<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1998
REGISTRATION NO. 333-50729
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HOST MARRIOTT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 7011 53-00895950
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
For Co-Registrants, please see "Table of Co-Registrants" on the following
page.
10400 FERNWOOD ROAD
BETHESDA, MARYLAND 20817-1109
301-380-9000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CHRISTOPHER G. TOWNSEND, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
10400 FERNWOOD ROAD
BETHESDA, MARYLAND 20817-1109
301-380-9000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
J. WARREN GORRELL, JR., ESQ. BRUCE E. ROSENBLUM, ESQ.
BRUCE W. GILCHRIST, ESQ. SCOTT C. HERLIHY, ESQ.
HOGAN & HARTSON L.L.P. LATHAM & WATKINS
555 THIRTEENTH STREET, N.W. 1001 PENNSYLVANIA AVENUE, N.W.,
WASHINGTON, D.C. 20004-1109 SUITE 1300
(202) 637-5600 WASHINGTON, D.C. 20004
(202) 637-2200
---------------
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 the Registrants.
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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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. [_]
---------------
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 WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1)(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock of Host
Marriott Corporation
(the "Company");
Debt Securities of the
Company(3)(4);
Preferred Stock of the
Company; $300,000,000 $300,000,000 $88,500
Warrants of the Company;
Subscription Rights(5);
Depositary Shares; and
Preferred Stock Purchase
Rights(6)
- -------------------------------------------------------------------------------------------------------
Senior Notes of HMH
Properties, Inc. ("HMH
Properties")(4)(7); $2,200,000,000 $2,200,000,000 $649,000
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Guarantees of the
Company and
the Co-Registrants of
Senior Notes
of HMH Properties(8); --(8) --(8) --(8) --(8)
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Guarantees of Co-
Registrants of Debt
Securities of the
Company(9)............ --(8) --(8) --(8) --(8)
- -------------------------------------------------------------------------------------------------------
Total.................. $2,500,000,000(6)(10) 100% $2,500,000,000(10) $737,500(11)
- -------------------------------------------------------------------------------------------------------
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</TABLE>
(1) The proposed maximum offering price per unit will be determined from time
to time by the Registrants in connection with the issuance by the
Registrants of the securities registered hereunder.
(2) Estimated solely for the purpose of calculating the registration fee,
which is calculated in accordance with Rule 457(o) under the Securities
Act.
(3) The Company's payment obligations under any series of Debt Securities may
be guaranteed by certain of the Co-Registrants, including HMH Properties.
(4) If any Debt Securities of the Company or Senior Notes of HMH Properties
are issued at an original issue discount, then the offering price shall
be in such greater principal amount as shall result in an aggregate
initial offering price not to exceed $300,000,000 in the case of Debt
Securities issued by the Company and $2,200,000,000 in the case of Senior
Notes issued by HMH Properties.
(5) Rights evidencing the right to purchase Debt Securities, Common Stock,
Preferred Stock, Depositary Shares or Warrants.
(6) The Preferred Stock Purchase Rights are initially carried and traded with
the Common Stock. The value of the Preferred Stock Purchase Rights, if
any, is reflected in the value of the Common Stock.
(7) The payment obligations of HMH Properties under any series of Senior
Notes will be guaranteed by the Company and may be guaranteed by one or
more of the other Co-Registrants.
(8) No separate consideration will be received from purchasers of Senior
Notes of HMH Properties with respect to these guarantees and, therefore,
no registration fee is attributable to the guarantees of the Senior
Notes.
(9) No separate consideration will be received from purchasers of Debt
Securities with respect to these guarantees and, therefore, no
registration fee is attributable to the guarantees of the Debt
Securities.
(10) In no event will the aggregate offering price of all securities issued by
the Company from time to time pursuant to this Registration Statement
(other than guarantees by the Company of Senior Notes of HMH Properties)
exceed $300,000,000 or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies. The aggregate
amount of Common Stock registered hereunder is further limited to that
which is permissible under Rule 415(a)(4) under the Securities Act. In no
event will the aggregate offering price of all Senior Notes issued by HMH
Properties from time to time pursuant to this Registration Statement
exceed $2,200,000,000 or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies. Of such
amount, $1,700,000,000 was issued on August 5, 1998. The securities
registered hereunder may be sold separately or as units with other
securities registered hereby.
(11) The filing fee was paid on April 22, 1998.
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<PAGE>
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TABLE OF CO-REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY STANDARD
STATE OR OTHER INDUSTRIAL IRS EMPLOYER
JURISDICTION CLASSIFICATION IDENTIFICATION
NAME OF FORMATION CODE NUMBER NUMBER
---- ------------------- ---------------- --------------
<S> <C> <C> <C>
Farrell's Ice Cream
Parlour Restaurants,
Inc...................... California 7011 94-2773466
HMC AP Canada, Inc........ Province of Ontario 7011 N/A
HMC Airport, Inc.......... Delaware 7011 52-1946920
HMC BN Corporation........ Delaware 7011 52-1982075
HMC Boyton Beach, Inc..... Delaware 7011 52-1925004
HMC Capital Resources
Corp. ................... Delaware 7011 52-2007402
HMC Charlotte (Calgary),
Inc...................... Province of Alberta 7011 N/A
HMC East Side Financial
Corporation.............. Delaware 7011 52-1899299
HMC East Side, Inc........ Delaware 7011 52-1891584
HMC Gateway, Inc.......... Delaware 7011 52-1951837
HMC Hartford, Inc......... Delaware 7011 52-2033802
HMC Hotel Development
Corporation.............. Delaware 7011 52-2062680
HMC Manhattan Beach,
Inc...................... Delaware 7011 52-2033801
HMC Mexpark, Inc.......... Delaware 7011 52-1946918
HMC Partnership Holdings,
Inc...................... Delaware 7011 52-2055796
HMC Polanco, Inc.......... Delaware 7011 52-1946921
HMC Retirement Properties,
Inc...................... Delaware 7011 52-1536288
HMC SFO, Inc.............. Delaware 7011 52-1888778
HMC Toronto Air, Inc...... Province of Ontario 7011 N/A
HMC Ventures, Inc......... Delaware 7011 52-1846642
HMC Waterford, Inc........ Delaware 7011 52-2007398
HMH General Partner
Holdings, Inc............ Delaware 7011 52-2050852
HMH HPT Courtyard, Inc.... Delaware 7011 52-1915184
HMH HPT Residence Inn,
Inc...................... Delaware 7011 52-1962668
HMH Marina, Inc........... Delaware 7011 52-1943709
HMH Norfolk, Inc.......... Delaware 7011 52-2039043
HMH Pentagon Corporation.. Delaware 7011 52-1859615
HMH Properties, Inc....... Delaware 7011 52-1822042
HMH Realty Company, Inc... Delaware 7011 52-1928293
HMH Restaurants, Inc...... Delaware 7011 52-1930119
HMH Rivers, Inc........... Delaware 7011 52-1928290
Host Airport Hotels,
Inc...................... Delaware 7011 95-2744596
Host LaJolla, Inc......... Delaware 7011 52-1518562
Host Marriott Hospitality,
Inc...................... Delaware 7011 52-1822038
Host Marriott, L.P........ Delaware 7011 52-2095412
Host of Boston, Ltd....... Mass 7011 59-0164700
Host of Houston, Ltd...... Texas 7011 52-1874034
Host of Houston 1979...... Delaware 7011 95-3552476
Hot Shoppes, Inc.......... Delaware 7011 52-0811874
MHP Acquisition
Corporation.............. Delaware 7011 52-2002254
MHP II Acquisition
Corporation.............. Delaware 7011 52-1971552
Marriott Family
Restaurants, Inc. of
Illinois................. Illinois 7011 04-2539796
Marriott Family
Restaurants, Inc. of
Vermont.................. Vermont 7011 04-2377578
Marriott Family
Restaurants, Inc. of
Wisconsin................ Wisconson 7011 04-2324735
Marriott Financial
Services, Inc............ Delaware 7011 52-1320896
Marriott MDAH One
Corporation.............. Delaware 7011 52-1647378
Marriott Marquis
Corporation.............. Delaware 7011 52-1443309
Marriott PLP Corporation.. Delaware 7011 52-1320899
Marriott Park Ridge
Corporation.............. Delaware 7011 52-1507987
Marriott Properties,
Inc...................... Delaware 7011 52-0903698
Marriott SBM One
Corporation.............. Delaware 7011 52-1630624
Marriott SBM Two
Corporation.............. Delaware 7011 52-1694383
Marriott's Bickford Family
Fare, Inc................ Delaware 7011 04-2277061
PM Financial Corporation.. Delaware 7011 52-2007399
Philadelphia Airport Hotel
Corporation.............. Pennsylvania 7011 52-1619138
PRM Corporation........... Delaware 7011 52-2087492
Saga Property Leasing
Corporation.............. California 7011 94-2940820
Saga Restaurants, Inc..... Delaware 7011 52-1498549
Sparky's Virgin Island,
Inc...................... Delaware 7011 95-6399178
Tecon Hotel Corporation... Nevada 7011 75-1621907
Willmar Distributors,
Inc...................... Delaware 7011 52-0892531
YBG Associates LLC........ Delaware 7011 52-2059377
</TABLE>
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<PAGE>
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PROSPECTUS SUPPLEMENT
, 1998
(TO PROSPECTUS DATED , 1998)
HMH PROPERTIES, INC.
$
% SERIES C SENIOR NOTES DUE 20
- -------------------------------------------------------------------------
THE COMPANY: THE SERIES C SENIOR NOTES AND
THE OFFERING (CONTINUED):
. We are an indirect wholly
owned subsidiary of Host . Guarantees: The Series C
Marriott Corporation. We own Senior Notes are guaranteed by
or hold controlling interests Host Marriott Corporation and
in the majority of Host Host Marriott Hospitality,
Marriott's lodging properties. Inc., the direct and indirect
Our assets consist principally parent corporations of the
of full-service hotel Company, and by certain of our
properties generally operating subsidiaries. Such parent
under the Marriott and Ritz- guarantees are subject to
Carlton brands. release upon consummation of
the REIT Conversion. Not all
. HMH Properties, Inc. of our subsidiaries will be
10400 Fernwood Road guarantors.
Bethesda, MD 20817-1109
(301) 380-9000 . Security: The Series C Senior
Notes are secured by a pledge
of the capital stock of all
THE SERIES C SENIOR NOTES AND but one of the initial
THE OFFERING: subsidiary guarantors that the
Company and its subsidiaries
. Maturity: , 20 hold. Such security interest
supports, on an equal and
. Interest Payments: semi- ratable basis, significant
annually in cash in arrears on other indebtedness of the
and , commencing Company ranking equal in right
on , 1999. of payment with the Series C
Senior Notes.
. Redemption: The Series C
Senior Notes will be . Mandatory Offer to
redeemable, at our option, on Purchase: The Company must
or after , 20 . offer to repurchase the Series
C Senior Notes if it sells
. Ranking of Series C Senior certain assets or undergoes
Notes: Senior, general certain kinds of changes in
obligations of the Company, control.
equal in right of payment to
all of the Company's . Use of Proceeds: We expect to
unsubordinated indebtedness use the net proceeds to pay
and senior to all subordinated expenditures in connection
obligations of the Company. with the REIT Conversion
(which is discussed herein)
and for general corporate
purposes.
. Closing: , 1998.
<TABLE>
<CAPTION>
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PER NOTE: TOTAL
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<S> <C> <C>
Public Offering Price: % $
Underwriting Fees: % $
Proceeds to Company: % $
</TABLE>
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This investment involves risk. See "Risk Factors" beginning on Page S-7.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the Series C Senior Notes or passed
upon the adequacy or accuracy of the Prospectus Supplement or the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
DONALDSON, LUFKIN & JENRETTE BT ALEX. BROWN
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FORWARD LOOKING STATEMENTS............................................... S-3
PROSPECTUS SUPPLEMENT SUMMARY............................................ S-4
RISK FACTORS............................................................. S-7
USE OF PROCEEDS.......................................................... S-13
CAPITALIZATION........................................................... S-14
PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY..................... S-15
DESCRIPTION OF SERIES C SENIOR NOTES..................................... S-20
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-UNITED STATES
HOLDERS................................................................. S-22
UNDERWRITING............................................................. S-24
LEGAL MATTERS............................................................ S-25
EXPERTS.................................................................. S-25
PROSPECTUS
AVAILABLE INFORMATION.................................................... 2
INFORMATION INCORPORATED BY REFERENCE.................................... 3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS.......................... 4
THE COMPANY.............................................................. 5
HMH PROPERTIES........................................................... 5
THE REIT CONVERSION...................................................... 5
USE OF PROCEEDS.......................................................... 7
RISK FACTORS............................................................. 7
ERISA MATTERS............................................................ 7
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS............................................................... 8
RATIOS OF EARNINGS TO FIXED CHARGES...................................... 8
RATIOS OF EARNINGS TO FIXED CHARGES OF HMH PROPERTIES.................... 9
DESCRIPTION OF DEBT SECURITIES........................................... 10
DESCRIPTION OF CAPITAL STOCK............................................. 18
DESCRIPTION OF DEPOSITARY SHARES......................................... 27
DESCRIPTION OF WARRANTS.................................................. 31
DESCRIPTION OF SUBSCRIPTION RIGHTS....................................... 33
DESCRIPTION OF HMH SENIOR NOTES.......................................... 34
PLAN OF DISTRIBUTION..................................................... 70
LEGAL MATTERS............................................................ 71
EXPERTS.................................................................. 71
</TABLE>
<PAGE>
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. In addition to historical information,
this Prospectus Supplement and the accompanying Prospectus and other materials
filed or to be filed by us with the Commission and incorporated by reference in
the accompanying Prospectus contain or will contain forward looking statements
within the meaning of the federal securities law. Forward-looking statements
include information relating to our intent, belief or current expectations,
primarily with respect to, but not limited to:
. economic outlook
. capital expenditures
. cost reduction
. cash flow
. operating performance, or
. improvements and related industry developments.
We intend to identify forward-looking statements in this Prospectus
Supplement and the accompanying Prospectus, and in documents incorporated by
reference, by using words or phrases such as "anticipate," "believe,"
"estimate," "expect," "intend," "may be," "objective," "plan," "predict,"
"project," and "will be" and similar words or phrases (or the negative
thereof).
The forward-looking information involves important risks and uncertainties
that could cause our actual results, performance or achievements to differ
materially from our anticipated results, performance or achievements expressed
or implied by such forward-looking statements. These risks and uncertainties
include, but are not limited to:
. national and local economic and business conditions that will, among
other things, affect demand for hotels and other properties, the level of
rates and occupancy that can be achieved by such properties and the
availability and terms of financing;
. the ability to maintain the properties in a first-class manner (including
meeting capital expenditure requirements);
. our ability to compete effectively in areas such as access, location,
quality or accommodations and room rate structures;
. our ability to acquire or develop additional properties and the risk that
potential acquisitions or developments may not perform in accordance with
expectations;
. changes in travel patterns, taxes and government regulations which
influence or determine wages, prices, construction procedures and costs;
. governmental approvals, actions and initiatives including the need for
compliance with environmental and safety requirements, and changes in
laws and regulations or the interpretation thereof;
. the effects of tax legislative action;
. the effect on us and our operations of the year 2000 issue; and
. the timing (if it occurs) of the election by Host Marriott Corporation
(or its successor), our indirect parent company, to be taxed as a real
estate investment trust ("REIT") and its ability to satisfy complex rules
in order to qualify for taxation as a REIT for federal income tax
purposes and to operate effectively within the limitations imposed by
these rules.
Although we believe the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, we can give no assurance that
such expectations will be attained or that any deviations will not be material.
We disclaim any obligation or undertaking to disseminate to you any updates or
revisions to any forward-looking statement contained in this Prospectus
Supplement or in the accompanying Prospectus (or other materials that we have
filed or will file with the Commission and incorporated by reference into the
accompanying Prospectus) to reflect any change in our expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
S-3
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
On the cover page, in this summary and in the "Risk Factors" section, the
words "Company," "we," "our," "ours" and "us" refer only to HMH Properties,
Inc. and not to any of our subsidiaries or to any of the underwriters. The
following summary contains basic information about this offering. It likely
does not contain all the information that is important to you. For a more
complete understanding of the offering, we encourage you to read this entire
document and the documents that are incorporated by reference into the
accompanying Prospectus.
THE COMPANY
The Company is a wholly owned subsidiary of Host Marriott Hospitality, Inc.,
a Delaware corporation ("Hospitality"), which is a wholly owned subsidiary of
Host Marriott Corporation, a Delaware corporation ("Host Marriott"). Together
with our subsidiaries, we own or hold controlling interests in the majority of
Host Marriott's lodging properties. Our consolidated assets principally consist
of 72 full-service hotel properties. These hotel properties are generally
operated under the Marriott and Ritz-Carlton brand names and are managed by
Marriott International, Inc. The Marriott and Ritz-Carlton brands are among the
most respected and widely recognized in the lodging industry.
On April 17, 1998, Host Marriott announced its intention to restructure its
business operations (including those business operations conducted by us and
our subsidiaries) to qualify as a real estate investment trust for Federal
income tax purposes (the "REIT Conversion") effective as of January 1, 1999
(but which might not occur until the year beginning January 1, 2000). However,
there can be no assurance that the REIT Conversion will occur. For a full
description of the REIT Conversion, see the Proxy Statement of Host Marriott
Corporation dated November 23, 1998, which is incorporated by reference into
the accompanying Prospectus.
In connection with the REIT Conversion, we expect that each of the Company's
wholly owned corporate subsidiaries will be reorganized as a single member
limited liability company or as a limited partnership. Thereafter, the Company
will be merged into Host Marriott, L.P., a Delaware limited partnership of
which Host Marriott is the sole general partner (the "Operating Partnership").
The Operating Partnership will hold, among other things, the Company's assets
(including the equity interests in its subsidiaries) and will become the
successor obligor under the Series C Senior Notes as defined herein and other
outstanding indebtedness of the Company.
Our principal executive offices are located at 10400 Fernwood Road, Bethesda,
Maryland 20817-1109. Our telephone number is (301) 380-9000.
S-4
<PAGE>
THE OFFERING
Issuer.................. HMH Properties, Inc.
Securities Offered...... $ aggregate principal amount of % Series C Senior
Notes due 20 ("Series C Senior Notes").
Maturity................ , 20 .
Issue Price............. % plus accrued interest from , 1998.
Interest................ Interest on the Series C Senior Notes will accrue at
the rate of % per annum, paid semi-annually in cash
in arrears on and commencing on , 1999.
Ranking................. The Series C Senior Notes are senior, general
obligations of the Company, equal in right of payment
with all of the Company's unsubordinated indebtedness
and senior to all subordinated obligations of the
Company.
Guarantors.............. The Series C Senior Notes are guaranteed by Host
Marriott and Hospitality (our direct and indirect
parent companies) and by certain of our subsidiaries.
Not all of our subsidiaries are or will be guarantors
of the Series C Senior Notes. The guarantees of Host
Marriott and Hospitality will be released upon
consummation of the REIT Conversion. See "Description
of HMH Senior Notes--Certain Definitions" in the
accompanying Prospectus for a definition of the REIT
Conversion.
Security................ The Series C Senior Notes are secured by a pledge of
the capital stock of all but one of the initial
subsidiary guarantors owned (directly or indirectly)
by the Company. This security interest ranks on an
equal and ratable priority with those of the
Company's bank credit facility, the Company's
outstanding senior notes and certain future
unsubordinated indebtedness of the Company ranking
equal in right of payment with the Series C Senior
Notes.
Optional Redemption..... On or after , 20 , we may redeem some or all of
the Series C Senior Notes at any time at the
redemption prices listed in the section "Description
of Series C Senior Notes" under the heading "Optional
Redemption".
Mandatory Offer to
Repurchase.............. If the Company sells certain assets or undergoes
specific kinds of changes of control, we must offer
to repurchase the Series C Senior Notes as described
in the Prospectus in the section "Description of HMH
Senior Notes".
Basic Covenants of the
Indenture.............. We will issue the Series C Senior Notes pursuant to a
supplemental indenture to the indenture dated August
5, 1998, among the Company, Host Marriott and
Hospitality (as the Guarantors) and the Subsidiary
Guarantors and Marine Midland Bank, as Trustee. The
indenture (as so
S-5
<PAGE>
supplemented) will, among other things, restrict our
ability and the ability of our restricted
subsidiaries to:
. incur additional indebtedness;
. pay dividends on, redeem or repurchase our stock;
. make investments;
. permit payment or dividend restrictions on certain
of our subsidiaries;
. sell assets;
. in the case of our restricted subsidiaries,
guarantee indebtedness;
. create certain liens; and
. sell certain assets or merge with or into other
companies.
All of these limitations are subject to important
exceptions and qualifications described in the
Prospectus, in the section "Description of HMH Senior
Notes" under the heading "Certain Covenants."
Use of Proceeds......... We estimate the net proceeds from the offering of the
Series C Senior Notes (after deducting the
Underwriters' discounts and commissions and expenses
payable by us) to be approximately $340 million. We
intend to use the net proceeds from the offering of
the Series C Senior Notes for expenditures in
connection with the REIT Conversion which would
otherwise have been funded with borrowings from other
sources. Any remaining proceeds would be used for
general corporate purposes, which may include future
acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES OF HMH PROPERTIES
The following table sets forth the ratio of earnings to fixed charges of HMH
Properties for the periods indicated.
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED FISCAL YEAR
--------------------------- --------------------------------------
SEPTEMBER 11, SEPTEMBER 12,
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ---- ---- ---- ----------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(a)....... 1.9x 1.9x 1.6x 1.5x 1.5x 1.7x 1.3x
</TABLE>
- --------
(a) The ratio of earnings to fixed charges is computed by dividing income from
continuing operations before income taxes and fixed charges by total fixed
charges. Fixed charges represent interest expense (including capitalized
interest), the amortization of debt issuance costs, and the portion of
rental expense that represents interest.
S-6
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors in addition to the
other information contained in the Prospectus and this Prospectus Supplement,
before deciding to invest in the Series C Senior Notes.
RISKS OF INDEBTEDNESS
We have substantial leverage
We have now and, after the offering of the Series C Senior Notes will
continue to have, a significant amount of indebtedness. The following chart
shows certain important credit statistics and is presented assuming we had
completed this offering as of September 11, 1998:
<TABLE>
<CAPTION>
PRO FORMA
AS OF SEPTEMBER 11, 1998
------------------------
<S> <C>
Total indebtedness................................ $2,812 million
Stockholders' equity.............................. $ 851 million
Debt to equity ratio.............................. 3.3 x
</TABLE>
Our substantial indebtedness could have important consequences to you. For
example it could adversely affect our ability to:
. obtain financing in the future;
. undertake refinancings on terms and conditions deemed acceptable to us;
. pursue our acquisition strategy; or
. compete effectively or operate successfully under adverse economic
conditions.
If our cash flow and working capital is not sufficient to fund our
expenditures or service our indebtedness, we would have to raise additional
funds through:
. the sale of equity;
. the refinancing of all or part of our indebtedness;
. the incurrence of additional permitted indebtedness; or
. the sale of assets.
We cannot assure you that any of these sources of funds would be available
in amounts sufficient for us to meet our obligations.
The Series C Senior Notes may be structurally subordinated to other debt
The Series C Senior Notes effectively will be subordinated in right of
payment to liabilities of our subsidiaries which are not guarantors of the
Series C Senior Notes, to the extent of the assets of such subsidiaries.
In connection with the REIT Conversion, the Operating Partnership (into
which we will merge) and its subsidiaries are expected to assume significant
amounts of secured debt of Host Marriott and certain of its subsidiaries. The
Series C Senior Notes will not be secured by assets of the Operating
Partnership or its subsidiaries (other than the capital stock of certain of
the subsidiary guarantors). Therefore, the Series C Senior Notes effectively
will be subordinated to secured debt of the Operating Partnership and its
subsidiaries to the extent of the value of the assets securing such debt.
In addition, the HMH Indenture (as defined in the accompanying Prospectus)
also permits the Company to make certain distributions to its parent,
including for any tax liabilities of its parent or subsidiaries of its parent.
See, "Description of HMH Series Notes--Covenants at Issuance--Limitation on
Restricted Payments; and --Covenants upon REIT Conversion--Limitation on
Restricted Payments" contained in the accompanying Prospectus.
The terms of our debt place restrictions on us and our subsidiaries
The documents governing the terms of our debt (including the documents
governing the terms of these Series C Senior Notes) contain covenants that
place restrictions on us and our subsidiaries. The activities upon which such
restrictions exist include (but are not limited to):
S-7
<PAGE>
. the incurrence of additional debt;
. the creation of liens;
. the sale of assets;
. transactions with affiliates; and
. certain mergers and consolidations.
In addition, certain covenants (other than those contained in the HMH
Indenture governing the Series A Senior Notes, the Series B Senior Notes and
the Series C Senior Notes, as these terms are defined in "Description of HMH
Senior Notes" in the accompanying Prospectus) may require us or our
subsidiaries to meet financial performance tests. These covenants reduce our
flexibility in conducting our operations and create a risk of default under the
debt if we cannot satisfy the covenants.
The Series C Senior Notes or a guarantee thereof may be deemed a fraudulent
transfer
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee of the Series C Senior Notes could be
voided, or claims on a guarantee of the Series C Senior Notes could be
subordinated to all other debts of that guarantor if, among other things, the
guarantor, at the time it incurred the indebtedness evidenced by its guarantee:
(1) received less than reasonably equivalent value or fair consideration
for the incurrence of such guarantee; and
(2) either:
(a) was insolvent or rendered insolvent by reason of such incurrence;
(b) was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
(c) intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee of the
Series C Senior Notes could be voided and required to be returned to the
guarantor, or to a fund for the benefit of the creditors of the guarantor.
In addition, our obligations under the Series C Senior Notes may be subject
to review under the same laws in the event of our bankruptcy or other financial
difficulty. In that event, if a court were to find that when we issued the
Series C Senior Notes the factors in clauses (1) and (2) above applied to us
(or that the Series C Senior Notes were issued with actual intent to hinder,
delay or defraud creditors), the court could avoid our obligations under the
Series C Senior Notes, or direct the return of any amounts paid thereunder to
us or to a fund for the benefit of our creditors. In addition, a court might
avoid the Series C Senior Notes and direct such payment if the proceeds of the
Series C Senior Notes were distributed to our stockholders where such
distribution constituted a fraudulent transfer. In this regard, prospective
investors should be aware that a portion of the proceeds of this offering of
Series C Senior Notes may be distributed to Host Marriott and may constitute a
portion of the funds distributed to Host Marriott stockholders as part of the
REIT Conversion. However, we do not believe that the issuance of the Series C
Senior Notes would be deemed a fraudulent transfer because we do not believe
that any of the applicable factors set forth in clause (2) above would apply
with respect to the issuance of the Series C Senior Notes.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, the Company or a
guarantor would be considered insolvent if:
. the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets, or
S-8
<PAGE>
. if the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become absolute
and mature, or
. it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to its
guarantee of the Series C Senior Notes, will be solvent, will have a reasonable
amount of capital for the business in which it is engaged and will not have
incurred debts beyond its ability to pay such debts as they mature. We can
offer no assurance, however, as to what standard a court would apply in making
such determinations or that a court would agree with our conclusions in this
regard.
There is no prior market for the Series C Senior Notes
Prior to this offering, there was no public market for the Series C Senior
Notes. We have been informed by the underwriters that they intend to make a
market in the Series C Senior Notes after this offering is completed. However,
the underwriters are not obligated to do so and may cease their market-making
at any time. In addition, the liquidity of the trading market in these Series C
Senior Notes, and the market price quoted for these Series C Senior Notes, may
be adversely affected by changes in the overall market for high yield
securities and by changes in our financial performance or prospects or in the
prospects for companies in our industry generally. As a result, you cannot be
sure that an active trading market will develop for these Series C Senior
Notes.
RISKS ASSOCIATED WITH OPERATIONS
We are subject to certain conditions affecting the lodging industry
If our assets do not generate income sufficient to pay our expenses, service
our debt and maintain our properties, we may be unable to make expected
payments on the Series C Senior Notes. Factors that could adversely affect the
economic performance and value of our properties include:
. changes in the national, regional and local economic climate,
. local conditions such as an oversupply of hotel properties or a reduction
in demand for hotel properties,
. the attractiveness of our hotels to consumers and competition from
comparable hotels,
. the quality, philosophy and performance of the managers of our hotels
(primarily Marriott International),
. the ability of any lessee of our hotels to maximize rental payments,
. changes in room rates and increases in operating costs due to inflation
and other factors, and
. the need periodically to repair and renovate our hotels.
The expenses of owning a property are not necessarily reduced when
circumstances such as market factors and competition cause a reduction in
income from the property. If a property is mortgaged and we are unable to meet
the mortgage payments, the lender could foreclose and take the property. In
addition, interest rate levels, the availability of financing, the cost of
compliance with government regulation, including zoning and tax laws, and
changes in laws and governmental regulations (including those governing usage,
zoning and taxes) could adversely affect our financial condition and ability to
service debt, including the Series C Senior Notes.
We may be unable to sell hotel properties when appropriate because real
estate investments are illiquid
Real estate investments generally cannot be sold quickly. We may not be able
to vary our portfolio promptly in response to economic or other conditions.
This inability to respond promptly to changes in the performance of our
investments could adversely affect our financial condition and ability to
service debt, including the Series C Senior Notes.
S-9
<PAGE>
RISKS OF RELATIONSHIPS WITH MARRIOTT INTERNATIONAL
We may be at risk because Marriott International manages a significant number
of our hotels
Marriott International serves as the manager for a significant number of our
hotels. Our potential desire, from time-to-time, to finance, refinance or sell
any of the properties managed by Marriott International may, depending upon the
structure of such transactions, result in a need to modify the management
agreements with Marriott International with respect to such property. Any such
modification proposed by us may not be acceptable to Marriott International,
and the lack of consent from Marriott International could adversely affect our
ability to consummate such financing, refinancing or sale.
In addition, Marriott International acts as manager of hotels owned by others
that compete with our hotels. Certain situations could arise where actions
taken by Marriott International in its capacity as manager of competing lodging
properties would not necessarily be in our best interests. Nevertheless, we
believe that there is sufficient mutuality of interest between us and Marriott
International to result in a mutually productive relationship.
We may be at risk because certain of our officers and directors may have a
conflict of interest in dealing with Marriott International
Two of Marriott International's directors are also directors of Host
Marriott. These two directors are:
. J.W. Marriott, Jr., who serves as Chairman of the Board of Directors and
Chief Executive Officer of Marriott International and also serves as a
director of Host Marriott; and
. Richard E. Marriott, who is a director of Marriott International and
Chairman of the Board of Directors of Host Marriott.
J.W. Marriott, Jr. and Richard E. Marriott, as well as certain other officers
and directors of Marriott International and Host Marriott, also own shares
(and/or options or other rights to acquire shares) in both companies. As a
result, such persons have potential conflicts of interest when making decisions
regarding Marriott International (including decisions relating to management
agreements involving the Company's hotels managed by Marriott International and
Marriott International's management of competing lodging properties).
The Boards of Directors of both Marriott International and Host Marriott
follow appropriate policies and procedures to limit the involvement of J.W.
Marriott, Jr. and Richard E. Marriott (and, if appropriate, other officers and
directors of such companies) in conflict situations, including requiring them
to abstain from voting as directors of either Host Marriott or Marriott
International (or as directors of any of their subsidiaries) on certain matters
which present a conflict between the companies.
OTHER BUSINESS RISKS
We Depend on Our Key Personnel
We depend on the efforts of our executive officers. While we believe that we
could find replacements for these key personnel, the loss of their services
could have a significant adverse effect on our operations. We do not intend to
obtain key-man life insurance with respect to any of our executive officers.
Joint venture investments have additional risks
Instead of purchasing hotel properties directly, we may invest as a co-
venturer. Joint venturers often share control over the operation of the joint
venture assets. Actions by a co-venturer could subject such assets to
additional risk. Our co-venturer in an investment might have economic or
business interests or goals that are inconsistent with our interest or goals,
or be in a position to take action contrary to our instructions or requests or
contrary to our policies or objectives. Although we generally will seek to
maintain sufficient control of any joint venture to permit our objectives to be
achieved, we might not be able to take action without the approval
S-10
<PAGE>
of our joint venture partners. Also, our joint venture partners could take
actions binding on the joint venture without our consent. Finally, a joint
venture partner could go bankrupt, leaving us liable for its share of joint
venture liabilities.
