Inc., a Maryland corporation (the "Company"), and to Starwood
Hotels & Resorts, a Maryland real estate investment trust (the "Trust"), in
connection with certain matters of Maryland law arising out of the registration
by the Company of $360,000,000 in aggregate principal amount of its 3.50%
Convertible Senior Notes due 2023 (the "Notes"), covered by the Registration
Statement on Form S-3, as filed with the United States Securities and Exchange
Commission (the "Commission") by the Company, the Trust and Sheraton Holding
Corporation on or about the date hereof under the Securities Act of 1933, as
amended (the "1933 Act") (the "Registration Statement"). The Notes were issued
by the Company pursuant to that certain Purchase Agreement (the "Purchase
Agreement"), dated as of May 9, 2003, between the Company, Banc of America
Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned to them in the Purchase Agreement.

                  In connection with our representation of the Company and the
Trust, and as a basis for the opinion hereinafter set forth, we have examined
originals, or copies certified or otherwise identified to our satisfaction, of
the following documents (hereinafter collectively referred to as the
"Documents"):




Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 2



                  1. The Purchase Agreement, certified as of the date hereof by
an officer of the Company;

                  2. The Notes, certified as of the date hereof by an officer of
the Company;

                  3. The Indenture, dated as of May 16, 2003 (the "Indenture"),
between the Company, Sheraton Holding Corporation, the Trust and U.S. Bank
National Association, as trustee, certified as of the date hereof by an officer
of the Company and an officer of the Trust;

                  4. The Registration Statement and the related form of
prospectus included therein in the form in which it was transmitted to the
Commission under the 1933 Act;

                  5. The charter of the Company (the "Charter"), certified as of
the date hereof by the State Department of Assessments and Taxation of Maryland
(the "SDAT");

                  6. The Bylaws of the Company (the "Corporate Bylaws"),
certified as of the date hereof by an officer of the Company;

                  7. The Declaration of Trust of the Trust (the "Declaration of
Trust"), certified as of the date hereof by the SDAT;

                  8. The Bylaws of the Trust (the "Trust Bylaws"), certified as
of the date hereof by an officer of the Trust;

                  9. Resolutions adopted by the Board of Directors of the
Company (the "Company Resolutions"), certified as of the date hereof by an
officer of the Company;

                  10. Resolutions adopted by the Board of Trustees of the Trust
(the "Trust Resolutions"), certified as of the date hereof by an officer of the
Trust;

                  11. A certificate of the SDAT as to the good standing of the
Company, dated as of a recent date;

                  12. A certificate of the SDAT as to the good standing of the
Trust, dated as of a recent date;

                  13. A certificate executed by an officer of the Company, dated
as of the date hereof;


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 3


                  14. A certificate executed by an officer of the Trust, dated
as of the date hereof;

                  15. The Amended and Restated Intercompany Agreement, dated as
of January 6, 1999 (the "Intercompany Agreement"), between the Company and the
Trust, in the form incorporated by reference in the Registration Statement; and

                  16. Such other documents and matters as we have deemed
necessary or appropriate to express the opinion set forth below, subject to the
assumptions, limitations and qualifications stated herein.

                  In expressing the opinion set forth below, we have assumed the
following:

                  1. Each individual executing any of the Documents, whether on
behalf of such individual or any other person, is legally competent to do so.

                  2. Each individual executing any of the Documents on behalf of
a party (other than the Company and the Trust) is duly authorized to do so.

                  3. Each of the parties (other than the Company and the Trust)
executing any of the Documents has duly and validly executed and delivered each
of the Documents to which such party is a signatory, and such party's
obligations set forth therein are legal, valid and binding.

                  4. All Documents submitted to us as originals are authentic.
The form and content of all Documents submitted to us as unexecuted drafts do
not differ in any respect relevant to this opinion from the form and content of
such Documents as executed and delivered. All Documents submitted to us as
certified or photostatic copies conform to the original documents. All
signatures on all such Documents are genuine. All public records reviewed or
relied upon by us or on our behalf are true and complete. All representations,
warranties, statements and information contained in the Documents are true and
complete. There has been no oral or written modification of or amendment to any
of the Documents, and there has been no waiver of any provision of any of the
Documents, by action or omission of the parties or otherwise.

