Starwood 2009 Annual Report Download - page 68

becomes disabled as defined in subsection 5.3 above, his/her employment shall for these purposes be deemed to
terminate on the first day of the month in which he/she begins to receive long-term disability payments under the
Company’s long-term disability plan. All distributions under this subsection 5.4 will be made in whole Shares and
cash equal to the Fair Market Value of any fractional Share and such Shares shall be issuable under the Company’s
LTIP. If a Participant dies before his/her entire Distributable Balance has been paid, the Company shall pay the then-
undistributed remainder of the Distributable Balance to the Participant’s Designated Beneficiary.
(b) 409A Covered Amounts. Notwithstanding any contrary terms in the Plan, each portion of a Participant’s
Deferred Share Account described in subsections 5.1(a) and 5.1(b) above that is required to comply with
section 409A of the Code (together, “409A-Covered Amounts”) shall not be paid at the time specified in subsection
5.4(a) above but shall instead be paid at the following time and subject to the following conditions:
(1) On the earlier of (i) the third anniversary of the end of the applicable Performance Period, or (ii) the
day following the date of the Participant’s Separation from Service or (iii) the date on which the Participant
first incurs a Disability (such earlier date being referred to as the “Distribution Date”), the Company shall
compute and pay the vested portion of the 409A-Covered Amounts in the Participant’s Deferred Share
Account on such date. If payment is triggered by the Participant’s Separation from Service and the Participant
is determined to be a Specified Employee on the date of the Participant’s Separation from Service, the
otherwise applicable payment date related to the Separation from Service (including a retirement) shall be
delayed six months after such Separation from Service.
(2) Notwithstanding anything set out in the Plan for purposes of determining the time of payment of
409A-Covered Amounts, a Change in Control shall not be deemed to have occurred unless the transaction
constitutes a change in the ownership or effective control of a corporation or a change in the ownership of a
substantial portion of the assets of a corporation within the meaning of Treasury Regulation § 1.409A-3(i)(5)
(a “409A Change in Control”). If a Change in Control occurs for vesting purposes with respect to 409A-
Covered Amounts at a time when a 409A Change in Control has not occurred for payment purposes with
respect to such 409A-Covered Amounts, then payment of such 409A-Covered Amounts will be made at the
time otherwise provided in subsection 5.4(b)(1).
(3) Any amounts credited to a Participant’s Deferred Share Account pursuant to subsection 5.1(a) above
will be deemed to be a 409A-Covered Amount if the Participant has satisfied the definition of “retirement” at
any time during the Performance Period for which such amounts are being credited.
5.5 Designation of Beneficiaries. A Participant may designate a Designated Beneficiary by executing and
filing with the Company during his/her lifetime, a beneficiary designation. The Participant may change his
Designated Beneficiary at any time by filing a new beneficiary designation with the Company. If a Designated
Beneficiary is adjudicated bankrupt prior to the date of the Participant’s death, or if the Participant fails to designate
a beneficiary, then the following persons in the following order shall receive the entire amount which the previous
Designated Beneficiary would have been entitled to receive: (i) Participant’s spouse, if living; (ii) Participant’s then-
living descendants, per stirpes; and (iii) Participant’s estate.
5.6 Tax Withholding. The Company shall have the right to require, prior to the issuance or delivery of any
Shares, payment by the Participant of any federal, state, local or other taxes which may be required to be withheld or
paid in connection with the distribution of Shares. In the alternative, the Company may withhold whole Shares
which would otherwise be delivered to a Participant, having an aggregate Fair Market Value determined as of the
date the obligation to withhold or pay taxes arises in connection with a distribution in the amount necessary to
satisfy any such obligation. Any fraction of a Share that would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the Participant.
5.7 Restrictions on Shares. If at any time the Company determines that the listing, registration or qual-
ification of the Shares allocated to the Deferred Share Accounts of Participants upon any securities exchange or
under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of Shares hereunder, such Shares shall not be
delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company. The Company may require that certificates
A-5