Some potential losses are not covered by insurance
We carry comprehensive liability, fire, flood, extended coverage and rental
loss (for rental losses extending up to 12 months) insurance with respect to
all of our hotels. We believe the policy specifications and insured limits of
these policies are of the type customarily carried for similar hotels. Certain
types of losses, however, such as from earthquakes and environmental hazards,
may be either uninsurable or too expensive to justify insuring against. Should
an uninsured loss or a loss in excess of insured limits occur, we could lose
all or a portion of the capital we have invested in a hotel, as well as the
anticipated future revenue from the hotel. In such an event, we might
nevertheless remain obligated for any mortgage debt or other financial
obligations related to the property.
Compliance with the Americans with Disabilities Act can be costly
Our hotels must comply with Title III of the Americans with Disabilities Act
(the "ADA") to the extent that such hotels are "public accommodations" or
"commercial facilities" as defined by the ADA. The ADA requires removal of
structural barriers to access by persons with disabilities in certain public
areas of hotels where such removal is readily achievable. We do not believe
that substantial non-budgeted capital expenditures will be required in the
future to comply with the ADA. However, in the event that any of our hotels, or
any hotel that we may purchase or construct in the future, fails to comply with
the ADA, (1) we could be required to make substantial capital expenditures to
remove structural barriers, (2) we could receive significant fines or (3) we
could be required to pay damages to private litigants. This might adversely
affect our ability to make payments on debt, including the Series C Senior
Notes.
Compliance with other regulations can also be costly
Our hotels are subject to various forms of regulation in addition to the ADA,
including building codes, regulations pertaining to fire safety. Such
regulations may be changed from time to time, or new regulations adopted,
resulting in additional or unexpected costs of compliance. Any such increased
costs could reduce the cash available for debt securities, including for
payments of amounts due under the Series C Senior Notes.
Environmental problems are possible and can be costly
Federal, state and local laws and regulations relating to the protection of
the environment may require a current or previous owner or operator of real
estate to investigate and clean up hazardous or toxic substances or petroleum
products released at or from such property. The owner or operator may have to
pay a governmental entity or third parties for property damage and for
investigation and clean-up costs incurred by such parties in connection with
the contamination. These laws typically impose clean-up responsibility and
liability without regard to whether the owner or operator knew of or caused the
presence of the contaminants. Even if more than one person may have been
responsible for the contamination, each person covered by the environmental
laws may be held responsible for all of the clean-up costs incurred. In
addition, third parties may sue the owner or operator of a site for damages and
costs resulting from environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal of
asbestos. These laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, that they notify and train
those who may come into contact with asbestos and that they undertake special
precautions, including removal or other abatement, if asbestos would be
disturbed during renovation or demolition of a building. These laws may impose
fines and penalties on building owners or operators who fail to comply with
these requirements and may allow third parties to seek recovery from owners or
operators for personal injury associated with exposure to asbestos fibers. We
believe that our properties are in compliance in all material respects with all
applicable environmental laws. Unidentified environmental liabilities could
arise, however, and could have an adverse effect on our financial condition and
performance.
S-11
<PAGE>
We are unable to predict the impact of the Year 2000 problem on our business
and financial condition
Year 2000 issues have arisen because many existing computer programs and
chip-based embedded technology systems use only the last two digits to refer
to a year, and therefore do not properly recognize a year that begins with
"20" instead of the familiar "19." If not corrected, many computer
applications could fail or create erroneous results. Our potential Year 2000
problems include issues relating to our in-house hardware and software
computer systems, as well as issues relating to third parties with which we
have a material relationship or whose systems are material to the operations
of our hotels.
In-House Systems Since October of 1993, we have invested in the
implementation and maintenance of accounting and reporting systems and
equipment that are intended to enable us to provide adequately for our
information and reporting needs and which are also Year 2000 compliant.
Substantially all of our in-house systems have already been certified as
Year 2000 compliant through testing and other mechanisms. We have not
delayed any systems projects due to the Year 2000 issue. We have engaged a
third party to review our Year 2000 in-house compliance.
Third-Party Systems We rely upon operational and accounting systems
provided by third parties, primarily the managers of our hotels, to provide
the appropriate property-specific operating systems (including reservation,
phone, elevator, security, HVAC and other systems) and to provide us with
financial information. We will continue to monitor the efforts of these
third parties to become Year 2000 compliant and will take appropriate steps
to address any non-compliance issues.
Risks Management believes that future costs associated with Year 2000
issues for its in-house systems will be insignificant and therefore not
impact our business, financial condition and results of operations.
However, the actual effect that Year 2000 issues will have on our business
will depend significantly on whether other companies and governmental
entities properly and timely address Year 2000 issues and whether broad-
based or systemic failures occur. We cannot predict the severity or
duration of any such failures, which could include disruptions in passenger
transportation or transportation systems generally, loss of utility and/or
telecommunications services, the loss or disruption of hotel reservations
made on centralized reservation systems and errors or failures in financial
transactions or payment processing systems such as credit cards.
RISKS AND EFFECTS OF THE REIT CONVERSION
The REIT Conversion is a very complex series of transactions that could have
significant consequences for the holders of Series C Senior Notes. Therefore,
we urge you to read the Proxy Statement of Host Marriott dated November 23,
1998 contained in Host Marriott's Current Report on Form 8-K dated November
24, 1998 (filed on November 25, 1998), incorporated by reference into the
accompanying Prospectus. This Proxy Statement contains important information
about these transactions and the significant risks associated with these
transactions.
However, there can be no assurance that the REIT Conversion will occur. The
transactions comprising the REIT Conversion are subject to satisfaction or
waiver of a number of significant conditions, some outside the control of the
Company. Host Marriott's board of directors retains the right: (1) to waive
any such condition, (2) not to consummate the REIT Conversion, even if such
conditions are satisfied and even if certain preliminary REIT Conversion
transactions (including the distribution to Host Marriott shareholders of
significant assets and properties) have been consummated, or (3) to consummate
the REIT Conversion (or any transactions comprising a portion thereof) upon
terms substantially different than those described in the Proxy Statement
referenced above. There can be no assurance that consummation of the REIT
Conversion, any waiver of a condition to the REIT Conversion, or failure to
consummate the REIT Conversion, will not have a material adverse effect on the
Company or the Operating Partnership.
S-12
<PAGE>
USE OF PROCEEDS
We expect the net proceeds to the Company from the offering of Series C
Senior Notes in an aggregate principal amount of $350 million (after deducting
the estimated Underwriters' discounts and commissions and expenses payable by
us) to be approximately $340 million. We intend to use the net proceeds from
the offering of the Series C Senior Notes for expenditures in connection with
the REIT Conversion which would otherwise have been funded with borrowings from
other sources. These expenditures may include (i) payments required to be made
to acquire certain properties from The Blackstone Group, (ii) refinancing or
repayment of debt securing properties to be acquired, (iii) cash to be
distributed to Host Marriott's shareholders as part of a dividend of estimated
earnings and profits and/or (iv) expenses of consummating the REIT Conversion.
Any proceeds not used in connection with the REIT Conversion (for example, if
the REIT Conversion does not occur or is delayed) would be used for general
corporate purposes, which may include future acquisitions.
S-13
<PAGE>
CAPITALIZATION
The following table sets forth (i) the actual capitalization of the Company
as of September 11, 1998 and (ii) such capitalization as adjusted to give
effect to the offering of Series C Senior Notes and the application of such
proceeds. The capitalization of the Company should be read in conjunction with
the Company's Consolidated Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which we have incorporated by reference into the accompanying
Prospectus and the Pro Forma Consolidated Financial Data of the Company
contained elsewhere in this Prospectus Supplement.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 11, 1998
-----------------------------
ACTUAL PRO FORMA
------------ -------------
(UNAUDITED, IN MILLIONS)
<S> <C> <C>
Cash, cash equivalents and short-term
marketable securities........................ $ 404 $740(1)
============ ============
Debt:
Senior notes
7 7/8% Series A Senior Notes due 2005..... $ 500 $ 500
7 7/8% Series B Senior Notes due 2008..... 1,192(2) 1,192(2)
% Series C Senior Notes due 20....... -- 350
9 1/2% Senior Secured Notes due 2005 and
other senior notes....................... 21 21
Mortgage debt............................... 367 367
Bank credit facility........................ 350 350(3)
Other debt.................................. 32 32
------------ ------------
Total debt................................ 2,462 2,812
Shareholder's equity.......................... 851 851
------------ ------------
Total capitalization...................... $ 3,313 $3,663
============ ============
</TABLE>
- --------
(1) Reflects the proceeds to the Company from the offering of the Series C
Senior Notes in the aggregate principal amount of $350 million, net of
expenses relating to the offering which are estimated to be $10 million,
and the acquisition of minority interest in the Norfolk Waterside Marriott
for approximately $4 million.
(2) Amount is net of an $8 million discount at issuance.
(3) Represents draws under the Company's bank credit facility through November
30, 1998. An additional $900 million is available under the revolving
portion of the Company's bank credit facility subject to the terms and
conditions thereof.
S-14
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The unaudited Pro Forma Condensed Consolidated Statements of Operations of
the Company for the thirty-six weeks ended September 11, 1998 and for the
fiscal year ended January 2, 1998 each reflect the following transactions, as
if such transactions had been completed at the beginning of the fiscal year:
. 1998 issuance of $1.7 billion in senior notes (the "New Senior Notes"),
the consummation of the new bank credit facility (the "New Credit
Facility"), repurchase of approximately $1.5 billion in senior notes (the
"Old Senior Notes") and repayment of amounts due under the Company's old
bank credit facility (the "Old Credit Facility") (collectively, the
"August Refinancing")
. Issuance of $350 million in Series C Senior Notes
. 1998 acquisition, or purchase of controlling interests in, eight full-
service properties
. 1998 purchase of the remaining minority interest in the Norfolk Waterside
Marriott
. 1998 disposition of the Napa Valley Marriott
. 1997 acquisition of, or purchase of controlling interests in, 13 full-
service properties
. 1997 repayment of mortgage debt for the San Francisco Marriott
The unaudited Pro Forma Condensed Consolidated Balance Sheet of the Company
reflects the adjustments for the issuance of $350 million in Series C Senior
Notes (the "Series C Senior Notes Offering") and the purchase of the remaining
minority interest in the Norfolk Waterside Marriott. The remaining
transactions detailed above have been reflected in the historical balance
sheet as of September 11, 1998.
In 1998, the Company acquired, or purchased controlling interests in, eight
full-service properties with 4,034 rooms for approximately $554 million,
including the assumption of $164 million in mortgage debt on the Atlanta
Marriott Marquis. During 1997, the Company acquired, or purchased controlling
interests in, thirteen full-service properties with 6,071 rooms for
approximately $615 million, including the completion of the acquisition of the
New York Financial Center Marriott through foreclosure of the mortgage on the
hotel in 1997. Also, during 1997, the Company repaid the $230 million in
mortgage debt on the San Francisco Marriott.
The unaudited Pro Forma Financial Statements present the financial position
and the results of operations of the Company as if the transactions described
above were completed. These presentations do not purport to represent what the
Company's results of operations would actually have been if the transactions
described above had in fact occurred on such date or at the beginning of such
period or to project the Company's results of operations for any future date
or period.
The unaudited Pro Forma Financial Statements are based upon certain
assumptions, as set forth in the notes to the unaudited Pro Forma Financial
Statements, that the Company believes are reasonable under the circumstances
and should be read in conjunction with the Company's Consolidated Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
S-15
<PAGE>
HMH PROPERTIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 11, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
SERIES C
1998 SENIOR NOTES
HISTORICAL ACQUISITIONS OFFERING PRO FORMA
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
Property and equipment, net... $2,989 $ 1 (B) $-- $2,990
Due from managers............. 51 -- -- 51
Investments in affiliates..... 18 -- -- 18
Other assets.................. 142 -- 10(A) 152
Cash, cash equivalents and
short-term marketable
securities................... 404 (4)(B) 340(A) 740
------ ----- ---- ------
$3,604 $ (3) $350 $3,951
====== ===== ==== ======
Debt
Senior notes................ $1,713 $ -- $350(A) $2,063
Mortgage debt............... 367 -- -- 367
New Credit Facility......... 350 -- -- 350
Other....................... 32 -- -- 32
------ ----- ---- ------
2,462 -- 350 2,812
Deferred income taxes......... 166 -- -- 166
Other liabilities............. 125 (3)(B) -- 122
------ ----- ---- ------
Total liabilities........... 2,753 (3) 350 3,100
Equity........................ 851 -- -- 851
------ ----- ---- ------
$3,604 $ (3) $350 $3,951
====== ===== ==== ======
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
S-16
<PAGE>
HMH PROPERTIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THIRTY-SIX WEEKS ENDED SEPTEMBER 11, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
DEBT SERIES C
1998 REPAYMENT & SENIOR NOTES
HISTORICAL ACQUISITIONS DISPOSITION REFINANCING OFFERING PRO FORMA
---------- ------------ ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Hotels................ $469 $31 (C) $ (1)(E) $-- $-- $499
Net gain on property
transaction.......... 11 -- (10)(E) -- -- 1
Equity in earnings of
affiliates........... 6 -- -- -- -- 6
---- --- ---- ---- ---- ----
Total revenues...... 486 31 (11) -- -- 506
OPERATING COSTS AND
EXPENSES
Hotels................ 244 15 (C) (1)(E) -- -- 258
---- --- ---- ---- ---- ----
OPERATING PROFIT BEFORE
MINORITY INTEREST,
CORPORATE EXPENSES AND
INTEREST............... 242 16 (10)(E) -- -- 248
Minority interest....... (7) (1)(C) -- -- -- (8)
Corporate expenses...... (13) -- -- -- -- (13)
Interest expense........ (131) (1)(C) -- (17)(G) (20)(H) (169)
Interest income......... 19 (13)(C) -- -- -- 6
---- --- ---- ---- ---- ----
INCOME BEFORE INCOME
TAXES.................. 110 1 (10) (17) (20) 64
Provision for income
taxes.................. (44) -- 4 (I) 6 (I) 8 (I) (26)
---- --- ---- ---- ---- ----
INCOME BEFORE
EXTRAORDINARY ITEM..... $ 66 $ 1 $ (6) $(11) $(12) $ 38
==== === ==== ==== ==== ====
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
S-17
<PAGE>
HMH PROPERTIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 2, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
SERIES C
DEBT SENIOR
1998 1997 1998 REPAYMENT NOTES PRO
HISTORICAL ACQUISITIONS ACQUISITIONS DISPOSITIONS & REFINANCING OFFERING FORMA
---------- ------------ ------------ ------------ ------------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Hotels................ $ 493 $ 85 (C) $ 83 (D) $(3)(E) $-- $-- $ 658
Net gain on property
transactions......... 1 -- -- -- -- -- 1
Equity in earnings of
affiliates........... 6 -- -- -- -- -- 6
----- ---- ---- --- ---- ---- -----
Total revenue....... 500 85 83 (3) -- -- 665
OPERATING COSTS AND
EXPENSES
Hotels................ 269 43 (C) 40 (D) (1)(E) -- -- 351
----- ---- ---- --- ---- ---- -----
OPERATING PROFIT BEFORE
MINORITY INTEREST,
CORPORATE EXPENSES AND
INTEREST............... 231 42 43 (2) -- -- 314
Minority interest....... (1) (4)(C) -- -- -- -- (5)
Corporate expenses...... (18) -- -- -- -- -- (18)
Interest expense........ (135) (12)(C) (10)(D) -- 5 (F) (29)(H) (234)
(53)(G)
Interest income......... 28 (8)(C) (10)(D) -- (3)(F) 7
----- ---- ---- --- ---- ---- -----
INCOME (LOSS) BEFORE
INCOME TAXES........... 105 18 23 (2) (51) (29) 64
Benefit (provision) for
income taxes........... (43) (7)(I) (9)(I) 1 (I) 20 (I) 12 (I) (26)
----- ---- ---- --- ---- ---- -----
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM..... $ 62 $ 11 $ 14 $(1) $(31) $(17) $ 38
===== ==== ==== === ==== ==== =====
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements.
S-18
<PAGE>
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
A.Represents the adjustment to record the Series C Senior Notes Offering:
--Record the issuance of $350 million in Series C Senior Notes
--Record the estimated deferred financing fees of $10 million
--Record the estimated cash proceeds of $340 million
B.Represents the adjustment to record the 1998 purchase of the remaining
minority interest in the Norfolk Waterside Marriott:
--Record property and equipment of $1 million
--Record the elimination of the minority interest liability of $3
million included in other liabilities
--Record the use of cash of $4 million
C.Represents the adjustment to record the revenue, operating costs, interest
expense, net increase in minority interest expense and to reduce interest
income for the 1998 acquisition of, or purchase of controlling interests in,
eight full-service properties and the acquisition of the remaining minority
interest in one hotel.
D.Represents the adjustment to record the revenue, operating costs, interest
expense and to reduce interest income for the 1997 acquisition of, or purchase
of controlling interests in, thirteen full-service hotel properties.
E.Represents the adjustment to reduce revenues and operating expenses for
the 1998 sale of the Napa Valley Marriott, including the adjustment to reduce
revenues in 1998 for the non-recurring $10 million gain on the sale, plus the
related $4 million impact on income tax expense.
F.Represents the adjustment to reduce interest expense and interest income
related to the repayment of the San Francisco Marriott mortgage debt,
excluding the extraordinary gain of $5 million, net of taxes.
G.Represents the adjustment to record interest expense and related
amortization of deferred financing fees as a result of the August Refinancing.
The net adjustment of $17 million for the thirty-six weeks ended September 11,
1998 is comprised of $85 million of interest expense related to the New Senior
Notes (including deferred financing fee amortization of $3 million) plus $20
million of net interest expense related to the New Credit Facility (including
deferred financing fee amortization of $2 million), less $88 million of
interest expense related to the Old Senior Notes (including deferred financing
fee amortization of $2 million). The net adjustment of $53 million for fiscal
year 1997 is comprised of $139 million of interest expense related to the New
Senior Notes (including deferred financing fee amortization of $4 million)
plus $30 million of interest expense related to the New Credit Facility
(including deferred financing fee amortization of $2 million), less $116
million of interest expense related to the Old Senior Notes (including
deferred financing fee amortization of $3 million). The adjustment excludes
the extraordinary loss of $148 million, net of taxes, related to the August
Refinancing resulting from the write-off of deferred financing fees and the
payment of bond tender and consent fees.
H.Represents the adjustment to record the interest expense and related
amortization of deferred financing fees as a result of the Series C Senior
Notes Offering, assuming an offering of $350 million principal amount of
Series C Senior Notes.
I.Represents the income tax impact of pro forma adjustments at statutory
rates.
S-19
<PAGE>
DESCRIPTION OF SERIES C SENIOR NOTES
The following description of the terms of the Series C Senior Notes offered
hereby supplements, and to the extent inconsistent replaces, the description of
the general terms and provisions of the HMH Senior Notes set forth in the
accompanying Prospectus. Capitalized terms not otherwise defined herein have
the meanings given them in the accompanying Prospectus (under the caption
"Description of HMH Senior Notes") or the Indenture. The Indenture is referred
to in the accompanying Prospectus as the "HMH Indenture."
We will issue the Series C Senior Notes pursuant to the Indenture. The
following description is a summary of selected portions of the Indenture and
the Pledge Agreement. It does not restate those agreements in their entirety.
We urge you to read the Indenture and the Pledge Agreement because they, and
not this description, define your rights as holders of these Series C Senior
Notes. The Indenture and the Pledge Agreement are listed as exhibits to the
registration statement of which this Prospectus is a part.
In this section, the "Company" means HMH Properties, Inc., excluding, unless
the context otherwise requires or as expressly stated, our subsidiaries.
DESCRIPTION OF THE SERIES C SENIOR NOTES AND THE GUARANTEES
The Series C Senior Notes
These Series C Senior Notes:
. are general obligations of the Company;
. are secured initially by a senior pledge of all of the capital stock of
all but one of the Initial Subsidiary Guarantors owned (directly or
indirectly) by the Company. This pledge is shared equally and ratably
with the Credit Facility, the Series A Senior Notes, the Series B Senior
Notes, the Existing Senior Notes and certain future Indebtedness of the
Company that is equal in right of payment with the Series C Senior Notes.
See "Description of HMH Senior Notes--Security" in the accompanying
Prospectus;
. are equal in right of payment with all other existing and future
unsubordinated Indebtedness of the Company;
. are senior in right of payment to all subordinated obligations of the
Company; and
. are, and will be, jointly and severally guaranteed by the Guarantors, the
Initial Subsidiary Guarantors and, subject to certain exceptions, each of
the Company's Restricted Subsidiaries that guarantees Indebtedness of the
Company in the future. The guarantee of the Guarantors will be released
upon consummation of the REIT Conversion. See "Description of HMH Senior
Notes--Guarantees" in the accompanying Prospectus.
. will be issued in denominations of $1,000 and integral multiples of
$1,000.
. will not be listed on any national securities exchange or the Nasdaq
Stock Market.
The Guarantees
The Guarantees of the Series C Senior Notes:
. are general obligations of the Guarantors and the Subsidiary Guarantors;
. are equal in right of payment with all other existing and future
unsubordinated Indebtedness of each Guarantor and Subsidiary Guarantor;
and
. are senior in right of payment to all subordinated obligations of each
Guarantor and Subsidiary Guarantor.
S-20
<PAGE>
As described in greater detail in the Prospectus, not all of our Subsidiaries
will guarantee the Series C Senior Notes. In the event of bankruptcy,
liquidation or reorganization of any non-guarantor Subsidiaries, such non-
guarantor Subsidiaries will pay the holders of their debt, including their
trade creditors, and holders of their preferred stock (if any) before they will
be able to distribute any of their assets to us.
PRINCIPAL, MATURITY AND INTEREST
The Series C Senior Notes will be limited to $ aggregate principal amount
and will mature on , 20 .
Interest on the Series C Senior Notes will accrue at the rate of % per annum
and will be payable semi-annually in arrears on and , commencing on
, 1999. The Company will make each interest payment to the Holders of
record of the Series C Senior Notes on the immediately preceding and .
OPTIONAL REDEMPTION
The Company will not have the right to redeem any Series C Senior Notes prior
to , 20 .
On and after , 20 , the Company may redeem all or part of the Series C
Senior Notes, upon not less than 30 days' nor more than 60 days' notice, at the
redemption prices (expressed as percentages of the principal amount thereof)
set forth below plus (subject to the right of Holders of record on a Record
Date that is on or prior to such Redemption Date to receive interest due on the
corresponding Interest Payment Date) accrued and unpaid interest thereon, if
any, to the applicable Redemption Date, if redeemed during the twelve-month
period beginning on , of the year indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
20 .......................................................... %
20 .......................................................... %
20 .......................................................... %
20 and thereafter........................................... 100.000%
</TABLE>
The Series C Senior Notes will not have the benefit of any sinking fund.
COVENANTS
The provisions described under "Description of HMH Senior Notes--Covenants at
Issuance; and, --Covenants upon REIT Conversion; and--Covenants upon Attainment
and Maintenance of an Investment Grade Rating" in the accompanying Prospectus
are applicable to the Series C Senior Notes.
DEFEASANCE
The provisions described under "Description of HMH Senior Notes--Legal
Defeasance and Covenant Defeasance" in the accompanying Prospectus are
applicable to the Series C Senior Notes.
BOOK-ENTRY, DELIVERY AND FORM
The Series C Senior Notes will initially be issued in the form of one or more
registered Global Notes. On the closing date for the purchase of Series C
Senior Notes, each Global Note will be deposited with DTC as Depositary and
registered in the name of Cede & Co.
A description of DTC's procedures with respect to the Series C Senior Notes
is set forth in the accompanying Prospectus under the headings "Description of
HMH Senior Notes--Book-Entry--Delivery and Form" and "--Certificated Notes."
S-21
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal income
and estate tax consequences of the acquisition, ownership and disposition of
Series C Senior Notes by an initial beneficial owner of Series C Senior Notes
who is not a United States Holder (as defined below). This discussion is based
upon the United States federal tax law now in effect, which is subject to
change, possibly retroactively. The tax treatment of the holders of the Series
C Senior Notes may vary depending upon their particular situations. Certain
holders (including insurance companies, tax exempt organizations, financial
institutions, subsequent purchasers of Series C Senior Notes and broker-
dealers) may be subject to special rules not discussed below. This discussion
does not describe the tax consequences to holders who purchase the Series C
Senior Notes other than in an original issuance for cash. In addition, this
discussion does not describe any tax consequences arising under the laws of any
state, locality or taxing jurisdiction other than the United States federal
government. In general, the discussion assumes that a holder acquires a Series
C Senior Note at original issuance and holds such Series C Senior Notes as a
capital asset and not as part of a "hedge," "straddle," "conversion
transaction," "synthetic security" or other integrated investment. Prospective
investors are urged to consult their tax advisors regarding the United States
federal tax consequences of acquiring, holding and disposing of Series C Senior
Notes, as well as any tax consequences that may arise under the laws of any
foreign, state, local or other taxing jurisdiction.
As used herein, the term "United States Holder" means a beneficial owner of a
Series C Senior Note that is, for United States federal income tax purposes,
(i) a citizen or resident (as defined in Section 7701 (b)(1) of the Code) of
the United States, a corporation, partnership or other entity created or
organized in the United States or under the law of the United States or any
state thereof or the District of Columbia, unless in the case of a partnership,
Treasury Regulations provide otherwise, (iii) an estate whose income is
includible in gross income for United States federal income tax purposes
regardless of its source, or (iv) a trust, if a U.S. court is able to exercise
primary supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust.
Notwithstanding the preceding sentence, to the extent provided in Treasury
Regulations, certain trusts in existence on August 20, 1996, and treated as
U.S. persons prior to this date that elect to continue to be treated as U.S.
persons, shall also be considered "United States Holders."
Stated Interest. Interest paid by the Company to any beneficial owner of a
Series C Senior Note that is not a United States Holder ("Non-United States
Holder") will not be subject to United States federal income or withholding tax
if such interest is not effectively connected with the conduct of a trade or
business within the United States by such Non-United States Holder and (a) such
Non-United States Holder (i) does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the Company;
(ii) is not a controlled foreign corporation with respect to which the Company
is a "related person" within the meaning of the Code, and (iii) satisfies
certain certification requirements or (b) such Non-United States Holder is
entitled to the benefits of an income tax treaty under which the interest is
exempt from United States withholding tax, and such Non-United States Holder
provides a properly executed IRS Form 1001 claiming the exemption (or, after
December 31, 1999, IRS Form W-8, which may require obtaining a Taxpayer
Identification Number and making certain certifications). Notwithstanding the
above, a Non-United States Holder that is engaged in the conduct of a United
States trade or business will be subject to (i) United States federal income
tax on interest that is effectively connected with the conduct of such trade or
business and (ii) if the Non-United States Holder is a corporation, a United
States branch profits tax equal to 30% of its "effectively connected earnings
and profits" as adjusted pursuant to Section 884 of the Code for the taxable
year, unless the holder qualifies for an exemption from such tax or a lower tax
rate under an applicable treaty.
Sale, Exchange or Retirement of the Notes. A Non-United States Holder will
generally not be subject to United States federal income tax on gain recognized
on a sale, redemption, retirement at maturity or other
S-22
<PAGE>
disposition of a Series C Senior Note unless (i) the gain is effectively
connected with the conduct of a trade or business within the United States by
the Non-United States Holder or (ii) in the case of a Non-United States Holder
who is a nonresident alien individual and holds the Series C Senior Note as a
capital asset, such holder is present in the United States for 183 or more days
in the taxable year and certain other requirements are met.
Federal Estate Taxes. If interest on the Series C Senior Notes is exempt from
withholding of United States federal income tax under clause (a) of the rules
described under "Stated Interest," the Series C Senior Notes will not be
included in the estate of a deceased Non-United States Holder for United States
federal estate tax purposes.
Backup Withholding and Information Reports. The Company will, where required,
report to the holders of Series C Senior Notes and the Internal Revenue Service
the amount of any interest paid on the Series C Senior Notes in each calendar
year and the amounts of tax withheld, if any, with respect to such payments.
In the case of payments of interest to Non-United States Holders, Treasury
Regulations provide that the 31% backup withholding tax and certain information
reporting will not apply to such payment with respect to which either the
requisite certification has been received or an exemption has otherwise been
established; provided that neither the Company nor its payment agent has actual
knowledge that the holder is a United States Holder or that the conditions of
any other exemption are not in fact satisfied. Under the Treasury Regulations,
these information reporting and backup withholding requirements will apply,
however, to the gross proceeds paid to a Non-United States Holder on the
disposition of the Series C Senior Notes by or through a United States office
of a United States or foreign broker, unless certain certification requirements
are met or the holder otherwise establishes an exemption. Information reporting
requirements, but not backup withholding, will also apply to a payment of the
proceeds of a disposition of the Series C Senior Notes by or through a foreign
office of a United States broker or foreign brokers with certain types of
relationships to the United States unless the holder is an exempt recipient (as
demonstrated through appropriate certification) or such broker has documentary
evidence in its file that the holder of the Series C Senior Notes is not a
United States person and has no actual knowledge to the contrary and certain
other conditions are met. Neither information reporting nor backup withholding
generally will apply to a payment of the proceeds of a disposition of the
Series C Senior Notes by or through a foreign office of a foreign broker not
subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
The Treasury Department promulgated final regulations regarding the
withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. Under the final regulations, special
rules apply which permit the shifting of primary responsibility for withholding
to certain financial intermediaries acting on behalf of beneficial owners. The
final regulations will generally be effective for payments made after December
31, 1999, subject to certain transition rules. Non-United States Holders are
urged to consult their tax advisors with respect to the application of these
final regulations.
S-23
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in an Underwriting Agreement
dated , 1998 (the "Underwriting Agreement"), Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), BT Alex. Brown Incorporated ("BT Alex. Brown"),
and (collectively, the "Underwriters") have severally and not jointly
agreed to purchase from the Company the respective principal amount of Series C
Senior Notes set forth opposite their names below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SERIES C
UNDERWRITERS NOTES
------------ ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............. $
BT Alex. Brown Incorporated......................................
------
Total........................................................ $
======
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to purchase and accept delivery of the Series C Senior Notes offered hereby are
subject to approval by their counsel of certain legal matters and to certain
other conditions. The Underwriters are severally obligated to purchase and
accept delivery of all the Series C Senior Notes offered hereby, if any are
purchased.
The Underwriters initially propose to offer the Series C Senior Notes in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement and in part to certain dealers at such
price less a concession not in excess of 0.40% of the principal amount of the
Series C Senior Notes. The Underwriters may allow, and such dealers may re-
allow, to certain other dealers, a concession not in excess of 0.25% of the
principal amount of the Series C Senior Notes. After the initial offering of
the Series C Senior Notes, the public offering price and other selling terms
may be changed by the Underwriters at any time without notice.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.
The Series C Senior Notes are a new issue of securities with no established
trading market. We do not intend to apply for listing of the Series C Senior
Notes on any securities exchange or the Nasdaq National Market. We have been
advised by the Underwriters that they intend to make a market in the Series C
Senior Notes. The Underwriters are not obligated, however, to make a market in
the Series C Senior Notes, and they may discontinue any such market making at
any time without notice. Therefore, no assurance can be given as to the
liquidity of the trading market for the Series C Senior Notes.
Each of the Company and the Underwriters has represented and agreed that (1)
it has not offered or sold and, prior to the date six months after the Closing
Date will not offer or sell, any Series C Senior Notes to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investment (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom for the purposes of the
Public Offers of Securities Regulations 1995; (2) it has complied and will
comply with all applicable provisions of the Public Offers of Securities
Regulations 1995 and the Financial Services Act 1986 with respect to anything
done by it in relation to the Series C Senior Notes in, from or otherwise
involving the United Kingdom; and (3) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue or sale of the Series C Senior Notes to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 (as amended) or is a person
to whom the document may otherwise lawfully be issued or passed on.
S-24
<PAGE>
Other than in the United States, no action has been taken by us or the
Underwriters that would permit a public offering of the Series C Senior Notes
offered hereby in any jurisdiction where action for that purpose is required.
The Series C Senior Notes offered hereby may not be offered or sold, directly
or indirectly, nor may this Prospectus Supplement and the accompanying
Prospectus or any other offering material or advertisements in connection with
the offer and sale of the Series C Senior Notes be distributed or published in
any jurisdiction, except under circumstances that will result in compliance
with the applicable rules and regulations of such jurisdiction. Persons into
whose possession this Prospectus Supplement and the accompanying Prospectus
comes are advised to inform themselves about and to observe any restrictions
relating to the Offering and the distribution of this Prospectus Supplement and
the accompanying Prospectus. This Prospectus Supplement and the accompanying
Prospectus do not constitute an offer to sell or a solicitation of any offer to
buy any of the Series C Senior Notes offered hereby in any jurisdiction in
which such an offer or a solicitation is unlawful.