                  5. None of the shares of Common Stock, $0.01 par value per
share (the "Common Stock"), of the Company or the Class B Shares of Beneficial
Interest, $0.01 par value per share ("Class B Shares"), of the Trust, which are
attached and trade together as a unit (each such unit, a "Share"), issued upon
conversion of the Notes (the "Conversion Shares") will be


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 4



issued, sold or transferred in violation of (i) Article Ninth of the Charter,
(ii) Article VI, Sections 6.12, 6.13 or 6.14 of the Declaration of Trust or
(iii) the Intercompany Agreement, as amended from time to time.

                  6. Upon issuance of the Conversion Shares, the total number of
shares of Common Stock issued and outstanding will not exceed the total number
of shares of Common Stock that the Company is then authorized to issue under the
Charter and the total number of Class B Shares issued and outstanding will not
exceed the total number of Class B Shares that the Trust is then authorized to
issue under the Declaration of Trust.

                  The phrase "known to us" is limited to the actual knowledge,
without independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.

                  Based upon the foregoing, and subject to the assumptions,
limitations and qualifications stated herein, it is our opinion that:

                  1. The Company is a corporation duly incorporated and existing
under and by virtue of the laws of the State of Maryland and is in good standing
with the SDAT. The Trust is a real estate investment trust duly formed and
existing under and by virtue of the laws of the State of Maryland and is in good
standing with the SDAT.

                  2. The Notes have been duly authorized, executed and, so far
as is known to us, delivered by the Company.

                  3. The Conversion Shares are duly authorized and, when issued
and delivered by the Company and the Trust upon conversion of the Notes in
accordance with the Charter, the Declaration, the Company Resolutions, the Trust
Resolutions, the Indenture and the terms of the Notes, will be validly issued,
fully paid and non-assessable.

                  4. The Indenture has been duly authorized, executed and, so
far as is known to us, delivered by the Company and the Trust.

                  5. The Company has all requisite corporate power and the Trust
has all requisite trust power to perform the transactions contemplated by the
Indenture including, without limitation, the corporate power or trust power to
issue and deliver the Conversion Shares upon due conversion of the Notes in
accordance with the terms of thereof.


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 5



                  6. The issuance and sale of the Notes by the Company and the
performance by the Company under the Indenture will not conflict with the
Charter or the Corporate Bylaws. The performance by the Trust under the
Indenture will not conflict with the Declaration of Trust or the Trust Bylaws.

                  The foregoing opinion is limited to the substantive laws of
the State of Maryland and we do not express any opinion herein concerning any
other law. We express no opinion as to compliance with the securities (or "blue
sky") laws or the real estate syndication laws of the State of Maryland. We note
that each of the Purchase Agreement and the Indenture are governed by the laws
of the State of New York. To the extent that any matter as to which our opinion
is expressed herein would be governed by the laws of any jurisdiction other than
the State of Maryland, we do not express any opinion on such matter. The opinion
expressed herein is subject to the effect of judicial decisions which may permit
the introduction of parol evidence to modify the terms or the interpretation of
agreements.

                  We assume no obligation to supplement this opinion if any
applicable law changes after the date hereof or if we become aware of any fact
that might change the opinion expressed herein after the date hereof.

                  This opinion is being furnished to you solely for submission
to the Commission as an exhibit to the Registration Statement and, accordingly,
may not be relied upon by, quoted in any manner to, or delivered to any person
or entity (except Sidley Austin Brown & Wood LLP, counsel to the Company, in
connection with its opinions issued on the date hereof in connection with the
Registration Statement) without, in each instance, our prior written consent. We
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of the name of our firm therein. In giving this
consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the 1933 Act.


