<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
PRIME HOSPITALITY CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-2640625
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
700 ROUTE 46 EAST, FAIRFIELD, NEW JERSEY 07007-2700, (201) 882-1010
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOSEPH BERNADINO, ESQ.
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
PRIME HOSPITALITY CORP.
700 ROUTE 46 EAST
FAIRFIELD, NEW JERSEY 07007-2700
(973) 882-1010
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
WILLIAM N. DYE, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, check the following box. [X]
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: [ ] ______
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: [ ] ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
- - - --------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value...... 3,637,832 shares $65,480,976 $18.00 $19,317
========================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) based on the average of the high and low sales prices of the
Common Stock quoted on the New York Stock Exchange on January 27, 1998.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 3, 1998
PROSPECTUS
PRIME HOSPITALITY CORP.
COMMON STOCK
Up to 637,832 presently outstanding shares (the "Shares") of Common Stock,
par value $.01 per share (the "Common Stock") of Prime Hospitality Corp., a
Delaware corporation ("Prime" or the "Company"), may be offered for sale from
time to time by certain stockholders (the "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
the Shares by the Selling Stockholders.
The Shares covered by this Prospectus may be sold by the Selling
Stockholders or by pledgees, donees, transferees or other successors in
interest. Sales of Shares by the Selling Stockholders may be effected from time
to time in one or more transactions, including block trades, in negotiated
transactions or in a combination of any such methods of sale. The selling price
of the Shares may be at the market price prevailing at the time of sale, at a
price related to such prevailing market price or at a negotiated price. Each
Selling Stockholder may be deemed to be an "underwriter" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). See "Plan of
Distribution."
The Company's Common Stock is traded on The New York Stock Exchange (the
"NYSE") under the symbol "PDQ." On January 27, 1998, the closing sales price of
the Common Stock as reported on the NYSE was $18 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY , 1998.
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO PURCHASE, ANY OF
THE SECURITIES OFFERED BY THIS PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN
ANY JURISDICTION TO OR FROM ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION OF AN OFFER, OR PROXY SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE ISSUANCE OR SALE
OF ANY SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN SINCE THE DATE
HEREOF OR INCORPORATED BY REFERENCE HEREIN SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
Prime is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith file
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and may be available at the following Regional
Offices of the Commission: Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such materials can be obtained at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
site is http://www.sec.gov. The Prime's Common Stock is listed on the NYSE.
Material filed by Prime can be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 and exhibits relating thereto, including any
amendments (the "Registration Statement"), of which this Prospectus is a part,
and which Prime has filed with the Commission under the Securities Act.
Reference is made to such Registration Statement for further information with
respect to Prime and the securities of Prime offered hereby. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission or
attached as an annex hereto.
FORWARD LOOKING STATEMENTS
Certain statements in this Prospectus under the captions "Summary," "Risk
Factors," and elsewhere constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of Prime, or industry results, to differ materially from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other important
factors include, among others: general economic and business conditions;
industry trends; expansion and construction costs; integration risks;
competition; changes in business strategy or development plans; availability,
terms and deployment of capital; availability of qualified personnel; changes
in, or the failure or inability to comply with, government regulation,
including, without limitation, environmental regulations; and other factors
referenced in this Prospectus. See "Risk Factors." These forward-looking
statements speak only as of the date of this Prospectus. Prime expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statement contained herein to reflect any change in
Prime's expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
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<PAGE> 4
INCORPORATION OF DOCUMENTS BY REFERENCE
Prime (Commission File No. 1-6869) hereby incorporates by reference into
this Prospectus the following documents previously filed with the Commission
pursuant to the Exchange Act:
1. Prime's Annual Report on Form 10-K for the year ended December 31,
1996;
2. Prime's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997;
3. The description of Prime's Common Stock contained in Prime's
Registration Statement on Form 8-A, dated June 5, 1992, as amended on July
9, 1992 and December 21, 1992; and
4. Prime's Current Reports on Form 8-K dated March 3, 1997, July 25,
1997, December 1, 1997, December 11, 1997 and January 7, 1998.
In addition, all reports and other documents filed by Prime pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the date hereof shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such reports
and documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE FILED BY PRIME WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE HEREIN) ARE AVAILABLE, WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST
FROM ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS
DELIVERED, FROM PRIME HOSPITALITY CORP., 700 ROUTE 46 EAST, FAIRFIELD, NEW
JERSEY 07007, ATTENTION: SECRETARY (TEL. (973) 882-1010).
ii
<PAGE> 5
SUMMARY
The following summary is intended only to highlight certain information
contained elsewhere in this Prospectus or incorporated by reference herein. This
summary is not intended to be complete and is qualified in its entirety by the
more detailed information contained elsewhere or incorporated by reference in
this Prospectus. Prospective purchasers of the Shares offered hereby should read
carefully this Prospectus in its entirety. EBITDA represents earnings before
extraordinary items, interest expense, provision for income taxes and
depreciation and amortization and excludes interest income on cash investments
and other income. EBITDA is used by Prime for the purpose of analyzing its
operating performance, leverage and liquidity. Hotel EBITDA represents EBITDA
generated from the operations of owned hotels. Hotel EBITDA excludes management
fee income, interest income from mortgages and notes receivable, general and
administrative expenses and other revenues and expenses which do not directly
relate to operations of owned hotels. EBITDA and Hotel EBITDA are not measures
of financial performance under generally accepted accounting principles and
should not be considered as alternatives to net income as an indicator of
Prime's operating performance or as alternatives to cash flows as a measure of
liquidity.
THE COMPANY
Prime is a national hotel company, with a portfolio of 140 hotels
containing 19,513 rooms located in 28 states and the U.S. Virgin Islands (the
"Portfolio") as of December 31, 1997. Prime controls three high-quality hotel
brands -- AmeriSuites(R), Homegate Studios & Suites(R) and Wellesley
Inns(R) -- as well as a portfolio of upscale full-service hotels. One of the
country's largest hotel owner/operators, Prime has positioned itself to benefit
significantly from favorable lodging industry fundamentals that have prevailed
in recent years. From 1994 to 1996, Prime's EBITDA has grown at a compound
annual rate of 44.0%, from $42.8 million in 1994 to $88.8 million in 1996, while
recurring net income has grown at a compound annual rate of 48.7%, from $12.8
million to $28.3 million over the same period. The positive trends continued in
1997. For the nine months ended September 30, 1997, EBITDA increased by 41.4% to
$92.8 million and recurring net income increased by 55.8% to $31.9 million over
the same period in 1996.
Prime's strategy is to capitalize on two lodging industry trends perceived
by management: (i) favorable industry fundamentals in the segments in which
Prime operates (e.g. all suite, mid-price extended stay), which are producing
strong earnings growth and (ii) growing consumer preferences for newer all-suite
accommodations with strong brand identities. Reflecting this strategy, more than
85% of Prime's capital spending in 1995 and 1996 was dedicated to the growth of
Prime's proprietary AmeriSuites and Wellesley Inns brands. Through its
development of proprietary brands, Prime is evolving from an owner/operator into
a brand oriented company and is positioning itself to generate additional
revenue not dependent on investment in real estate.
Prime owns and operates 128 of the 140 hotels in the Portfolio (the "Owned
Hotels") and holds financial or equity interests in 7 of the remaining 12 hotels
managed by Prime for third parties (the "Managed Hotels"). Prime's Portfolio is
modern and well-maintained, with an average hotel age of approximately nine
years. Over the past three years, Prime has achieved rapid growth in the
Portfolio, from 5,092 owned rooms at January 1, 1994 to 16,975 owned rooms at
December 31, 1997. At the same time, Prime has focused on brand development,
with the number of Owned Hotels operated under Prime's proprietary AmeriSuites,
Homegate, and Wellesley Inns brands increasing from 19 of the 41 Owned Hotels at
January 1, 1994 to 106 of the 128 Owned Hotels at December 31, 1997.