In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Series C Senior
Notes. Specifically, the Underwriters may overallot the Offering, creating a
syndicate short position. The Underwriters may bid for and purchase the Series
C Senior Notes in the open market to cover such syndicate short position or to
stabilize the price of the Series C Senior Notes. These activities may
stabilize or maintain the market price of the Series C Senior Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end these activities at any time.
Each of the Underwriters and certain of their affiliates have in the past
provided, and may in the future provide, various investment banking and
commercial banking services for the Company, for which they have received, and
may in the future receive, usual and customary fees. In August 1998, Bankers
Trust Company ("Bankers Trust") an affiliate of BT Alex. Brown acted as agent
and lender and DLJ acted as lender under the New Credit Facility, for which
they received usual and customary fees. Bankers Trust also serves as the
collateral agent with respect to the stock pledge of collateral securing the
Series A Senior Notes and the Series B Senior Notes, which collateral will
secure the Series C Senior Notes, subject to replacement in certain
circumstances for which it receives usual and customary fees. In August 1998,
DLJ and BT Alex. Brown acted as underwriters in the issuance by the Company of
its Series A Notes and Series B Notes. In addition, in the summer of 1998 DLJ
acted as dealer manager and financial advisor for the Company in connection
with the offers to purchase and consent solicitations of the Company's 9 1/2%
Senior Notes, 9% Senior Notes and 8 7/8% Senior Notes. BT Wolfensohn, a
division of BT Alex. Brown, is acting as financial advisor to Host Marriott in
connection with the REIT Conversion for which it will receive usual and
customary fees.
LEGAL MATTERS
Certain legal matters relating to the issuance and sale of the Series C
Senior Notes will be passed upon for the Company by Latham & Watkins,
Washington, D.C. and by Christopher G. Townsend, Senior Vice President and
General Counsel of the Company. Certain legal matters relating to the Offering
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher and
Flom LLP, Los Angeles, California. Mr. Townsend owns shares of Host Marriott
common stock, and holds stocks options, deferred stock and restricted stock
awards under Host Marriott compensation plans. Mr. Townsend may receive
additional awards under these plans in the future.
EXPERTS
The audited consolidated financial statements and schedules of Host Marriott
Corporation, Hotel Marriott Hotels, Host Marriott L.P., HMC Senior Communities,
Inc., HMC Merger Corporation and HMH Properties and the combined financial
statements of HMH Properties, Inc. and subsidiaries and HMC Capital Resources
Holding Corporation and subsidiaries incorporated by reference in the
accompanying Prospectus to the extent and for the periods indicated in their
reports have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
S-25
<PAGE>
PROSPECTUS
$300,000,000
HOST MARRIOTT CORPORATION
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES,
COMMON STOCK, WARRANTS AND SUBSCRIPTION RIGHTS
$2,200,000,000
HMH PROPERTIES, INC.
SENIOR NOTES
---------------
Host Marriott Corporation, a Delaware corporation (the "Company" or "Host
Marriott"), directly or through agents, dealers, or underwriters designated
from time to time, may offer, issue and sell: (i) debt securities consisting
of debentures, notes or other evidences of indebtedness (the "Debt
Securities"); (ii) shares of common stock of the Company, par value $1.00 per
share (the "Common Stock"); (iii) shares of preferred stock of the Company,
without par value (the "Preferred Stock"); (iv) shares of its Preferred Stock
represented by depositary shares (the "Depositary Shares"); (v) warrants to
purchase Debt Securities, Common Stock, Preferred Stock or Depositary Shares
(the "Warrants"); and (vi) subscription rights evidencing the right to
purchase Debt Securities, Common Stock, Preferred Stock, Depositary Shares or
Warrants (the "Subscription Rights"), with an aggregate public offering price
of up to $300,000,000 (or the equivalent if the securities are denominated in
foreign currency or foreign currency units). In addition, debt securities
consisting of senior notes ("HMH Senior Notes") may be issued, directly or
through agents, dealers or underwriters designated from time to time, by the
Company's indirect wholly owned subsidiary HMH Properties, Inc., a Delaware
corporation ("HMH Properties") which is a co-registrant on the Registration
Statement under the Securities Act of 1933, as amended (the "Act") of which
this Prospectus is a part, with an aggregate public offering price of up to
$2,200,000,000 (or the equivalent if the securities are denominated in foreign
currency or foreign currency units). Of such amount, HMH Properties issued
$1,700,000,000 amount of senior notes on August 5, 1998. The Debt Securities
may be issued as exchangeable and/or convertible Debt Securities, exchangeable
for or convertible into shares of Common Stock, Preferred Stock or Depositary
Shares. The Preferred Stock may be issued as exchangeable and/or convertible
Preferred Stock, exchangeable for or convertible into Debt Securities or
shares of Common Stock. The Company's payment obligations under any series of
Debt Securities may be guaranteed by one or more of the Company's direct or
indirect wholly owned subsidiaries (including HMH Properties) which are co-
registrants on the Registration Statement (each such subsidiary a "Co-
Registrant", and together, the "Co-Registrants") and the payment obligation of
HMH Properties under any series of HMH Senior Notes will be guaranteed by the
Company and may be guaranteed by one or more of the other Co-Registrants (each
entity providing such a guarantee, a "Guarantor" and collectively, the
"Guarantors"). The Debt Securities, the Common Stock, the Preferred Stock, the
Depositary Shares, the Warrants, the Subscription Rights and HMH Senior Notes
(collectively, the "Offered Securities") may be offered, separately or
together, in one or more separate classes or series and in amounts, at prices
and on terms to be determined at the time of offering and to be set forth in
one or more supplements to this Prospectus (each, a "Prospectus Supplement").
Additionally, the Company may issue Subscription Rights to its stockholders.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities and HMH Senior Notes, and any guarantees thereof, the specific
designation, aggregate principal amount, designated currency (or currency
unit), purchase price, maturity, interest rate (or manner of calculation
thereof), time of payment of interest (if any), terms of the subordination (if
any), redemption or conversion thereof, and any other specific terms of the
Debt Securities or HMH Senior Notes; (ii) in the case of Common Stock, the
number of shares, purchase price and terms of the offering and sale thereof;
(iii) in the case of Preferred Stock, the specific designation, number of
shares, liquidation preference, purchase price, dividend, voting, redemption,
exchange and conversion provisions and any other specific terms of the
Preferred Stock; (iv) in the case of Depositary Shares, the aggregate number
of shares offered, the fractional share of Preferred Stock represented by each
such Depositary Shares and the purchase price; (v) in the case of Warrants,
the specific designations, number, duration, purchase price, exercise price,
detachability and any other terms in connection with the offering, sale and
exercise of the Warrants, as well as the terms on which, and the securities
for which, such Warrants may be exercised; and (vi) in the case of
Subscription Rights, the designations, number, exercise price and duration,
transferability, any oversubscription privilege and any other terms in
connection with the distribution of such Subscription Rights, as well as the
terms on which and the securities for which such Subscription Rights may be
exercised.
The Common Stock is traded on the New York Stock Exchange (the "NYSE") under
the symbol "HMT." Any Common Stock sold pursuant to a Prospectus Supplement
may be listed on the NYSE. On November 30, 1998, the last reported sales price
of the Common Stock on the NYSE was $14 11/16 per share. Neither the Company,
HMH Properties nor any other Co-Registrant has determined whether any of the
other Offered Securities will be listed on the NYSE. If the Company, HMH
Properties or any other Co-Registrant decides to seek listing of any such
Offered Securities, the Prospectus Supplement relating thereto will disclose
such exchange or market. The applicable Prospectus Supplement will also
contain information, where applicable, about certain material United States
federal income tax considerations relating to the Offered Securities covered
by such Prospectus Supplement.
---------------
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 Offered Securities may be offered directly to the Company's stockholders
(in the case of Subscription Rights) or to purchasers, directly or through
agents, underwriters or dealers, as designated from time to time, or through a
combination of such methods, each as set forth in the applicable Prospectus
Supplement. The Company, HMH Properties and the other Co-Registrants reserve
the sole right to accept, and together with their agents, from time to time,
to reject in whole or in part any proposed purchase of Offered Securities to
be made directly or through agents. Certain terms of the offering and sale of
the Offered Securities, including, where applicable, the names of any
underwriters, dealers, or agents, any applicable commission, discounts and
other items constituting compensation of such underwriters, dealers or agents,
and the proceeds to the Company, HMH Properties or to any other Co-Registrant
from such sale will be set forth in the accompanying Prospectus Supplement.
See "Plan of Distribution" for possible indemnification arrangements for
underwriters, dealers and agents.
No Offered Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of the
Offered Securities.
The date of this Prospectus is , 1998.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND THEREIN, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, HMH PROPERTIES OR ANY OTHER CO-
REGISTRANT. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT SHALL
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY OFFERED
SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE
SUCH AN OFFERING OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR IN ANY PROSPECTUS SUPPLEMENT IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF OR OF SUCH PROSPECTUS SUPPLEMENT.
IN CONNECTION WITH THE OFFERING OF CERTAIN OFFERED SECURITIES, CERTAIN
PERSONS PARTICIPATING IN SUCH OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICES OF SUCH OFFERED
SECURITIES OR OTHER SECURITIES OF THE COMPANY, HMH PROPERTIES OR ANY OTHER CO-
REGISTRANT INCLUDING STABILIZING TRANSACTIONS, SYNDICATE COVERING TRANSACTIONS
AND THE IMPOSITION OF PENALTY BIDS. SPECIFICALLY, SUCH PERSONS MAY OVERALLOT
IN CONNECTION WITH THE OFFERING AND MAY BID FOR AND PURCHASE THE OFFERED
SECURITIES IN THE OPEN MARKET.
AVAILABLE INFORMATION
The Company, HMH Properties and the other Co-Registrants have filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Offered Securities. This Prospectus
does not, and any Prospectus Supplement will not, contain all of the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
For further information about the Company, HMH Properties and the Offered
Securities, reference is hereby made to the Registration Statement, including
the exhibits and schedules filed as a part thereof and otherwise incorporated
therein. Statements made in this Prospectus as to the contents of any
agreement or other document referred to herein are not necessarily complete,
and in each instance, reference is made to the copy of such document so filed,
each such statement being qualified in its entirety by such reference.
The Company and HMH Properties are subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, the Company and HMH Properties each file
periodic reports, proxy statements (in the case of the Company) and other
information with the Commission. The Registration Statement, including the
exhibits thereto, as well as such reports and other information filed by the
Company or HMH Properties with the Commission, can be inspected, without
charge, and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington D.C., 20549 and at
the Commission's regional offices located at Seven World Trade Center, Suite
1300, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Commission also maintains a site on the World
Wide Web at http://www.sec.gov. which contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission and certain of the Company's filings are available at such web
site. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Reports and other information concerning the Company can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
2
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are hereby incorporated by reference in, and shall be deemed to be a part
of, this Prospectus:
1. Host Marriott Corporation's Annual Report on Form 10-K for the fiscal
year ended January 2, 1998.
2. Host Marriott Corporation's Quarterly Reports on Form 10-Q for the
quarters ended March 27, 1998, as amended, June 19, 1998 and September 11,
1998.
3. Current Reports on Form 8-K filed by Host Marriott Corporation dated
April 17, 1998 (filed on April 17, 1998), dated July 29, 1998 (filed on
July 30, 1998), July 29, 1998 (filed on August 6, 1998) and August 5, 1998
(filed on September 11, 1998).
4. Current Report on Form 8-K of Host Marriott Corporation dated November
24, 1998 (filed on November 25, 1998). For purposes of this Prospectus and
the Registration Statement of which this Prospectus is a part, the
statements contained in the Current Reports on Form 8-K of Host Marriott
Corporation dated July 15, 1998 (filed on July 17, 1998), dated July 17,
1998 (filed on July 28, 1998), dated July 29, 1998 (filed on July 30, 1998)
and July 29, 1998 (filed on July 31, 1998) are superseded by the statements
contained in the Proxy Statement under Section 14(a) of the Exchange Act of
Host Marriott Corporation dated November 23, 1998 filed as a part of the
Current Report on Form 8-K dated November 24, 1998 (filed on November 25,
1998), except for the Combined Consolidated Financial Statements of HMH
Properties, Inc. and subsidiaries and HMC Capital Resources Holding
Corporation and subsidiaries contained in the Current Report on Form 8-K
dated July 29, 1998 (filed on July 30, 1998).
5. Description of Host Marriott Corporation's Common Stock included in a
Registration Statement on Form 10 filed with the Commission.
6. Description of Host Marriott Corporation's Common Stock included in a
Registration Statement on Form 8-A filed with the Commission on February
10, 1989.
7. HMH Properties, Inc.'s Annual Report on Form 10-K for the fiscal year
ended January 2, 1998.
8. HMH Properties, Inc.'s Quarterly Reports on Form 10-Q for the quarters
ended March 27, 1998, as amended, June 19, 1998 and September 11, 1998.
9. Current Reports on Form 8-K filed by HMH Properties, Inc. dated July
29, 1998 (filed on July 30, 1998), July 29, 1998 (filed on August 6, 1998)
and August 5, 1998 (filed on September 11, 1998). For purposes of this
Prospectus and the Registration Statement of which this Prospectus is a
part, any statement contained in any of the Current Reports on Form 8-K of
HMH Properties, Inc. dated July 15, 1998 (filed on July 17, 1998), dated
July 17, 1998 (filed on July 28, 1998), dated July 28, 1998 (filed on July
30, 1998) and July 29, 1998 (filed on July 31, 1998) are superseded by the
statements contained in the Proxy Statement under Section 14(a) of the
Exchange Act of Host Marriott Corporation dated November 23, 1998 filed as
part of the Current Report on Form 8-K of Host Marriott Corporation dated
November 24, 1998 (filed on November 25, 1998), except for the Combined
Consolidated Financial Statements of HMH Properties, Inc. and subsidiaries
and HMC Capital Resources Holding Corporation and subsidiaries contained in
the Current Report on Form 8-K dated July 29, 1998 (filed on July 30,
1998).
All documents filed by the Company, HMH Properties or any other Co-
Registrants pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of all Offered Securities to which this Prospectus relates shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents. Any statement
contained in this Prospectus or in any Prospectus Supplement or 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 and any
Prospectus Supplement to the extent that a statement contained herein or in
any Prospectus Supplement or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or
3
<PAGE>
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
The Company and HMH Properties will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
request, a copy of any of the foregoing documents (other than exhibits
incorporated by reference into such document). Requests for documents should
be submitted to the Corporate Secretary, Host Marriott Corporation, 10400
Fernwood Road, Bethesda, Maryland, 20817-1109. The information relating to the
Company, HMH Properties or the other Co-Registrants contained in this
Prospectus does not purport to be comprehensive and should be read together
with the information contained in the documents incorporated or deemed to be
incorporated by reference herein.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents that are incorporated by reference,
contain "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements relate to,
among other things, our intent, belief or current expectations, primarily with
respect to capital expenditures, cost reduction, cash flow, operating
performance and improvements and related industry developments. When we use
words such as "anticipate," "estimate," "plan," "project," "expect," "intend,"
"maybe," "objective," "predict," "will be," "believes," and similar words or
phrases (or the negative thereof) in this Prospectus, including the documents
that are incorporated by reference, we intend to identify such statements.
The cautionary statements contained in any Prospectus Supplement under the
caption "Risk Factors" and other similar statements contained elsewhere in
this Prospectus, including the documents that are incorporated by reference,
identify important factors with respect to such forward-looking statements,
including certain risks and uncertainties that could cause our actual results,
performance or achievements expressed or implied by such forward-looking
statements. These important factors include: (i) national and local economic
and business conditions that will, among other things, affect demand for
hotels and other properties, the level of rates and occupancy that can be
achieved by such properties and the availability and terms of financing; (ii)
the ability to maintain the properties in a first-class manner (including
meeting capital expenditure requirements); (iii) the ability to compete
effectively in areas such as access, location, quality or accommodations and
room rate structures; (iv) the ability to acquire or develop additional
properties and the risk that potential acquisitions or developments may not
perform in accordance with expectations; (v) changes in travel patterns, taxes
and government regulations which influence or determine wages, prices,
construction procedures and costs; (vi) governmental approvals, actions and
initiatives including the need for compliance with environmental and safety
requirements, and changes in laws and regulations or the interpretation
thereof; (vii) the effects of tax legislative action; (viii) the effect of the
year 2000 issue; and (ix) the timing of the election by the Company to be
taxed as a REIT and its ability to satisfy complex rules in order to qualify
for taxation as a REIT for federal income tax purposes and to operate
effectively within the limitations imposed by these rules.
Although the Company and HMH Properties believe that the expectations
reflected in such forward-looking statements are based upon reasonable
assumptions, no assurance can be given that such expectations will be attained
or that any deviations will not be material. The Company and HMH Properties
disclaim any obligation or undertaking to disseminate any updates or revision
to any forward-looking statement contained herein to reflect any change in our
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
4
<PAGE>
THE COMPANY
The Company is one of the largest owners of hotels in the world, with 104
upscale and luxury full-service hotel lodging properties in its portfolio as
of November 30, 1998. The Company's hotels are located primarily in the United
States. These properties generally are operated under the Marriott and Ritz-
Carlton brands and managed by Marriott International, Inc. ("Marriott
International"), formerly a wholly owned subsidiary of the Company. The
Marriott and Ritz-Carlton brand names are among the most respected and widely
recognized brand names in the lodging industry. The Company's business
strategy focuses on maximizing the profitability of its existing full-service
hotel portfolio and acquiring and, in limited cases, constructing, additional
high-quality, full-service hotel properties, including controlling interests
in joint ventures, partnerships or other entities holding such hotel
properties.
The Company also owns 31 senior living communities, all of which are managed
by Marriott International. On April 17, 1998, the Company announced its
intention to effect the REIT Conversion, reorganizing its business operations
to qualify as a real estate investment trust. See "The REIT Conversion."
Following the REIT Conversion, the Company's senior living communities would
be owned by Crestline Capital Corporation. Crestline Capital Corporation is a
subsidiary of the Company which the Company proposes to distribute to the
Company's common stockholders as part of the REIT Conversion, and would
thereafter operate as a separate publicly traded company.
In connection with the REIT Conversion, the Company is proposing to acquire
various hotel properties as a result of mergers of subsidiaries of the Company
and certain partnerships owning such hotels. The Company is also proposing to
acquire a portfolio of full service hotels owned by The Blackstone Group and
its affiliates.
The transactions comprising the REIT Conversion are subject to a number of
conditions and there can be no assurances that all or any of these
transactions will be consummated. For more information on the transactions
comprising the REIT Conversion, see the descriptions of the REIT Conversion
set forth in the documents that are incorporated by reference into this
Prospectus.
The Company's principal executive offices are located at 10400 Fernwood
Road, Bethesda, Maryland 20817-1109. Its telephone number is (301) 380-9000.
HMH PROPERTIES
HMH Properties is a wholly owned subsidiary of Host Marriott Hospitality,
Inc., a Delaware corporation ("Hospitality"), which is a wholly owned
subsidiary of Host Marriott. Together with its subsidiaries, HMH Properties
owns or holds controlling interests in the majority of Host Marriott's lodging
properties. HMH Properties' consolidated assets principally consist of 72
full-service hotel properties. These hotel properties are generally operated
under the Marriott and Ritz-Carlton brand names and managed by Marriott
International, Inc.
HMH Properties' principal executive offices are located at 10400 Fernwood
Road, Bethesda, Maryland 20817-1109. Its telephone number is (301) 380-9000.
THE REIT CONVERSION
On April 17, 1998, Host Marriott announced its intention to restructure its
business operations to qualify as a real estate investment trust for Federal
income tax purposes effective as of January 1, 1999 (but which might not be
until the year beginning January 1, 2000 if at all). After this restructuring,
which is referred to as the "REIT Conversion," the Company intends to conduct
its operations as an umbrella partnership real estate investment trust, which
is sometimes referred to as an "UPREIT."
5
<PAGE>
Host Marriott is currently engaged in, or in the future expects to engage
in, a series of transactions comprising the REIT Conversion. In order to
conduct its operations as an UPREIT and to qualify as a REIT for Federal
income tax purposes: (i) Host Marriott and its subsidiaries propose to
contribute their lodging assets to Host Marriott, L.P., a Delaware limited
partnership (the "Operating Partnership" in the UPREIT structure) and its
subsidiaries; (ii) Host Marriott proposes to change the state of its
incorporation from the State of Delaware to the State of Maryland by merging
with and into HMC Merger Corporation, its newly formed, wholly owned
subsidiary ("Host REIT"); (iii) Host Marriott (and Host REIT as its successor
in the merger) proposes to distribute to its stockholders all of Host
Marriott's accumulated earnings and profits; and (iv) Host REIT proposes to
elect to be treated as a REIT for Federal income tax purposes.
Additionally, as part of the REIT Conversion, Host Marriott and the
Operating Partnership propose to: (i) restructure or acquire certain
partnerships owning lodging assets in which Host Marriott or certain of its
subsidiaries hold general and limited partnership interests; and (ii) acquire
certain hotel properties, mortgage loans and/or other lodging assets from The
Blackstone Group, a Delaware limited partnership and a series of investment
funds controlled by Blackstone Real Estate Partners, a Delaware limited
partnership, and assume certain indebtedness related thereto.
In connection with the REIT Conversion, it is expected that each of HMH
Properties' wholly owned corporate subsidiaries will be reorganized as a
single member limited liability company or as a limited partnership.
Thereafter, HMH Properties would be merged into the Operating Partnership
which will hold, among other things, HMH Properties' assets (including the
equity interests in its subsidiaries).
This summary does not fully describe all of the components of the REIT
Conversion or the effects thereof. For a full description of the transactions
comprising the REIT Conversion, including historical and pro forma financial
information and the risk factors relating thereto, please see the more
detailed descriptions set forth in the documents that are incorporated by
reference into this Prospectus.
The transactions comprising the REIT Conversion are subject to a number of
conditions, including the approval of the Company's stockholders to certain
aspects of the REIT Conversion. A description of these conditions is set forth
in the Company's Proxy Statement contained in the Company's Current Report on
Form 8-K, dated November 24, 1998 (filed November 25, 1998) which is
incorporated herein by reference. See "Information Incorporated By Reference".
There can be no assurances that all or any of the transactions comprising the
REIT Conversion will be consummated.
6
<PAGE>
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company, HMH Properties and the other Co-Registrants anticipate that any net
proceeds from the sale of Offered Securities will be used for general
operational purposes, which may include, but are not limited to, working
capital, capital expenditures, acquisitions and the repayment, refinancing or
repurchase of the indebtedness of the Company or its subsidiaries (including
certain of the other Co-Registrants) or capital stock of the Company. The
factors which the Company, HMH Properties and the other Co-Registrants will
consider in any refinancing will include the amount and characteristics of any
Offered Securities issued and may include, among others, the impact of such
refinancing on the liquidity of the Company, HMH Properties or any other Co-
Registrant or on their respective debt-to-capital ratios and earnings per
share. When a particular series of Offered Securities is offered, the
Prospectus Supplement relating thereto will set forth the intended use for the
net proceeds received from the sale of such Offered Securities. Pending the
application of the net proceeds, the Company, HMH Properties and the other Co-
Registrants expect to invest such proceeds in short-term, interest-bearing
instruments or other investment-grade debt securities or to reduce
indebtedness under the Company's bank credit agreement.
RISK FACTORS
CERTAIN OF THE SECURITIES TO BE OFFERED HEREBY THEMSELVES MAY INVOLVE A HIGH
DEGREE OF RISK. SUCH RISKS WILL BE SET FORTH IN OR INCORPORATED BY REFERENCE
INTO THE PROSPECTUS SUPPLEMENT RELATING TO SUCH OFFERED SECURITIES.
ERISA MATTERS
The Company and its subsidiaries may each be considered a "party in
interest" (within the meaning of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) or a "disqualified person" (within the meaning
of Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"))
with respect to many employee benefit plans ("Plans") that are subject to
ERISA. The purchase of Offered Securities by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement
arrangements and other plans described in Section 4975(e)(1) of the Code) and
with respect to which the Company or any of its affiliates is a service
provider (or otherwise is a party in interest or a disqualified person) may
constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless such Offered Securities are acquired pursuant to and in
accordance with an applicable exemption. Any pension or other employee benefit
plan proposing to acquire any Offered Securities should consult with its
counsel.
7
<PAGE>
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratio of earnings to combined
fixed charges and preferred stock dividends on a historical basis for the
periods indicated.
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED FISCAL YEAR
--------------------------- --------------------------------------
SEPTEMBER 11, SEPTEMBER 12,
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------- ------- ------ ------ ------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
combined fixed charges
and preferred stock
dividends(a).......... 1.7x 1.4x 1.3x 1.0x -- -- --
Deficiency of earnings
to combined fixed
charges and preferred
stock dividends(b).... -- -- -- -- $ 70 $ 12 $ 45
</TABLE>
- --------
(a) The ratio of earnings to fixed charges and preferred stock dividends is
computed by dividing income from continuing operations before income taxes
and fixed charges and preferred stock dividends by total fixed charges and
preferred stock dividends. Fixed charges represent interest expense
(including capitalized interest), the amortization of debt issuance costs,
and the portion of rental expense that represents interest.
(b) The deficiency of earnings to fixed charges and preferred stock dividends
in 1995, 1994 and 1993 is largely the result of depreciation and
amortization of $122 million in 1995, $113 million in 1994 and $196
million in 1993. In addition, the deficiency for 1995 was impacted by the
$60 million pre-tax charge to write-down the carrying value of one
undeveloped land parcel to its estimated sales value.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED FISCAL YEAR
--------------------------- --------------------------------------
SEPTEMBER 11, SEPTEMBER 12,
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------- ------- ------ ------ ------
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(a)....... 1.7x 1.4x 1.3x 1.0x -- -- --
Deficiency of earnings
to fixed charges(b).... -- -- -- -- $ 70 $ 12 $ 45
</TABLE>
- --------
(a) The ratio of earnings to fixed charges is computed by dividing income from
continuing operations before income taxes and fixed charges by total fixed
charges. Fixed charges represent interest expense (including capitalized
interest), the amortization of debt issuance costs, and the portion of
rental expense that represents interest.
(b) The deficiency of earnings to fixed charges in 1995, 1994 and 1993 is
largely the result of depreciation and amortization of $122 million in
1995, $113 million in 1994 and $196 million in 1993. In addition, the
deficiency for 1995 was impacted by the $60 million pre-tax charge to
write down the carrying value of one undeveloped land parcel to its
estimated sales value.
8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES OF HMH PROPERTIES
The following table sets forth the ratio of earnings to fixed charges of HMH
Properties for the periods indicated.
<TABLE>
<CAPTION>
THIRTY-SIX WEEKS ENDED FISCAL YEAR
--------------------------- --------------------------------------
SEPTEMBER 11, SEPTEMBER 12,
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ---- ---- ---- ----------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges(a)....... 1.9x 1.9x 1.6x 1.5x 1.5x 1.7x 1.3x
</TABLE>
- --------
(a) The ratio of earnings to fixed charges is computed by dividing income from
continuing operations before income taxes and fixed charges by total fixed
charges. Fixed charges represent interest expense (including capitalized
interest), the amortization of debt issuance costs, and the portion of
rental expense that represents interest.
9
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby are to be issued under an indenture (the
"Indenture") to be executed by the Company (for purposes of this section, the
Company is sometimes referred to as the "Issuer") and a trustee to be
identified in the applicable Prospectus Supplement, as trustee (the
"Trustee"). The terms of the Debt Securities will include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "TIA") as in effect on the date of the Indenture.
The Debt Securities will be subject to all such terms, and potential
purchasers of the Debt Securities are referred to the Indenture and the TIA
for a statement thereof. A copy of the form of Indenture to be used by the
Company in connection with any series of Debt Securities has been filed as an
exhibit to the Registration Statement. Section references used in this
Prospectus refer to sections of the Indenture.
The Company may offer under this Prospectus up to $300,000,000 aggregate
principal amount of Debt Securities (not including guarantees by the Company
of HMH Senior Notes issued under this Prospectus by HMH Properties), or if
Debt Securities are issued at a discount, or in a foreign currency or
composite currency, such principal amount as may be sold for an initial public
offering price of up to $300,000,000. Unless otherwise specified in the
applicable Prospectus Supplement, the Debt Securities will represent direct,
unsecured obligations of the Issuer and will rank equally with all other
unsecured and unsubordinated indebtedness of the Issuer. The Company's payment
obligations under any series of Debt Securities may be guaranteed by certain
of the Co-Registrants.
The following statements relating to the Debt Securities and the Indenture
are summaries and do not purport to be complete. Such summaries may make use
of certain terms defined in the Indenture and are qualified in their entirety
by express reference to the Indenture. Certain other specific terms of any
series of Debt Securities will be described in the applicable Prospectus
Supplement. To the extent that any particular terms of the Debt Securities
described in a Prospectus Supplement differ from any of the terms described
herein, then such terms described herein shall be deemed to have been
superseded by such Prospectus Supplement.
GENERAL
The terms of each series of Debt Securities will be set forth or determined
in the manner provided in an Officers' Certificate or by a supplemental
indenture. (Indenture sec. 2.2) The particular terms of each series of Debt
Securities will be described in a Prospectus Supplement relating to such
series (including any pricing supplement thereto).
The Debt Securities that may be offered under the Indenture are not limited
in aggregate principal amount. The Debt Securities may be issued in one or
more series with the same or various maturities, at par, at a premium, or at a
discount. The Prospectus Supplement (including any pricing supplement thereto)
will set forth the initial offering price, the aggregate principal amount and
the following terms of the Debt Securities in respect of which this Prospectus
is delivered: (1) the title of such Debt Securities; (2) the price or prices
(expressed as a percentage of the aggregate principal amount thereof) at which
the Debt Securities will be issued; (3) any limit on the aggregate principal
amount of such Debt Securities; (4) the date or dates on which principal on
such Debt Securities will be payable; (5) the rate or rates (which may be
fixed or variable) per annum or, if applicable, the method used to determine
such rate or rates (including any commodity, commodity index, stock exchange
index or financial index) at which such Debt Securities will bear interest, if
any, the date or dates from which such interest, if any, will accrue, the date
or dates on which such interest, if any, will commence and be payable and any
regular record date for the interest payable on any interest payment date; (6)
the place or places where principal of, premium, if any, and interest, if any,
on such Debt Securities will be payable; (7) the period or periods within
which, the price or prices at which and the terms and conditions upon which
the Debt Securities may be redeemed, in whole or in part, at the option of the
Issuer; (8) the obligation, if any, of the Issuer to redeem or purchase the
Debt Securities, in whole or in part, pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof; (9) the dates, if
any, on which and the price or prices at which the Debt Securities will be
repurchased by the Issuer at the option of the Holders thereof and other
detailed terms and
10
<PAGE>
provisions of such repurchase obligations; (10) the denominations in which
such Debt Securities may be issuable, if other than denominations of $1,000
and any integral multiple thereof; (11) whether the Debt Securities are to be
issuable in the form of Certificated Debt Securities (as defined below) or
Global Debt Securities (as defined below); (12) the portion of principal
amount of such Debt Securities that shall be payable upon declaration of
acceleration of the maturity date thereof, if other than the principal amount
thereof; (13) the currency of denomination of such Debt Securities; (14) the
designation of the currency, currencies or currency units in which payment of
principal of, premium, if any, and interest, if any, on such Debt Securities
will be made; (15) if payments of principal of, premium, if any, or interest,
if any, on the Debt Securities are to be made in one or more currencies or
currency units other than that or those in which such Debt Securities are
denominated, the manner in which the exchange rate with respect to such
payments will be determined; (16) the manner in which the amounts of payment
of principal of, premium, if any, or interest, if any, on such Debt Securities
will be determined, if such amounts may be determined by reference to an index
based on a currency or currencies other than that in which the Debt Securities
are denominated or designated to be payable or by reference to a commodity,
commodity index, stock exchange index or financial index; (17) the provisions,
if any, relating to any security provided for such Debt Securities; (18) any
addition to or change in the Events of Default described herein or in the
Indenture with respect to such Debt Securities; (19) any addition to or change
in the covenants described herein or in the Indenture with respect to such
Debt Securities and any change in the acceleration provisions described herein
or in the Indenture with respect to such Debt Securities; (20) the terms and
conditions, if any, upon which the Debt Securities shall be exchanged for or
converted into Common Stock, Preferred Stock or Depository Shares; (21) any
other terms of such Debt Securities, which may modify or delete any provision
of the Indenture insofar as it applies to such series; (22) any depositories,
interest rate calculation agents, exchange rate calculation agents or other
agents with respect to the Debt Securities; (23) whether such Debt Securities
rank as senior subordinated Debt Securities or subordinated Debt Securities or
any combination thereof; and (24) the form and terms of any guarantee of the
Debt Securities. (Indenture sec. 2.2)
Debt Securities may be issued that provide for an amount less than the
stated principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof pursuant to the terms of the Indenture
("Discount Debt Securities"). Federal income tax considerations and other
special considerations applicable to any such Discount Debt Securities will be
described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable
to bearer securities will be described in the applicable Prospectus
Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest, if any, on any series of Debt
Securities is payable in a foreign currency or currencies or a foreign
currency unit or units, the restrictions, elections, general tax
considerations, specific terms and other information with respect to such
issue of Debt Securities and such foreign currency or currencies or foreign
currency unit or units will be set forth in the applicable Prospectus
Supplement.