                                 Very truly yours,

                                 /s/ Venable, Baetjer and Howard, LLP

                                 Venable, Baetjer and Howard, LLP

EX-5.3

                      [LIONEL SAWYER & COLLINS LETTERHEAD]



                                                                     Exhibit 5.3

                                  July 7, 2003


Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York 10604

                  Re:   Starwood Hotels & Resorts Worldwide, Inc.
                        3.50% Convertible Senior Notes due 2023

Ladies and Gentlemen:

                  We refer to the Registration Statement on Form S-3 (the
"Registration Statement") being filed by Starwood Hotels & Resorts Worldwide,
Inc., a Maryland corporation (the "Corporation"), Starwood Hotels & Resorts
Worldwide, a Maryland Real Estate Investment Trust (the "Trust"), and the
Guarantor (as hereinafter defined) with the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933, as amended (the "Securities Act"),
to register up to $360,000,000 aggregate principal amount of the Corporation's
3.50% Convertible Senior Notes due 2023 (the "Notes") and the Shares, each
consisting of one share of common stock, par value $0.01 per share, of the
Corporation and one Class B share of beneficial interest, par value $0.01 per
share, of the Trust, issuable upon conversion of the Notes.

                  The Notes are guaranteed (the "Guarantee") by Sheraton Holding
Corporation, a Nevada corporation (the "Guarantor").

                  The Notes were issued pursuant to an Indenture dated as of May
16, 2003 (the "Indenture") among the Corporation, the Trust, the Guarantor and
U.S. Bank National Association, N.A., as trustee (the "Trustee").

                  In rendering the opinions expressed below, we have examined
and relied upon copies of the Registration Statement and the Indenture. We have
also examined originals, or copies of originals certified to our satisfaction,
of such agreements, documents, certificates and other statements of governmental
officials and other instruments, and have examined such questions of law and
have satisfied ourselves as to such matters of fact, as we have considered
relevant and necessary as a basis for this opinion. We have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures, the legal capacity of all natural persons and the conformity
with the original documents of any copies thereof submitted to us for our
examination.

                  Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:

                  1. The Guarantor has been duly incorporated and is validly
existing and in good standing under the laws of the State of Nevada.

                  2. The Guarantor has full right, power and authority to
execute, deliver and perform its obligations under the Indenture.



                  3. The Indenture has been duly authorized, executed and
delivered by the Guarantor.

                  4. The execution, delivery and performance of the Indenture do
not and will not violate the organizational documents of the Guarantor.

                  This opinion letter is limited to the laws of the State of
Nevada.

                  This opinion is provided at your request and is to be limited
in its use to reliance by the addressee hereof and Sidley Austin Brown & Wood
LLP.

                  We hereby consent to the filing of this opinion letter as an
Exhibit to the Registration Statement and to all references to our firm included
in or made a part of the Registration Statement.

                                       Very truly yours,

                                       /s/ Lionel, Sawyer & Collins

                                       LIONEL, SAWYER & COLLINS

EX-8.1

         [SIDLEY AUSTIN BROWN & WOOD LLP NEW YORK, NEW YORK LETTERHEAD]

                                                                   EXHIBIT 8.1


                                  July 8, 2003



Starwood Hotels & Resorts Worldwide, Inc.
1111 Westchester Avenue
White Plains, New York  10604

Starwood Hotels & Resorts
1111 Westchester Avenue
White Plains, New York  10604


               Re:   Starwood Hotels & Resorts Worldwide, Inc.
                     Starwood Hotels & Resorts
                     Registration Statement on Form S-3
                     ----------------------------------

Ladies and Gentlemen:

                  We have acted as special counsel to Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation (the "Corporation"), and Starwood Hotels
& Resorts, a Maryland real estate investment trust (together with the
Corporation, the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 of the Company and the other registrants
named therein, initially filed on or about the date hereof (together with all
exhibits thereto, the "Registration Statement"). This opinion is being furnished
in accordance with the requirements of Item 16 of Form S-3 and Item 601(b)(8) of
Regulation S-K under the Securities Act of 1933, as amended (the "Act").
Capitalized terms used but not otherwise defined herein have the respective
meanings set forth in the Registration Statement.