Prime's hotels serve four major lodging industry segments: the all-suites
segment, under Prime's proprietary AmeriSuites brand; the extended-stay segment,
under Prime's proprietary Homegate brand; the upscale full-service segment,
under major national franchises; and the limited-service segment, primarily
under Prime's proprietary Wellesley Inns brand.
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<PAGE> 6
RECENT DEVELOPMENTS
Homegate. On December 1, 1997, Prime completed its merger (the "Merger")
with Homegate Hospitality, Inc. ("Homegate"), a provider of high quality,
mid-price extended stay hotels. Prime exchanged approximately 6.5 million shares
of Common Stock for the approximately 10.7 million outstanding shares of
Homegate, which now operates as a wholly-owned subsidiary of Prime. The
transaction was valued at approximately $125 million. As of December 31, 1997,
there were 15 Homegate hotels in operation and another 42 Homegate hotels under
development. Prime intends to aggressively develop the Homegate chain through
strategic alliances with Trammell Crow Residential Company and Greystar Capital
Partners, L.P., founders of Homegate.
Strategic Alliances. Prime has entered into two strategic alliances with
real estate investment trusts for purposes of financing its brand development
through the sale/leaseback of certain of its hotels.
Under a September 1997 agreement, Equity Inns, Inc. ("Equity Inns") has
certain rights to acquire AmeriSuites hotels developed by Prime over the next
three years. As part of this alliance, on December 11, 1997, Prime completed the
sale to Equity Inns of 10 AmeriSuites hotels for an aggregate consideration of
$87.0 million, consisting of $78.3 million in cash and $8.7 million in Equity
Inns limited partnership operating units. Prime has also agreed to lease the
hotels from Equity Inns for a term of 10 years, with certain renewal options.
Under a November 1997 agreement, American General Hospitality Corporation
("AGH") has agreed to acquire substantially all of Prime's full-service hotels
through March 1999. In the initial phase of this alliance, on January 7, 1998,
Prime completed the sale to AGH of eight full-service hotels for an aggregate
consideration of $138.4 million, consisting of $114.4 million in cash, $10.2
million in assumed debt and $13.8 million in AGH limited partnership operating
units. Prime has also agreed to lease the hotels from AGH for a term of 10
years.
Revolving Credit Facility. On December 17, 1997, Prime amended its secured
revolving credit facility (the "Revolving Credit Facility") to increase
availability from $100 million to $200 million, subject to a borrowing base
determined under the agreement.
Share Repurchase Program. On December 22, 1997, Prime announced a program
to repurchase up to one million shares of Common Stock over the next year.
------------------------
Prime is a Delaware corporation incorporated in 1985. The principal office
of Prime is located at 700 Route 46 East, Fairfield, New Jersey 07007-2700 and
its telephone number is (973) 882-1010.
2
<PAGE> 7
RISK FACTORS
In addition to the other information included in and incorporated by
reference in this Prospectus, prospective investors should carefully consider
and evaluate the following risk factors relating to the Company and the offering
of the Shares. This Prospectus contains forward-looking statements which involve
risks and uncertainties relating to future events. Prospective investors are
cautioned that the Company's actual events or results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause actual results to differ materially from those indicated by such
forward-looking statements include the matters set forth below.
RISK RELATING TO INTEGRATION OF HOMEGATE AND PRIME
The realization of certain benefits anticipated as a result of the Merger
with Homegate will depend in part on the integration of Homegate's extended-stay
hotel business with Prime and the successful inclusion of Homegate's hotels in
Prime's Portfolio. The dedication of management resources to such integration
may detract attention from the day-to-day business of Prime. Extended-stay
lodging is a market in which Prime does not currently operate. There can be no
assurance that there will not be substantial costs associated with the
transition process or that there will not be other material adverse effects as a
result of these integration efforts. There can be no assurance that Homegate's
business can be operated profitably or integrated successfully into Prime's
operations. Such effects could have a material adverse effect on the financial
results of Prime.
AMERISUITES AND HOMEGATE EXPANSION RISKS
Prime is committed to expanding its AmeriSuites hotel brand and its
Homegate hotel brand, to meet growing demand in the all-suite and extended stay
hotel segments. Prime will be required to expend significant management and
financial resources to expand its hotel brands and develop brand name
identification. Prime competes with other companies in the all-suites segment
and in the extended stay segment, some of which companies have greater brand
recognition and financial resources than Prime. As a result, there is no
assurance that Prime can successfully expand its hotel brands or compete
effectively with these other franchises. Prime will be expanding into hotel
markets where it does not currently operate. There can be no assurance that
Prime will anticipate all of the changing demands that expanding operations will
impose on its management and management information system or its reservation
service. The failure to adapt its systems and procedures could have a material
adverse effect on Prime's business.
The expansion of its brands will require significant capital. Prime
believes that the availability under the Revolving Credit Facility, cash flow
from operations and proceeds from sale/leaseback transactions will be sufficient
to fund the near term growth of its brands. However, there can be no assurance
that Prime will be able to obtain financing to fund the growth of its brands
beyond the near term. If Prime is unable to obtain additional financing, the
growth prospects for its brands and the financial results of Prime would be
adversely affected.
Prime's growth strategy of developing new AmeriSuites and Homegate hotels
will subject Prime to pre-opening and pre-stabilization costs. As Prime opens
additional hotels, such costs may adversely affect Prime's results of
operations. Newly opened hotels historically begin with lower occupancy and room
rates that improve over time. While Prime has in the past successfully opened
new hotels, there can be no assurance that Prime will be able to continue to do
so successfully. Construction of hotels involves certain risks, including the
possibility of construction cost overruns and delays, site acquisition cost and
availability, uncertainties as to market potential, market deterioration after
commencement of the development and possible unavailability of financing on
favorable terms. Although Prime seeks to manage its construction activities so
as to minimize such risks, there can be no assurance that its brand expansion
will perform in accordance with Prime's expectations.
The opening of the new AmeriSuites and Homegate hotels will be contingent
upon, among other things, receipt of all required licenses, permits and
authorizations. The scope of the approvals required for a new hotel is
extensive, including, without limitation, state and local land-use permits,
building and zoning permits and
3
<PAGE> 8
health and safety permits. In addition, unexpected changes or concessions
required by local, regulatory and state authorities could involve significant
additional costs and could delay or prevent the completion of construction or
the opening of a new hotel. There can be no assurance that the necessary
permits, licenses and approvals for the construction and operation of the new
hotels will be obtained, or that such permits, licenses and approvals will be
obtained within the anticipated time frame.
Of Prime's 63 AmeriSuites, 30, or 48%, have been open less than one year
and 44, or 70%, have been open less than two years. Of the 15 Homegate hotels,
all have been acquired or constructed by Homegate within the past two years.
Consequently, the results achieved by these hotels to date may not be indicative
of future results for these hotels or for other new hotels. Although the revenue
and profitability of the AmeriSuites and Homegate have improved as the hotels
have matured, there can be no assurance that future hotels will experience
similar results.
RISKS OF THE LODGING INDUSTRY; COMPETITION
Prime's business is subject to all of the risks inherent in the lodging
industry. These risks include, among other things, adverse effects of general
and local economic conditions, changes in local market conditions, oversupply of
hotel space, a reduction in local demand for hotel rooms, changes in travel
patterns, changes in governmental regulations that influence or determine wages,
prices or construction costs, changes in interest rates, the availability of
credit and changes in real estate taxes and other operating expenses. Prime's
ownership of real property, including hotels, is substantial. Real estate values
are sensitive to changes in local market and economic conditions and to
fluctuations in the economy as a whole. Due in part to the strong correlation
between the lodging industry's performance and economic conditions, the lodging
industry is subject to cyclical changes in revenues and profits.