EXCHANGE AND/OR CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or Depository Shares
will be set forth in the Prospectus Supplement relating thereto.
TRANSFER AND EXCHANGE
Each Debt Security will be represented by either one or more global
securities (a "Global Debt Security") registered in the name of The Depository
Trust Company, as Depositary (the "Depositary") or a nominee of the Depositary
(each such Debt Security represented by a Global Debt Security being herein
referred to as a "Book-Entry Debt Security"), or a certificate issued in
definitive registered form (a "Certificated Debt Security"), as
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set forth in the applicable Prospectus Supplement. Except as set forth under
"--Global Debt Securities and Book-Entry System" below, Book-Entry Debt
Securities will not be issuable in certificated form.
Certificated Debt Securities. Certificated Debt Securities may be
transferred or exchanged at the Trustee's office or paying agencies in
accordance with the terms of the Indenture. No service charge will be made for
any transfer or exchange of Certificated Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
The transfer of Certificated Debt Securities and the right to receive the
principal of, premium, if any, and interest, if any, on such Certificated Debt
Securities may be effected only by surrender of the certificate representing
such Certificated Debt Securities and either reissuance by the Company or the
Trustee of such certificate to the new Holder or the issuance by the Company
or the Trustee of a new certificate to the new Holder.
Global Debt Securities and Book-Entry System. Each Global Debt Security
representing Book-Entry Debt Securities will be deposited with, or on behalf
of, the Depositary, and registered in the name of the Depositary or a nominee
of the Depositary. Except as set forth below, Book-Entry Debt Securities will
not be exchangeable for Certificated Debt Securities and will not otherwise be
issuable as Certificated Debt Securities.
The procedures that the Depositary has indicated it intends to follow with
respect to Book-Entry Debt Securities are set forth below.
Ownership of beneficial interests in Book-Entry Debt Securities will be
limited to persons that have accounts with the Depositary for the related
Global Debt Security ("participants") or persons that may hold interests
through participants. Upon the issuance of a Global Debt Security, the
Depositary will credit, on its book-entry registration and transfer system,
the participants' accounts with the respective principal amounts of the Book-
Entry Debt Securities represented by such Global Debt Security beneficially
owned by such participants. The accounts to be credited shall be designated by
any dealers, underwriters or agents participating in the distribution of such
Book-Entry Debt Securities. Ownership of Book-Entry Debt Securities will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by the Depositary for the related Global Debt
Security (with respect to interests of participants) and on the records of
participants (with respect to interests of persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to own, transfer or pledge beneficial interests in
Book-Entry Debt Securities.
So long as the Depositary for a Global Debt Security, or its nominee, is the
registered owner of such Global Debt Security, the Depositary or such nominee,
as the case may be, will be considered the sole owner or Holder of the Book-
Entry Debt Securities represented by such Global Debt Security for all
purposes under the Indenture. Except as set forth below, beneficial owners of
Book-Entry Debt Securities will not be entitled to have such securities
registered in their names, will not receive or be entitled to receive physical
delivery of a certificate in definitive form representing such securities and
will not be considered the owners or Holders thereof under the Indenture.
Accordingly, each person beneficially owning Book-Entry Debt Securities must
rely on the procedures of the Depositary for the related Global Debt Security
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a
Holder under the Indenture.
The Company and the Co-Registrants understand, however, that under existing
industry practice, the Depositary will authorize the persons on whose behalf
it holds a Global Debt Security to exercise certain rights of Holders of Debt
Securities, and the Indenture provides that the Issuer, the Trustee and their
respective agents will treat as the Holder of a Debt Security the persons
specified in a written statement of the Depositary with respect to such Global
Debt Security for purposes of obtaining any consents or directions required to
be given by Holders of the Debt Securities pursuant to the Indenture.
(Indenture sec. 2.14.6)
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Payments of principal of, premium, if any, and interest on Book-Entry Debt
Securities will be made to the Depositary or its nominee, as the case may be,
as the registered holder of the related Global Debt Security. (Indenture sec.
2.14.5) None of the Issuer, the Trustee or any other agent of the Issuer or
agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests in such Global Debt Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company and the Co-Registrants expect that the Depositary, upon receipt
of any payment of principal of, premium, if any, or interest, if any, on a
Global Debt Security, will immediately credit participants' accounts with
payments in amounts proportionate to the respective amounts of Book-Entry Debt
Securities held by each such participant as shown on the records of the
Depositary. The Company and the Co-Registrants also expect that payments by
participants to owners of beneficial interests in Book-Entry Debt Securities
held through such participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by the Issuer within 90 days, the Issuer will
issue Certificated Debt Securities in exchange for each Global Debt Security.
In addition, the Issuer may at any time and in its sole discretion determine
not to have the Book-Entry Debt Securities of any series represented by one or
more Global Debt Securities and, in such event, will issue Certificated Debt
Securities in exchange for the Global Debt Securities of such series. Global
Debt Securities will also be exchangeable by the Holders for Certificated Debt
Securities if an Event of Default with respect to the Book Entry Debt
Securities represented by such Global Debt Securities has occurred and is
continuing. Any Certificated Debt Securities issued in exchange for a Global
Debt Security will be registered in such name or names as the Depositary shall
instruct the Trustee. It is expected that such instructions will be based upon
directions received by the Depositary from participants with respect to
ownership of Book-Entry Debt Securities relating to such Global Debt Security.
The foregoing information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources the Company and
the Co-Registrants believe to be reliable, but the Company and the Co-
Registrants take no responsibility for the accuracy thereof.
COVENANTS
Unless otherwise indicated in this Prospectus or a Prospectus Supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict the Issuer's business or operations, the pledging of the Issuer's
assets or the incurrence of indebtedness by the Issuer.
The applicable Prospectus Supplement will describe any material covenants in
respect of a series of Debt Securities. Other than the covenants of the Issuer
included in the Indenture as described above or as described in the applicable
Prospectus Supplement, there are no covenants or other provisions in the
Indenture providing for a put or increased interest or otherwise that would
afford Holders of Debt Securities additional protection in the event of a
recapitalization transaction, a change of control of the Issuer or a highly
leveraged transaction.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Issuer may not consolidate with or merge with or into, or convey,
transfer or lease all or substantially all of its properties and assets to,
any Person (a "successor Person") unless (i) the Issuer is the surviving
corporation or the successor Person (if other than the Issuer) is a
corporation, partnership, limited liability company, trust or other entity
organized and validly existing under the laws of any U.S. domestic
jurisdiction and expressly assumes the Issuer's obligations on the Debt
Securities and under the Indenture, (ii) immediately after giving effect to
the transaction, no Event of Default, and no event which, after notice or
lapse of time, or
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both, would become an Event of Default, shall have occurred and be continuing
under the Indenture and (iii) certain other conditions are met. In the event
the Issuer's obligations on the Debt Securities and under the Indenture are
assumed by a successor Person, the Issuer will be released from such
obligations. (Indenture sec. 5.1)
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will be Events of Default under the Indenture with respect to Debt
Securities of any series: (a) default in the payment of any interest upon any
Debt Security of that series when it becomes due and payable, and continuance
of such default for a period of 30 days (unless the entire amount of such
payment is deposited by the Company with the Trustee or with a paying agent
prior to the expiration of such period of 30 days); (b) default in the payment
of principal of or premium, if any, on any Debt Security of that series when
due and payable, at maturity, upon redemption or otherwise; (c) default in the
deposit of any sinking fund payment, when and as due in respect of any Debt
Security of that series; (d) default in the performance or breach of any other
covenant or warranty of the Issuer in the Indenture (other than a covenant or
warranty that has been included in the Indenture solely for the benefit of a
series of Debt Securities other than that series), which default continues
uncured for a period of 30 days after written notice to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of that series
as provided in the Indenture; (e) certain events of bankruptcy, insolvency or
reorganization with respect to the Issuer; and (f) any other Event of Default
provided with respect to Debt Securities of that series that is described in
the Prospectus Supplement accompanying this Prospectus. No Event of Default
with respect to a particular series of Debt Securities (except as to certain
events of bankruptcy, insolvency or reorganization with respect to the Issuer)
necessarily constitutes an Event of Default with respect to any other series
of Debt Securities. (Indenture sec. 6.1). The occurrence of an Event of
Default may constitute an event of default under bank credit agreements, if
any, of the Issuer in existence from time to time. In addition, the occurrence
of certain Events of Default or an acceleration under the Indenture may
constitute an event of default under certain other indebtedness of the Issuer
outstanding from time to time.
If an Event of Default with respect to Debt Securities of any series
outstanding at the time occurs and is continuing, then in every such case the
Trustee or the holders of not less than 25% in principal amount of the
outstanding Debt Securities of that series may, by a notice in writing to the
Issuer (and to the Trustee if given by the holders), declare to be due and
payable immediately the principal (or, if the Debt Securities of that series
are Discount Debt Securities, such portion of the principal amount as may be
specified in the terms of that series) of and accrued and unpaid interest, if
any, on all Debt Securities of that series. In the case of an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization, the
principal (or such specified amount) of and accrued and unpaid interest, if
any, on all outstanding Debt Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or any Holder of outstanding Debt Securities. At any time after
a declaration of acceleration with respect to Debt Securities of any series
has been made, but before a judgment or decree for payment of the money due
has been obtained by the Trustee, the holders of a majority in principal
amount of the outstanding Debt Securities of that series may rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal and interest, if any, with respect to Debt Securities of
that series have been cured or waived as provided in the Indenture. (Indenture
sec. 6.2) For information as to waiver of defaults see the discussion set
forth below under "Modification and Waiver."
The Indenture provides that the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of outstanding Debt Securities, unless the Trustee receives indemnity
satisfactory to it against any loss, liability or expense. (Indenture sec.
7.1(e)) Subject to certain rights of the Trustee, the Holders of a majority in
principal amount of the outstanding Debt Securities of any series shall have
the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of that series.
(Indenture sec. 6.12)
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No Holder of any Debt Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the Indenture
or for the appointment of a receiver or trustee, or for any remedy under the
Indenture, unless such holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt
Securities of that series and unless also the holders of at least 25% in
principal amount of the outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee, and the Trustee shall not have received
from the Holders of a majority in principal amount of the outstanding Debt
Securities of that series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. (Indenture sec. 6.7)
Notwithstanding the foregoing, the Holder of any Debt Security will have an
absolute and unconditional right to receive payment of the principal of,
premium, if any, and any interest on such Debt Security on or after the due
dates expressed in such Debt Security and to institute suit for the
enforcement of any such payment. (Indenture sec. 6.8)
The Indenture requires the Issuer, within 120 days after the end of each of
its fiscal years, to furnish to the Trustee a statement as to compliance with
the Indenture. (Indenture sec. 4.3) The Indenture provides that the Trustee
may withhold notice to the holders of Debt Securities of any series of any
Default or Event of Default (except in payment on any Debt Securities of such
series) with respect to Debt Securities of such series if it in good faith
determines that withholding such notice is in the interest of the Holders of
such Debt Securities. (Indenture sec. 7.5)
MODIFICATION AND WAIVER
Modifications to, and amendments of, the Indenture may be made by the Issuer
and the Trustee with the consent of the Holders of at least a majority in
principal amount of the outstanding Debt Securities of each series affected by
such modifications or amendments; provided, however, that no such modification
or amendment may, without the consent of the Holder of each outstanding Debt
Security affected thereby: (a) reduce the amount of Debt Securities whose
Holders must consent to an amendment or waiver affecting such series; (b)
reduce the rate of or extend the time for payment of interest (including
default interest) on any such Debt Security; (c) reduce the principal of or
premium, if any, on or change the fixed maturity of any such Debt Security or
reduce the amount of, or postpone the date fixed for, the payment of any
sinking fund or analogous obligation with respect to such series of Debt
Securities; (d) reduce the principal amount of any such Discount Debt
Securities payable upon acceleration of the maturity thereof; (e) waive a
Default or an Event of Default in the payment of the principal of, premium, if
any, or interest, if any, on any such Debt Security (except a rescission of
acceleration of the Debt Securities of any series by the Holders of at least a
majority in aggregate principal amount of the then outstanding Debt Securities
of such series and a waiver of the payment default that resulted from such
acceleration); (f) make the principal of or premium, if any, or interest, if
any, on any such Debt Security payable in currency other than that stated in
the Debt Security; (g) make any change to certain provisions of the Indenture
relating to, among other things, the right of Holders of Debt Securities of
such series to receive payment of the principal of, premium, if any, and
interest, if any, on such Debt Securities and to institute suit for the
enforcement of any such payment; or (h) waive a redemption payment with
respect to any such Debt Security. (Indenture sec. 9.3) The Issuer and the
Trustee may amend the Indenture without notice to or consent of any holder of
Debt Securities: (i) to cure any ambiguity, defect or inconsistency; (ii) to
comply with the Indenture's provisions regarding successor obligors; (iii) to
comply with any requirements of the Commission in connection with the
qualification of the Indenture under the TIA; (iv) to provide for Global Debt
Securities in addition to or in place of Certificated Debt Securities; (v) to
add to, change or eliminate any of the provisions of the Indenture in respect
of one or more series of Debt Securities provided however, that any such
addition, change or elimination (A) shall neither (i) apply to any Debt
Security of any series created prior to the execution of such amendment and
entitled to the benefit of such provision, nor (2) modify the rights of a
holder of any such Debt Security with respect to such provision, or (B) shall
become effective only when there is no outstanding Debt Security of any series
created prior to such amendment and entitled to the benefit of such
provisions; (vi) to make any change that does not adversely affect in any
material respect the interest of any holder; or (vii) to establish additional
series of Debt Securities as permitted by the Indenture.
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The holders of at least a majority in principal amount of the outstanding
Debt Securities of any series may on behalf of the holders of all Debt
Securities of that series waive, insofar as that series is concerned,
compliance by the Company with provisions of the Indenture other than certain
specified provisions. (Indenture sec. 9.2) The Holders of a majority in
principal amount of the outstanding Debt Securities of any series may on
behalf of the Holders of all the Debt Securities of such series waive any past
default under the Indenture with respect to such series and its consequences,
except a default in the payment of the principal of, premium, if any, or
interest, if any, on any Debt Security of that series or in respect of a
covenant or provision which cannot be modified or amended without the consent
of the Holder of each outstanding Debt Security of such series affected;
provided, however, that the Holders of a majority in principal amount of the
outstanding Debt Securities of any series may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration. (Indenture sec. 6.13)
DEFEASANCE OF SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
Legal Defeasance. The Indenture provides that, unless otherwise provided by
the terms of the applicable series of Debt Securities, the Issuer may be
discharged from any and all Obligations in respect of the Debt Securities of
any series (except for certain obligations to register the transfer or
exchange of Debt Securities of such series, to replace stolen, lost or
mutilated Debt Securities of such series, and to maintain paying agencies and
certain provisions relating to the treatment of funds held by paying agents)
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
obligations or, in the case of Debt Securities denominated in a single
currency other than U.S. Dollars, Foreign Government Obligations (as defined
below), that, through the payment of interest and principal in respect thereof
in accordance with their terms, will provide money in an amount sufficient in
the opinion of a nationally recognized firm of independent public accountants
to pay and discharge each installment of principal (and premium, if any) and
interest, if any, on and any mandatory sinking fund payments in respect of the
Debt Securities of such series on the stated maturity of such payments in
accordance with the terms of the Indenture and such Debt Securities. Such
discharge may occur only if, among other things, the Issuer shall have
delivered to the Trustee an opinion of counsel stating that the Issuer has
received from, or there has been published by, the United States Internal
Revenue Service a ruling or, since the date of execution of the Indenture,
there has been a change in the applicable United States federal income tax
law, in either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the Debt Securities of such series will not
recognize income, gain or loss for United States federal income tax purposes
as a result of such deposit, defeasance and discharge and will be subject to
United States federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred. (Indenture sec. 8.3)
Defeasance of Certain Covenants. The Indenture provides that, unless
otherwise provided by the terms of the applicable series of Debt Securities,
upon compliance with certain conditions, (i) the Issuer may omit to comply
with the covenants described above under "--Consolidation, Merger and Sale of
Assets" and certain other covenants set forth in the Indenture, as well as any
additional restrictive covenants, or other provisions which may be set forth
in the applicable Prospectus Supplement, and any omission to comply with such
covenants will not constitute a Default or an Event of Default with respect to
the Debt Securities of such series ("covenant defeasance"). The conditions
include: the deposit with the Trustee of money and/or U.S. Government
Obligations or, in the case of Debt Securities denominated in a single
currency other than U.S. Dollars, Foreign Government Obligations, that,
through the payment of interest and principal in respect thereof in accordance
with their terms, will provide money in an amount sufficient in the opinion of
a nationally recognized firm of independent public accountants to pay and
discharge each installment of principal of, premium, if any, and interest, if
any, on and any mandatory sinking fund payments in respect of the Debt
Securities of such series on the stated maturity of such payments in
accordance with the terms of the Indenture and such Debt Securities; and the
delivery to the Trustee of an opinion of counsel to the effect that the
Holders of the Debt Securities of such series will not recognize income, gain
or loss for United States federal income tax purposes as a result of such
deposit and related covenant defeasance and will be subject to United States
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and related covenant
defeasance had not occurred. (Indenture sec. 8.4)
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Covenant Defeasance and Events of Default. In the event the Issuer exercises
its option to effect covenant defeasance with respect to any series of Debt
Securities and the Debt Securities of such series are declared due and payable
because of the occurrence of any Event of Default, the amount of money and/or
U.S. Government Obligations or Foreign Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Debt Securities of
such series at the time of their stated maturity but may not be sufficient to
pay amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. However, the Issuer shall
remain liable for such payments.
"Foreign Government Obligations" means, with respect to Debt Securities of
any series that are denominated in a currency other than U.S. Dollars, (i)
direct obligations of the government that issued or caused to be issued such
currency for the payment of which obligations its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by or acting
as an agency or instrumentality of such government the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by such
government, which, in either case under clauses (i) or (ii), are not callable
or redeemable at the option of the issuer thereof.
GUARANTEES
The Company's payment obligations under any series of Debt Securities may be
guaranteed by certain of the Co-Registrants.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the internal laws of the State of New York. (Indenture sec.
10.10).
REGARDING THE TRUSTEE
The Trustee with respect to any series of Debt Securities will be identified
in the Prospectus Supplement relating to such Debt Securities. The Indenture
and the provisions of the TIA incorporated by reference therein contain
certain limitations on the rights of the Trustee, should it become a creditor
of the Issuer, to obtain payments of claims in certain cases, or to realize on
certain property received in respect of any such claim, as security or
otherwise. The Trustee and its affiliates may engage in, and will be permitted
to continue to engage in, other transactions with the Issuer and its
affiliates, provided, however, that if it acquires any conflicting interest
(as defined in the TIA), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee. The TIA and the Indenture provide that in the case an Event of
Default shall occur (and be continuing), the Trustee will be required, in the
exercise of its rights and powers, to use the degree of care and skill of a
prudent man in the conduct of his own affairs. Subject to such provision, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the holders of the Debt
Securities issued thereunder, unless they have offered to the Trustee
indemnity satisfactory to it.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Restated Certificate of Incorporation (the "Company
Certificate") authorizes the issuance of a total of 601,000,000 shares of all
classes of stock, of which 600,000,000 shares are Common Stock and 1,000,000
shares are Preferred Stock. As of October 31, 1998, 205,162,442 shares of
Common Stock were outstanding and no shares of Preferred Stock were
outstanding. The following summaries of certain provisions of the Company's
capital stock do not purport to be complete and are subject to and qualified
in their entirety by the provisions of the Company Certificate, the Company's
Amended and Restated Bylaws (the "Bylaws") and the Company's Rights Agreement
(as defined), each of which is included as an exhibit to the Registration
Statement of which this Prospectus forms a part, and by applicable law. In
connection with the Company's adoption of a shareholder rights plan, the Board
authorized and reserved for issuance 300,000 shares of Series A Junior
Participating Preferred Stock ("Junior Preferred Stock"). No shares of Junior
Preferred Stock are currently outstanding.
COMMON STOCK
Subject to such preferential rights as may be granted by the Board in
connection with the future issuance of preferred stock, each holder of Common
Stock is entitled to one vote for each share registered in such holder's name
on the books of the Company on all matters submitted to a vote of
shareholders. Except as otherwise provided by law, the holders of Common Stock
vote as one class. Holders of Common Stock are entitled to such dividends as
the Board may declare out of funds legally available therefor. Subject to the
prior rights of creditors and the holders of any of the Company's preferred
stock, if any, the holders of Common Stock are entitled in the event of
liquidation, dissolution or winding up to share pro rata in the distribution
of all remaining assets. There are no redemption or sinking fund provisions
applicable to the Common Stock, and the Company Certificate provides that
there shall be no preemptive rights. The shares of Common Stock do not have
cumulative voting rights. As a result, the holders of Common Stock entitled to
exercise more than 50% of the voting rights in an election of directors will
be able to elect 100% of the directors to be elected if they choose to do so.
All of the outstanding shares of Common Stock are, and the shares of Common
Stock offered hereby will be, fully paid and nonaccessable.
PREFERRED STOCK
Under the Company Certificate, shares of Preferred Stock may be issued from
time to time, in one or more classes or series, as authorized by the Board,
generally without the approval of the shareholders. Prior to issuance of
shares of each series, the Board is required by the General Corporation Law of
the State of Delaware (the "DGCL") and the Company Certificate to adopt
resolutions and file a Certificate of Designation (the "Certificate of
Designation") with the Secretary of State of the State of Delaware, fixing for
each such class or series the designation, powers, preferences and rights of
the shares of such class or series and the qualifications, limitations or
restrictions thereon, including, but not limited to, dividend rights, dividend
rate or rates, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption price or
prices, and the liquidation preferences as are permitted by the DGCL. The
Board could authorize the issuance of shares of Preferred Stock with terms and
conditions which could have the effect of discouraging a takeover or other
transaction which holders of some, or a majority, of such shares might believe
to be in their best interest or in which holders of some, or a majority, of
such shares might receive a premium for their shares over the then-market
price of such shares.
Subject to limitations prescribed by the DGCL, the Company Certificate and
the Bylaws, the Board is authorized to fix the number of shares constituting
each class or series of Preferred Stock and the designations and powers,
preferences and relative, participating, optional or other special rights,
including such provisions as may be desired concerning voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and such other subjects or matters as may be fixed by resolution of the Board
or duly authorized
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committee thereof. The Preferred Stock offered hereby will, when issued, be
fully paid and nonassessable and will not have, or be subject to, any
preemptive or similar rights.
Reference is made to the Prospectus Supplement relating to the class or
series of Preferred Stock being offered for the specific terms thereof,
including:
(i) The title and stated value of such Preferred Stock;
(ii) The number of shares of such Preferred Stock offered, the
liquidation preference per share and the purchase price of such Preferred
Stock;
(iii) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock;
(iv) Whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such Preferred Stock shall
accumulate;
(v) The procedures for any auction and remarketing, if any, for such
Preferred Stock;
(vi) The provisions for a sinking fund, if any, for such Preferred Stock;
(vii) The provisions for redemption, if applicable, of such Preferred
Stock;
(viii) Any listing of such Preferred Stock on any securities exchange or
market;
(ix) The terms and conditions, if applicable, upon which such Preferred
Stock will be convertible into Common Stock of the Company, including the
conversion price (or manner of calculation thereof) and conversion period;
(x) The terms and conditions, if applicable, upon which Preferred Stock
will be exchangeable into Debt Securities, including the exchange price (or
manner of calculation thereof) and exchange period);
(xi) Voting rights, if any, of such Preferred Stock;
(xii) Whether interests in such Preferred Stock will be represented by
depositary shares;
(xiii) A discussion of any material and/or special United States federal
income tax considerations applicable to such Preferred Stock;
(xiv) The relative ranking and preferences of such Preferred Stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Company;
(xv) Any limitations on issuance of any class or series of Preferred
Stock ranking senior to or on a parity with such series of Preferred Stock
as to dividend rights and rights upon liquidation, dissolution or winding
up of the affairs of the Company; and
(xvi) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
DELAWARE LAW; CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE AND BYLAWS AND
THE MARRIOTT INTERNATIONAL PURCHASE AGREEMENT
Company Certificate and Bylaws. The Company Certificate contains several
provisions that will make difficult an acquisition of control of the Company
by means of a tender offer, open market purchases, a proxy fight or otherwise,
that is not approved by the Board. The Bylaws also contain provisions that
could have an antitakeover effect.
The purposes of the relevant provisions of the Company Certificate and
Bylaws are to discourage certain types of transactions, described below, which
may involve an actual or threatened change of control of the Company and to
encourage persons seeking to acquire control of the Company to consult first
with the Board to negotiate the terms of any proposed business combination or
offer. The provisions are designed to reduce the vulnerability of the Company
to an unsolicited proposal for a takeover that does not contemplate the
acquisition of all outstanding shares or is otherwise unfair to shareholders
of the Company or an unsolicited proposal for the restructuring or sale of all
or part of the Company. The Company believes that, as a general rule, such
proposals would not be in the best interests of the Company and its
shareholders.
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Classified Board of Directors. The Company Certificate provides for the
Board to be divided into three classes serving staggered terms so that
directors' current terms will expire at the 1999, 2000 or 2001 annual meeting
of shareholders.
The classification of directors has the effect of making it more difficult
for shareholders to change the composition of the Board in a relatively short
period of time. At least two annual meetings of shareholders, instead of one,
will generally be required to effect a change in a majority of the Board. Such
a delay may help ensure that the Board, if confronted by a holder attempting
to force a stock repurchase at a premium above market prices, a proxy contest
or an extraordinary corporate transaction, will have sufficient time to review
the proposal and appropriate alternatives to the proposal and to act in what
it believes are the best interests of the shareholders.
The classified board provision could have the effect of discouraging a third
party from making a tender offer or otherwise attempting to obtain control of
the Company, even though such an attempt might be beneficial to the Company
and its shareholders. The classified board provision could thus increase the
likelihood that incumbent directors will retain their positions. In addition,
since the classified board provision is designed to discourage accumulations
of large blocks of the Company's stock by purchasers whose objective is to
have such stock repurchased by the Company at a premium, the classified board
provision could tend to reduce the temporary fluctuations in the market price
of the Company's stock that could be caused by accumulations of large blocks
of such stock. Accordingly, shareholders could be deprived of certain
opportunities to sell their stock at a temporarily higher market price.
The Company believes that a classified board of directors helps to assure
the continuity and stability of the Board and business strategies and policies
as determined by the Board, because generally a majority of the directors at
any given time will have had prior experience as directors of the Company. The
classified board provision also helps assure that the Board, if confronted
with an unsolicited proposal from a third party that has acquired a block of
the voting stock of the Company, will have sufficient time to review the
proposal and appropriate alternatives and to seek the best available result
for all shareholders.
Removal; Filling Vacancies. The Company Certificate provides that, subject
to any rights of the holders of preferred stock, only a majority of the Board
then in office shall have the authority to fill any vacancies on the Board,
including vacancies created by an increase in the number of directors. In
addition, the Company Certificate provides that a new director elected to fill
a vacancy on the Board will serve for the remainder of the full term of his or
her class and that no decrease in the number of directors shall shorten the
term of an incumbent. Moreover, the Company Certificate provides that
directors may be removed with or without cause only by the affirmative vote of
holders of at least 66 2/3% of the voting power of the shares entitled to vote
at the election of directors, voting together as a single class. These
provisions relating to removal and filling of vacancies on the Board will
preclude shareholders from enlarging the Board or removing incumbent directors
and filling the vacancies with their own nominees.
Limitations on Shareholder Action by Written Consent; Special Meetings. The
Company Certificate and Bylaws provide that shareholder action can be taken
only at an annual or special meeting of shareholders and prohibit shareholder
action by written consent in lieu of a meeting. The Company Certificate and
Bylaws provide that, subject to the rights of holders of any series of
preferred stock, special meetings of shareholders can be called only by a
majority of the entire Board. Shareholders are not permitted to call a special
meeting or to require that the Board call a special meeting of shareholders.
Moreover, the business permitted to be conducted at any special meeting of
shareholders is limited to the business brought before the meeting by or at
the direction of the Board.
The provisions of the Company Certificate and Bylaws restricting shareholder
action by written consent may have the effect of delaying consideration of a
shareholder proposal until the next annual meeting unless a special meeting is
called by a majority of the entire Board. These provisions would also prevent
the holders of a majority of the voting power of the voting stock from using
the written consent procedure to take shareholder action and
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from taking action by consent without giving all the shareholders entitled to
vote on a proposed action the opportunity to participate in determining such
proposed action. Moreover, a shareholder could not force shareholder
consideration of a proposal over the opposition of the Board by calling a
special meeting of shareholders prior to the time the Board believed such
consideration to be appropriate.
The Company believes that such limitations on shareholder action will help
to assure the continuity and stability of the Board and the Company's business
strategies and policies as determined by the Board, to the benefit of all of
the Company's shareholders. If confronted with an unsolicited proposal from
Company shareholders, the Board will have sufficient time to review such
proposal and to seek the best available result for all shareholders, before
such proposal is approved by such shareholders by written consent in lieu of a
meeting or through a special meeting of shareholders.
Nominations of Directors and Shareholder Proposals. The Bylaws establish an
advance notice procedure with regard to the nomination, other than by or at
the direction of the Board, of candidates for election as directors (the
"Nomination Procedure") and with regard to shareholder proposals to be brought
before an annual or special meeting of shareholders (the "Business
Procedure").
The Nomination Procedure provides that only persons who are nominated by or
at the direction of the Board, or by a shareholder who has given timely prior
written notice to the Corporate Secretary of the Company prior to the meeting
at which directors are to be elected, will be eligible for election as
directors. The Business Procedure provides that shareholder proposals must be
submitted in writing in a timely manner in order to be considered at any
annual or special meeting. To be timely, notice must be received by the
Company (i) in the case of an annual meeting, not less than 90 days prior to
the annual meeting for a director nomination, and not less than 120 days prior
to the annual meeting for a shareholder proposal or (ii) in the case of a
special meeting not later than the seventh day following the day on which
notice of such meeting is first given to shareholders for both a director
nomination and a shareholder proposal.
Under the Nomination Procedure, notice to the Company from a shareholder who
proposes to nominate a person at a meeting for election as a director must
contain certain information about that person, including age, business and
residence addresses, principal occupation, the class and number of shares of
Common Stock beneficially owned, the consent to be nominated and such other
information as would be required to be included in a proxy statement
soliciting proxies for the election of the proposed nominee, and certain
information about the shareholder proposing to nominate that person. Under the
Business Procedure, notice relating to a shareholder proposal must contain
certain information about such proposal and about the shareholder who proposes
to bring the proposal before the meeting, including the class and number of
shares of Common Stock beneficially owned by such shareholder. If the Chairman
or other officer presiding at a meeting determines that a person was not
nominated in accordance with the Nomination Procedure, such person will not be
eligible for election as a director, or if he determines that the shareholder
proposal was not properly brought before such meeting, such proposal will not
be introduced at such meeting. Nothing in the Nomination Procedure or the
Business Procedure will preclude discussion by any shareholder of any
nomination or proposal properly made or brought before an annual or special
meeting in accordance with the above-mentioned procedures.