                  Our opinion is based upon an examination of the Registration
Statement and such other documents as we have deemed necessary or appropriate as
a basis therefor. For the purpose of rendering our opinion, we have relied, as
to various questions of fact material to such opinion, upon the representations
made by the Corporation in the Purchase Agreement, dated as of May 9, 2003,
between Banc of America Securities LLC, Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc., as initial purchasers (the "Initial Purchasers"), and
the Corporation,





SIDLEY AUSTIN BROWN & WOOD LLP                                      NEW YORK


Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 2


and upon certificates of officers of the Company, the Guarantor, the Trust and
certain of the Initial Purchasers. We have also assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed, or photostatic copies,
and the authenticity of the originals of such copies.

                  In rendering our opinion, we have considered the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations, judicial decisions, administrative rulings and other applicable
authorities, in each case as in effect on the date hereof. The statutory
provisions, regulations, decisions, rulings and other authorities on which this
opinion is based are subject to change, and such changes could apply
retroactively.

                  This letter shall not be construed as or deemed to be a
guaranty or insuring agreement. Opinions of counsel represent only counsel's
best legal judgment and are not binding on the Internal Revenue Service or on
any court. Accordingly, no assurance can be given that the Internal Revenue
Service will not challenge the propriety of the opinion set forth herein or that
such a challenge would not be successful.

                  Based on and subject to the foregoing, the statements
contained in the Offering Memorandum under the caption "Certain United States
Federal Income Tax Considerations," insofar as such statements purport to
summarize certain federal income tax laws of the United States, constitute a
fair summary of the material United States federal income tax consequences of an
investment in the Notes by persons described under such heading.

                  Other than as expressly stated above, we express no opinion on
any issue relating to the Company or to any investment therein or under any
other law. We are furnishing this letter to you for the Company's benefit in
connection with the filing of the Registration Statement with the Securities and
Exchange Commission and this letter is not to be used, circulated, quoted, or
otherwise referred to for any other purpose without our written permission. The
opinion in this letter is expressed as of the date hereof, and we disclaim any
undertaking to advise you of any subsequent changes in the matters stated,
represented or assumed herein or any subsequent changes in applicable law,
regulations or interpretations thereof.






SIDLEY AUSTIN BROWN & WOOD LLP                                      NEW YORK

Starwood Hotels & Resorts Worldwide, Inc.
Starwood Hotels & Resorts
July 8, 2003
Page 3


                  We consent to the filing of this letter as Exhibit 8.1 to the
Registration Statement. In giving this consent, we do not hereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Act or the rules or regulations of the Securities and Exchange Commission
promulgated thereunder.

                                Very truly yours,

                                /S/ Sidley Austin Brown & Wood LLP

EX-12.1

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

                                                                    EXHIBIT 12.1

                   STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
            CALCULATION OF RATIO OF EARNINGS TO TOTAL FIXED CHARGES
                             (Dollars in Millions)



                                                                                  Year Ended December 31,
                                                                    --------------------------------------------------   March 31,
                                                                     2002      2001       2000       1999       1998       2003
                                                                    -------   -------    -------    -------    -------    -------
                                                                                                        
Earnings:
Income (loss) from continuing operations ........................       251       147        397       (672)       218       (117)
Add:
    Adjustment for distributions in excess of
        equity earnings and losses (a) ..........................         3       (13)       (14)       (30)        (8)        21
    Provision for income taxes (benefit) ........................         4        43        201      1,095        (89)       (70)
    Minority equity in net income (loss) ........................         2         3          8         95         14         (1)
    Amortization of interest capitalized ........................         1         1          1          1          4          -
                                                                    -------   -------    -------    -------    -------    -------
                                                                        261       181        593        489        139       (167)
                                                                    -------   -------    -------    -------    -------    -------