The lodging industry is highly competitive. During the 1980s, construction
of lodging facilities in the United States resulted in an excess supply of
available rooms. This oversupply had an adverse effect on occupancy levels and
room rates in the industry, although the oversupply has since largely been
absorbed. Competitive factors in the industry include reasonableness of room
rates, quality of accommodations, brand recognition, service levels and
convenience of locations. Prime's hotels generally operate in areas that contain
numerous other competitors. There can be no assurance that demographic, economic
or other changes in markets will not adversely affect the convenience or
desirability of the sites in which Prime's hotels are located. Furthermore,
there can be no assurance that, in the markets in which Prime's hotels operate,
competing hotels will not pose greater competition for guests than presently
exists, or that new hotels will not enter such locales.
HOTEL ACQUISITION RISKS
Prime from time to time makes selective acquisitions of hotels with
repositioning potential, notably in the full-service segment and in locations
where Prime presently operates. There can be no assurance that hotel
acquisitions can be consummated successfully or that acquired hotels can be
operated profitably or integrated successfully into Prime's operations. Hotel
acquisition entails certain risks that the acquired hotels could be subject to
unanticipated business uncertainties or legal liabilities.
GEOGRAPHIC CONCENTRATION OF HOTELS
Many of Prime's hotels open or under development are located in Florida,
New Jersey, New York, Georgia, Texas and Tennessee, and such geographic
concentration exposes Prime's operating results to events or conditions which
specifically affect those areas, such as local and regional economic, weather
and other conditions. Adverse developments which specifically affect those areas
may have a material adverse effect on the results of operations of Prime. While
Prime's AmeriSuites and Homegate expansion is expected to reduce these risks,
Prime will remain subject to certain risks associated with geographic
concentration.
In addition, Prime owns the Marriott's Frenchman's Reef Beach Resort (the
"Frenchman's Reef ") in St. Thomas, U.S. Virgin Islands. Prime obtained
ownership and control of this hotel in December 1994 pursuant to the
restructuring of a note receivable. The Frenchman's Reef accounted for
approximately 12.9% of Prime's
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<PAGE> 9
EBITDA for the year ended December 31, 1996 and 8.2% during the nine months
ended September 30, 1997. The Frenchman's Reef's operating results have been
adversely affected in recent years by hurricanes and a disruption in airline
service. As a resort hotel primarily operated for leisure travelers, operating
results at the Frenchman's Reef also are subject to adverse developments in
general economic conditions and changes in travel patterns. Adverse developments
with respect to the Frenchman's Reef may have a material adverse effect on the
results of operations of Prime.
In September 1995, the Frenchman's Reef suffered hurricane damage when
Hurricane Marilyn struck the U.S. Virgin Islands. Prime and its insurance
carrier settled Prime's property and business interruption insurance claim for
$25.0 million. Due to this insurance coverage, Prime's liquidity was affected
only to the extent of its insurance deductibles, for which Prime provided a
reserve of $2.2 million in 1995. In July 1996, Hurricane Bertha struck the
island and caused further damage to the hotel. Prime is currently reviewing its
claims for property damage and business interruption insurance with its
insurance carrier with respect to the damage caused by Hurricane Bertha. The
impact of the hurricanes has caused operating profits to decline. Prime closed
the hotel in April 1997 and, following a $45.0 million refurbishment and
upgrading, reopened the hotel in December 1997. Prime does not believe the
closing of the Frenchman's Reef had a material impact on its cash flow due to
the seasonality of the hotel's operations and its business interruption
insurance coverage.
LEVERAGE
As of September 30, 1997, after giving effect to the Merger, Prime's total
long-term debt (including current portion) would have been $528.1 million. Prime
expects it may incur additional indebtedness in connection with the
implementation of its growth strategy. The degree to which Prime is leveraged,
as well as its rent expense, could have important consequences to holders of
Prime's Common Stock, including: (i) Prime's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions
or general corporate purposes may be impaired; (ii) a substantial portion of
Prime's cash flow from operations may be dedicated to the payment of principal
and interest on its indebtedness and rent expense, thereby reducing the funds
available to Prime for its operation; and (iii) certain of Prime's indebtedness,
including the Revolving Credit Facility, contains financial and other
restrictive covenants, including those restricting the incurrence of additional
indebtedness, the creation of liens, the payment of dividends and sales of
assets, as well as those imposing minimum net worth requirements.
EMPLOYMENT AND OTHER GOVERNMENT REGULATION
The lodging industry is subject to numerous federal, state and local
government regulations, including those relating to the preparation and sale of
food and beverage (such as health and liquor license laws) and building and
zoning requirements. Also, Prime is subject to laws governing its relationship
with employees, including minimum wage requirements, overtime, working
conditions and work permits requirements. The failure to obtain or retain liquor
licenses or an increase in the minimum wage rate, employee benefit costs or
other costs associated with employees, could adversely affect Prime. Both at the
federal and state level, there are proposals under consideration to increase the
minimum wage and introduce a system of mandated health insurance. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all public accommodations
are required to meet certain federal requirements related to access and use by
disabled persons. While Prime believes its hotels are substantially in
compliance with these requirements, a determination that Prime is not in
compliance with the ADA could result in the imposition of fines or an award of
damages to private litigants. These and other initiatives could adversely affect
Prime as well as the lodging industry in general.
ENVIRONMENTAL REGULATION
Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. Certain environmental laws and common law
principles could be used to impose liability for release of asbestos-containing
materials ("ACMs") into the air, and third parties may seek recovery from owners
or operators of
5
<PAGE> 10
real properties for personal injury associated with exposure to released ACMs.
Environmental laws also may impose restrictions on the manner in which property
may be used or businesses may be operated, and these restrictions may require
expenditures. In connection with the ownership or operation of hotels, Prime may
be potentially liable for any such costs. Although Prime is currently not aware
of any material environmental claims pending or threatened against it, no
assurance can be given that a material environmental claim will not be asserted
against Prime or against Prime and its Managed Hotels. The cost of defending
against claims of liability or of remediating a contaminated property could have
a material adverse effect on the results of operations of Prime.
IMPORTANCE OF FRANCHISOR RELATIONSHIPS
Prime currently enjoys good relationships with its major franchisors,
Marriott, Radisson, Sheraton, Crowne Plaza, Holiday Inn, Ramada and Howard
Johnson, and Prime has no reason to believe that such relationships will not
continue. However, under the applicable franchise agreements, the franchisor can
terminate the agreement if, among other things, its quality standards are not
maintained or if payments due are not made in a timely fashion. If any of the
franchise agreements were terminated by the franchisor, Prime could explore
entering into a franchise agreement with another franchisor. There can be no
assurance, however, that a desirable replacement relationship would be
available.
DEPENDENCE ON KEY EMPLOYEES
Prime is dependent on its President, Chief Executive Officer and Chairman
of the Board, David A. Simon, its Executive Vice President and Chief Financial
Officer, John M. Elwood, its Executive Vice President of Operations, Paul H.
Hower, and on certain other key members of its executive management staff, the
loss of whose services could have a material adverse effect on Prime's business
and future operations.
6
<PAGE> 11
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders.
7
<PAGE> 12
SELLING STOCKHOLDERS
The Shares offered by this Prospectus were initially issued to the Selling
Stockholders on December 1, 1997 in connection with the Merger with Homegate
pursuant to an Agreement and Plan of Merger, dated as of July 25, 1997 (the
"Merger Agreement"). Pursuant to the terms of a related Registration Rights
Agreement, dated as of July 25, 1997 (the "Registration Rights Agreement"), the
Company agreed to use commercially reasonable efforts to cause certain shares of
Common Stock of the Company issued to the Selling Stockholders in connection
with the Merger to be registered under the Securities Act and to keep such
Registration Statement effective until the Company determines in good faith that
such Shares are no longer subject to restrictions on transfer under Rule 144 or
Rule 145 of the Securities Act, up to the first anniversary of the Merger. The
Company and the Selling Stockholders each agreed to bear one-half of the
registration fee applicable to the Registration Statement and the Company agreed
to bear additional costs and expenses of preparing and maintaining such
registration.