The purpose of the Nomination Procedure is, by requiring advance notice of
nomination by shareholders, to afford the Board a meaningful opportunity to
consider the qualifications of the proposed nominees and, to the extent deemed
necessary or desirable by the Board, to inform shareholders about such
qualifications. The purpose of the Business Procedure is, by requiring advance
notice of shareholder proposals, to provide a more orderly procedure for
conducting annual meetings of shareholders and, to the extent deemed necessary
or desirable by the Board, to provide the Board with a meaningful opportunity
to inform shareholders, prior to such meetings, of any proposal to be
introduced at such meetings, together with any recommendation as to the
Board's position or belief as to action to be taken with respect to such
proposal, so as to enable shareholders better to determine whether they desire
to attend such meeting or grant a proxy to the Board as to the disposition of
any such proposal. Although the Bylaws do not give the Board any power to
approve or disapprove shareholder
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nominations for the election of directors or of any other proposal submitted
by shareholders, the Bylaws may have the effect of precluding a nomination for
the election of directors or precluding the conducting of business at a
particular shareholder meeting if the proper procedures are not followed, and
may discourage or deter a third-party from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company, even if the conduct of such solicitation or such
attempt might be beneficial to the Company and its shareholders.
Fair Price Provision. Article Fifteen of the Company Certificate (the "Fair
Price Provision") requires approval by the holders of 66 2/3% of the voting
power of the outstanding capital stock of the Company entitled to vote
generally in the election of directors (the "Voting Stock") as a condition for
mergers and certain other business combinations ("Business Combinations")
involving the Company and any holder of more than 25% of such voting power (an
"Interested Shareholder") unless the transaction is either (i) approved by a
majority of the members of the Board who are not affiliated with the
Interested Shareholder and who were directors before the Interested
Shareholder became an Interested Shareholder (the "Disinterested Directors")
or (ii) certain minimum price and procedural requirements are met.
The Fair Price Provision is designed to prevent a third party from utilizing
two-tier pricing and similar inequitable tactics in a takeover attempt. The
Fair Price Provision is not designed to prevent or discourage tender offers
for the Company. It does not impede an offer for at least 66 2/3% of the
Voting Stock in which each shareholder receives substantially the same price
for his or her shares as each other shareholder or which the Board has
approved in the manner described herein. Nor does the Fair Price Provision
preclude a third party from making a tender offer for some of the shares of
Voting Stock without proposing a Business Combination in which the remaining
shares of Voting Stock are purchased. Except for the restrictions on Business
Combinations, the Fair Price Provision will not prevent an Interested
Shareholder having a controlling interest of the Voting Stock from exercising
control over the Company or increasing its interest in the Company. Moreover,
an Interested Shareholder could increase its ownership to 66 2/3% and avoid
application of the Fair Price Provision. However, the separate provisions
contained in the Company Certificate and the Bylaws relating to "Classified
Boards of Directors" discussed above will, as therein indicated, curtail an
Interested Shareholder's ability to exercise control in several respects,
including such shareholder's ability to change incumbent directors who may
oppose a Business Combination or to implement a Business Combination by
written consent without a shareholder meeting. The Fair Price Provision would,
however, discourage some takeover attempts by persons intending to acquire the
Company in two steps and to eliminate remaining shareholder interests by means
of a business combination involving less consideration per share than the
acquiring person would propose to pay for its initial interest in the Company.
In addition, acquisitions of stock by persons attempting to acquire control
through market purchases may cause the market price of the stock to reach
levels which are higher than would otherwise be the case. The Fair Price
Provision may thereby deprive some holders of the Common Stock of an
opportunity to sell their shares at a temporarily higher market price.
Although the Fair Price Provision is designed to help assure fair treatment
of all shareholders vis-a-vis other shareholders in the event of a takeover,
it is not the purpose of the Fair Price Provision to assure that shareholders
will receive a premium price for their shares in a takeover. Accordingly, the
Board is of the view that the adoption of the Fair Price Provision does not
preclude the Board's opposition to any future takeover proposal which it
believes would not be in the best interests of the Company and its
shareholders, whether or not such a proposal satisfies the minimum price
criteria and procedural requirements of the Fair Price Provision.
In addition, under Section 203 of the Delaware General Corporation Law as
applicable to the Company, certain "business combinations" (defined generally
to include (i) mergers or consolidations between a Delaware corporation and an
interested shareholder (as defined below) and (ii) transactions between a
Delaware corporation and an interested shareholder involving the assets or
stock of such corporation or its majority-owned subsidiaries, including
transactions which increase the interested shareholder's percentage ownership
of stock) between a Delaware corporation, whose stock generally is publicly
traded or held of record by more than 2,000 shareholders, and an interested
shareholder (defined generally as those shareholders, who, on or after
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December 23, 1987, become beneficial owners of 15% or more of a Delaware
corporation's voting stock) are prohibited for a three-year period following
the date that such shareholder became an interested shareholder, unless (i)
prior to the date such shareholder became an interested shareholder, the board
of directors of the corporation approved either the business combination or
the transaction which resulted in the shareholder becoming an interested
shareholder, (ii) upon consummation of the transaction that made such
shareholder an interested shareholder, the interested shareholder owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding voting stock owned by officers who also are
directors and voting stock held in employee benefit plans in which the
employees do not have a confidential right to tender or vote stock held by the
plan), or (iii) the business combination was approved by the board of
directors of the corporation and ratified by two-thirds of the voting stock
which the interested shareholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
shareholder following the announcement or notification of certain
extraordinary transactions involving the corporation and a person who had been
an interested shareholder during the previous three years or who became an
interested shareholder with the approval of a majority of the corporation's
directors.
Shareholder Rights Plan. The Company has adopted a shareholder rights plan
which may have anti- takeover effects. See "--Preferred Stock Purchase Rights"
below.
Amendment of the Company Certificate and Bylaws. The Company Certificate
contains provisions requiring the affirmative vote of the holders of at least
66 2/3% the voting power of the stock entitled to vote generally in the
election of directors to amend certain provisions of the Company Certificate
and Bylaws (including the provisions discussed above). These provisions make
it more difficult for shareholders to make changes in the Company Certificate
or Bylaws, including changes designed to facilitate the exercise of control
over the Company. In addition, the requirement for approval by at least a 66
2/3% shareholder vote will enable the holders of a minority of the Company's
capital stock to prevent holders of a less-than-66 2/3% majority from amending
such provisions of the Company's Certificate or Bylaws.
Marriott International Purchase Right. In connection with the Company's
spin-off distribution of Marriott International (the "Special Dividend"), the
Company has granted to Marriott International the right to purchase up to 20%
of each class of the Company's voting stock (determined after assuming full
exercise of the right) at its then fair market value (based on an average of
trading prices during a specified period), upon the occurrence of certain
specified events generally involving a change in control of the Company.
PREFERRED STOCK PURCHASE RIGHTS
The Company has adopted a shareholder rights plan as set forth in a Rights
Agreement dated February 3, 1989, as amended, between the Company and the Bank
of New York, as rights agent (the "Rights Agreement"). The following is a
summary of the terms of the Rights Agreement.
Rights. Following the occurrence of certain events (the "Occurrence Date")
and except as described below, each right (a "Preferred Stock Purchase Right"
or "Right," and, collectively, the "Rights") will entitle the registered
holder thereof to purchase from the Company one one-thousandth of a share (a
"Unit") of Junior Preferred Stock at a price (the "Purchase Price") of $150
per Unit, subject to adjustment. The Rights are not exercisable until the
Occurrence Date. The Rights expire on the tenth anniversary of the adoption of
the Rights Agreement, unless exercised in connection with a transaction of the
type described below or unless earlier redeemed by the Company.
Until a Right is exercised, the holder thereof, as such, will have no rights
as the Company shareholder, including, without limitation, the right to vote
or to receive dividends.
Initially, ownership of the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
certificates representing the Rights (the "Rights Certificates") will be
distributed. Until the Occurrence Date (or earlier redemption or expiration of
the Rights), the Rights will be transferable
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only with the Common Stock, and the surrender or transfer of any certificate
of Common Stock will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. The Rights will
separate from the Common Stock and an Occurrence Date will occur upon the
earlier of (i) 10 days following the date (a "Stock Acquisition Date") of a
public announcement that a person or group of affiliates or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Common Stock or (ii) 10
business days following the commencement of or announcement of an intention to
make a tender offer or exchange offer, the consummation of which would result
in the Acquiring Person becoming the beneficial owner of 30% or more of such
outstanding Common Stock (such date being called the Occurrence Date).
For purposes of the Rights Agreement, a person shall not be deemed to
beneficially own "Exempt Shares" which include (i) shares of Common Stock
acquired by such person by gift, bequest and certain other transfers, which
shares were Exempt Shares immediately prior to such transfer and were held by
such person continuously thereafter and (ii) shares acquired by such person in
connection with certain distributions of Common Stock with respect to Exempt
Shares which were held by such person continuously thereafter. In connection
with the Company's spin-off distribution of Marriott International, the Board
amended the Rights Agreement to provide that the shares of Common Stock
acquired by Marriott International upon exercise of the Marriott International
Purchase Right will be deemed "Exempt Shares" under the Rights Agreement, such
that the exercise of such right by Marriott International will not cause
Marriott International to be deemed an "Acquiring Person" under the Rights
Agreement and thus trigger a distribution of the Rights. See "--Delaware Law;
Certain Provisions of the Company's Certificate and Bylaws and the Marriott
International Purchase Agreement--Marriott International Purchase Right"
above.
As soon as practicable following an Occurrence Date, Rights Certificates
will be mailed to holders of record of Common Stock as of the close of
business on the Occurrence Date. After such time, such separate Rights
Certificates alone will evidence the Rights and could trade independently from
the Common Stock.
In the event (i) the Company is the surviving corporation in a merger with
an Acquiring Person and the Common Stock is not changed or exchanged, or (ii)
an Acquiring Person becomes the beneficial owner of 30% or more of the then
outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock which the Board determines to be fair to
and otherwise in the best interests of the Company and its shareholders), each
holder of a Right will, in lieu of the right to receive one one-thousandth of
a share of Junior Preferred Stock, thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise
price of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are (or, under certain circumstances specified in the Rights Agreement, were)
beneficially owned by any Acquiring Person will be null and void. However, the
Rights are not exercisable following the occurrence of either of the events
set forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
For example, at an exercise price of $150 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $300
worth of Common Stock (or other consideration, as noted above) for $150.
Assuming that the Common Stock had a per share value of $30 at such time, the
holder of each valid Right would be entitled to purchase 10 shares of Common
Stock for $150.
In the event that, at any time following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger
described in the second preceding paragraph or a merger which follows an offer
described in the second preceding paragraph), or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a
Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of the
Right.
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In general, the Board may redeem the Rights in whole, but not in part, at
any time until 10 days following the Stock Acquisition Date, at a price of
$.01 per Right. After the redemption period has expired, the Company's right
of redemption may be reinstated if an Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company. Immediately
upon the action of the Board ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $.01 per Right redemption price.
The purchase price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable upon exercise of the Rights are
subject to adjustment upon the occurrence of certain events with respect to
the Company, including stock dividends, subdivisions, combinations,
reclassifications, rights or warrants offerings of Junior Preferred Stock at
less than the then current market price and certain distributions of property
or evidences of indebtedness of the Company to holders of Junior Preferred
Stock, all as set forth in the Rights Agreement.
The Rights have certain antitakeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board, except pursuant to an offer conditioned on
a substantial number of Rights being acquired. The Rights should not interfere
with any merger or other business combination approved by the Board since the
Rights may be redeemed by the Company as set forth above.
Junior Preferred Stock. The material terms of the Junior Preferred Stock are
summarized herein; however, such summary is subject to the terms of the
Company Certificate and the certificate of designation relating to the Junior
Preferred Stock (the "Junior Preferred Stock Certificate of Designation").
Subject to the prior payment of cumulative dividends on any class of
preferred stock ranking senior to the Junior Preferred Stock, a holder of
Junior Preferred Stock will be entitled to cumulative dividends out of funds
legally available therefor, when, as and if declared by the Board, at a
quarterly rate per share of Junior Preferred Stock equal to the greater of (a)
$10.00 or (b) 1,000 times (subject to adjustment upon certain dilutive events)
the aggregate per share amount of all cash dividends and 1,000 times (subject
to adjustment upon certain dilutive events) the aggregate per share amount
(payable in kind) of all noncash dividends or other distributions (other than
dividends payable in Common Stock or a sub-division of the outstanding shares
of Common Stock) declared on Common Stock, since the immediately preceding
quarterly dividend payment date for the Junior Preferred Stock (or since the
date of issuance of the Junior Preferred Stock if no such dividend payment
date has occurred).
A holder of Junior Preferred Stock will be entitled to 1,000 votes (subject
to adjustment upon certain dilutive events) per share of Junior Preferred
Stock on all matters submitted to a vote of the Company shareholders. Such
holders will vote together with the holders of the Common Stock as a single
class on all matters submitted to a vote of the Company shareholders.
In the event of a merger or consolidation of the Company which results in
Common Stock being exchanged or changed for other stock, securities, cash
and/or other property, the shares of Junior Preferred Stock shall similarly be
exchanged or changed in an amount per share equal to 1,000 times (subject to
adjustment upon certain dilutive events) the aggregate amount of stock,
securities, cash and/or other property, as the case may be, into which each
share of Common Stock has been exchanged or changed.
In the event of liquidation, dissolution or winding up of the Company, a
holder of Junior Preferred Stock will be entitled to receive $1,000 per share,
plus accrued and unpaid dividends and distributions thereon, before any
distribution may be made to holders of shares of stock of the Company ranking
junior to the Junior Preferred Stock, and the holders of Junior Preferred
Stock are entitled to receive an aggregate amount per share equal to 1,000
times (subject to adjustment upon certain dilutive events) the aggregate
amount to be distributed per share to holders of Common Stock.
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In the event that dividends on the Junior Preferred Stock are in arrears in
an amount equal to six quarterly dividends thereon, all holders of Junior
Preferred Stock, voting separately as a class with the holders of any other
series of preferred stock of the Company with dividends in arrears, will be
entitled to elect two directors pursuant to provisions of the Company
Certificate. Such right to elect two additional directors shall continue at
each annual meeting until all dividends in arrears (including the then-current
quarterly dividend payment) have been paid or declared and set apart for
payment. Upon payment or declaration and reservation of funds for payment of
all such dividends, the term of office of each director elected shall
immediately terminate and the number of directors shall be such number as may
be provided for in the Company Certificate or Bylaws.
The Junior Preferred Stock is not subject to redemption. The terms of the
Junior Preferred Stock provide that the Company is subject to certain
restrictions with respect to dividends and distributions on and redemptions
and purchases of shares of stock of the Company ranking junior to or on a
parity with the Junior Preferred Stock in the event that payments of dividends
or other distributions payable on the Junior Preferred Stock are in arrears.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest of a share of a
particular series of Preferred Stock, as specified in the applicable
Prospectus Supplement. Shares of Preferred Stock of each series represented by
Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company and the depositary named therein (the
"Preferred Stock Depositary"). Subject to the terms of the Deposit Agreement,
each owner of a Depositary Receipt will be entitled, in proportion to the
fractional interest of a share of a particular series of Preferred Stock
represented by the Depositary Shares evidenced by such Depositary Receipt, to
all the rights and preferences of the Preferred Stock represented by such
Depositary Shares (including dividend, voting, conversion, redemption and
liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Stock by the Company to the Preferred
Stock Depositary, the Company will cause the Preferred Stock Depositary to
issue, on behalf of theCompany, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Company upon request, and the statements made hereunder relating to
the Deposit Agreement and the Depositary Receipts to be issued thereunder are
summaries of certain provisions thereof and do not purport to be complete and
are subject to, and qualified in their entirety by reference to, all of the
provisions of the applicable Deposit Agreement and related Depositary
Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Stock Depositary.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred Stock Depositary, unless the Preferred
Stock Depositary determines that it is not feasible to make such distribution,
in which case the Preferred Stock Depositary may, with the approval of the
Company, sell such property and distribute the net proceeds from such sale to
such holders.
No distribution will be made in respect of any Depositary Share to the
extent that it represents any Preferred Stock converted into other securities.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary (unless the related Depositary Shares have
previously been called for redemption or converted into other securities), the
holders thereof will be entitled to delivery at such office, to or upon such
holder's order, of the number of whole or fractional shares of the Preferred
Stock and any money or other property represented by the Depositary Shares
evidenced by such Depositary Receipts. Holders of Depositary Receipts will be
entitled to receive whole or fractional shares of the related Preferred Stock
on the basis of the proportion of Preferred Stock represented by such
Depositary Share as specified in the applicable Prospectus Supplement, but
holders of such shares of Preferred Stock will not thereafter be entitled to
receive Depositary Shares therefor. If the Depositary Receipts delivered by
the holder evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the number of shares of Preferred Stock to be
withdrawn, the Preferred Stock Depositary will deliver to such holder at the
same time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
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REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems shares of Preferred Stock held by the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem, as of the same
redemption date, the number of Depositary Shares representing shares of the
Preferred Stock so redeemed, provided the Company shall have paid in full to
the Preferred Stock Depositary the redemption price of the Preferred Stock to
be redeemed plus an amount equal to any accrued and unpaid dividends thereon
to the date fixed for redemption. The redemption price per Depositary Share
will be equal to the corresponding proportion of the redemption price and any
other amounts per share payable with respect to the Preferred Stock. If fewer
than all the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected pro rata (as nearly as may be practicable without
creating fractional Depositary Shares) or by any other equitable method
determined by the Company.
From and after the date fixed for redemption, all dividends in respect of
the shares of Preferred Stock so called for redemption will cease to accrue,
the Depositary Shares so called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the Depositary Receipts
evidencing the Depositary Shares so called for redemption will cease, except
the right to receive any moneys payable upon such redemption and any money or
other property to which the holders of such Depositary Receipts were entitled
upon such redemption and surrender thereof to the Preferred Stock Depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Stock. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Preferred Stock Depositary as to the exercise of the voting rights pertaining
to the amount of Preferred Stock represented by such holder's Depositary
Shares. The Preferred Stock Depositary will vote the amount of Preferred Stock
represented by such Depositary Shares in accordance with such instructions,
and the Company will agree to take all reasonable action which may be deemed
necessary by the Preferred Stock Depositary in order to enable the Preferred
Stock Depositary to do so. The Preferred Stock Depositary will abstain from
voting the amount of Preferred Stock represented by such Depositary Shares to
the extent it does not receive specific instructions from the holders of
Depositary Receipts evidencing such Depositary Shares. The Preferred Stock
Depositary shall not be responsible for any failure to carry out any
instruction to vote, or for the manner or effect of any such vote made, as
long as such action or non-action is in good faith and does not result from
negligence or willful misconduct of the Preferred Stock Depositary.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of each Depositary Receipt will
be entitled to the fraction of the liquidation preference accorded each share
of Preferred Stock represented by the Depositary Shares evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED STOCK
The Depositary Shares, as such, are not convertible into Common Stock or any
other securities or property of the Company. Nevertheless, if so specified in
the applicable Prospectus Supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Stock Depositary with written instructions to the Preferred Stock
Depositary to instruct the Company to cause conversion of the Preferred Stock
represented by the Depositary Shares evidenced by such Depositary Receipts
into whole shares of Common Stock, other shares of Preferred Stock of the
Company or other shares of stock, and the Company has agreed that upon receipt
of such instructions and any amounts payable in respect thereof,
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it will cause the conversion thereof utilizing the same procedures as those
provided for delivery of Preferred Stock to effect such conversion. If the
Depositary Shares evidenced by a Depositary Receipt are to be converted in
part only, a new Depositary Receipt or Receipts will be issued for any
Depositary Shares not to be converted. No fractional shares of Common Stock
will be issued upon conversion, and if such conversion would result in a
fractional share being issued, an amount will be paid in cash by the Company
equal to the value of the fractional interest based upon the closing price of
the Common Stock on the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and the Preferred
Stock Depositary. However, any amendment that materially and adversely alters
the rights of the holders of Depositary Receipts or that would be materially
and adversely inconsistent with the rights granted to the holders of the
related Preferred Stock will not be effective unless such amendment has been
approved by the existing holders of at least 66% of the Depositary Shares
evidenced by the Depositary Receipts then outstanding. No amendment shall
impair the right, subject to certain exceptions in the Depositary Agreement,
of any holder of Depositary Receipts to surrender any Depositary Receipt with
instructions to deliver to the holder the related Preferred Stock and all
money and other property, if any, represented thereby, except in order to
comply with law. Every holder of an outstanding Depositary Receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold
such Receipt, to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby.
The Deposit Agreement may be terminated by the Company upon not less than 30
days prior written notice to the Preferred Stock Depositary if a majority of
each series of Preferred Stock affected by such termination consents to such
termination, whereupon the Preferred Stock Depositary shall deliver or make
available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by such holder, such number of whole or fractional
shares of Preferred Stock as are represented by the Depositary Shares
evidenced by such Depositary Receipts together with any other property held by
the Preferred Stock Depositary with respect to such Depositary Receipt. In
addition, the Deposit Agreement will automatically terminate if (i) all
outstanding Depositary Shares shall have been redeemed, (ii) there shall have
been a final distribution in respect of the related Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Depositary
Receipts evidencing the Depositary Shares representing such Preferred Stock or
(iii) each share of the related Preferred Stock shall have been converted into
securities of the Company not so represented by Depositary Shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Stock Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITORY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time
remove the Preferred Stock Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depositary. A
successor Preferred Stock Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
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MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The
obligations of the Company and the Preferred Stock Depositary under the
Deposit Agreement will be limited to performing their duties thereunder in
good faith and without negligence (in the case of any action or inaction in
the voting of Preferred Stock represented by the Depositary Shares), gross
negligence or willful misconduct, and the Company and the Preferred Stock
Depositary will not be obligated to prosecute or defend any legal proceeding
in respect of any Depositary Receipts, Depositary Shares or shares of
Preferred Stock represented thereby unless satisfactory indemnity is
furnished. The Company and the Preferred Stock Depositary may rely on written
advice of counsel or accountants, or information provided by persons
presenting shares of Preferred Stock represented thereby for deposit, holders
of Depositary Receipts or other persons believed in good faith to be competent
to give such information, and on documents believed in good faith to be
genuine and signed by a proper party.
In the event the Preferred Stock Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Company, on the other hand, the Preferred Stock
Depositary shall be entitled to act on such claims, requests or instructions
received from the Company.
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DESCRIPTION OF WARRANTS
The Company may issue warrants to purchase Debt Securities (the "Debt
Warrants"), Preferred Stock (the "Preferred Stock Warrants"), Depositary
Shares (the "Depositary Shares Warrants") or Common Stock (the "Common Stock
Warrants," collectively the "Warrants"). Warrants may be issued independently
or together with any Offered Securities and may be attached to or separate
from such Offered Securities. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to the Warrants being
offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and Debt Warrant certificates representing such Debt Warrants, including the
following:
(i) the title for such Debt Warrants;
(ii) the aggregate number of such Debt Warrants;
(iii) the price or prices at which such Debt Warrants will be issued;
(iv) the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants, and the
procedures and conditions relating to the exercise of such Debt Warrants;
(v) the designation and terms of any related Debt Securities with which
such Debt Warrants are issued, and the number of such Debt Warrants issued
with each such security;
(vi) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable;
(vii) the principal amount of Debt Securities purchasable upon exercise
of each Debt Warrant, and the price at which such principal amount of Debt
Securities may be purchased upon such exercise;
(viii) the date on which such right shall expire;
(ix) the maximum or minimum number of such Debt Warrants which may be
exercised at any time;
(x) a discussion of the material United States federal income tax
considerations applicable to the exercise of such Debt Warrants; and
(xi) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders
of the securities purchasable upon such exercise and will not be entitled to
payments of principal of (or premium, if any) or interest, if any, on the
securities purchasable upon such exercise.
OTHER WARRANTS
The applicable Prospectus Supplement will describe the following terms of
Preferred Stock Warrants, the Depositary Share Warrants or Common Stock
Warrants in respect of which this Prospectus is being delivered:
(i) the title of such Warrants;
(ii) the securities for which such Warrants are exercisable;
(iii) the price or prices at which such Warrants will be issued;
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(iv) the number of such Warrants issued with each share of Preferred
Stock or Common Stock;
(v) any provisions for adjustment of the number or amount of shares of
Preferred Stock or Common Stock receivable upon exercise of such Warrants
or the exercise price of such Warrants;
(vi) if applicable, the date on and after which such Warrants and the
related Preferred Stock or Common Stock will be separately transferable;
(vii) if applicable, a discussion of the material United States federal
income tax considerations applicable to the exercise of such Warrants;
(viii) any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants;
(ix) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire; and
(x) the maximum or minimum number of such Warrants which may be exercised
at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount of Debt Securities or shares of Preferred Stock, Common Stock
or Depositary Shares at such exercise price as shall in each case be set forth
in, or be determinable as set forth in, the Prospectus Supplement relating to
the Warrants offered thereby. Warrants may be exercised at any time up to the
close of business on the expiration date set forth in the Prospectus
Supplement relating to the Warrants offered thereby. After the close of
business on the expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the Warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Debt
Securities or shares of Preferred Stock or Common Stock purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
certificate are exercised, a new Warrant certificate will be issued for the
remaining Warrants.
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DESCRIPTION OF SUBSCRIPTION RIGHTS
The Company may issue Subscription Rights to purchase (i) Common Stock (the
"Common Stock Rights"), (ii) Preferred Stock (the "Preferred Stock Rights"),
(iii) Depositary Shares (the "Depositary Share Rights") or (iv) Warrants to
purchase Preferred Stock or Common Stock (the "Warrant Rights" and,
collectively with the Common Stock Rights, Preferred Stock Rights and the
Depository Share Rights, the "Subscription Rights"). Subscription Rights may
be issued independently or together with any other Offered Security and may or
may not be transferable by the purchaser receiving the Subscription Rights. In
connection with any Subscription Rights offering to the Company's
shareholders, the Company may enter into a standby underwriting arrangement
with one or more underwriters pursuant to which such underwriter will purchase
any Offered Securities remaining unsubscribed for after such Subscription
Rights offering. In connection with a Subscription Rights offering to the
Company's shareholders, certificates evidencing the Subscription Rights and a
Prospectus Supplement will be distributed to the Company's shareholders on the
record date for receiving Subscription Rights in such Subscription Rights
offering set by the Company.
The applicable Prospectus Supplement will describe the following terms of
Subscription Rights in respect of which this Prospectus is being delivered:
(i) the title of such Subscription Rights;
(ii) the securities for which such Subscription Rights are exercisable;
(iii) the exercise price for such Subscription Rights;
(iv) the number of such Subscription Rights issued to each shareholder;
(v) the extent to which such Subscription Rights are transferable;
(vi) if applicable, a discussion of the material United States federal
income tax considerations applicable to the issuance or exercise of such
Subscription Rights;
(vii) any other terms of such Subscription Rights, including terms,
procedures and limitations relating to the exchange and exercise of such
Subscription Rights;
(viii) the date on which the right to exercise such Subscription Rights
shall commence, and the date on which such right shall expire.
(ix) the extent to which such Subscription Rights includes an over-
subscription privilege with respect to unsubscribed securities.
(x) if applicable, the material terms of any standby underwriting
arrangement entered into by the Company in connection with the Rights
offering.
EXERCISE OF SUBSCRIPTION RIGHTS
Each Subscription Right will entitle the holder of Subscription Rights to
purchase for cash such principal amount of shares of Preferred Stock,
Depository Shares, Common Stock, Preferred Stock Warrants, Depository Share
Warrants, Common Stock Warrants or any combination thereof, at such exercise
price as shall in each case be set forth in, or be determinable as set forth
in, the Prospectus Supplement relating to the Subscription Rights offered
thereby. Subscription Rights may be exercised at any time up to the close of
business on the expiration date for such Subscription Rights set forth in the
Prospectus Supplement. After the close of business on the expiration date, all
unexercised Subscription Rights will become void.
Subscription Rights may be exercised as set forth in the Prospectus
Supplement relating to the Subscription Rights offered thereby. Upon receipt
of payment and the Subscription Rights certificate properly completed and duly
executed at the corporate trust office of the Rights Agent or any other office
indicated in the Prospectus Supplement, the Company will, as soon as
practicable, forward the shares of Preferred Stock or Common Stock, Depository
Shares, Common Stock Warrants or Preferred Stock Warrants purchasable upon
such exercise. In the event that not all of the Subscription Rights issued in
any Rights offering are exercised, the Company may determine to offer any
unsubscribed Offered Securities directly to persons other than shareholders,
to or through agents, underwriters or dealers or through a combination of such
methods, (including pursuant to standby underwriting arrangements), as set
forth in the applicable Prospectus Supplement.
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DESCRIPTION OF HMH SENIOR NOTES
HMH Properties may offer up to $2,200,000,000 aggregate principal amount of
HMH Senior Notes, in one or more series with the same or various maturities,
at par, at a premium or at a discount. On August 5, 1998, HMH Properties
issued $500,000,000 aggregate principal amount of 7 7/8% Series A Senior Notes
due 2005 (the "Series A Senior Notes") and $1,200,000,000 aggregate principal
amount of 7 7/8% Series B Senior Notes due 2008 (the "Series B Senior Notes").
The Series A Senior Notes and the Series B Notes were issued, and any other
series of HMH Senior Notes offered in the future under this Prospectus will be
issued, pursuant to an indenture (as amended or supplemented from time to
time, the "HMH Indenture") dated as of August 5, 1998, by and among HMH
Properties, the Guarantors, the Subsidiary Guarantors and Marine Midland Bank,
as trustee (the "Trustee"). The terms of the HMH Indenture are also governed
by certain provisions contained in the Trust Indenture Act of 1939, as
amended. The following summaries of certain provisions of the HMH Indenture
are summaries only, do not purport to be complete and are qualified in their
entirety by reference to all of the provisions of the HMH Indenture.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the HMH Indenture. Wherever particular provisions
of the HMH Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference. For purposes of this
"Description of HMH Senior Notes" section of the Prospectus, the term "the
Company" refers solely to HMH Properties.
GENERAL
The terms of the Series A Senior Notes and the Series B Senior Notes are set
forth in the HMH Indenture and the supplemental indenture thereto dated August
5, 1998 by and among HMH Properties, the Guarantors, the Subsidiary Guarantors
and the Trustee. The Series A Notes bear interest at 7 7/8% per annum and will
mature on August 1, 2005. Interest on the Series A Senior Notes is payable
semi-annually on March 15 and September 15, commencing September 15, 1998, to
the Persons in whose names such Series A Senior Notes are registered at the
close of business on the March 1st or the September 1st immediately preceding
the most recent Interest Payment Date with respect to the Series A Senior
Notes. The Series B Senior Notes bear interest at 7 7/8% per annum and will
mature on August 1, 2008. Interest on the Series B Senior Notes is payable
semi-annually on June 15 and December 15, commencing December 15, 1998 to the
Persons in whose names such Series B Senior Notes are registered at the close
of business on the June 1st or the December 1st immediately preceding the most
recent Interest Payment Date with respect to the Series B Senior Notes.