Fixed Charges:
    Interest and other financial charges ........................       341       390        450        560        466         81
    Interest factor attributable to rentals (b) .................        26        25         21         14         12          6
                                                                    -------   -------    -------    -------    -------    -------
                                                                        367       415        471        574        478         87
                                                                    -------   -------    -------    -------    -------    -------

                                                                    -------   -------    -------    -------    -------    -------
Earnings, as adjusted, from continuing operations ...............       628       607      1,064    $ 1,063    $   617        (80)
                                                                    =======   =======    =======    -------    =======    =======

Fixed Charges:
    Fixed charges above .........................................       367       415        471    $   574    $   478         87
    Interest capitalized ........................................         6         7          3          8         14          1
                                                                    -------   -------    -------    -------    -------    -------
    Total fixed charges .........................................       373       422        474    $   582    $   492         88
                                                                    =======   =======    =======    =======    =======    =======

Ratio:
    Earnings, as adjusted, from continuing operations to
        fixed charges ...........................................      1.68      1.44       2.24       1.83       1.25        (c)
                                                                    =======   =======    =======    =======    =======    =======



Notes:

(a)  The adjustment represents distributions in excess of undistributed earnings
     and losses of companies in which at least 20% but less than 50% equity is
     owned.

(b)  The interest factor attributable to rentals consists of one-third of rental
     charges, which is deemed by Starwood to be representative of the interest
     factor inherent in rents.

(c)  Earnings were not sufficient to cover fixed charges by $168 million

EX-23.1

                                                                    EXHIBIT 23.1

                        Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Starwood Hotels &
Resorts Worldwide, Inc. and Starwood Hotels & Resorts and to the incorporation
by reference therein of our report dated January 29, 2003, with respect to the
consolidated financial statements and schedules of Starwood Hotels & Resorts
Worldwide, Inc. and Starwood Hotels & Resorts included in its Joint Annual
Report on Form 10-K for the year ended December 31, 2002, as amended by its
Joint Annual Report on Form 10-K/A for the year ended December 31, 2002, filed
with the Securities and Exchange Commission.

                                                      ERNST & YOUNG LLP

New York, New York
July 7, 2003

EX-25.1

                                                                    Exhibit 25.1


================================================================================

                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                           --------------------------

                         STATEMENT OF ELIGIBILITY UNDER
                      THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE
               Check if an Application to Determine Eligibility of
                     a Trustee Pursuant to Section 305(b)(2)
             -------------------------------------------------------

                         U.S. BANK NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

                                   31-0841368
                      (I.R.S. Employer Identification No.)

- --------------------------------------------------------------------------------
         180 East Fifth Street
          St. Paul, Minnesota                                     55101
- --------------------------------------------------------------------------------
(Address of principal executive offices)                       (Zip Code)
- --------------------------------------------------------------------------------

                                Richard Prokosch
                         U.S. Bank National Association
                              180 East Fifth Street
                               St. Paul, MN 55101
                                 (651) 244-8677
            (Name, address and telephone number of agent for service)

                    STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
                            STARWOOD HOTELS & RESORTS
                          SHERATON HOLDING CORPORATION
               (Exact name of obligor as specified in its charter)

- --------------------------------------------------------------------------------
            Maryland                                            52-1193298
- --------------------------------------------------------------------------------
            Maryland                                            52-0901263
- --------------------------------------------------------------------------------
             Nevada                                             88-0340591
- --------------------------------------------------------------------------------
   (State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                           Identification No.)
- --------------------------------------------------------------------------------


        111 Westchester Avenue
        White Plains, New York                                    10604
- --------------------------------------------------------------------------------
Address of Principal Executive Offices)                         (Zip Code)
- --------------------------------------------------------------------------------


                     3.50% CONVERTIBLE SENIOR NOTES DUE 2023
                       (TITLE OF THE INDENTURE SECURITIES)



================================================================================






                                    FORM T-1


ITEM 1.    GENERAL INFORMATION. Furnish the following information as to the
           Trustee.

              a) Name and address of each examining or supervising authority to
                 which it is subject. Comptroller of the Currency Washington,
                 D.C.

              b) Whether it is authorized to exercise corporate trust powers.
                 Yes

ITEM 2.    AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
           Trustee, describe each such affiliation. None

ITEMS 3-15 Items 3-15 are not applicable because to the best of the Trustee's
           knowledge, the obligor is not in default under any Indenture for
           which the Trustee acts as Trustee.

