Starwood 2006 Annual Report Download - page 15

approvals, or the appointment of a supervisor, would not have a material adverse effect on us given the limited
nature and extent of the investment by us in casino gaming.
We are also required to submit certain financial and operating reports to the Nevada Commission. Further,
certain loans, leases, sales of securities and similar financing transactions by us must be reported to or approved by
the Nevada Commission. We have a Nevada “shelf” approval for certain public offerings that expires in November
2008.
The Nevada Gaming Authorities may investigate and require a finding of suitability of any holder of any class
of our voting securities at any time. Nevada law requires any person who acquires more than 5 percent of any class
of our voting securities to report the acquisition to the Nevada Commission and such person may be investigated and
found suitable or unsuitable. Any person who becomes a beneficial owner of more than 10 percent of any class of
our voting securities must apply for finding of suitability by the Nevada Commission within 30 days after the
Nevada Board Chairman mails a written notice requiring such filing. The applicant must pay the costs and fees
incurred by the Nevada Board in connection with the investigation.
Under certain circumstances, an “institutional investor,” as defined by the Nevada Act, that acquires more than
10 percent but no more than 15 percent of our voting securities may apply to the Nevada Commission for a waiver of
such finding of shareholder suitability requirements if such institutional investor holds the voting securities for
investment purposes only. An institutional investor will not be deemed to hold voting securities for investment
purposes unless the voting securities were acquired and are held in the ordinary course of business as a institutional
investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of either
our Board of Directors, any change in our corporate charter, bylaws, management, policies or operations or any of
our casino gaming operations, or any other action which the Nevada Commission finds to be inconsistent with
holding our voting securities for investment purposes only. The Nevada Commission also may in its discretion
require the holder of any debt security of a registered company to file an application, be investigated and be found
suitable to own such debt security.
Any beneficial owner of our voting securities who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or by the Chairman of the Nevada
Board may be found unsuitable. Any person found unsuitable who holds, directly or indirectly, any beneficial
ownership of our debt or equity voting securities beyond such periods or periods of time as may be prescribed by the
Nevada Commission may be guilty of a gross misdemeanor. We could be subject to disciplinary action if, without
prior approval of the Nevada Commission, and after receipt of notice that a person is unsuitable to be an equity or
debt security holder or to have any other relationship with us, either (i) pays to the unsuitable person any dividend,
interest or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with
such securities; (iii) pays the unsuitable person remuneration in any form; (iv) makes any payment to the unsuitable
person by way of principal, redemption, conversion, exchange, liquidation or similar transaction; or, (v) fails to
pursue all lawful efforts to require such unsuitable person to relinquish his securities including, if necessary, the
immediate purchase of such securities for cash at fair market value.
Regulations of the Nevada Commission provide that control of a registered publicly traded corporation cannot
be changed through merger, consolidation, acquisition or assets, management or consulting agreements, or any
form of takeover without the prior approval of the Nevada Commission. Persons seeking approval to control a
registered publicly traded corporation must satisfy the Nevada Commission as to a variety of stringent standards
prior to assuming control of such corporation. The failure of a person to obtain such approval prior to assuming
control over the registered publicly traded corporation may constitute grounds for finding such person unsuitable.
Regulations of the Nevada Commission also prohibit certain repurchases of securities by registered publicly
traded corporations without the prior approval of the Nevada Commission. Transactions covered by these
regulations are generally aimed at discouraging repurchases of securities at a premium over market price from
certain holders of more than 3 percent of the outstanding securities of the registered publicly traded corporation.
The regulations of the Nevada Commission also require approval for a “plan of recapitalization.” Generally a plan of
recapitalization is a plan proposed by the management of a registered publicly traded corporation that contains
recommended action in response to a proposed corporate acquisition opposed by management of the corporation if
such acquisition would require the prior approval of the Nevada Commission.
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