The terms of each other series of HMH Senior Notes that may be issued under
the HMH Indenture in the future will be set forth or determined in the manner
provided in an Officers' Certificate or by a supplemental indenture. The
particular terms of each series of HMH Senior Notes will be described in a
Prospectus Supplement relating to such series (including any pricing
supplement thereto). The Prospectus Supplement (including any pricing
supplement thereto) will set forth the initial offering price, the aggregate
principal amount and the following terms of the HMH Senior Notes in respect of
which this Prospectus is delivered, to the extent different from the terms
described below in this section: (1) the title of such HMH Senior Notes; (2)
the price or prices at which the HMH Senior Notes will be issued; (3) any
limit on the aggregate principal amount of such HMH Senior Notes; (4) the date
or dates on which principal on such HMH Senior Notes will be payable; (5) the
rate or rates (which may be fixed or variable) per annum or, if applicable,
the method used to determine such rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which such HMH
Senior Notes will bear interest, if any, the date or dates from which such
interest, if any, will accrue, the date or dates on which such interest, if
any, will commence and be payable and any regular record date for the interest
payable on any Interest Payment Date; (6) the place or places where principal
of, premium, if any, and interest, if any, on such HMH Senior Notes will be
payable; (7) the period or periods within which, the price or prices at which
and the terms and conditions upon which the HMH Senior Notes may be redeemed,
in whole or in part, at the option of the Company; (8) the obligation, if any,
of the Company to redeem or purchase HMH Senior Notes, in whole or in part,
pursuant
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to any sinking fund or analogous provisions or at the option of a Holder
thereof; (9) the dates, if any, on which and the price or prices at which the
HMH Senior Notes will be repurchased by the Company at the option of the
Holders thereof and other detailed terms and provisions of such repurchase
obligations; (10) the denominations in which such HMH Senior Notes may be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (11) whether the HMH Senior Notes are to be issuable in the form of
Certificated Notes (as defined below) or Global Notes (as defined below); (12)
the portion of principal amount of such HMH Senior Notes that shall be payable
upon declaration of acceleration of the maturity date thereof, if other than
the principal amount thereof; (13) the currency of denomination of such HMH
Senior Notes, if other than U.S. dollars; (14) the designation of the
currency, currencies or currency units in which payment of principal of,
premium, if any, and interest, if any, on such HMH Senior Notes will be made,
if other than U.S. dollars; (15) if payments of principal of, premium, if any,
or interest, if any, on the HMH Senior Notes are to be made in one or more
currencies or currency units other than that or those in which such HMH Senior
Notes are denominated, the manner in which the exchange rate with respect to
such payments will be determined; (16) the manner in which the amounts of
payment of principal of, premium, if any, or interest, if any, on such HMH
Senior Notes will be determined, if such amounts may be determined by
reference to an index based on a currency or currencies other than that in
which the HMH Senior Notes are denominated or designated to be payable or by
reference to a commodity, commodity index, stock exchange index or financial
index; (17) the provisions, if any, relating to any security provided for such
HMH Senior Notes; (18) any addition to or change in the Events of Default
described herein or in the HMH Indenture with respect to such HMH Senior
Notes; (19) any addition to or change in the covenants described herein or in
the HMH Indenture with respect to such HMH Senior Notes and any change in the
acceleration provisions described herein or in the HMH Indenture with respect
to such HMH Senior Notes; (20) any other terms of such HMH Senior Notes which
may modify or delete any provision of the HMH Indenture insofar as it applies
to such series; (21) any depositories, interest rate calculation agents,
exchange rate calculation agents or other agents with respect to the HMH
Senior Notes; and (22) the form and terms of any guarantee of the HMH Senior
Notes.
The Series A Senior Notes and the Series B Senior Notes are, and, unless
otherwise provided in a supplemental indenture relating to a series of HMH
Senior Notes, any other series of HMH Senior Notes issued under the HMH
Indenture will be, senior, general obligations of the Company, secured
initially by a pledge of all the Capital Stock of all but one of the Initial
Subsidiary Guarantors owned (directly or indirectly) by HMH Properties, which
pledge is, and will be, shared equally and ratably with the Credit Facility,
the Series A Senior Notes, the Series B Senior Notes, the Existing Senior
Notes and certain future Indebtedness of HMH Properties ranking pari passu
with the HMH Senior Notes. See "--Security." The Series A Senior Notes and the
Series B Senior Notes are, and any other series of HMH Senior Notes will be,
pari passu with all other existing and future unsubordinated Indebtedness of
HMH Properties and will rank senior to all subordinated obligations of HMH
Properties. The Series A Senior Notes and the Series B Senior Notes are, and,
to the extent provided in the supplemental indenture relating to future series
of HMH Senior Notes, such future series of HMH Senior Notes will be, jointly
and severally guaranteed on a senior basis by the Guarantors, the Initial
Subsidiary Guarantors, and subject to certain exceptions, each of the
Company's future Restricted Subsidiaries that subsequently guarantees
Indebtedness of HMH Properties. The Guarantee of the Guarantors and of the
Subsidiary Guarantors with respect to the HMH Senior Notes, and the pledges of
Capital Stock, are subject to release upon satisfaction of certain conditions,
and the Guarantee of the Guarantors with respect to the HMH Senior Notes will
be released upon consummation of the REIT Conversion, at which time the assets
of the Guarantors shall consist of Qualified Assets. See "--Guarantees" and
"--Security."
Interest on any series of HMH Senior Notes will be calculated on the basis
of a 360-day year consisting of twelve 30-day months. The HMH Senior Notes
will be issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. Principal of, premium,
if any, and interest on any series of HMH Senior Notes will be payable at the
office or agency of the Company maintained for such purpose, in the Borough of
Manhattan, The City of New York. Except as provided below, at the option of
the Company, payment of interest may be made by check mailed to the Holders of
any HMH Senior Notes at the addresses set forth upon the registry books of the
Company; provided, however, Holders of Certificated Notes will be entitled
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to receive interest payments (other than at maturity) by wire transfer of
immediately available funds, if appropriate wire transfer instructions have
been received in writing by the Trustee not less than 15 days prior to the
applicable Interest Payment Date. Such wire instructions, upon receipt by the
Trustee, shall remain in effect until revoked by such Holder. No service
charge will be made for any registration of transfer or exchange of HMH Senior
Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Until
otherwise designated by the Company, the Company's office or agency will be
the corporate trust office of the Trustee presently located at 140 Broadway,
New York, New York 10005-1180.
GUARANTEES
The Series A Senior Notes and the Series B Senior Notes are and, to the
extent provided in the applicable supplemental indenture, additional series of
HMH Senior Notes will be, fully and unconditionally guaranteed as to
principal, premium, if any, and interest, jointly and severally, by each of
the Guarantors and the Subsidiary Guarantors. If the Company defaults in the
payment of the principal of, premium, if any, or interest on, a guaranteed
series of Senior Notes when and as the same shall become due, whether upon
maturity, acceleration, call for redemption, Change of Control Offer, Offer to
Purchase or otherwise, without the necessity of action by the Trustee or any
Holder, the Guarantors and the Subsidiary Guarantors of any such guaranteed
series of HMH Senior Notes shall be required, jointly and severally, promptly
to make such payment in full. The HMH Indenture provides that the Guarantors
and the Subsidiary Guarantors of a guaranteed series of HMH Senior Notes will
be released from their obligations as guarantors under such series of HMH
Senior Notes under certain circumstances. The obligations of each Subsidiary
Guarantor and Guarantor will be limited in a manner intended to avoid such
obligations being construed as fraudulent conveyances under applicable law.
Each current and future Restricted Subsidiary of the Company that
subsequently guarantees any Indebtedness (the "Guaranteed Indebtedness") of
HMH Properties (each a "Future Subsidiary Guarantor") will be required to
Guarantee any series of HMH Senior Notes guaranteed under the HMH Indenture.
If the Guaranteed Indebtedness is (A) pari passu in right of payment with the
guaranteed series of HMH Senior Notes, then the Guarantee of such Guaranteed
Indebtedness shall be pari passu in right of payment with, or subordinated in
right of payment to, the Subsidiary Guarantee or (B) subordinated in right of
payment to the guaranteed series of HMH Senior Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated in right of payment to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness
is subordinated in right of payment to the guaranteed series of HMH Senior
Notes.
The HMH Indenture provides that each of the Guarantors shall be
automatically and unconditionally released from its obligations as a guarantor
under a series of guaranteed HMH Senior Notes at such time as all or
substantially all of the assets of such Guarantor shall, directly or
indirectly, consist of Qualified Assets. Pursuant to these provisions, the
Guarantees of the Guarantors with respect to each series of guaranteed HMH
Senior Notes will automatically be released upon consummation of the REIT
Conversion. Thereafter, the Guarantors will conduct their business such that
upon the consummation of any transaction by them, all or substantially all of
their assets will be Qualified Assets. Subject to compliance with the
preceding paragraph, the Indenture also provides that any Subsidiary Guarantee
by a Restricted Subsidiary shall be automatically and unconditionally released
upon (i) the sale or other disposition of Capital Stock of a Subsidiary
Guarantor, if, as a result of such sale or disposition, such Subsidiary
Guarantor ceases to be a Subsidiary of the Company, (ii) the consolidation or
merger of any such Subsidiary Guarantor with any Person other than the Company
or a Subsidiary of the Company, if, as a result of such consolidation or
merger, such Subsidiary Guarantor ceases to be Subsidiary of the Company,
(iii) a Legal Defeasance or Covenant Defeasance, or (iv) the unconditional and
complete release of such Subsidiary Guarantor from its Guarantee of all
Guaranteed Indebtedness.
SECURITY
The obligations of HMH Properties to pay the principal of, premium, if any,
and interest on the Series A Senior Notes and the Series B Senior Notes are,
and, unless otherwise provided in an applicable supplemental
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indenture, any other series of HMH Senior Notes issued under the HMH Indenture
will be, secured by a pledge of the Capital Stock of each Initial Subsidiary
Guarantor (which will not include Marriott Financial Services, Inc.), which
pledge is, and will be, shared equally and ratably with the Credit Facility,
the Existing Senior Notes and certain future Indebtedness of HMH Properties
ranking pari passu in right of payment with the HMH Senior Notes. The HMH
Indenture also provides that, unless otherwise provided in a supplemental
indenture with respect to a series of HMH Senior Notes, the Capital Stock of
each Restricted Subsidiary that is subsequently pledged to secure the Credit
Facility will also be pledged to secure each such series of HMH Senior Notes
on an equal and ratable basis with respect to Liens securing the Credit
Facility and any other pari passu Indebtedness secured by such Capital Stock,
provided, however, that any shares of the Capital Stock of any Restricted
Subsidiary will not be and will not be required to be pledged to secure any
such series of HMH Senior Notes if the pledge of or grant of a security
interest in such shares is prohibited by law. Bankers Trust Company (the
administrative agent under the Credit Facility) will serve as the initial
collateral agent with respect to such stock pledge, subject to replacement in
certain circumstances. So long as the Credit Facility is in effect, the
Lenders under the Credit Facility will have the right to direct the manner and
method of enforcement of remedies with respect to the stock pledge. Any
proceeds realized on a sale or disposition of collateral would be applied
first to expenses of, and other obligations owed to, the Collateral Agent,
second, pro rata to outstanding principal and interest of the secured
Indebtedness, and third, pro rata to other secured obligations.
Upon the complete and unconditional release of the pledge of any such
Capital Stock in favor of the Credit Facility, the pledge of such Capital
Stock as collateral securing the HMH Senior Notes shall be released; provided
that should the obligations of the Company under the Credit Facility
subsequently be secured by a pledge of such Capital Stock at any time, the
Company shall cause such Capital Stock to be pledged ratably and with at least
the same priority for the benefit of Holders of the HMH Senior Notes.
RANKING
The Series A Senior Notes and the Series B Senior Notes are, and any other
series of HMH Senior Notes issued under the HMH Indenture will be, senior,
general obligations of the Company, ranking pari passu in right of payment
with any other outstanding or future unsubordinated Indebtedness of the
Company, including, without limitation, the obligations of the Company under
the Credit Facility and the Existing Senior Notes. The Series A Senior Notes
and the Series B Senior Notes are, and any other series of HMH Senior Notes
issued under the HMH Indenture will be, senior to all subordinated obligations
of the Company. The Guarantees of the Series A Senior Notes, the Series B
Senior Notes and any other series of guaranteed HMH Senior Notes by the
Guarantors will be senior, general obligations of Host and any other Parent of
the Company, and the Guarantees of the Subsidiary Guarantors ("Subsidiary
Guarantees") of the Series A Senior Notes, the Series B Senior Notes and any
other series of guaranteed HMH Senior Notes will be senior, general
obligations of the Subsidiary Guarantors. The Guarantees of Series A Senior
Notes, the Series B Senior Notes and any other series of HMH Senior Notes by
the Guarantors will be pari passu in right of payment with all unsubordinated,
unsecured Indebtedness of the Guarantors and senior to all subordinated
Indebtedness of the Guarantors. Each of the Subsidiary Guarantees of the
Series A Senior Notes, the Series B Senior Notes and any other series of
guaranteed HMH Senior Notes will rank pari passu with all current and future
unsubordinated Indebtedness, and senior to all current and future subordinated
Indebtedness, of the Subsidiary Guarantors. Holders of a series of guaranteed
HMH Senior Notes will be direct creditors of each of the Guarantors and the
Subsidiary Guarantors by virtue of such Guarantees of such series of
guaranteed HMH Senior Notes.
OPTIONAL REDEMPTION
The dates, if any, on which, and the price or prices at which, any series of
HMH Senior Notes may be redeemed, in whole or in part, at the option of HMH
Properties, and other detailed terms and provisions of such redemption
obligation will be set forth in a Prospectus Supplement with respect to such
series.
The Company will not have the right to redeem any Series A Senior Notes or
Series B Senior Notes prior to August 1, 2002. At the option of the Company,
these two series of HMH Senior Notes are redeemable in
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whole or in part, at any time, and from time to time, on and after August 1,
2002 with respect to the Series A Senior Notes and August 1, 2003 with respect
to the Series B Notes, upon the terms and conditions set forth in the
Prospectus Supplement with respect to the Series A Senior Notes and the Series
B Senior Notes.
In the case of a partial redemption of any series of HMH Senior Notes, the
Trustee shall select the HMH Senior Notes or portions thereof for redemption
on a pro rata basis, by lot or in such other manner it deems appropriate and
fair. The HMH Senior Notes may be redeemed in part in multiples of $1,000
only.
Unless otherwise provided for in a Prospectus Supplement for a series of HMH
Senior Notes, no series of HMH Senior Notes will have the benefit of any
sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30
days, but not more than 60 days, prior to the date fixed for redemption to the
Holder of each HMH Senior Note to be redeemed to such Holder's last address as
then shown upon the registry books of the Registrar. Any notice which relates
to a HMH Senior Note to be redeemed in part only must state the portion of the
principal amount equal to the unredeemed portion thereof and must state that
on and after the date of redemption, upon surrender of such HMH Senior Note, a
new HMH Senior Note or HMH Senior Notes in a principal amount equal to the
unredeemed portion thereof will be issued. On and after the date of
redemption, interest will cease to accrue on the HMH Senior Notes or portions
thereof called for redemption, unless the Company defaults in the payment
thereof.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the HMH
Indenture for the full definition of all terms as well as any other
capitalized term used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness or Disqualified Stock of a Person
existing at the time such Person becomes a Restricted Subsidiary of the
Company or assumed in connection with an Asset Acquisition and not incurred in
connection with or in contemplation or anticipation of such event, provided
that Indebtedness of such Person which is redeemed, defeased (including the
deposit of funds in a valid trust for the exclusive benefit of holders and the
trustee thereof, sufficient to repay such Indebtedness in accordance with its
terms), retired or otherwise repaid at the time of or immediately upon
consummation of the transactions by which such Person becomes a Restricted
Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness.
"Adjusted Total Assets" means, for any Person, the Total Assets for such
Person and its Restricted Subsidiaries as of any Transaction Date, as adjusted
to reflect the application of the proceeds of the Incurrence of Indebtedness
and issuance of Disqualified Stock on the Transaction Date.
"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract, or otherwise; provided that a beneficial owner of 10% or more of the
total voting power normally entitled to vote in the election of directors,
managers or trustees, as applicable, shall for such purposes be deemed to
constitute control; provided, further, that (i) the right to designate a
member of the Board of a Person or a Parent of that Person will not, by
itself, be deemed to constitute control and (ii) Marriott International and
its Subsidiaries shall not be deemed to be Affiliates of the Company or its
Parent or Restricted Subsidiaries.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged or consolidated into
or with the Company or any of its Restricted Subsidiaries or (ii) an
acquisition by the Company or any of its Restricted Subsidiaries from any
other Person that constitutes all or substantially all of a division or line
of business, or one or more real estate properties, of such Person.
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"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or
a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary (including by issuance of such Capital Stock), (ii) all or
substantially all of the property and assets of an operating unit or business
of the Company or any of its Restricted Subsidiaries, or (iii) any other
property and assets of the Company or any of its Restricted Subsidiaries
(other than Capital Stock of a Person which is not a Restricted Subsidiary)
outside the ordinary course of business of the Company or such Restricted
Subsidiary and, in each case, that is not governed by the covenant of the HMH
Indenture entitled "Consolidation, Merger and Sale of Assets"; provided that
"Asset Sale" shall not include (a) sales or other dispositions of inventory,
receivables and other current assets, (b) sales, transfers or other
dispositions of assets with a fair market value not in excess of $10 million
in any transaction or series of related transactions, (c) leases of real
estate assets, (d) Permitted Investments (other than Investments in Cash
Equivalents) or Restricted Investments made in accordance with the "Limitation
on Restricted Payments" covenant, (e) any transaction comprising part of the
REIT Conversion, and (f) any transactions that, pursuant to the "Limitation of
Asset Sales" covenant, are defined not to be an "Asset Sale."
"Average Life" means at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years (calculated to the nearest one-twelfth) from such date of
determination to the date of each successive scheduled principal (or
redemption) payment of such debt security and (b) the amount of such principal
(or redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Blackstone Acquisition" means the acquisition by the Operating Partnership
from The Blackstone Group, a Delaware limited partnership, and a series of
funds controlled by Blackstone Real Estate Partners, a Delaware limited
partnership, of certain hotel properties, mortgage loans and other assets
together with the assumption of related Indebtedness.
"Board" means (i) with respect to any corporation, the board of directors of
such corporation or any committee of the board of directors of such
corporation authorized, with respect to any particular matter, to exercise the
power of the board of directors of such corporation, (ii) with respect to any
partnership, any partner (including, without limitation, in the case of any
partner that is a corporation, the board of directors of such corporation or
any authorized committee thereof) with the authority to cause the partnership
to act with respect to the matter at issue, (iii) in the case of a trust, any
trustee or board of trustees with the authority to cause the trust to act with
respect to the matter at issue, (iv) in the case of a limited liability
company (a "LLC"), the managing member, management committee or other Person
or group with the authority to cause the LLC to act with respect to the matter
at issue, and (v) with respect to any other entity, the Person or group
exercising functions similar to a board of directors of a corporation.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Contribution" means any contribution to the equity of the Company
for which no consideration is given, or if given, consists only of the
issuance of Qualified Capital Stock (or, if other consideration is given only
the value of the contribution in excess of such other consideration).
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, or other equivalents (however designated, whether
voting or non-voting), including partnership interests, whether general or
limited, in the equity of such Person, whether outstanding on the Closing Date
or issued thereafter, including, without limitation, all Common Stock,
Preferred Stock and Units.
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"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease as reflected on the balance sheet
of such Person in accordance with GAAP.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America are pledged in support thereof), or (ii) time deposits,
bankers acceptances and certificates of deposit and commercial paper issued by
the Parent of any domestic commercial bank of recognized standing having
capital and surplus in excess of $500 million and commercial paper issued by
others rated at least A-2 or the equivalent thereof by S&P or at least P-2 or
the equivalent thereof by Moody's, (iii) marketable direct obligations issued
by the District of Columbia or any state of the United States of America or
any political subdivision or public instrumentality thereof bearing (at the
time of investment therein) one of the two highest ratings obtainable from
either S&P or Moody's and (iv) liquid investments in money market funds
substantially all of the assets of which are securities of the type described
in clauses (i) through (iii) inclusive; provided that the securities described
in clauses (i) through (iii) inclusive have a maturity of one year or less
after the date of acquisition.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company or Host or Host REIT (for so long as Host or Host REIT is a Parent of
the Company immediately prior to such transaction or series of related
transactions), on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such transaction,
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) other than an
Excluded Person is or becomes the "beneficial owner," directly or indirectly,
of more than 50% of the total voting power in the aggregate normally entitled
to vote in the election of directors, managers, or trustees, as applicable, of
the transferee, (ii) any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) other than an Excluded Person is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total voting power in
the aggregate of all classes of Capital Stock of the Company (or Host or Host
REIT for so long as Host or Host REIT is a Parent of the Company immediately
prior to such transaction or series of related transactions) then outstanding
normally entitled to vote in elections of directors, managers or trustees, as
applicable, (iii) during any period of 12 consecutive months after the Issue
Date (for so long as Host or Host REIT is a Parent of the Company immediately
prior to such transaction or series of related transactions), Persons who at
the beginning of such 12-month period constituted the Board of Host or Host
REIT (together with any new Persons whose election was approved by a vote of a
majority of the Persons then still comprising the Board who were either
members of the Board at the beginning of such period or whose election,
designation or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Host or Host REIT, as
applicable, then in office, or (iv) (a) prior to the consummation of the REIT
Conversion, the Company is no longer consolidated with Host for Federal income
tax reporting purposes or (b) on or after the REIT Conversion, Host REIT
ceases to be a general partner of the Operating Partnership or ceases to
control the Company; provided, however, that neither (x) the pro rata
distribution by Host to its shareholders of shares of the Company or shares of
any of Host's or Host REIT's other Subsidiaries, nor (y) the REIT Conversion
(or any element thereof) shall, in and of itself, constitute a Change of
Control for purposes of this definition.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Closing Date" means August 5, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting), which have no preference on liquidation or with respect
to distributions over any other class of Capital Stock, including partnership
interests, whether general or limited, of such Person's equity, whether
outstanding on the Closing Date or issued thereafter, including, without
limitation, all series and classes of common stock.
"Company" means HMH Properties and its successors and assigns, including,
without limitation, the Operating Partnership upon the consummation of the
Merger.
"Consolidated" or "consolidated" means, with respect to any Person, the
consolidation of the accounts of the Restricted Subsidiaries (including those
of the Non-Consolidated Restricted Entities) of such Person with those of such
Person; provided that (i) "consolidation" will not include consolidation of
the accounts of any other Person other than a Restricted Subsidiary of such
Person with such Person and (ii) "consolidation" will include consolidation of
the accounts of any Non-Consolidated Restricted Entities, whether or not such
consolidation would be required or permitted under GAAP (it being understood
that the accounts of such Person's Consolidated Subsidiaries shall be
consolidated only to the extent of such Person's proportionate interest
therein). The terms "consolidated" and "consolidating" have correlative
meanings to the foregoing.
"Consolidated Coverage Ratio" of any Person on any Transaction Date means
the ratio, on a pro forma basis, of (a) the aggregate amount of Consolidated
EBITDA of such Person attributable to continuing operations and businesses
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of) for the Reference Period to (b) the aggregate
Consolidated Interest Expense of such Person (exclusive of amounts
attributable to operations and businesses permanently discontinued or disposed
of, but only to the extent that the obligations giving rise to such
Consolidated Interest Expense would no longer be obligations contributing to
such Person's Consolidated Interest Expense subsequent to the Transaction
Date) during the Reference Period; provided that for purposes of such
calculation, (i) acquisitions of operations, businesses or other income-
producing assets (including any reinvestment of disposition proceeds in
income-producing assets held as of and not disposed on the Transaction Date)
which occurred during the Reference Period or subsequent to the Reference
Period and on or prior to the Transaction Date shall be assumed to have
occurred on the first day of the Reference Period, (ii) transactions giving
rise to the need to calculate the Consolidated Coverage Ratio shall be assumed
to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Stock during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date (and the application of the proceeds therefrom to the
extent used to refinance or retire other Indebtedness or invested in income-
producing assets held as of and not disposed on the Transaction Date) shall be
assumed to have occurred on the first day of such Reference Period, and (iv)
the Consolidated Interest Expense of such Person attributable to interest on
any Indebtedness or dividends on any Disqualified Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless
such Person or any of its Subsidiaries is a party to an Interest Swap or
Hedging Obligation (which shall remain in effect for the 12-month period
immediately following the Transaction Date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Consolidated EBITDA" means, for any Person and for any period, the
Consolidated Net Income of such Person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, (A) the sum of (i) Consolidated Interest
Expense, (ii) provisions for taxes based on income (to the extent of such
Person's proportionate interest therein), (iii) depreciation and amortization
expense (to the extent of the proportionate interest of the referent Person
therein), (iv) any other noncash items reducing the Consolidated Net Income of
such Person for such period (to the extent of such Person's proportionate
interest therein), (v) any dividends or distributions during such period to
such Person or a Consolidated Subsidiary (to the extent of such Person's
proportionate interest therein) of such Person from any other Person which is
not a Restricted Subsidiary of such Person or which is accounted for by such
Person by
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the equity method of accounting (other than a Non-Consolidated Restricted
Entity), to the extent that (a) such dividends or distributions are not
included in the Consolidated Net Income of such Person for such period and (b)
(1) the sum of such dividends and distributions, plus the aggregate amount of
dividends or distributions from such other Person since the Issue Date that
have been included in Consolidated EBITDA pursuant to this clause (v), do not
exceed (2) the cumulative net income of such other Person attributable to the
equity interests of the Person (or Restricted Subsidiary of the Person) whose
Consolidated EBITDA is being determined, (vi) any cash receipts of such Person
or a Consolidated Subsidiary of such Person (to the extent of such Person's
proportionate interest therein) during such period that represent items
included in Consolidated Net Income of such Person for a prior period which
were excluded from Consolidated EBITDA of such Person for such prior period by
virtue of clause (B) of this definition, and (vii) any nonrecurring expenses
incurred in connection with the REIT Conversion, minus (B) the sum of (I) all
non-cash items increasing the Consolidated Net Income of such Person (to the
extent of such Person's proportionate interest therein) for such period and
(II) any cash expenditures of such Person (to the extent of such Person's
proportionate interest therein) during such period to the extent such cash
expenditures (a) did not reduce the Consolidated Net Income of such Person for
such period and (b) were applied against reserves or accruals that constituted
noncash items reducing the Consolidated Net Income of such Person (to the
extent of such Person's proportionate interest therein) when reserved or
accrued; all as determined on a consolidated basis for such Person and its
Consolidated Subsidiaries (it being understood that the accounts of such
Person's Consolidated Subsidiaries shall be consolidated only to the extent of
such Person's proportionate interest therein).
"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case on a
consolidated basis) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations but excluding
the amortization of fees or expenses incurred in order to consummate the sale
of any series of HMH Senior Notes as described herein or to establish the
Credit Facility) of such Person and its Consolidated Subsidiaries during such
period, including (i) original issue discount and noncash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all deferred
payment obligations, and (iii) all commissions, discounts and other fees and
charges owed with respect to bankers' acceptances and letters of credit
financings and Interest Swap and Hedging Obligations, in each case to the
extent attributable to such period, and (b) dividends accrued or payable by
such Person or any of its Consolidated Subsidiaries in respect of Disqualified
Stock (other than by Restricted Subsidiaries of such Person to such Person or,
to the extent of such Person's proportionate interest therein, such Person's
Restricted Subsidiaries); provided, however, that any such interest, dividends
or other payments or accruals (referenced in clauses (a) or (b)) of a
Consolidated Subsidiary that is not Wholly Owned shall be included only to the
extent of the proportionate interest of the referent Person in such
Consolidated Subsidiary. For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
Person or a Restricted Subsidiary of such Person of an obligation of another
Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Net Income" means, with respect to any Person for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries for
such period, determined on a consolidated basis (it being understood that the
net income of Consolidated Subsidiaries shall be consolidated with that of a
Person only to the extent of the proportionate interest of such Person in such
Consolidated Subsidiaries); provided that (i) net income (or loss) of any
other Person which is not a Restricted Subsidiary of the Person, or that is
accounted for by such specified Person by the equity method of accounting
(other than a Non-Consolidated Restricted Entity), shall be included only to
the extent of the amount of dividends or distributions paid to the specified
Person or a Restricted Subsidiary of such Person, (ii) the net income (or
loss) of any other Person acquired by such specified Person or a Restricted
Subsidiary of such Person in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded, (iii) all gains and
losses which are either extraordinary (as determined in accordance with GAAP)
or are either unusual or nonrecurring (including any gain from the sale or
other
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disposition of assets or from the issuance or sale of any Capital Stock) shall
be excluded, and (iv) the net income, if positive, of any of such Person's
Consolidated Subsidiaries other than Consolidated Subsidiaries that are not
Subsidiary Guarantors to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation
of the terms of its charter or bylaws or any other agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Consolidated Subsidiary shall be excluded; provided, however, in the
case of exclusions from Consolidated Net Income set forth in clauses (ii),
(iii) and (iv), such amounts shall be excluded only to the extent included in
computing such net income (or loss) on a consolidated basis and without
duplication.
"Consolidated Subsidiary" means, for any Person, each Restricted Subsidiary
of such Person (including each Non-Consolidated Restricted Entity).
"Conversion Date" means the effective date of the Host REIT Merger.
"Credit Facility" means the credit facility established pursuant to the
Credit Agreement dated as of August 5, 1998 among the Company, Host, the
lenders party thereto, Bankers Trust Company, as Arranger and Administrative
Agent, and Wells Fargo Bank, N.A., The Bank of Nova Scotia and Credit Lyonnais
New York Branch, as Co-Arrangers, together with all other agreements,
instruments and documents executed or delivered pursuant thereto or in
connection therewith, in each case as such agreements, instruments or
documents may be amended, supplemented, extended, renewed, replaced or
otherwise modified or restructured from time to time (including by way of
adding Subsidiaries of the Company as additional borrowers or guarantors
thereof), whether by the same or any other agent, lender or group of lenders.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means except as set forth below, with respect to any
Person, Capital Stock of that Person that by its terms or otherwise is (i)
required to be redeemed on or prior to the Stated Maturity of the HMH Senior
Notes for cash or property other than Qualified Capital Stock, (ii) redeemable
for cash or property other than Qualified Capital Stock at the option of the
holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the HMH Senior Notes, or (iii) convertible into or
exchangeable mandatorily or at the option of the holder for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness of the Company or a
Restricted Subsidiary having a scheduled maturity prior to the Stated Maturity
of the HMH Senior Notes; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the Stated Maturity of the HMH Senior Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in "Limitation on Asset Sales" and
"Repurchase of HMH Senior Notes at the Option of Holders upon a Change of
Control Triggering Event" covenants described below and such Capital Stock
specifically provides that such Person will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such HMH
Senior Notes as are required to be repurchased pursuant to the "Limitation on
Asset Sales" and "Repurchase of HMH Senior Notes at the Option of Holders upon
a Change of Control Triggering Event" covenants described below. With respect
to Capital Stock of a Restricted Subsidiary, only the amount thereof issued to
Persons (other than the Company or any of its Restricted Subsidiaries) in
excess of such Persons' Pro Rata Share of such Capital Stock shall be deemed
to be Disqualified Stock for purposes of determining the amount of
Disqualified Stock of the Company and its Restricted Subsidiaries.
Notwithstanding anything to the contrary contained in this definition, (a)
the QUIPs are not Disqualified Stock, (b) any Capital Stock issued by the
Partnership to Host REIT shall not be deemed to be Disqualified Stock solely
by reason of a right by Host REIT to require the Company to make a payment to
it sufficient to enable
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Host REIT to satisfy its concurrent obligation with respect to Capital Stock
of Host REIT, provided such Capital Stock of Host REIT would not constitute
Disqualified Stock, and (c) no Capital Stock shall be deemed to be
Disqualified Stock as the result of the right of the holder thereof to request
redemption thereof if the issuer of such Capital Stock (or the Parent of such
issuer) has the right to satisfy such redemption obligations by the issuance
of Qualified Capital Stock to such holder.
"E&P Distribution" means (a) one or more distributions to the shareholders
of Host and/or Host REIT of (i) shares of SLC and (ii) cash, securities or
other property, with a cumulative aggregate value equal to the amount
estimated in good faith by Host or Host REIT from time to time as being
necessary to assure that Host and Host REIT have distributed the accumulated
earnings and profits (as referenced in Section 857(a)(2)(B) of the Code) of
Host as of the last day of the first taxable year for which Host REIT's
election to be taxed as a REIT is effective and (b) the distributions from the
Operating Partnership to (i) Host REIT necessary to enable Host REIT to make
the distributions described in clause (a) and (ii) holders of Units (other
than Host REIT) required as a result of or a condition to such distributions
made pursuant to clause (b)(i).
"Excluded Person" means, in the case of the Company, Host, Host REIT or any
Wholly Owned Subsidiary of Host or Host REIT.
"Exempted Affiliate Transaction" means (i) employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of the Company, (ii) payments of reasonable fees and
expenses to the members of the Board, (iii) transactions solely between the
Company and any of its Subsidiaries or solely among Subsidiaries of the
Company, (iv) Permitted Tax Payments, (v) Permitted Sharing Arrangements, (vi)
Procurement Contracts, (vii) Operating Agreements, (viii) Restricted Payments
permitted under the "Limitation on Restricted Payments" covenant, and (ix) any
and all elements of the REIT Conversion.
"Existing Senior Notes" means amounts outstanding from time to time of (i)
the 9 1/2% Senior Secured Notes due 2005 of the Company, (ii) the 8 7/8%
Senior Notes due 2007 of the Company, and (iii) the 9% Senior Notes due 2007
of the Company, in each case not in excess of amounts outstanding immediately
following the Issue Date, less amounts retired from time to time.
"Fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined
(i) in good faith by the Board of the Company or the applicable Subsidiary
involved in such transaction, or (ii) by an appraisal or valuation firm of
national or regional standing selected by the Company or such Subsidiary, with
experience in the appraisal or valuation of properties or assets of the type
for which fair market value is being determined.