Immediately following the consummation of the Merger, the Selling
Stockholders beneficially owned 3,637,832 shares of Common Stock, or
approximately 7.7% of the Company's outstanding Common Stock. Because the
Selling Stockholders may offer pursuant to this Prospectus all or some part of
the Shares to which this Prospectus relates, and because the offering may or may
not be an underwritten offering on a firm commitment basis, no estimate can be
given as of the date hereof as to the number of Shares to be offered for sale by
each Selling Stockholder or as to the number of shares of Common Stock that will
be held by the Selling Stockholders upon termination of such offering. See "Plan
of Distribution."
The following table sets forth certain information, as of the date of this
Prospectus, with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
NO. OF SHARES
OWNED PRIOR TO
SELLING STOCKHOLDER THE OFFERING
--------------------------------------------------------------- --------------
<S> <C>
JMI/Greystar Extended Stay Partners, L.P. ..................... 1,381,602
Developer Extended Stay Partners, L.P.(1)...................... 566,360
CRI/ESH Partners, L.P.(2)...................................... 1,234,898
Robert A. Faith(3)............................................. 2,266,809
Harlan R. Crow(4).............................................. 1,873,177
Crow Hotel Realty Investors, L.P............................... 59,935
Crow Family, Inc.(5)........................................... 1,870,141
JMI/Greystar Realty Partners, L.P.............................. 236,951
Greystar Realty Services, L.P.(6).............................. 32,058
Clifford A. Breining(7)........................................ 428
CFP Residential, L.P.(7)....................................... 7,652
Patrick W. Dukes(7)............................................ 1,603
E. Garth Erdossy(7)............................................ 4,165
Robert M. Hutt(7).............................................. 1,923
Randy J. Pace(7)............................................... 962
Ronald J. Terwilliger(7)....................................... 7,662
Bruce C. Ward(7)............................................... 7,663
</TABLE>
- - - ---------------
(1) Shares owned by Developer Extended Stay Partners, L.P. will be voted by its
general partner, DESP General Partner, L.L.C., until such time as such
shares are distributed by such partnership to its partners, TCR Extended
Stay I Limited Partnership and Greystar Realty Services, L.P.
(2) Crow Realty Investors d/b/a Crow Investment Trust, of which Crow Family,
Inc. is the sole general partner, indirectly owns an approximate 74% limited
partner interest in such partnership.
(3) Includes 1,381,602 shares owned by JMI/Greystar Extended Stay Partners, L.P.
which may be deemed to be beneficially owned by Mr. Faith, who is the sole
stockholder of Greystar Holdings, Inc., the sole
8
<PAGE> 13
general partner of such partnership. Mr. Faith disclaims beneficial ownership of
all such shares held by such partnership beyond his percentage ownership
therein. Includes 566,360 shares owned by Developer Extended Stay Partners, L.P.
as to which Mr. Faith has shared voting power as a result of his indirect
ownership of a percentage interest in DESP General Partner, L.L.C., the
sole general partner of such partnership. Mr. Faith disclaims beneficial
ownership of all such shares beyond his percentage ownership therein.
Includes 236,951 shares owned by JMI/Greystar Realty Partners, L.P. as to
which Mr. Faith has shared voting power as a result of his being the sole
stockholder of Greystar Holdings, Inc., one of the two general partners of
such partnership. Mr. Faith disclaims beneficial ownership of all such
shares held by such partnership beyond his percentage ownership therein.
Also includes 81,986 shares of Prime Common Stock issuable pursuant to
fully vested options granted under the Homegate Hospitality, Inc. 1996
Long-Term Incentive Plan (the "1996 Plan").
(4) Includes 8,420 shares owned by Crow Family, Inc., of which Mr. Crow is the
sole director. Includes 1,234,898 shares owned by CRI/ESH Partners, L.P.,
59,935 shares owned by Crow Hotel Realty Investors, L.P., and 528 shares
owned by Crow Realty Investors d/b/a Crow Investment Trust as Crow Family,
Inc. is the sole general partner of each such partnership. Also includes
566,360 shares owned by Developer Extended Stay Partners, L.P., as to which
Mr. Crow has shared voting power as a result of Crow Family, Inc.'s
ownership of a percentage interest in DESP General Partner, L.L.C., the sole
general partner of such partnership and fully vested options granted under
the 1996 Plan to non-employee directors. Mr. Crow disclaims beneficial
ownership of all shares other than the shares subject to an option to
acquire 3,036 shares of Prime's Common Stock granted under the 1996 Plan.
(5) Includes 8,420 shares owned by Crow Family, Inc. as the general partner of
ESH Partners, L.P. Includes 1,234,898 shares owned by CRI/ESH Partners,
L.P., 59,935 shares owned by Crow Hotel Realty Investors, L.P., and 528
shares owned by Crow Realty Investors d/b/a Crow Investment Trust of which
Crow Family, Inc. is the sole general partner. Also includes 641,162 shares
owned by Developer Extended Stay Partners, L.P. as a result of Crow Family,
Inc.'s ownership of a percentage interest in DESP General Partner, L.L.C.,
the sole general partner of such partnership.
(6) Consists of shares distributed by Developer Extended Stay Partners, L.P. to
Greystar Realty Services, L.P., as a limited partner.
(7) Consists of shares distributed by TCR Extended Stay I Limited Partnership to
the holder, as a limited partner.
Mr. Faith was Chairman of the Board, Chief Executive Officer and President
of Homegate, and Mr. Crow was a director of Homegate, from February 1997 until
December 1, 1997, the effective date of the Merger.
9
<PAGE> 14
DESCRIPTION OF PRIME CAPITAL STOCK
The authorized capital stock of Prime consists of 75,000,000 shares of
Common Stock and 20,000,000 shares of Preferred Stock.
COMMON STOCK
At December 31, 1997, 47,251,259 shares of Common Stock were issued and
outstanding. Holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of Prime's stockholders, including the election of
directors. The Common Stock does not have cumulative voting rights. Subject to
the preferential rights of any outstanding series of Preferred Stock, the
holders of Common Stock will be entitled to such dividends as may be declared
from time to time by the Board of Directors from funds legally available
therefor, and will be entitled to receive pro rata all assets of Prime available
for distribution to such holders upon liquidation. All shares of Common Stock
are fully paid and non-assessable.
PREFERRED STOCK
The Board of Directors has authority to establish the designations,
liquidation preferences, dividend rights, terms of redemption, conversion
rights, sinking fund terms and all other preferences and rights (including
voting rights) of any series of Preferred Stock. The ability of the Board of
Directors to issue Preferred Stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting powers of holders of Common Stock and, under
certain circumstances, may discourage an attempt by others to gain control of
Prime.
WARRANTS
Warrants to purchase 2,106,383 shares of Common Stock were issued to former
shareholders of Prime's predecessor, Prime Motor Inns, Inc. ("PMI"), in partial
settlement of their bankruptcy interests. The warrants became exercisable on
August 31, 1993 at an exercise price of $2.71 per share. The exercise price was
determined from the average per share daily closing price of the Common Stock
during the year following the effective date of the PMI reorganization. As of
December 31, 1997, warrants to purchase 1,418,378 shares of Common Stock had
been exercised.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Certificate of Incorporation and Bylaws of Prime
summarized below may be deemed to have an anti-takeover effect and may delay,
defer or prevent a tender offer or takeover attempt that a stockholder might
consider in its best interest, including an attempt that might result in a
premium over the market price for the shares held by stockholders.
Staggered Board of Directors. The Certificate of Incorporation and the
Bylaws provide that the Board of Directors will be divided into three classes of
Directors, each class constituting approximately one-third of the total number
of Directors and with the classes serving staggered three-year terms. The
classification of Directors will have the effect of making it more difficult for
shareholders to change the composition of the Board of Directors. Prime
believes, however, that the longer time required to elect a majority of a
classified Board of Directors will help to ensure continuity and stability of
Prime's management and policies.
