Starwood 2003 Annual Report Download - page 19

consent of our Board of Directors, even if such change in control would otherwise give the holders of Shares or
other of our equity securities the opportunity to realize a premium over then-prevailing market prices, and
even if such change in control would not reasonably jeopardize the status of the Trust as a REIT.
At Least Two Annual Meetings Must Be Held Before a Majority of Our Board of Directors Can Be
Changed. Our Board of Directors is divided into three classes. 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 oÇce 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 aÇrmative 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.
Our Board of Directors May Issue Preferred Stock and Establish the Preferences and Rights of Such
Preferred Stock. Our charter provides that the total number of shares of stock of all classes which the
Corporation has authority to issue is 1,350,000,000, initially consisting of one billion shares of common stock,
50 million shares of excess common stock, 200 million shares of preferred stock and 100 million shares of
excess preferred stock. Our Board of Directors has the authority, without a vote of shareholders, to establish
the preferences and rights of any preferred or other class or series of shares to be issued and to issue such
shares. The issuance of preferred shares or other shares having special preferences or rights could delay or
prevent a change in control even if a change in control would be in the interests of our shareholders. Since our
Board of Directors has the power to establish the preferences and rights of additional classes or series of shares
without a shareholder vote, our Board of Directors may give the holders of any class or series preferences,
powers and rights, including voting rights, senior to the rights of holders of our shares.
Certain Provisions of Our Charter May Require the Approval of Two-Thirds of Our Shares and Only Our
Directors May Amend Our Bylaws. Our charter contains provisions relating to restrictions on transferability
of the Corporation Shares, which may be amended only by the aÇrmative vote of our shareholders holding
two-thirds of the votes entitled to be cast on the matter. As permitted under the Maryland General
Corporation Law, our Bylaws provide that directors have the exclusive right to amend our Bylaws.
Our Shareholder Rights Plan Would Cause Substantial Dilution to Any Shareholder That Attempts to
Acquire Us on Terms Not Approved by Our Board of Directors. We adopted a shareholder rights plan which
provides, among other things, that when speciÑed events occur, our shareholders will be entitled to purchase
from us a newly created series of junior preferred stock, subject to the ownership limit described above. The
preferred stock purchase rights are triggered by the earlier to occur of (i) ten days after the date of a public
announcement that a person or group acting in concert has acquired, or obtained the right to acquire,
beneÑcial ownership of 15% or more of our outstanding Corporation Shares or (ii) ten business days after the
commencement of or announcement of an intention to make a tender oÅer or exchange oÅer, the
consummation of which would result in the acquiring person becoming the beneÑcial owner of 15% or more of
our outstanding Corporation Shares. The preferred stock purchase rights would cause substantial dilution to a
person or group that attempts to acquire us on terms not approved by our Board of Directors.
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