Starwood 2012 Annual Report Download - page 88

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.-2013Proxy StatementA-11
5.3 Option Price. The Option Price for each grant of an Option
shall be determined by the Committee and shall not be less
than one hundred percent (100%) of the Fair Market Value of
a Share on the date the Option is granted. Notwithstanding
the prior sentence, an Option may be granted with an Option
Price that is less than one hundred percent (100%) of the Fair
Market Value of a Share on the date the Option is granted if
such Option is granted in replacement for an award previously
granted by an entity that is assumed by the Company in a
business combination, provided that the Committee determines
that such Option Price is appropriate to preserve the economic
benefi t of the replaced award and will not impair the exemption
of the Option from Code section 409A (unless the Committee
clearly and expressly foregoes such exemption at the time
the Option is granted).
5.4 Duration of Options. Each Option shall expire at such time as
the Committee shall determine at the time of grant; provided,
however, that the Committee may extend the term of any Option
that would otherwise expire at a time when the Participant is
not permitted by applicable law or Company policy to exercise
such Option; and provided, further, that no Option shall be
exercisable later than the tenth (10
th
) anniversary of its grant
date. Notwithstanding the foregoing, for Options granted to
Participants outside the United States, the Committee has
the authority to grant Options that have a term that extends
past the tenth (10th) anniversary of the Option grant date.
5.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions
and conditions as the Committee shall in each instance
approve, including conditions related to the employment of
or provision of services by the Participant to the Company or
any Employer, which need not be the same for each grant
or for each Participant. The Committee may provide in the
Agreement for automatic accelerated vesting and other rights
upon the occurrence of a Change in Control of the Company
or upon the occurrence of other events as specifi ed in the
Agreement. Deferral of Option gains is not permitted.
5.6 Payment. Options shall be exercised by the delivery of an
oral, written or electronic notice of exercise to the Company
or its designated representative, setting forth the number of
Shares with respect to which the Option is to be exercised
and satisfying any requirements that the Committee may
apply from time to time. Full payment of the Option Price
(after taking into account any amount previously received to
acquire the Option) must be made on or prior to the Payment
Date, as defi ned below. The Option Price shall be payable to
the Company in United States dollars either: (a) in cash; (b)
cash equivalent approved by the Committee; (c) if approved
by the Committee, by tendering previously acquired Shares
(or delivering a certifi cation or attestation of ownership of
such Shares) having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price (provided that
the tendered Shares must have been held by the Participant
for any period required by the Committee); (d) if approved
by the Committee, by cashless exercise as permitted under
Federal Reserve Board’s Regulation T, subject to applicable
securities law restrictions; (e) by any other means which
the Committee determines to be consistent with the Plan’s
purpose and applicable law, including a net exercise; or (f) by
any combination of the above. “Payment Date” shall mean the
date on which a sale transaction in connection with a cashless
exercise (whether or not payment is actually made pursuant
to a cashless exercise) would have settled in connection with
the subject option exercise. No certifi cate representing a Share
shall be delivered until the full Option Price has been paid.
5.7 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws
of descent and distribution. Further, all ISOs granted to a
Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant or the Participant’s
legal representative.
(b) Nonqualifi ed Stock Options. Except as otherwise provided
in a Participant’s Agreement or otherwise determined at any
time by the Committee consistent with securities and other
applicable laws, rules and regulations, no NQSO granted
under this Article 5 may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution. Further,
except as otherwise provided in a Participant’s Agreement
or otherwise determined at any time by the Committee, all
NQSOs granted to a Participant under this Article 5 shall be
exercisable during his or her lifetime only by such Participant
or the Participant’s legal representative. In no event may
an NQSO be transferred for value or consideration.
5.8 Special Rules for ISOs. Notwithstanding the above, in no
event shall any Participant who owns (within the meaning
of Code section 424(d)) stock of the Company possessing
more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any “parent”
or “subsidiary” (within the meaning of Code section 424(e) or
(f), respectively) be eligible to receive an ISO (i) at an Option
Price less than one hundred ten percent (110%) of the Fair
Market Value of a Share on the date the ISO is granted, or
(ii) that is exercisable later than the fi fth (5th) anniversary date
of its grant date. The aggregate Fair Market Value of Shares
with respect to which incentive stock options (within the
meaning of Code section 422) granted to a Participant are
fi rst exercisable in any calendar year under the Plan and all
other incentive stock option plans of the Employer) shall not
exceed One Hundred Thousand Dollars ($100,000). For this
purpose, Fair Market Value shall be determined with respect
to a particular incentive stock option on the date on which
such incentive stock option is granted. In the event that this
One Hundred Thousand Dollar ($100,000) limit is exceeded
with respect to a Participant, then Incentive Stock Options
granted under this Plan to such Participant shall, to the extent
and in the order required by Treasury Regulations under Code
section 422, automatically become NQSOs granted under this
Plan. Solely for purposes of determining the limit on ISOs that
may be granted under the Plan, the provisions of Section 4.1
that replenish or forgo a deduction from the Award Pool shall
only be applied to the extent permitted by Code section 422
and regulations promulgated thereunder.
ANNEX A