The classification provisions could also have the effect of discouraging a
third party from accumulating large blocks of Prime's stock or attempting to
obtain control of Prime, even though such an attempt might be beneficial to
Prime and its stockholders. Accordingly, stockholders could be deprived of
certain opportunities to sell their shares of Common Stock at a higher market
price than might otherwise be the case.
Fair Price Provisions. Provisions of the Certificate of Incorporation (the
"Fair Price Provisions") limit the ability of an Interested Stockholder (defined
as the beneficial owner of 20% of outstanding voting shares) to effect certain
transactions involving Prime. Unless the Fair Price Provisions are satisfied, an
Interested Stockholder may not engage in a business combination involving Prime
unless approved by 75% of Prime's outstanding voting shares or a majority of the
Disinterested Directors (as defined therein). A business
10
<PAGE> 15
combination includes a merger, consolidation, sale of assets valued at over
$25.0 million or issuance or transfer of securities valued at over $25.0
million, or a similar transaction. In general, the Fair Price Provisions require
that an Interested Stockholder pay shareholders at least the same amount of cash
or the same amount and type of consideration paid by the Interested Stockholder
when it initially acquired Prime's shares.
The Fair Price Provisions are designed to discourage attempts to take over
Prime in non-negotiated transactions utilizing two-tier pricing tactics, which
typically involve the accumulation of a substantial block of the target
corporation's stock followed by a merger or other reorganization of the acquired
Prime on terms determined by the purchaser. Due to the difficulties of complying
with the requirements of the Fair Price Provisions, the Fair Price Provisions
generally discourage attempts to obtain control of Prime.
LIMITATIONS ON DIRECTORS' LIABILITY
Prime's Certificate of Incorporation provides that no director of Prime
shall be liable to Prime or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to Prime or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) in respect of certain unlawful dividend payments or
stock redemptions or redemptions or repurchases pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. The effect of these provisions is
to eliminate the rights of Prime and its stockholders (through stockholders'
derivative suits on behalf of Prime) to recover monetary damages against a
director for breach of fiduciary duty as a director (including breaches
resulting from grossly negligent behavior), except in the situations described
above. These provisions will not limit the liability of directors under Federal
securities laws.
CERTAIN PROVISIONS OF DELAWARE LAW REGARDING AN INTERESTED STOCKHOLDER
Section 203 of the Delaware General Corporation Law prohibits certain
transactions between a Delaware corporation and an "interested stockholder,"
which is defined as a person who, together with any affiliates or associates of
such person, beneficially owns, directly or indirectly, 15% or more of the
outstanding voting shares of a Delaware corporation. This provision prohibits
certain business combinations (defined broadly to include mergers,
consolidations, sales or other dispositions of assets having an aggregate value
in excess of 10% of the consolidated assets of the corporation, and certain
transactions that would increase the interested stockholder's proportionate
share ownership in the corporation) between an interested stockholder and a
corporation for a period of three years after the date the interested
stockholder becomes an interested stockholder, unless (i) the business
combination is approved by the corporation's board of directors prior to the
date the interested stockholder becomes an interested stockholder; (ii) the
interested stockholder acquired at least 85% of the voting stock of the
corporation (other than stock held by directors who are also officers or by
certain employee stock plans) in the transaction in which it becomes an
interested stockholder; or (iii) the business combination is approved by a
majority of the board of directors and by the affirmative vote of 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for Prime Common Stock is Continental
Stock Transfer & Trust Company in New York, New York.
11
<PAGE> 16
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time to purchasers
directly by the Selling Stockholders. The Shares may also be offered in one or
more underwritten offerings, on a firm commitment or best efforts basis. The
Company will receive no proceeds from the sale of the Shares by the Selling
Stockholders. The distribution of Shares may be effected from time to time in
one or more underwritten transactions at a fixed price or prices, which may be
changed, or in other transactions at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Any such underwritten offering may be on either a "best efforts" or a
"firm commitment" basis. In connection with any such underwritten offering,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or from purchasers
of the Shares for whom they may act as agents. Underwriters may sell Shares to
or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents.
The Selling Stockholders and any underwriters, dealers or agents that
participate in the distribution of Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any profit on the sale of Shares
by them and any discounts, commissions or concessions received by any such
underwriters, dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act.
Those who act as underwriter, broker, dealer or agent in connection with
the sale of Shares will be selected by the Selling Stockholders and may have
other business relationships with the Company and its subsidiaries or affiliates
in the ordinary course of business. The Selling Stockholders may indemnify any
broker-dealer that participates in transactions involving the sale of Shares
against certain liabilities, including liabilities under the Securities Act.
At any time a particular offer of Shares is made by the Selling
Stockholders, a supplement to this Prospectus will be distributed, if required,
which will set forth the aggregate amount of Shares being offered and the terms
of the offering, including the name or names of any underwriters, dealers or
agents, any discounts, commissions or concessions allowed or reallowed or paid
to dealers. Such Prospectus supplement and, if necessary, a post-effective
amendment to the Registration Statement of which this Prospectus is a part, will
be filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of the Shares.
Pursuant to the provisions of the Registration Rights Agreement, the
Company and the Selling Stockholders each agreed to bear one half of the
registration fee applicable to the Registration Statement and the Company agreed
to bear additional costs and expenses of preparing and maintaining such
registration. In addition, the Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities arising under
the Securities Act.
The sale of Shares by the Selling Stockholders may also be effected from
time to time by selling Shares directly to purchasers or to or through
broker-dealers. In connection with any such sale, any such broker-dealer may act
as agent for the Selling Stockholders or may purchase from the Selling
Stockholders all or a portion of the Shares as principal, and sales may be made
pursuant to any of the methods described below. Such sales may be made on the
NYSE or other exchanges on which the Shares are then traded, in the over-
the-counter market, in negotiated transactions or otherwise, in each case at
prices and at terms then prevailing or at prices related to the then-current
market prices or at prices otherwise negotiated.
The Shares may also be sold in one or more of the following transactions:
(i) block transactions (which may involve crosses) in which a broker-dealer may
sell all or a portion of such shares as agent but may position and resell all or
a portion of the block as principal to facilitate the transaction; (ii)
purchases by any such broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to a prospectus supplement; (iii) a
special offering, an exchange distribution or a secondary distribution in
accordance with the applicable NYSE or other stock exchange rules; (iv) ordinary
brokerage transactions and transactions in which any such broker-dealer solicits
purchasers; (v) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and (vi)
sales in other ways not
12
<PAGE> 17
involving market makers or established trading markets, including direct sales
to purchasers. In effecting sales, broker-dealers engaged by the Selling
Stockholders may arrange for other broker-dealers to participate. Broker-dealers
will receive commissions or other compensation from the Selling Stockholders in
amounts to be negotiated immediately prior to the sale that will not exceed
those customary in the types of transactions involved. Broker-dealers may also
receive compensation from purchasers of the Shares which is not expected to
exceed that customary in the types of transactions involved.
The Selling Stockholders may also enter into hedging transactions with
broker-dealers or others, and such broker-dealers may engage in short sales of
Shares or other transactions in the course of hedging the positions assumed by
such persons in connection with such hedging transactions or otherwise. The
Selling Stockholders may also sell Shares short and redeliver Shares to close
out such short positions, enter into option or other transactions with
broker-dealers or others which may involve the delivery to such persons of the
Shares offered hereby, which Shares such persons may resell pursuant to this
Prospectus; and or pledge the Shares to a broker or dealer or others and, upon a
default, such persons may effect sales of the pledged Shares pursuant to this
Prospectus.