ITEM 16.   LIST OF EXHIBITS:  List below all exhibits filed as a part of this
           statement of eligibility and qualification.

           1. A copy of the Articles of Association of the Trustee.*

           2. A copy of the certificate of authority of the Trustee to commence
              business.*

           3. A copy of the certificate of authority of the Trustee to exercise
              corporate trust powers.*

           4. A copy of the existing bylaws of the Trustee.*

           5. A copy of each Indenture referred to in Item 4. Not applicable.

           6. The consent of the Trustee required by Section 321(b) of the Trust
              Indenture Act of 1939, attached as Exhibit 6.

           7. Report of Condition of the Trustee as of December 31, 2002,
              published pursuant to law or the requirements of its supervising
              or examining authority, attached as Exhibit 7.



* Incorporated by reference to Registration Number 333-67188.


                                       2




                                      NOTE

         The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.



                                    SIGNATURE

         Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of St. Paul, State of Minnesota on the 25th day of June, 2003.


                                            U.S. BANK NATIONAL ASSOCIATION


                                            By: /s/ Richard H. Prokosch
                                               ---------------------------------
                                               Richard H. Prokosch
                                               Vice President



                                            By: /s/ Lori-Anne Rosenberg
                                               ---------------------------------
                                               Lori-Anne Rosenberg
                                               Assistant Vice President



                                       3





                                    EXHIBIT 6

                                     CONSENT


         In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.


Dated:  June 25, 2003


                                            U.S. BANK NATIONAL ASSOCIATION


                                            By: /s/ Richard H. Prokosch
                                               ---------------------------------
                                               Richard H. Prokosch
                                               Vice President




                                            By: /s/ Lori-Anne Rosenberg
                                               ---------------------------------
                                               Lori-Anne Rosenberg
                                               Assistant Vice President



                                       4





                                    EXHIBIT 7
                         U.S. BANK NATIONAL ASSOCIATION
                        STATEMENT OF FINANCIAL CONDITION
                                 AS OF 3/31/2003

                                    ($000'S)



                                                               3/31/2003
                                                             ------------
                                                          
ASSETS
     Cash and Due From Depository Institutions               $  9,084,839
     Federal Reserve Stock                                              0
     Securities                                                30,038,992
     Federal Funds                                                833,567
     Loans & Lease Financing Receivables                      115,894,797
     Fixed Assets                                               1,462,006
     Intangible Assets                                          9,080,815
     Other Assets                                              11,583,795
                                                             ------------
         TOTAL ASSETS                                        $177,978,811

LIABILITIES
     Deposits                                                $121,508,878
     Fed Funds                                                  3,820,981
     Treasury Demand Notes                                              0
     Trading Liabilities                                          454,575
     Other Borrowed Money                                      21,082,000
     Acceptances                                                  139,821
     Subordinated Notes and Debentures                          5,694,952
     Other Liabilities                                          5,164,656
                                                             ------------
     TOTAL LIABILITIES                                       $157,865,863

EQUITY
     Minority Interest in Subsidiaries                       $    993,907
     Common and Preferred Stock                                    18,200
     Surplus                                                   11,015,123
     Undivided Profits                                          8,085,718
                                                             ------------
         TOTAL EQUITY CAPITAL                                $ 20,112,948

TOTAL LIABILITIES AND EQUITY CAPITAL                         $177,978,811



- --------------------------------------------------------------------------------

To the best of the undersigned's determination, as of the date hereof, the above
financial information is true and correct.

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Richard H. Prokosch
   ----------------------------------
   Vice President



Date:  June 25, 2003


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