"Fifty Percent Venture" means a Person (i) in which the Company owns
(directly or indirectly) at least 50% of the aggregate economic interests;
(ii) in which the Company or a Restricted Subsidiary participates in control
as a general partner, a managing member or through similar means, and (iii)
which is not consolidated for financial reporting purposes with the Company
under GAAP.
"FF&E" means furniture, fixtures and equipment, and other tangible personal
property other than real property.
"Funds From Operations" for any period means the Consolidated Net Income of
the Company and its Restricted Subsidiaries for such period excluding gains or
losses from debt restructurings and sales of property, plus depreciation of
real estate assets and amortization related to real estate assets and other
non-cash charges related to real estate assets, after adjustments for
unconsolidated partnerships and joint ventures plus minority interests, if
applicable (it being understood that the accounts of such Person's
Consolidated Subsidiaries shall be consolidated only to the extent of such
Person's proportionate interest therein).
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"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or
in such other statements by such other entity as approved by a significant
segment of the accounting profession in the United States of America.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly Guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or
by agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantors" means, with respect to HMH Senior Notes of any series issued on
the Issue Date, Host and each other Parent of the Company and, with respect to
HMH Senior Notes of any other series, any Person providing a Guarantee with
respect to HMH Senior Notes of such series and designated as "Guarantor" in
the board resolution, supplemental indenture or Officers Certificate
establishing such series.
"HMH Properties" means HMH Properties, Inc., a Delaware corporation.
"Hospitality" means Host Marriott Hospitality, Inc., a Delaware corporation
and the direct Parent of the Company on the Issue Date.
"Host" means Host Marriott Corporation, a Delaware corporation and the
indirect Parent of the Company on the Issue Date, and its successors and
assigns.
"Host REIT" means Host Marriott Trust, a Maryland real estate investment
trust, which will be the sole general partner of the Operating Partnership
following the REIT Conversion and the successor to Host, and its successors
and assigns.
"Host REIT Merger" means the merger of Host with and into Host REIT, with
Host REIT surviving the merger.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to (including
as a result of an acquisition), or become responsible for, the payment of,
contingently or otherwise, such Indebtedness (including Acquired
Indebtedness); provided that neither the accrual of interest nor the accretion
of original issue discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" of any Person means, without duplication, (i) all liabilities
and obligations, contingent or otherwise, of such Person, (a) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), (b) evidenced by
bonds, notes, debentures or similar instruments, (c) representing the balance
deferred and unpaid of the purchase price of any property or services, except
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (d) evidenced by bankers'
acceptances, (e) for the payment of money relating to a Capitalized Lease
Obligation, or (f) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (ii) all net
obligations of such Person under Interest Swap and Hedging Obligations; and
(iii) all liabilities and obligations of others of the kind described in the
preceding clause (i) or
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(ii) that such Person has guaranteed or that is otherwise its legal liability
or which are secured by any assets or property of such Person.
"Interest Swap and Hedging Obligation" means any obligation of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of
the Indenture, the amount of such obligations shall be the amount determined
in respect thereof as of the end of the then most recently ended fiscal
quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such obligation provides for the
netting of amounts payable by and to such Person thereunder or if any such
agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligations shall be the
net amount so determined, plus any premium due upon default by such Person.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including without limitation by way of Guarantee or
similar arrangement, but excluding advances to customers in the ordinary
course of business that are, in conformity with GAAP, recorded as accounts
receivable on the consolidated balance sheet of the Company and its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property (tangible or intangible) to others or any payment for property
or services solely for the account or use of others, or otherwise), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include the designation
of a Restricted Subsidiary to be an Unrestricted Subsidiary or a Non-
Consolidated Entity. For purposes of the definition of "Unrestricted
Subsidiary" and the "Limitation on Restricted Payments" covenant described
below, (a) "Investment" shall include the proportionate share of the Company
and its Restricted Subsidiaries in the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time such Restricted
Subsidiary is designated an Unrestricted Subsidiary or Non-Consolidated
Entity, (b) the proportionate share of the Company and its Restricted
Subsidiaries in the fair market value of the assets (net of liabilities (other
than liabilities to the Company or any of its Restricted Subsidiaries)) of any
Unrestricted Subsidiary or Non-Consolidated Entity at the time that such
Unrestricted Subsidiary or Non-Consolidated Entity is designated a Restricted
Subsidiary shall be considered a reduction in outstanding Investments and (c)
any property transferred to or from an Unrestricted Subsidiary or Non-
Consolidated Entity shall be valued at its fair market value at the time of
such transfer.
"Investment Grade" means a rating of the HMH Senior Notes by both S&P and
Moody's, each such rating being in one of such agency's four highest generic
rating categories that signifies investment grade (i.e., currently BBB--(or
the equivalent) or higher by S&P and Baa3 (or the equivalent) or higher by
Moody's); provided in each case such ratings are publicly available; provided,
further, that in the event Moody's or S&P is no longer in existence for
purposes of determining whether the HMH Senior Notes are rated "Investment
Grade," such organization may be replaced by a nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act) designated by the Company, notice of which shall be given to the Trustee.
"Issue Date" means August 5, 1998.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien,
privilege, hypothecation, other encumbrance or charge of any kind (including,
without limitation, any conditional sale or other title retention agreement or
lease in the nature thereof or any agreement to give any security interest)
upon or with respect to any property of any kind now owned or hereinafter
acquired.
"Limited Partner Note" means an unsecured note of the Operating Partnership
which a limited partner of a Public Partnership can elect to receive at the
time of the Partnership Mergers instead of or in exchange for Units.
"Merger" means the merger of HMH Properties with and into the Operating
Partnership with the Operating Partnership as the surviving entity.
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"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (i) with respect to any Asset Sale other than the
sale of Capital Stock of a Restricted Subsidiary, the proceeds of such Asset
Sale in the form of cash or Cash Equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the principal,
but not interest, component thereof) when received in the form of cash or Cash
Equivalents (except to the extent such obligations are financed or sold with
recourse to the Company or any of its Restricted Subsidiaries) and proceeds
from the conversion of other property received when converted to cash or Cash
Equivalents, net of (a) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to
such Asset Sale, (b) provisions for all Taxes (including Taxes of Host REIT)
actually paid or payable as a result of such Asset Sale by the Company and its
Restricted Subsidiaries, taken as a whole, (c) payments made to repay
Indebtedness (other than Indebtedness subordinated in right of payment to the
HMH Senior Notes or a Subsidiary Guarantee) or any other obligations
outstanding at the time of such Asset Sale that either (I) is secured by a
Lien on the property or assets sold or (II) is required to be paid as a result
of such sale, (d) amounts reserved by the Company and its Restricted
Subsidiaries against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities
under any indemnification obligations associated with such Asset Sale, all as
determined on a consolidated basis in conformity with GAAP and (e) unless
Taxes thereon are paid by Host REIT as set forth in clause (b) above, amounts
required to be distributed as a result of the realization of gains from Asset
Sales in order to maintain or preserve Host REIT's status as a REIT (provided,
however, that with respect to an Asset Sale by any Person other than the
Company or a Wholly Owned Subsidiary, Net Cash Proceeds shall be the above
amount multiplied by the Company's (direct or indirect) percentage ownership
interest in such Person) and (ii) with respect to any issuance or sale of
Capital Stock, the proceeds of such issuance or sale in the form of cash or
Cash Equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not interest,
component thereof) when received in the form of cash or Cash Equivalents
(except to the extent such obligations are financed or sold with recourse to
the Company or any of its Restricted Subsidiaries) and proceeds from the
conversion of other property received when converted to cash or Cash
Equivalents, net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees incurred in connection with such issuance or sale and net of tax
paid or payable as a result thereof (provided, however, that with respect to
an issuance or sale by any Person other than the Company or a Wholly Owned
Subsidiary, Net Cash Proceeds shall be the above amount multiplied by the
Company's (direct or indirect) percentage ownership interest in such Person).
"Net Investments" means, with respect to any referenced category or group of
Investments, (x) the aggregate amount of such Investments made by the Company
and its Restricted Subsidiaries (to the extent of the Company's proportionate
interest in such Restricted Subsidiaries) on or subsequent to the Issue Date,
minus (y) the aggregate amount of any dividends, distributions, sales proceeds
or other amounts received by the Company and its Restricted Subsidiaries (to
the extent of the Company's proportionate interest in such Restricted
Subsidiaries) in respect of such Investments on or subsequent to the Issue
Date; and, in the event that any such Investments are made, or amounts are
received, in property other than cash, such amounts shall be the fair market
value of such property.
"Non-Conforming Assets" means various assets (principally comprising
partnership or other interests in hotels which are not leased, certain
international hotels in which Host or its Subsidiaries own interests, and
certain FF&E relating to hotels owned by the Operating Partnership and its
Subsidiaries) which assets, if owned by the Operating Partnership, could
jeopardize Host REIT's status as a REIT.
"Non-Consolidated Entity" means a Non-Controlled Entity or a Fifty Percent
Venture which is neither a Non-Consolidated Restricted Entity nor an
Unrestricted Subsidiary.
"Non-Consolidated Restricted Entity" means a Non-Controlled Entity or a
Fifty Percent Venture which has been designated by the Company (by notice to
the Trustee) as a Restricted Subsidiary and which designation has
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not been revoked (by notice to the Trustee). Revocation of a previous
designation of a Non-Controlled Entity or a Fifty Percent Venture as a Non-
Consolidated Restricted Entity shall be deemed to be a designation of such
entity to be a Non-Consolidated Entity.
"Non-Controlled Entity" means a taxable corporation in which the Operating
Partnership owns (directly or indirectly) 90% or more of the economic interest
but no more than 9.9% of the Voting Stock and whose assets consist primarily
of Non-Conforming Assets.
"Offering" means the offering of the HMH Senior Notes for sale by the
Company.
"Officers' Certificate" means a certificate signed on behalf of the Company,
a Guarantor or Subsidiary Guarantor, as applicable, by an officer of the
Company, a Guarantor or Subsidiary Guarantor, as applicable, who must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, Guarantor or Subsidiary
Guarantor, as applicable.
"Old Notes" means the approximately $35 million aggregate principal amount
of four series of Indebtedness of Host outstanding on the Issue Date.
"Operating Agreements" means the asset or property management agreements,
franchise agreements, lease agreements and other similar agreements between
the Company, any Subsidiary Guarantor or any of their respective Restricted
Subsidiaries, on the one hand, and Marriott International, SLC or another
entity engaged in and having pertinent experience with the operation of such
similar properties, on the other, relating to the operation of the real estate
properties owned by the Company, any Subsidiary Guarantor or any of their
respective Restricted Subsidiaries, provided that the management of the
Company determines in good faith that such arrangements are fair to the
Company and to such Restricted Subsidiary.
"Operating Partnership" means Host Marriott, L.P., a Delaware limited
partnership, and, prior to the REIT Conversion, a Wholly Owned Subsidiary of
Host, and, upon consummation of the Merger, the successor obligor to the
Company under the HMH Senior Notes.
"Parent" of any Person means a corporation which at the date of
determination owns, directly or indirectly, a majority of the Voting Stock of
such Person or of a Parent of such Person.
"Partnership Mergers" means the merger of one of more Subsidiaries of the
Operating Partnership into one or more of the Public Partnerships.
"Paying Agent" means, until otherwise designated, the Trustee.
"Permitted Investment" means any of the following: (i) an Investment in Cash
Equivalents; (ii) Investments in a Person substantially all of whose assets
are of a type generally used in a Related Business (an "Acquired Person") if,
as a result of such Investments, (a) the Acquired Person immediately thereupon
is or becomes a Restricted Subsidiary of the Company, or (b) the Acquired
Person immediately thereupon either (I) is merged or consolidated with or into
the Company or any of its Restricted Subsidiaries and the surviving Person is
the Company or a Restricted Subsidiary of the Company or (II) transfers or
conveys all or substantially all of its assets to, or is liquidated into, the
Company or any of its Restricted Subsidiaries; (iii) an Investment in a
Person, provided that (A) such Person is principally engaged in a Related
Business, (B) the Company or one or more of its Restricted Subsidiaries
participates in the management of such Person, as a general partner, member of
such Person's governing board or otherwise and (C) any such Investment shall
not be a Permitted Investment if, after giving effect thereto, the aggregate
amount of Net Investments outstanding made in reliance on this clause (iii)
subsequent to the Issue Date would exceed 5% of Total Assets; (iv) Permitted
Sharing Arrangement Payments; (v) securities received in connection with an
Asset Sale so long as such Asset Sale complied with the HMH Indenture
including the covenant "Limitation on Asset Sales" (but, only to the extent
the fair market value of such securities and all other non-cash and non-Cash
Equivalent consideration received complies with clause (ii)
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of the first paragraph of the "Limitation on Asset Sales" covenant); (vi)
Investments in the Company or in Restricted Subsidiaries of the Company; (vii)
Permitted Mortgage Investments; (viii) any Investments constituting part of
the REIT Conversion; and (ix) any Investments in a Non-Consolidated Entity,
provided that (after giving effect to such Investment) the total assets
(before depreciation and amortization) of all Non-Consolidated Entities
attributable to the Company's proportionate ownership interest therein, plus
an amount equal to the Net Investments outstanding made in reliance upon
clause (iii) above, does not exceed 20% of the total assets (before
depreciation and amortization) of the Company and its Consolidated
Subsidiaries (to the extent of the Company's proportionate ownership interest
therein).
"Permitted Lien" means any of the following: (i) Liens imposed by
governmental authorities for taxes, assessments or other charges where
nonpayment thereof is not subject to penalty or which are being contested in
good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of the Company in accordance with GAAP;
(ii) statutory liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in the
ordinary course of business, provided that (a) the underlying obligations are
not overdue for a period of more than 30 days, or (b) such Liens are being
contested in good faith and by appropriate proceedings and adequate reserves
with respect thereto are maintained on the books of the Company in accordance
with GAAP; (iii) Liens securing the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (iv) easements, rights-of-way,
zoning, similar restrictions and other similar encumbrances or title defects
which, singly or in the aggregate, do not in any case materially detract from
the value of the property, subject thereto (as such property is used by the
Company or any of its Restricted Subsidiaries) or interfere with the ordinary
conduct of the business of the Company or any of its Restricted Subsidiaries;
(v) Liens arising by operation of law in connection with judgments, only to
the extent, for an amount and for a period not resulting in an Event of
Default with respect thereto; (vi) pledges or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security legislation; and (vii) Liens
securing on an equal and ratable basis the HMH Senior Notes and any other
Indebtedness.
"Permitted Mortgage Investment" means an Investment in Indebtedness secured
by real estate assets or Capital Stock of Persons (other than the Company or
its Restricted Subsidiaries) owning such real estate assets; provided that (i)
the Company is able to consolidate the operations of the real estate assets in
its GAAP financial statements, (ii) such real estate assets are owned by a
partnership, LLC or other entity which is controlled by the Company or a
Restricted Subsidiary as a general partner, managing member or through similar
means, or (iii) the aggregate amount of such Permitted Mortgage Investments
(excluding those referenced in clauses (i) and (ii) above), determined at the
time each such Investment was made, does not exceed 10% of Total Assets after
giving effect to such Investment.
"Permitted REIT Distributions" means a declaration or payment of any
dividend or the making of any distribution (i) to Host REIT that is necessary
to maintain Host REIT's status as a REIT under the Code or to satisfy the
distributions required to be made by reason of Host REIT's making of the
election provided for in Notice 88-19 (or Treasury regulations issued pursuant
thereto), if (a) the aggregate principal amount of all outstanding
Indebtedness (other than the QUIPs Debt) of the Company and its Restricted
Subsidiaries on a consolidated basis at such time is less than 80% of Adjusted
Total Assets of the Company and (b) no Default or Event of Default shall have
occurred and be continuing and (ii) to any Person in respect of any Units,
which distribution is required as a result of or a condition to the
distribution or payment of such dividend or distribution to Host REIT;
provided that such Person's investment in the Operating Partnership in
consideration of which such Person received such Units shall have been
consummated in a transaction determined by the Company to be fair to the
Operating Partnership as set forth in an Officer's Certificate for Investments
in an amount less than $50 million and as set forth in a Board Resolution for
Investments equal to or greater than such amount.
"Permitted REIT Payments" means, without duplication, payments to Host REIT
and its Subsidiaries that hold only Qualified Assets in an amount necessary
and sufficient to permit Host REIT and such Subsidiaries to
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pay all of their operating expenses and other general corporate expenses and
liabilities (including any reasonable professional fees and expenses).
"Permitted Sharing Arrangements" means any contracts, agreements or other
arrangements between the Company and/or one or more of its Subsidiaries and a
Parent of the Company and/or one or more Subsidiaries of such Parent, pursuant
to which such Persons share centralized services, establish joint payroll
arrangements, procure goods or services jointly or otherwise make payments
with respect to goods or services on a joint basis, or allocate corporate
expenses (other than taxes based on income) (provided that (i) such Permitted
Sharing Arrangements are, in the determination of management of the Company,
the Subsidiary Guarantors, or their Restricted Subsidiaries in the best
interests of the Company, the Subsidiary Guarantors, or their Restricted
Subsidiaries and (ii) the liabilities of the Company, the Subsidiary
Guarantors and their Restricted Subsidiaries under such Permitted Sharing
Arrangements are determined in good faith and on a reasonable basis).
"Permitted Sharing Arrangements Payment" means payments under Permitted
Sharing Arrangements.
"Permitted Tax Payments" means payment of any liability of the Company,
Host, Host REIT or any of their respective Subsidiaries for Taxes.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participation or other equivalents (however designated, whether
voting or non-voting), which have a preference on liquidation or with respect
to distributions over any other class of Capital Stock, including preferred
partnership interests, whether general or limited, or such Person's preferred
or preference stock, whether outstanding on the Closing Date or issued
thereafter, including, without limitation, all series and classes of such
preferred or preference stock.
"Private Partnership" means a partnership (other than a Public Partnership)
or limited liability company that owns one or more full service hotels and
that, prior to the REIT Conversion, is partially but not Wholly Owned by Host
or one of its Subsidiaries.
"Private Partnership Acquisition" means the acquisition by the Operating
Partnership or a Restricted Subsidiary thereof from unaffiliated partners of
certain Private Partnerships of partnership interests in such Private
Partnerships in exchange for Units or the assets of such Private Partnerships
by merger or conveyance in exchange for Units.
"Procurement Contracts" means contracts for the procurement of goods and
services entered into in the ordinary course of business and consistent with
industry practices.
"Pro Rata Share" means "PRS"where:
PRS equals CR divided by TC multiplied by OPTC
where:
CR equals the redemption value of such Capital Stock in the issuing
Restricted Subsidiary held in the aggregate by the Company and its
Restricted Subsidiaries.
TC equals the total contribution to the equity of the issuing
Restricted Subsidiary made by the Company and its Restricted
Subsidiaries, and
OPTC equals the total contribution to the equity of the issuing
Restricted Subsidiary made by other Persons.
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"Public Partnerships" mean, collectively, Atlanta Marriott Marquis II
Limited Partnership, a Delaware limited partnership; Desert Springs Marriott
Limited Partnership, a Delaware limited partnership; Hanover Marriott Limited
Partnership, a Delaware limited partnership; Marriott Diversified American
Hotels, L.P., a Delaware limited partnership; Marriott Hotel Properties
Limited Partnership, a Delaware limited partnership; Marriott Hotel Properties
II Limited Partnership, a Delaware limited partnership; Mutual Benefit Chicago
Marriott Suite Hotel Partners, L.P., a Rhode Island Limited partnership;
Potomac Hotel Limited Partnership, a Delaware limited partnership; and
Marriott Suites Limited Partnership; or, as the context may require, any such
entity together with its Subsidiaries, or any of such Subsidiaries.
"Qualified Assets" means (i) Capital Stock of the Company or any of its
Subsidiaries or of other Subsidiaries of the Guarantors substantially all of
whose sole assets are direct or indirect interests in Capital Stock of the
Company and (ii) other assets related to corporate operations of the Guarantor
which are de minimus in relation to those of the Guarantors and their
Restricted Subsidiaries, taken as a whole.
"Qualified Capital Stock" means any Capital Stock of the Company that is not
Disqualified Stock and, when used in the definition of "Disqualified Stock,"
also includes any Capital Stock of a Restricted Subsidiary, Host REIT or any
Parent of the Company that is not Disqualified Stock.
"Qualified Exchange" means (i) any legal defeasance, redemption, retirement,
repurchase or other acquisition of then outstanding Capital Stock or
Indebtedness of the Company issued on or after the Issue Date with the Net
Cash Proceeds received by the Company from the substantially concurrent sale
of Qualified Capital Stock or (ii) any exchange of Qualified Capital Stock for
any then outstanding Capital Stock or Indebtedness issued on or after the
Issue Date.
"QUIPS" means the 6 3/4% Convertible Preferred Securities issued by Host
Financial Trust, a statutory business trust and a Subsidiary of Host.
"QUIPs Debt" means the $567 million aggregate principal amount of 6 3/4%
convertible subordinated debentures due 2026 of Host, held by Host Marriott
Financial Trust, a statutory business trust.
"Rating Agencies" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of all of the HMH Senior Notes publicly
available, a nationally recognized securities rating agency or agencies, as
the case may be, selected by the Company, which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means currently (i) with respect to S&P, any of the
following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories:
Ba, B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the
equivalent of any such category of S&P or Moody's used in another Rating
Agency. In determining whether the rating of the HMH Senior Notes has
decreased by one or more gradations, gradations within Rating Categories
(currently + and - for S&P, 1, 2 and 3 for Moody's; or the equivalent
gradations for another Rating Agency) shall be taken into account (e.g., with
respect to S&P, a decline in a rating from BB+ to BB, as well as from BB- to
B+, will constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) the first public notice of the occurrence of a
Change of Control or of the intention by the Company to effect a Change of
Control.
"Rating Decline" means the occurrence, on or within 90 days after the
earliest to occur of (i) a Change of Control and (ii) the date of the first
public notice of the occurrence of a Change of Control or of the intention by
any Person to effect a Change of Control (which period shall be extended so
long as the rating of the HMH Senior Notes is under publicly announced
consideration for possible downgrade by any of the Rating Agencies), of (a) in
the event the HMH Senior Notes are rated by either Moody's or S&P on the
Rating Date as Investment
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Grade, a decrease in the rating of the HMH Senior Notes by either of such
Rating Agencies to a rating that is below Investment Grade, or (b) in the
event the HMH Senior Notes are rated below Investment Grade by both Rating
Agencies on the Rating Date, a decrease in the rating of the HMH Senior Notes
by either Rating Agency by one or more gradations (including gradations with
Rating Categories as well as between Rating Categories).
"real estate assets" means real property and all FF&E associated or used in
connection therewith.
"Reference Period" with regard to any Person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is
to be made pursuant to the terms of the HMH Senior Notes or the HMH Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Stock (i)
issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or
(ii) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((i) and (ii) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Stock in a principal amount or, in the case of
Disqualified Stock, liquidation preference, not to exceed the sum of (a) the
reasonable and customary fees and expenses incurred in connection with the
Refinancing plus (b) the lesser of (I) the principal amount or, in the case of
Disqualified Stock, liquidation preference, of the Indebtedness or
Disqualified Stock so refinanced and (II) if such Indebtedness being
refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such
Refinancing; provided that Refinancing Indebtedness (other than a revolving
line of credit from a commercial lender or other Indebtedness whose proceeds
are used to repay a revolving line of credit from a commercial lender to the
extent such revolving line of credit or other Indebtedness was not put in
place for purposes of evading the limitations described in this definition)
shall (A) not have an Average Life shorter than the Indebtedness or
Disqualified Stock to be so refinanced at the time of such Refinancing and (B)
be subordinated in right of payment to the rights of Holders of the HMH Senior
Notes if the Indebtedness or Disqualified Stock to be refinanced was so
subordinated.
"REIT Conversion" means the various transactions to be carried out in
connection with Host's conversion to a REIT, as generally described in the
Prospectus and the S-4 Registration Statement, including without limitation
(i) the contribution to the Operating Partnership and its Subsidiaries of
substantially all of the assets (excluding the assets of SLC) held by Host and
its other Subsidiaries (which shall be substantially completed on or prior to
the Conversion Date); (ii) the assumption by the Operating Partnership and/or
its Subsidiaries of substantially all of the liabilities of Host and its other
Subsidiaries (including, without limitation, the QUIPs Debt and the Old
Notes); (iii) the Partnership Mergers; (iv) the Private Partnership
Acquisitions; (v) the issuance of Limited Partner Notes in connection with the
foregoing; (vi) the Blackstone Acquisition; (vii) the contribution, prior to
or substantially concurrent with the Conversion Date, to Non-Controlled
Entities of Non-Conforming Assets; (viii) the leases to SLC or Subsidiaries of
SLC of the hotels owned by the Operating Partnership and its Subsidiaries;
(ix) the Host REIT Merger; (x) the E&P Distribution; and (xi) such other
related transactions and steps, occurring prior to or substantially concurrent
with or within a reasonable time after the Conversion Date as may be
reasonably necessary to complete the above transactions or otherwise to permit
Host REIT to elect to be treated as a REIT for Federal income tax purposes;
provided that Host may in its sole discretion exclude any one or more of the
specific transactions enumerated above in clauses (ii) through (x) hereof;
provided, further, that Host shall not have distributed to its shareholders
any significant amounts of assets (other than regular dividends and the E&P
Distribution) on or prior to the Conversion Date and subsequent to the Issue
Date.
"Related Business" means the businesses conducted (or proposed to be
conducted) by the Company and its Restricted Subsidiaries as of the Closing
Date and any and all businesses that in the good faith judgment of the Board
of the Company are materially related businesses or real estate related
businesses. Without limiting the generality of the foregoing, Related Business
shall include the ownership and operation of lodging properties.
"Restricted Investment" means, in one or a series of related transactions,
any Investment, other than a Permitted Investment.
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"Restricted Payment" means, with respect to any Person (but without
duplication), (i) the declaration or payment of any dividend or other
distribution in respect of Capital Stock of such Person or the Parent or any
Restricted Subsidiary of such Person, (ii) any payment on account of the
purchase, redemption or other acquisition or retirement for value of Capital
Stock of such Person or the Parent or any Restricted Subsidiary of such
Person, (iii) other than with the proceeds from the substantially concurrent
sale of, or in exchange for, Refinancing Indebtedness, any purchase,
redemption, or other acquisition or retirement for value of, any payment in
respect of any amendment of the terms of or any defeasance of, any
Subordinated Indebtedness, directly or indirectly, by such Person or the
Parent or a Restricted Subsidiary of such Person prior to the scheduled
maturity, any scheduled repayment of principal, or scheduled sinking, fund
payment, as the case may be, of such Indebtedness, (iv) any Restricted
Investment by such Person, and (v) the payment to any Affiliate (other than
the Company or its Restricted Subsidiaries) in respect of taxes owed by any
consolidated group of which both such Person or a Subsidiary of such Person
and such Affiliate are members; provided, however, that the term "Restricted
Payment" does not include (a) any dividend, distribution or other payment on
or with respect to Capital Stock of the Company to the extent payable solely
in shares of Qualified Capital Stock; (b) any dividend, distribution or other
payment to the Company, or to any of the Subsidiary Guarantors, by the Company
or any of its Restricted Subsidiaries; (c) Permitted Tax Payments; (d) the
declaration or payment of dividends or other distributions by any Restricted
Subsidiary of the Company, provided such distributions are made to the Company
(or a Subsidiary of the Company, as applicable) on a pro rata basis (and in
like form) with all dividends and distributions so made; (e) the retirement of
Units upon conversion of such Units to Capital Stock of Host REIT; (f) any
transactions comprising part of the REIT Conversion; (g) any payments with
respect to Disqualified Stock or Indebtedness at the stated time and amounts
pursuant to the original terms of the instruments governing such obligations;
(h) Permitted REIT Payments; and (i) payments in accordance with the existing
terms of the QUIPS; and provided, further, that any payments of bona fide
obligations of the Company or any Restricted Subsidiary shall not be deemed to
be Restricted Payments solely by virtue of the fact of another Person's co-
obligation with respect thereto.
"Restricted Subsidiary" means any Subsidiary of the Company other than (i)
an Unrestricted Subsidiary or (ii) a Non-Consolidated Entity.
"S-4 Registration Statement" means the registration statement of the
Operating Partnership on Form S-4, filed with the Commission on June 2, 1998,
as amended and supplemented.
"Secured Indebtedness" means any Indebtedness or Disqualified Stock secured
by a Lien (other than Permitted Liens) upon the property of the Company, the
Subsidiary Guarantors or any of their respective Restricted Subsidiaries.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-
X promulgated by the Commission as in effect as of the Issue Date.
"SLC" means HMC Senior Communities, Inc., a Delaware corporation, and its
successors and assigns.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Stated Maturity" means (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii)
with respect to any scheduled installment of principal of or interest on any
debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"Subordinated Indebtedness" means, with respect to HMH Senior Notes of any
series, Indebtedness of the Company or a Subsidiary Guarantor that is
expressly subordinated in right of payment to the HMH Senior Notes of such
series or a Subsidiary Guarantee thereof, as applicable.
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"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the voting
power of the outstanding Voting Stock is owned, directly or indirectly, by
such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or the accounts of which would be
consolidated with those of such Person in its consolidated financial
statements in accordance with GAAP, if such statements were prepared as of
such date, (ii) any partnership (a) in which such Person or one or more
Subsidiaries of such Person is, at the time, a general partner and owns alone
or together with the Company a majority of the partnership interest or (b) in
which such Person or one or more Subsidiaries of such Person is, at the time,
a general partner and which is controlled by such Person in a manner
sufficient to permit its financial statements to be consolidated with the
financial statements of such Person in conformance with GAAP and the financial
statements of which are so consolidated, (iii) any Non-Controlled Entity, and
(iv) any Fifty Percent Venture.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor for
payment of principal, premium and interest on the HMH Senior Notes of a series
by such Subsidiary Guarantor. Each Subsidiary Guarantee with respect to HMH
Senior Notes of a series issued on the Issue Date will be a senior obligation
of the Subsidiary Guarantor with respect to such series and will be full and
unconditional regardless of the enforceability of the HMH Senior Notes of such
series and the Indenture.
"Subsidiary Guarantors" means (i) with respect to any series of HMH Senior
Notes issued on the Issue Date (A) the Initial Subsidiary Guarantors
identified in the following sentence and (B) any Future Subsidiary Guarantors
that become Subsidiary Guarantors pursuant to the terms of the HMH Indenture,
and (ii) with respect to HMH Senior Notes of any other series, any Person
providing a Guarantee with respect to HMH Senior Notes of such series and
designated a "Subsidiary Guarantor" in the board resolution, supplemental
indenture or Officers' Certificate establishing such series, but in each case
excluding any Persons whose guarantees have been released pursuant to the
terms of the HMH Indenture. The Initial Subsidiary Guarantors are HMH Rivers,
Inc.; HMH Marina, Inc.; Marriott SBM Two Corporation; Marriott PLP
Corporation; HMC Retirement Properties, Inc.; HMH Pentagon Corporation; HMC
SFO, Inc.; Host Airport Hotels, Inc.; Host of Houston 1979; Host of Houston,
Ltd.; Host of Boston, Ltd.; Marriott Financial Services, Inc.; HMC Capital
Resources Corp.; Marriott SBM One Corporation; YBG Associates LLC; PRM
Corporation; and Marriott Park Ridge Corporation.
"Subsidiary Indebtedness" means, without duplication, all Unsecured
Indebtedness (including Guarantees (other than Guarantees by Restricted
Subsidiaries of Secured Indebtedness)) of which a Restricted Subsidiary other
than a Subsidiary Guarantor is the obligor. A release of the Guarantee of a
Subsidiary Guarantor which remains a Restricted Subsidiary shall be deemed to
be an Incurrence of Subsidiary Indebtedness in amount equal to the Company's
proportionate interest in the Unsecured Indebtedness of such Subsidiary
Guarantor.
"Tax" or "Taxes" means all Federal, state, local, and foreign taxes, and
other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto, imposed by any domestic or foreign governmental authority
responsible for the administration of any such taxes.
"Total Assets" means the sum of (i) Undepreciated Real Estate Assets and
(ii) all other assets (excluding intangibles) of the Company, the Subsidiary
Guarantors, and their respective Restricted Subsidiaries determined on a
consolidated basis (it being understood that the accounts of Restricted
Subsidiaries shall be consolidated with those of the Company only to the
extent of the Company's proportionate interest therein).