In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 or Rule 145 of the Securities Act may be sold under
Rule 144 or Rule 145 rather than pursuant to this Prospectus. There can be no
assurance that any Selling Stockholders will sell any or all of the Shares
described herein, and any Selling Stockholders may transfer, devise or gift such
securities by other means not described herein.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby will be passed upon for Prime by Willkie Farr & Gallagher, New
York, New York. Jack H. Nusbaum, a director of Prime who beneficially owns
10,000 shares of Prime Common Stock and an additional 55,000 shares of Prime
Common Stock underlying stock options, is a partner in the law firm of Willkie
Farr & Gallagher.
EXPERTS
The Consolidated Financial Statements of Prime Hospitality Corp.
incorporated by reference in this Prospectus, to the extent and for the periods
indicated in their reports, have been audited by Arthur Andersen LLP,
independent public accountants, and are included and incorporated by reference
herein in reliance upon the authority of said firm as experts in giving said
report.
The Consolidated Financial Statements of Homegate Hospitality, Inc.
appearing in Prime Hospitality Corp.'s Current Report on Form 8-K dated December
1, 1997 for the period from inception (February 9, 1996) through December 31,
1996, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated by reference in this
Prospectus. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.
13
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered which will be paid
solely by the Company (except that the SEC registration fee shall be borne
one-half by the Company and one-half by the Selling Stockholders). All the
amounts shown are estimates, except the SEC registration fee:
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
SEC registration fee............................................................ $ 19,317
Transfer agent fees and expenses................................................ 10,000
Printing and engraving expenses................................................. 10,000
Legal fees and expenses......................................................... 75,000
Accounting fees and expenses.................................................... 10,000
Blue Sky fees and expenses...................................................... 5,000
Miscellaneous expenses.......................................................... 10,683
Total................................................................. $140,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may, in advance of the final action of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that the director or officer undertakes to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation. A corporation may indemnify such
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she 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 or her conduct was unlawful.
A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him or
her against the expenses (including attorneys' fees) which he or she actually
and reasonably incurred in connection therewith. The indemnification provided is
not deemed to be exclusive of any other rights to which an officer or director
may be entitled under any corporation's by-law, agreement, vote or otherwise.
In accordance with Section 145 of the DGCL, Article 8 of Prime's Restated
Certificate of Incorporation (the "Restated Certificate") and Prime's By-Laws
(the "By-Laws") provide that Prime shall indemnify to the fullest extent
permitted under and in accordance with the laws of the State of Delaware any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he is or
was a
II-1
<PAGE> 19
director, officer, employee or agent of Prime, or is or was serving at the
request of Prime as director, officer, trustee, employee or agent of or in any
other capacity with another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of Prime, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The indemnification
provided by the Restated Certificate and the By-Laws shall not be deemed
exclusive of any other rights to which any of those seeking indemnification or
advancement of expenses may be entitled under any other contract or agreement
between Prime and any officer, director, employee or agent of Prime. Expenses
incurred in defending a civil or criminal action, suit or proceeding shall (in
the case of any action, suit or proceeding against a director of Prime) or may
(in the case of any action, suit or proceeding against an officer, trustee,
employee or agent) be paid by Prime in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors of Prime upon
receipt of an undertaking by or on behalf of the indemnified person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by Prime. Subparagraph (d) of Article 8 of the Restated Certificate
provides that neither the amendment or repeal of, nor the adoption of any
provision inconsistent with, the above-referenced provisions of the Restated
Certificate shall eliminate or reduce the effect of such provisions in respect
of any matter occurring before such amendment, repeal or adoption of an
inconsistent provision or in respect of any cause of action, suit or claim
relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to such provisions if any
such provision had not been so amended or repealed or if a provision
inconsistent therewith had not been so adopted. Subparagraph (e) of Article 8 of
the Restated Certificate provides that a director of Prime shall not be
personally liable to Prime or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to Prime or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL or any amendment thereto
or successor provision thereto, or (iv) for any transaction from which the
director derived an improper personal benefit. If the DGCL is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of Prime shall be
eliminated or limited to the fullest extent permitted by the DGCL as so amended.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- - - ----------- --------------------------------------------------------------------------------
<C> <C> <S>
3.1 -- Reference is made to the Restated Certificate of Incorporation of Prime, dated
June 5, 1992, filed as an Exhibit to Prime's Form 10-K dated September 25, 1992,
which is incorporated herein by reference.
3.2 -- Reference is made to the Restated Certificate of Incorporation, As Amended,
filed as an Exhibit to Prime's Form 10-Q/A, dated April 30, 1996, which is
incorporated herein by reference.
3.3 -- Reference is made to the Restated Bylaws of Prime, filed as an Exhibit to
Prime's Form 10-K, dated September 25, 1992, which is incorporated herein by
reference.
4.1 -- Reference is made to Form 8-A of Prime as filed on June 5, 1992 with the
Securities and Exchange Commission, as amended by Amendment No. 1 and Amendment
No. 2, which is incorporated herein by reference.
4.2 -- Registration Rights Agreement, dated as of July 25, 1997, among Prime and the
holders signatory thereto.
5.1 -- Opinion of Willkie Farr & Gallagher as to the legality of the shares of Common
Stock being registered.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of Willkie Farr & Gallagher (included in their opinion filed as Exhibit
5.1).
24.1 -- Power of Attorney (included on the signature page hereto).
</TABLE>
II-2
<PAGE> 20
Certain instruments defining the rights of holders of long-term debt of
Prime and its subsidiaries have not been filed in accordance with Item
601(b)(4)(iii) of Regulation S-K. Prime hereby agrees to furnish a copy of such
instruments to the Commission upon request.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(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;
(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 this
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) under the Securities Act 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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in registration statements on Form S-3 or Form S-8 and
the information required to be included in a post-effective amendment by those
subparagraphs is contained in periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, 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.
The Registrant also hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act and
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Exchange Act 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 the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Restated Certificate, Bylaws, the Purchase Agreement
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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, the 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
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 21
The Registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities
Act, 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 Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act, 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.
II-4
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 3rd day of
February, 1998.
PRIME HOSPITALITY CORP.
By: /s/ DAVID A. SIMON
------------------------------------
David A. Simon,
Chairman of the Board,
President and Chief Executive
Officer
POWER OF ATTORNEY
The undersigned officers and directors of Prime Hospitality Corp., hereby
severally constitute and appoint David A. Simon and John M. Elwood, and each of
them, attorneys-in-fact for the undersigned, in any and all capacities, with the
power of substitution, to sign any amendments to this Registration Statement
(including post-effective amendments) and any subsequent registration statement
for the same offering which may be filed under Rule 462(b) under the Securities
Act of 1933, as amended, and to file the same with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all interests and purposes as he
might or could do in person, hereby ratifying and confirming all that each said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons, in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- - - ------------------------------------------ ------------------------------ ------------------
<C> <S> <C>
/s/ DAVID A. SIMON Chairman of the Board, February 3, 1998
- - - ------------------------------------------ President, Chief Executive
David A. Simon Officer and Director
(principal executive officer)
/s/ JOHN M. ELWOOD Chief Financial Officer, February 3, 1998
- - - ------------------------------------------ Executive Vice President and
John M. Elwood Director (principal financial
and accounting officer)
/s/ HERBERT LUST, II Director February 3, 1998
- - - ------------------------------------------
Herbert Lust, II
/s/ JACK H. NUSBAUM Director February 3, 1998
- - - ------------------------------------------
Jack H. Nusbaum
/s/ ALLEN J. OSTROFF Director February 3, 1998
- - - ------------------------------------------
Allen J. Ostroff
/s/ A.F. PETROCELLI Director February 3, 1998
- - - ------------------------------------------
A.F. Petrocelli
/s/ HOWARD M. LORBER Director February 3, 1998
- - - ------------------------------------------
Howard M. Lorber
</TABLE>
II-5
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- - - ----------- ------------------------------------------------------------------- ------------
<C> <C> <S> <C>
3.1 -- Reference is made to the Restated Certificate of Incorporation of
Prime, dated June 5, 1992, filed as an Exhibit to Prime's Form 10-K
dated September 25, 1992, which is incorporated herein by
reference.
3.2 -- Reference is made to the Restated Certificate of Incorporation, As
Amended, filed as an Exhibit to Prime's Form 10-Q/A, dated April
30, 1996, which is incorporated herein by reference.
3.3 -- Reference is made to the Restated Bylaws of Prime, filed as an
Exhibit to Prime's Form 10-K, dated September 25, 1992, which is
incorporated herein by reference.
4.1 -- Reference is made to Form 8-A of Prime as filed on June 5, 1992
with the Securities and Exchange Commission, as amended by
Amendment No. 1 and Amendment No. 2, which is incorporated herein
by reference.
4.2 -- Registration Rights Agreement, dated as of July 25, 1997, among
Prime and the holders signatory thereto.
5.1 -- Opinion of Willkie Farr & Gallagher as to the legality of the
shares of Common Stock being registered.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of Willkie Farr & Gallagher (included in their opinion
filed as Exhibit 5.1).
24.1 -- Power of Attorney (included on the signature page hereto).
</TABLE>
<PAGE> 1
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of July 25, 1997 (the
"Agreement"), among Prime Hospitality Corp., a Delaware corporation (the
"Company"), and each of the other parties signatory hereto (the "Holders").
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of July 25,
1997 (the "Merger Agreement"), among the Company, PH Sub Corporation ("PH Sub")
and Homegate Hospitality, Inc. ("Homegate"), pursuant to which PH Sub will merge
with and into Homegate (the "Merger"), the Holders will receive shares of common
stock, par value $.01 per share, of the Company (the "Company Shares") in
exchange for their shares of Common Stock, par value $.01 per share, of Homegate
(the "Homegate Shares");
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein and other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
have the following meanings when used herein with initial capital letters:
Pooling Restriction Termination Date: The date on which there is
first published by the Company financial results reflecting 30 days of combined
operations of the Company and Homegate.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
Registrable Securities: The Company Shares to be issued to the
Holders upon conversion of their Homegate Shares, excluding (A) any Company
Shares that have been disposed of
<PAGE> 2
pursuant to a Registration Statement relating to the sale thereof that has
become effective under the Securities Act and (B) any Company Shares eligible to
be sold pursuant to Rule 144(k) or Rule 145(d)(2) under the Securities Act.
Registrable Securities shall also include any Company Shares or other securities
(or Company Shares underlying such other securities) that may be received by the
Holders (x) as a result of a stock dividend on or stock split of Registrable
Securities or (y) on account of Registrable Securities in a recapitalization of
or other transaction involving the Company.
Registration Statement: Any registration statement of the Company
under the Securities Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the related Prospectus, all
amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended.
2. Shelf Registration of Resales.
(a) Registration of Resales. The Company agrees to use commercially
reasonable efforts (i) to cause the Holders' offering and resale of their
Registrable Securities to be registered under the Securities Act on a
Registration Statement (the "Resale Registration Statement") to be filed by the
Company on or before January 31, 1998 on a form permitted to be used by the
Company for the registration under the Securities Act of the Holders' offering
and resale of Registrable Securities (in accordance with the intended methods of
distribution); and (ii) to cause the Resale Registration Statement to be
declared effective by the Pooling Restriction Termination Date or as soon as
practicable thereafter.
(b) Maintenance of Effectiveness. The Company agrees to use
commercially reasonable efforts to keep the Resale Registration Statement
effective for a period from the effective date thereof until the Company
determines in good faith that there are no more Registrable Securities; provided
that in no event shall the Company be required to keep the Resale Registration
Statement effective after the first anniversary of the effectiveness of the
Merger.
-2-
<PAGE> 3
3. Registration Procedures. In connection with the Company's
registration obligation pursuant to Section 2 hereof, the Company will as
expeditiously as possible, and in each case to the extent applicable:
(a) Prepare and file with the SEC such amendments and post-effective
amendments to the Resale Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement as so amended or in such
Prospectus as so supplemented.
(b) Notify the selling Holders promptly, (i) when a Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any requests by the SEC or any other federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or which requires the making of any changes in a Registration Statement,
Prospectus or any such document so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(c) Use every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a
-3-
<PAGE> 4
Registration Statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, at the earliest possible moment.
(d) If requested by Holders holding a majority of the Registrable
Securities being registered, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment such information as such Holders agree should be
included therein as may be required by applicable law and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company will not be required to take any actions
under this Section 3(d) that are not, in the opinion of counsel for the Company,
in compliance with and required by applicable law.
(e) Furnish to each selling Holder without charge, at least one
conformed copy of the Registration Statement and any post-effective amendment
thereto, including financial statements (but excluding schedules, all documents
incorporated or deemed incorporated therein by reference and all exhibits,
unless requested in writing by such holder, counsel or underwriter).
(f) Deliver to each selling Holder as many copies of the Prospectus
or Prospectuses relating to such Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as such persons
may reasonably request; and the Company hereby consents to the use of such
Prospectus or each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto.
(g) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders and their counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions within the United
States as any seller reasonably requests in writing; use all reasonable efforts
to keep such registration or qualification (or exemption therefrom) effective
during the period the applicable Registrable Statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in each such jurisdiction of the Registrable Securities
covered by the applicable Registration Statement; provided, however, that the
Company will not be required to (i) qualify to do business in any jurisdiction
-4-
<PAGE> 5
in which it is not then so qualified or (ii) take any action that would subject
it to service of process in any such jurisdiction in which it is not then so
subject.
(h) Cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold.
(i) Use all reasonable efforts to cause the Registrable Securities
covered by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States except as may be required solely as a consequence of the nature of any
selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of such
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section 3(b)(v)
or 3(b)(vi) hereof, promptly prepare and file an amendment or post-effective
amendment to each Registration Statement or a supplement to the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such Prospectus will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The Company may require each seller of the Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Holder will be deemed to have agreed by virtue of its
acquisition of Registrable Securities that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section
3(b)(ii), 3(b)(iii), 3(b)(v) or 3(b)(vi) hereof ("Suspension Notice"), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus (a "Black-Out") until such
Holder's receipt of the copies of the supplemented or
-5-
<PAGE> 6
amended Prospectus contemplated by Section 3(j) hereof, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and such Holder has received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
4. Registration Expenses. The Company will pay or cause to be paid, the
following fees and expenses directly related to the performance of or compliance
with this Agreement by the Company: (i) one-half of the SEC registration fee
applicable to the Registrable Securities the sale of which is registered on the
Resale Registration Statement and (ii) fees and disbursements of counsel for the
Company incurred by the Company. The Company also will pay its internal expenses
(including without limitation all salaries and expenses of their officers and
employees performing legal or accounting duties), the expense of any annual
audit, and the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed. The Holders will pay (i) the
other one-half of the SEC registration fee applicable to the Registrable
Securities the sale of which is registered on the Resale Registration Statement
and (ii) the fees and expenses of its counsel and accountants, if any.
5. Indemnification.
(a) Indemnification by the Company. The Company will, without
limitation as to time, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder holding Registrable Securities registered pursuant
to this Agreement, the officers, directors and agents and employees of each of
them, each person who controls such a Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of any such controlling person, from and against
all losses, claims, damages, liabilities, costs (including without limitation
the costs of investigation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of Prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based solely upon information furnished in writing to the Company
by such Holder expressly for use therein; provided, however, that the Company
will not be liable to any Holder to the extent that
-6-
<PAGE> 7
any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Registration
Statement, Prospectus or preliminary prospectus if either (A)(i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale by such Holder of a Registrable Security to
the person asserting the claim from which such Losses arise and (ii) the
Prospectus would have completely corrected such untrue statement or alleged
untrue statement or such omission or alleged omission; or (B) such untrue
statement or alleged untrue statement, omission or alleged omission is
completely corrected in an amendment or supplement to the Prospectus previously
furnished by or on behalf of the Company with copies of the Prospectus, and such
Holder thereafter fails to deliver such Prospectus as so amended or supplemented
prior to or concurrently with the sale of a Registrable Security to the person
asserting the claim from which such Losses arise.
(b) Indemnification by Holders. In connection with any Registration
Statement in which a Holder is participating, such Holder will furnish to the
Company in writing such information as the Company reasonably requests for use
in connection with any Registration Statement, Prospectus or preliminary
prospectus and will indemnify, to the fullest extent permitted by law, the
Company, its directors and officers, agents and employees, each person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons, from and against all Losses arising out
of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company expressly for
use in such Registration Statement, Prospectus or preliminary prospectus and was
relied upon by the Company in the preparation of such Registration Statement,
Prospectus or preliminary prospectus. In no event will the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any person shall
become entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the
-7-
<PAGE> 8
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses reasonably incurred in connection with investigating or
preparing to defend such action or proceeding) will be paid to the indemnified
party, as incurred, within 20 calendar days of written notice thereof to the
indemnifying party (subject to reimbursement if it is ultimately determined that
an indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 5,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this
Section 5 is unavailable to an indemnified party under Section 5(a) or 5(b)
hereof in respect of any Losses or is insufficient to hold such indemnified
party harmless, then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, will, severally but not jointly, contribute to the
amount paid or payable by such indemnified party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party or indemnifying parties, on the one hand, and such
indemnified party, on the other hand, in connection with the actions, statements
or omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, will be determined by reference to, among other things, whether any action
in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by,
or related to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses will
-8-
<PAGE> 9
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), an indemnifying party that
is a selling Holder will not be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages which such indemnifying party has 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) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
the Company hereunder will be in addition to any liability the Company may
otherwise have hereunder or otherwise. The provisions of this Section 5 will
survive so long as Registrable Securities remain outstanding, notwithstanding
any permitted transfer of the Registrable Securities by any Holder thereof or
any termination of this Agreement.
6. Miscellaneous.
(a) Remedies. In the event of a breach by the Company of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any provision of this Agreement and
hereby further agrees that, in the event of any action for specific performance
in respect of such breach, it will waive the defense that a remedy at law would
be adequate.
(b) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented without the prior written consent of the
Company, and Holders holding in excess of 50% of the Registrable Securities in
respect of which Registrable Securities are issuable.
-9-
<PAGE> 10
(c) Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the Company at the following
address and to a Holder at the address set forth on his or her signature page to
this Agreement (or at such other address for any party as shall be specified by
like notice, provided that notices of a change of address shall be effective
only upon receipt thereof):
If to the Company: Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07007-2700
Attn: Joseph W. Bernadino
Telephone: (201) 882-1010
Telecopy: (201) 882-8577
With a copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: William N. Dye
Telephone: (212) 821-8000
Telecopy: (212) 821-8111
(d) Successors and Assigns. This Agreement will inure to the benefit
of and be binding upon the successors and assigns of the Company. This Agreement
may not be assigned by any Holder, except to a constituent partner or
shareholder of such Holder, unless the proposed transferee or assignee of such
Holder (a "Holder Transferee") agrees in a writing reasonably acceptable to the
Company to be bound by the terms of this Agreement, and executes any and all
documents reasonably requested by the Company to bind such Holder Transferee to
the terms of the Voting Agreement (if the Merger shall not have already
occurred). Except as otherwise expressly permitted herein, any attempted
assignment hereof by any Holder will be void and of no effect and shall
terminate all obligations of the Company with respect to such Holder.
Notwithstanding the foregoing, each of the indemnified parties shall be entitled
to enforce the covenants set forth in Section 5 hereof.
(e) 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 will constitute one and the same instrument.
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<PAGE> 11
(f) Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement will be governed by and construed
in accordance with the laws of the State of Delaware, as applied to contracts
made and performed within the State of Delaware, without regard to principles of
conflict of laws.
(h) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(i) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(j) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, an determined by the court, will be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
(k) Effectiveness. This Agreement shall become effective
concurrently with the effectiveness of the Merger. If the Merger Agreement shall
be terminated, this Agreement shall terminate concurrently.
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<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PRIME HOSPITALITY CORP.
/s/ John M. Elwood
--------------------------------------
Name: John M. Elwood
Title: Executive Vice President and
Chief Financial Officer
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<PAGE> 13
Registration Rights Agreement
Holder Signature Pages
CRI/ESH PARTNERS, L.P.
By: Crow Family, Inc.,
its sole general partner
/s/ Anthony W. Dona
__________________________________
Name: Anthony W. Dona
Title: Executive Vice President
CROW HOTEL REALTY INVESTORS, L.P.
By: Crow Family, Inc.,
its sole general partner
/s/ Anthony W. Dona
__________________________________
Name: Anthony W. Dona
Title: Executive Vice President
CROW FAMILY, INC.
/s/ Anthony W. Dona
__________________________________
Name: Anthony W. Dona
Title: Executive Vice President
JMI/GREYSTAR EXTENDED STAY
PARTNERS, L.P.
By: Greystar Holdings, Inc.,
its general partner
/s/ Robert A. Faith
__________________________________
Name: Robert A. Faith
Title: President
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<PAGE> 14
JMI/GREYSTAR REALTY PARTNERS, L.P.
By: Greystar Holdings, Inc.,
its general partner
/s/ Robert A. Faith
__________________________________
Name: Robert A. Faith
Title: President
ROBERT A. FAITH
/s/ Robert A. Faith
______________________________________
DEVELOPER EXTENDED STAY
PARTNERS, L.P.
By: DESP General Partner, L.L.C., its
general partner
By: Greystar Holdings, Inc.,
as a member
/s/ Robert A. Faith
______________________________
Name: Robert A. Faith
Title: President
DEVELOPER EXTENDED STAY
PARTNERS, L.P.
By: DESP General Partner, L.L.C., its
general partner
By: Crow Family, Inc.,
as a member
/s/ Anthony W. Dona
_______________________________
Name: Anthony W. Dona
Title: Executive Vice President
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<PAGE> 1
Exhibit 5.1
February 3, 1998
Prime Hospitality Corp.
700 Route 46 East
Fairfield, New Jersey 07007
Ladies and Gentlemen:
We have acted as counsel to Prime Hospitality Corp., a corporation organized
under the laws of the State of Delaware (the "Company"), in connection with the
preparation of a registration statement on Form S-3 (the "Registration
Statement") relating to the sale of 3,637,832 shares (the "Shares") of common
stock, par value $0.01 per share, of the Company (the "Common Stock") from time
to time by certain selling stockholders named therein.
We have examined copies of the certificate of incorporation and by-laws of the
Company, and the amendments thereto, the Registration Statement, all resolutions
adopted by the Company's Board of Directors and other records and documents that
we have deemed necessary for the purpose of this opinion. We have also examined
such other documents, papers, statutes and authorities as we have deemed
necessary to form a basis for the opinion hereinafter expressed. In our
examination, we have assumed the genuineness of all signatures and the
conformity to original documents of all copies submitted to us. As to various
questions of fact material to our opinion, we have relied on statements and
certificates of officers and representatives of the Company and public
officials.
Based on the foregoing, we are of the opinion that the Shares have been duly
authorized and validly issued and are fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE> 1
Exhibit 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of Prime Hospitality Corp.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 28, 1997,
included in the Company's Form 10-K for the year ended December 31, 1996, and to
all references to our firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Roseland, New Jersey
January 28, 1998
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Prime
Hospitality Corp. for the registration of 3,647,940 shares of its common stock
and to the incorporation by reference therein of our report dated February 20,
1997, with respect to the consolidated financial statements of Homegate
Hospitality, Inc. included in Prime Hospitality Corp.'s Current Report on Form
8-K dated December 1, 1997, filed with the Securities and Exchange Commission.
Ernst & Young LLP
/s/ Ernst & Young LLP
Dallas, Texas
January 28, 1998