"Total Unencumbered Assets" as of any date means the sum of (i)
Undepreciated Real Estate Assets not securing any portion of Secured
Indebtedness and (ii) all other assets (but excluding intangibles and minority
interests in Persons who are obligors with respect to outstanding secured
debt) of the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries not securing any portion of Secured Indebtedness,
determined on a consolidated basis (it being understood that the accounts of
Restricted Subsidiaries shall be consolidated with those of the Company only
to the extent of the Company's proportionate interest therein).
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"Transaction Date" means, with the respect to the Incurrence of any
Indebtedness or issuance of Disqualified Stock by the Company or any of its
Restricted Subsidiaries, the date such Indebtedness is to be Incurred or such
Disqualified Stock is to be issued and, with respect to any Restricted
Payment, the date such Restricted Payment is to be made.
"Undepreciated Real Estate Assets" means, as of any date, the cost (being
the original cost to the Company, the Subsidiary Guarantors or any of their
respective Restricted Subsidiaries plus capital improvements) of real estate
assets of the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries on such date, before depreciation and amortization of
such real estate assets, determined on a consolidated basis (it being
understood that the accounts of Restricted Subsidiaries shall be consolidated
with those of the Company only to the extent of the Company's proportionate
interest therein).
"Units" means the limited partnership units of the Operating Partnership.
"Unrestricted Subsidiary" means any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of the Company in the manner provided below. The Board of the Company
may designate any Subsidiary (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary, unless such
Subsidiary owns any Capital Stock of the Company, the Subsidiary Guarantors or
any of their respective Restricted Subsidiaries (other than the designated
Subsidiary and any other Subsidiary concurrently being designated as an
Unrestricted Subsidiary); provided that (a) any Guarantee by the Company, the
Subsidiary Guarantors or any of their respective Restricted Subsidiaries
(other than the designated Subsidiary and any other Subsidiary concurrently
being designated as an Unrestricted Subsidiary) of any Indebtedness of the
Subsidiary being so designated shall be deemed an "Incurrence" of such
Indebtedness and an "Investment" by the Company, the Subsidiary Guarantors or
such Restricted Subsidiaries at the time of such designation; (b) either (I)
the Subsidiary to be so designated has total assets of $1,000 or less or (II)
if such Subsidiary has assets greater than $1,000, such designation would not
be prohibited under the "Limitation on Restricted Payments" covenant described
below; and (c) if applicable, the Incurrence of Indebtedness and the
Investment referred to in clause (a) of this proviso would be permitted under
the "Limitation on Incurrences of Indebtedness and Issuances of Disqualified
Stock" and "Limitation on Restricted Payments" covenants. The Board of the
Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that (1) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
designation; and (2) all Liens, Indebtedness and Disqualified Stock of such
Unrestricted Subsidiary outstanding immediately after such designation would,
if Incurred, granted or issued at such time, have been permitted to be
Incurred, granted or issued and shall be deemed to have been Incurred, granted
or issued for all purposes of the Indenture. Any such designation by the Board
of the Company shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and
an Officer's Certificate certifying that such designation complied with the
foregoing provisions.
"Unsecured Indebtedness" means any Indebtedness or Disqualified Stock of the
Company, the Subsidiary Guarantors or any of their respective Restricted
Subsidiaries that is not Secured Indebtedness.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by individuals mandated
by applicable law) by such Person and/or one or more Wholly Owned Subsidiaries
of such Person.
* * *
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The covenants set forth below under the captions "Covenants at Issuance" and
"Covenants upon REIT Conversion", and the provisions set forth below under the
caption "Covenants upon Attainment and Maintenance of an Investment Grade
Rating" are applicable to the Series A Senior Notes, to the Series B Senior
Notes and the HMH Senior Notes of any other series, unless in establishing
such a series in a board resolution, supplemental indenture or Officers'
Certificate, it is provided that such series shall not have the benefit of one
or more of said covenants. For the purposes of HMH Senior Notes of any series,
when used in these covenants, the terms "HMH Senior Notes" shall mean HMH
Senior Notes of that series, and the term "Guarantor" and Subsidiary
Guarantor" shall mean, respectively, a Guarantor and Subsidiary Guarantor with
respect to HMH Senior Notes of that series.
Covenants at Issuance. The following covenants will be effective upon
issuance of the HMH Senior Notes:
Repurchase of HMH Senior Notes at the Option of the Holder Upon a Change of
Control Triggering Event
Upon the occurrence of a Change of Control Triggering Event, each Holder of
HMH Senior Notes will have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
HMH Senior Notes pursuant to the unconditional, irrevocable Offer to Purchase
described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon to the date of purchase (the "Change of Control
Payment") on a date that is not more than 45 Business Days after the
occurrence of such Change of Control Triggering Event (the "Change of Control
Payment Date").
On or before the Change of Control Payment Date, the Company will (i) accept
for payment HMH Senior Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent cash
sufficient to pay the Change of Control Payment (together with accrued and
unpaid interest) of all HMH Senior Notes so tendered and (iii) deliver to the
Trustee HMH Senior Notes so accepted together with an Officer's Certificate
listing the aggregate principal amount of the HMH Senior Notes or portions
thereof being purchased by the Company. The Paying Agent will promptly mail to
the Holders of HMH Senior Notes so accepted payment in an amount equal to the
Change of Control Payment, and the Trustee will promptly authenticate and mail
or deliver (or cause to be transferred by book entry) to such Holders a new
Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. Any HMH Senior Notes not so accepted
will be promptly mailed or delivered by the Company to the Holder thereof. The
Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the consummation thereof.
The provisions of the Indenture relating to a Change of Control Triggering
Event may not afford the Holders protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect Holders, if such transaction does not
constitute a Change of Control Triggering Event, as defined. In addition, the
Company may not have sufficient financial resources available to fulfill its
obligation to repurchase the HMH Senior Notes upon a Change of Control
Triggering Event.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under
the Exchange Act and the rules thereunder and all other applicable Federal and
state securities laws.
Limitation on Incurrences of Indebtedness and Issuances of Disqualified Stock
(a) The HMH Indenture provides that, except as set forth below, neither the
Company, the Subsidiary Guarantors nor any of their respective Restricted
Subsidiaries will, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness) or issue any Disqualified Stock. Notwithstanding the
foregoing sentence, if, on the date of any such Incurrence or issuance, after
giving effect to, on a pro forma basis, such Incurrence or issuance and the
receipt and application of the proceeds therefrom, (i) the aggregate amount of
all outstanding Indebtedness (other than the QUIPs Debt) and Disqualified
Stock of the Company, the Subsidiary Guarantors
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and their respective Restricted Subsidiaries (including amounts of Refinancing
Indebtedness outstanding pursuant to paragraph (d)(iii) hereof or otherwise),
determined on a consolidated basis (it being understood that the amounts of
Indebtedness and Disqualified Stock of Restricted Subsidiaries shall be
consolidated with that of the Company only to the extent of the Company's
proportionate interest in such Restricted Subsidiaries), without duplication,
is less than or equal to 65% of Adjusted Total Assets of the Company and (ii)
the Consolidated Coverage Ratio of the Company would be greater than or equal
to 2.0 to 1, the Company and its Restricted Subsidiaries may Incur such
Indebtedness or issue such Disqualified Stock.
(b) In addition to the foregoing limitations set forth in (a) above, except
as set forth below, the Company, the Subsidiary Guarantors and their
Restricted Subsidiaries will not Incur any Secured Indebtedness or Subsidiary
Indebtedness. Notwithstanding the foregoing sentence, if, immediately after
giving effect to the Incurrence of such additional Secured Indebtedness and/or
Subsidiary Indebtedness and the application of the proceeds thereof, the
aggregate amount of all outstanding Secured Indebtedness and Subsidiary
Indebtedness of the Company, the Subsidiary Guarantors and their Restricted
Subsidiaries (including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (d)(iii) hereof or otherwise), determined on a
consolidated basis (it being understood that the amounts of Secured
Indebtedness and Subsidiary Indebtedness of Restricted Subsidiaries shall be
consolidated with that of the Company only to the extent of the Company's
proportionate interest in such Restricted Subsidiaries), without duplication,
is less than or equal to 45% of Adjusted Total Assets of the Company, the
Company and its Restricted Subsidiaries may Incur such Secured Indebtedness
and/or Subsidiary Indebtedness.
(c) In addition to the limitations set forth in (a) and (b) above, the
Company, the Subsidiary Guarantors and their Restricted Subsidiaries will
maintain at all times Total Unencumbered Assets of not less than 125% of the
aggregate outstanding amount of the Unsecured Indebtedness (other than the
QUIPs Debt) (including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (d)(iii) hereof or otherwise) determined on a
consolidated basis (it being understood that the Unsecured Indebtedness of the
Restricted Subsidiaries shall be consolidated with that of the Company only to
the extent of the Company's proportionate interest in such Restricted
Subsidiaries).
(d) Notwithstanding paragraphs (a) or (b), the HMH Indenture provides that
the Company, the Subsidiary Guarantors and their respective Restricted
Subsidiaries (except as specified below) may Incur or issue each and all of
the following: (i) Indebtedness outstanding (including Indebtedness issued to
replace, refinance or refund such Indebtedness) under the Credit Facility at
any time in an aggregate principal amount not to exceed $1.5 billion, less any
amount of such Indebtedness permanently repaid as provided under the
"Limitation on Asset Sales" covenant (including that, in the case of a
revolver or similar arrangement, such commitment is permanently reduced by
such amount); (ii) Indebtedness or Disqualified Stock owed (A) to the Company
or (B) to any Subsidiary Guarantor; provided that any event which results in
any Restricted Subsidiary holding such Indebtedness or Disqualified Stock
ceasing to be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness or Disqualified Stock (other than to the Company or a Subsidiary
Guarantor) shall be deemed, in each case, to constitute an Incurrence of such
Indebtedness or issuance of Disqualified Stock not permitted by this clause
(ii); (iii) Refinancing Indebtedness with respect to outstanding Indebtedness
(other than Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (viii)
of this paragraph) and any refinancings thereof; (iv) Indebtedness (A) in
respect of performance, surety or appeal bonds Incurred in the ordinary course
of business, (B) under Currency Agreements and Interest Swap and Hedging
Obligations; provided that such agreements (a) are designed solely to protect
the Company, the Subsidiary Guarantors or any of their Restricted Subsidiaries
against fluctuations in foreign currency exchange rates or interest rates and
(b) do not increase the Indebtedness of the obligor outstanding, at any time
other than as a result of fluctuations in foreign currency exchange rates or
interest rates or by reason of fees, indemnities and compensation payable
thereunder, or (C) arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from Guarantees or
letters of credit, surety bonds or performance bonds securing any obligations
of the Company, the Subsidiary Guarantors or any of their Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary (other
than Guarantees of
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Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing such
acquisition), in an amount not to exceed the gross proceeds actually received
by the Company, the Subsidiary Guarantors and their Restricted Subsidiaries on
a consolidated basis in connection with such disposition; (v) Indebtedness of
the Company, to the extent the net proceeds thereof are promptly (A) used to
purchase all of the HMH Senior Notes tendered in a Change of Control Offer
made as a result of a Change of Control or (B) deposited to defease the HMH
Senior Notes as described below under "Legal Defeasance and Covenant
Defeasance"; (vi) Guarantees of the HMH Senior Notes and Guarantees of
Indebtedness of the Company or any of the Subsidiary Guarantors by any of
their respective Restricted Subsidiaries; provided the guarantee of such
Indebtedness is permitted by and made in accordance with the terms of the
Indenture at the time of the incurrence of such underlying Indebtedness or at
the time such guarantor becomes a Restricted Subsidiary; (vii) Indebtedness
evidenced by the HMH Senior Notes and the Guarantees thereof and represented
by the HMH Indenture up to the amounts issued pursuant thereto as of the Issue
Date; (viii) the QUIPs Debt; (ix) Limited Partner Notes, and (x) Indebtedness
Incurred pursuant to the Blackstone Acquisition and any Indebtedness of Host,
its Subsidiaries, a Public Partnership or a Private Partnership incurred in
connection with the REIT Conversion.
(e) For purposes of determining any particular amount of Indebtedness under
this covenant, (1) Indebtedness Incurred under the Credit Facility on or prior
to the Issue Date shall be treated as Incurred pursuant to clause (i) of
paragraph (d) of this covenant and (2) Guarantees, Liens or obligations with
respect to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included as additional
Indebtedness. For purposes of determining compliance with this covenant, in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the above clauses, the Company, in its
sole discretion, shall classify such item of Indebtedness as being Incurred
under only one of such clauses.
Indebtedness or Disqualified Stock of any Person that is not a Restricted
Subsidiary of the Company, which Indebtedness or Disqualified Stock is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Company (including by designation) or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company, shall be deemed to
have been Incurred or issued at the time such Person becomes a Restricted
Subsidiary of the Company or is merged with or into or consolidated with the
Company, or a Restricted Subsidiary of the Company, and Indebtedness or
Disqualified Stock which is assumed at the time of the acquisition of any
asset shall be deemed to have been Incurred or issued at the time of such
acquisition.
Limitation on Liens
Neither the Company, the Subsidiary Guarantors, nor any Restricted
Subsidiary shall secure any Indebtedness under the Credit Facility by a Lien
or suffer to exist any Lien on their respective properties or assets securing
Indebtedness under the Credit Facility unless effective provision is made to
secure the HMH Senior Notes equally and ratably with the Lien securing such
Indebtedness for so long as Indebtedness under the Credit Facility is secured
by such Lien.
Limitation on Restricted Payments
The HMH Indenture provides that on and after the Issue Date each of the
Company and the Subsidiary Guarantors will not, and will not permit any of
their Restricted Subsidiaries to, directly or indirectly, make any Restricted
Payment, if (a) on the date of such Restricted Payment a Default or an Event
of Default would exist and be continuing or would occur as a consequence of
(after giving effect, on a pro forma basis, to) such Restricted Payment or (b)
immediately prior to such Restricted Payment or after giving effect thereto,
the aggregate amount of all Restricted Payments made by the Company, the
Subsidiary Guarantors and their Restricted Subsidiaries, including such
proposed Restricted Payment (if not made in cash, then the fair market value
of any property used therefor) from and after the Issue Date and on or prior
to the date of such Restricted Payment, shall exceed the sum of, without
duplication, (i) the amount determined by subtracting (x) 2.0 times the
aggregate Consolidated Interest Expense of the Company for the period (taken
as one accounting period)
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from the first day of the fiscal quarter in which the Issue Date occurs to the
last day of the last full fiscal quarter prior to the date of the proposed
Restricted Payment (the "Computation Period") from (y) Consolidated EBITDA of
the Company for the Computation Period, (ii) the aggregate Net Cash Proceeds
received by the Company from the sale (other than to a Subsidiary of the
Company and other than in connection with a Qualified Exchange) of its
Qualified Capital Stock or as a Capital Contribution from its Parent, in
either case, which Net Cash Proceeds are received by the Company after the
Issue Date, (iii) the fair market value of noncash tangible assets or Capital
Stock (other than that of the Company or its Parent) received by the Company
representing interests in Persons acquired in exchange for an issuance of
Qualified Capital Stock after the Issue Date, (iv) the fair market value of
noncash tangible assets or Capital Stock (other than that of the Company or
its Parent) representing interests in Persons contributed as a Capital
Contribution to the Company after the Issue Date and (v) $75 million.
Notwithstanding the foregoing, the provisions set forth in clause (b) of the
immediately preceding paragraph will not prohibit (i) the payment of any
dividend within 60 days after the date of its declaration if such dividend
could have been made on the date of its declaration in compliance with the
foregoing provisions, (ii) a Qualified Exchange, or (iii) a Permitted Sharing
Arrangements Payment; provided, however, that any amounts expended pursuant to
clause (i) of this paragraph shall be included as Restricted Payments made for
purposes of clause (b) of the immediately preceding paragraph, whereas amounts
received and expended in connection with a Qualified Exchange or a Permitted
Sharing Arrangements Payment shall neither be counted as Restricted Payments
made nor be credited as Net Cash Proceeds received for purposes of clause (b)
of the immediately preceding paragraph.
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiary
Guarantors
The HMH Indenture provides that the Company and the Subsidiary Guarantors
will not create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Subsidiary Guarantor to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Subsidiary Guarantor
held by the Company or its Restricted Subsidiaries, (ii) pay any Indebtedness
owed to the Company or any Subsidiary Guarantor, (iii) make loans or advances
to the Company or any Subsidiary Guarantor, or (iv) transfer its property or
assets to the Company or any Subsidiary Guarantor.
The foregoing provisions shall not prohibit any encumbrances or
restrictions: (i) imposed under the HMH Senior Notes as in existence
immediately following the Issue Date in the Indenture or under the Credit
Facility, and any extensions, refinancings, renewals or replacements of such
agreements; provided that the encumbrances and restrictions in any such
extensions, refinancings, renewals or replacements are no less favorable in
any material respect to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced, renewed or
replaced; (ii) imposed under any applicable documents or instruments
pertaining to any Secured Indebtedness (and relating solely to assets
constituting collateral thereunder or cash proceeds from or generated by such
assets); (iii) existing under or by reason of applicable law; (iv) existing
with respect to any Person or the property or assets of such Person acquired
by the Company or any Restricted Subsidiary, existing at the time of such
acquisition and not incurred in contemplation thereof, which encumbrances or
restrictions are not applicable to any Person or the property or assets of any
Person other than such Person or the property or assets of such Person so
acquired; (v) in the case of clause (iv) of the first paragraph of this
covenant, (A) that restrict in a customary manner the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted Subsidiary not otherwise
prohibited by the HMH Indenture or (C) arising or agreed to in the ordinary
course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or assets
of the Company or any Restricted Subsidiary in any manner material to the
Company and its Restricted Subsidiaries, taken as a whole; (vi) with respect
solely to a Restricted Subsidiary and imposed pursuant to an agreement that
has been entered into for the sale or disposition of all or substantially all
of the Capital Stock of, or property and assets of, such Restricted
Subsidiary; (vii) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of a payment default or a default with
respect to a financial covenant contained in such Indebtedness or agreement,
(B) the encumbrance or restriction is not
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materially more disadvantageous to the Holders of the HMH Senior Notes than is
customary in comparable financings (as determined by the Company) and (C) the
Company determines that any such encumbrance or restriction will not
materially affect its ability to make principal or interest payments on the
HMH Senior Notes, or (viii) in connection with and pursuant to permitted
refinancings thereof, replacements of restrictions imposed pursuant to clause
(iv) of this paragraph that are not more restrictive than those being replaced
and do not apply to any other Person or assets other than those that would
have been covered by the restrictions in the Indebtedness so refinanced.
Nothing contained in this covenant shall prevent the Company, the Subsidiary
Guarantors or any of their respective Restricted Subsidiaries from (1)
creating, incurring, assuming or suffering to exist any Permitted Liens or
Liens not prohibited by the "Limitation on Liens" covenant or (2) restricting
the sale or other disposition of property or assets of the Company or any of
its Restricted Subsidiaries that secure Indebtedness of the Company or any of
its Restricted Subsidiaries in accordance with the terms of such Indebtedness
or any related security document.
Limitation on Transactions with Affiliates
The HMH Indenture provides that neither the Company, the Subsidiary
Guarantors, nor any of their respective Restricted Subsidiaries will be
permitted to, directly or indirectly, enter into, renew or extend any
transaction or series of transactions (including, without limitation, the
purchase, sale, lease or exchange of property or assets, or the rendering of
any service) with any Affiliate of the Company or any of its Restricted
Subsidiaries ("Affiliate Transactions"), other than Exempted Affiliate
Transactions, except upon fair and reasonable terms no less favorable to the
Company, the Subsidiary Guarantor or such Restricted Subsidiary than could be
obtained, at the time of such transaction or, if such transaction is pursuant
to a written agreement, at the time of the execution of the agreement
providing therefor, in a comparable arm's-length transaction with a Person
that is not an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions approved by a majority of the Board of the Company; (ii) the
payment of reasonable and customary fees and expenses to members of the Board
of the Company who are not employees of the Company; (iii) any Restricted
Payments not prohibited by the "Limitation on Restricted Payments" covenant or
any payments specifically exempted from the definition of Restricted Payments;
and (iv) Permitted REIT Payments. Notwithstanding the foregoing, any Affiliate
Transaction or series of related Affiliate Transactions, other than Exempted
Affiliate Transactions and any transaction or series of related transactions
specified in any of clauses (ii) through (iv) of this paragraph, (a) with an
aggregate value in excess of $10 million must first be approved pursuant to a
Board Resolution by a majority of the Board of the Company who are
disinterested in the subject matter of the transaction, and (b) with an
aggregate value in excess of $25 million, will require the Company to obtain a
favorable written opinion from an independent financial advisor of national
reputation as to the fairness from a financial point of view of such
transaction to the Company, such Subsidiary Guarantor or such Restricted
Subsidiary, except that in the case of a real estate transaction or related
real estate transactions with an aggregate value in excess of $25 million but
not in excess of $50 million, an opinion may instead be obtained from an
independent, qualified real estate appraiser that the consideration received
in connection with such transaction is fair to the Company, such Subsidiary
Guarantor or such Restricted Subsidiary.
Limitation on Asset Sales
The HMH Indenture provides that the Company and the Subsidiary Guarantors
will not, and the Company and the Subsidiary Guarantors will not permit any of
their respective Restricted Subsidiaries to, consummate any Asset Sale, unless
(i) the consideration received by the Company, the Subsidiary Guarantor or
such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of as determined by the Board of the Company in good
faith and (ii) at least 75% of the consideration received consists of cash,
Cash Equivalents and/or real estate assets; provided that, with respect to the
sale of one or more real estate properties, up to 75% of the consideration may
consist of indebtedness of the purchaser of such real estate properties so
long as such Indebtedness is secured by a first priority Lien on the real
estate property or properties sold; and
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provided that, for purposes of this clause (ii) the amount of (A) any
Indebtedness (other than Indebtedness subordinated in right of payment to the
HMH Senior Notes or a Subsidiary Guarantee) that is required to be repaid or
assumed (and is either repaid or assumed by the transferee of the related
assets) by virtue of such Asset Sale and which is secured by a Lien on the
property or assets sold and (B) any securities or other obligations received
by the Company, any Subsidiary Guarantor or any such Restricted Subsidiary
from such transferee that are immediately converted by the Company, the
Subsidiary Guarantor or such Restricted Subsidiary into cash (or as to which
the Company, any Subsidiary Guarantor or such Restricted Subsidiary has
received at or prior to the consummation of the Asset Sale a commitment (which
may be subject to customary conditions) from a nationally recognized
investment, merchant or commercial bank to convert into cash within 90 days of
the consummation of such Asset Sale and which are thereafter actually
converted into cash within such 90-day period) will be deemed to be cash.
In the event that the aggregate Net Cash Proceeds received by the Company,
the Subsidiary Guarantors and the Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 1% of Total Assets (determined as of the date
closest to the commencement of such 12-month period for which a consolidated
balance sheet of the Company and its Restricted Subsidiaries has been filed
with the Commission or provided to the Trustee pursuant to the "Report"
covenant), then prior to 12-months after the date Net Cash Proceeds so
received exceeded 1% of Total Assets, the Net Cash Proceeds may be (A)
invested in or committed to be invested in, pursuant to a binding commitment
subject only to reasonable, customary closing conditions, and providing such
Net Cash Proceeds are, in fact, so invested, within an additional 180 days,
(x) fixed assets and property (other than notes, bonds, obligations and
securities) which in the good faith reasonable judgment of the Board of the
Company will immediately constitute or be part of a Related Business of the
Company, the Subsidiary Guarantor or such Restricted Subsidiary (if it
continues to be a Restricted Subsidiary) immediately following such
transaction, (y) Permitted Mortgage Investments or (z) a controlling interest
in the Capital Stock of an entity engaged in a Related Business; provided that
concurrently with an Investment specified in clause (z), such entity becomes a
Restricted Subsidiary or (B) used to repay and permanently reduce Indebtedness
outstanding under the Credit Facility (including that, in the case of a
revolver or similar arrangement, such commitment is permanently reduced by
such amount). Pending the application of any such Net Cash Proceeds as
described above, the Company may invest such Net Cash Proceeds in any manner
that is not prohibited by the Indenture. Any Net Cash Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of
this paragraph (including any Net Cash Proceeds which were committed to be
invested as provided in such sentence but which are not in fact invested
within the time period provided) will be deemed to constitute "Excess
Proceeds."
Within 30 days following each date on which the aggregate amount of Excess
Proceeds exceeds $25 million, the Company will make an Offer to Purchase from
the Holders and holders of any other Indebtedness of the Company ranking pari
passu with the HMH Senior Notes from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or redeem such
Indebtedness with the proceeds from such Asset Sale, on a pro rata basis, an
aggregate principal amount (or accreted value, as applicable) of HMH Senior
Notes and such other Indebtedness equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount (or accreted value,
as applicable) of the HMH Senior Notes and such other Indebtedness, plus, in
each case, accrued interest (if any) to the Payment Date. To the extent that
the aggregate amount of HMH Senior Notes and other senior Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount (or accreted value, as applicable) of HMH
Senior Notes and such other Indebtedness tendered pursuant to an Asset Sale
Offer exceeds the amount of Excess Proceeds, the HMH Senior Notes to be
purchased and such other Indebtedness shall be selected on a pro rata basis.
Upon completion of such Offer to Purchase, the amount of Excess Proceeds shall
be reset at zero.
Notwithstanding, and without complying with, any of the foregoing
provisions:
(i) the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries may, in the ordinary course of business, convey,
sell, lease, transfer, assign or otherwise dispose of inventory acquired
and held for resale in the ordinary course of business;
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(ii) the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries may convey, sell, lease, transfer, assign or
otherwise dispose of assets pursuant to and in accordance with the
"Consolidation, Merger and Sale of Assets" and "Limitation on Merger of
Subsidiary Guarantors and Release of Subsidiary Guarantors" covenants in
the HMH Indenture;
(iii) the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries may sell or dispose of damaged, worn out or other
obsolete property in the ordinary course of business so long as such
property is no longer necessary for the proper conduct of the business of
the Company, the Subsidiary Guarantor or such Restricted Subsidiary, as
applicable; and
(iv) the Company, the Subsidiary Guarantors and their respective
Restricted Subsidiaries may exchange assets held by the Company, the
Subsidiary Guarantor or a Restricted Subsidiary for one or more real estate
properties and/or one or more Related Businesses of any Person or entity
owning one or more real estate properties and/or one or more Related
Businesses; provided that the Board of the Company has determined in good
faith that the fair market value of the assets received by the Company are
approximately equal to the fair market value of the assets exchanged by the
Company.
No transaction listed in clauses (i) through (iv) inclusive shall be deemed
to be an "Asset Sale."
Limitation on Merger of Subsidiary Guarantors and Release of Subsidiary
Guarantors
The HMH Indenture provides that no Subsidiary Guarantor shall consolidate or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person) another Person (other than the Company or another Subsidiary
Guarantor), unless (i) subject to the provisions of the following paragraph,
the Person formed by or surviving any such consolidation or merger (if other
than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor pursuant to a supplemental indenture in form reasonably satisfactory
to the Trustee, pursuant to which such Person shall unconditionally and fully
guarantee, on a senior basis, all of such Subsidiary Guarantor's obligations
under such Subsidiary Guarantor's Guarantee under the HMH Indenture on the
terms set forth in the HMH Indenture; and (ii) immediately before and
immediately after giving effect to such transaction on a pro forma basis, no
Default or Event of Default shall have occurred or be continuing.
The Guarantee of the HMH Senior Notes by a Subsidiary Guarantor shall be
automatically released upon (i) the sale or other disposition of Capital Stock
of such Subsidiary Guarantor if, as a result of such sale or disposition, such
Subsidiary Guarantor ceases to be a Subsidiary of the Company, (ii) the
consolidation or merger of any such Subsidiary Guarantor with any Person other
than the Company or a Subsidiary of the Company if, as a result of such
consolidation or merger, such Subsidiary Guarantor ceases to be Subsidiary of
the Company, (iii) a Legal Defeasance or Covenant Defeasance, or (iv) the
unconditional and complete release of such Subsidiary Guarantor from its
Guarantee of all Guaranteed Indebtedness.
Limitation on Status as Investment Company
The HMH Indenture prohibits the Company and its Restricted Subsidiaries from
being required to register as an "investment company" (as that term is defined
in the Investment Company Act of 1940, as amended).
Covenants upon REIT Conversion. All of the covenants listed under the
heading "Covenants at Issuance" will also be applicable to the HMH Senior
Notes after the REIT Conversion, except that the first covenant governing
"Restricted Payments" under such heading will be replaced by the following
covenant:
Limitation on Restricted Payments
The HMH Indenture provides that the Company and the Subsidiary Guarantors
will not, and the Company and the Subsidiary Guarantors will not permit any of
their respective Restricted Subsidiaries to, directly or indirectly, make a
Restricted Payment if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing, (B) the Company could not Incur at least $1.00 of
Indebtedness under paragraph (a) of the "Limitation on Incurrence of
Indebtedness and
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Issuance of Disqualified Stock" covenant or (C) the aggregate amount of all
Restricted Payments (the amount, if other than in cash, the fair market value
of any property used therefor) made on and after the Issue Date shall exceed
the sum of, without duplication, (1) 95% of the aggregate amount of the Funds
From Operations (or, if the Funds From Operations is a loss, minus 100% of the
amount of such loss) accrued on a cumulative basis during the period (taken as
one accounting period) beginning on the first day of the fiscal quarter in
which the Issue Date occurs and ending on the last day of the last fiscal
quarter preceding the Transaction Date, (2) 100% of the aggregate Net Cash
Proceeds received by the Company after the Issue Date from the issuance and
sale permitted by the Indenture of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of the Company including from an
issuance to a Person who is not a Subsidiary of the Company of any options,
warrants or other rights to acquire Capital Stock of the Company (in each
case, exclusive of any Disqualified Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the HMH Senior Notes), and the
amount of any Indebtedness (other than Indebtedness subordinate in right of
payment to the HMH Senior Notes) of the Company that was issued and sold for
cash upon the conversion of such Indebtedness after the Issue Date into
Capital Stock (other than Disqualified Stock) of the Company, or otherwise
received as Capital Contributions, (3) an amount equal to the net reduction in
Investments (other than Permitted Investments) in any Person other than a
Restricted Subsidiary after the Issue Date resulting from payments of interest
on Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or any of its Restricted
Subsidiaries or from the Net Cash Proceeds from the sale of any such
Investment (except, in each case, to the extent any such payment or proceeds
are included in the calculation of Funds From Operations) or from designations
of Unrestricted Subsidiaries or Non-Consolidated Entities as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), (4) the fair market value of noncash tangible assets or
Capital Stock (other than that of the Company or its Parent) representing
interests in Persons acquired after the Issue Date in exchange for an issuance
of Qualified Capital Stock and (5) the fair market value of noncash tangible
assets or Capital Stock (other than that of the Company or its Parent)
representing interests in Persons contributed as a Capital Contribution to the
Company after the Issue Date. Notwithstanding the foregoing, the Company may
make Permitted REIT Distributions.
Covenants upon Attainment and Maintenance of an Investment Grade Rating. The
covenants "--Limitation on Liens," "--Limitation on Restricted Payments," "--
Limitation on Dividend and other Payment Restrictions Affecting Subsidiary
Guarantors," "--Limitation on Asset Sales" and "--Limitation on Transactions
with Affiliates"--will not be applicable in the event, and only for so long
as, the HMH Senior Notes are rated Investment Grade.
REPORTS
The HMH Indenture provides that whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder, within 15 days after it is or
would have been required to file such with the Commission, annual and
quarterly financial statements substantially equivalent to financial
statements that would have been included in reports filed with the Commission,
if the Company were subject to the requirements of Section 13 or 15(d) of the
Exchange Act, including, with respect to annual information only, a report
thereon by the certified independent public accountants of the Company, as
such would be required in such reports to the Commission, and, in each case,
together with a management's discussion and analysis of financial condition
and results of operations which would be so required. Whether or not required
by the rules and regulations of the Commission, the Company will file a copy
of all such information and reports with the Commission for public
availability and will make such information available to securities analysts
and prospective investors upon request.
EVENTS OF DEFAULT
The HMH Indenture defines an Event of Default with respect to any series of
HMH Senior Notes as (i) the failure by the Company to pay any installment of
interest on the HMH Senior Notes of that series as and when the same becomes
due and payable and the continuance of any such failure for 30 days, (ii) the
failure by the
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Company to pay all or any part of the principal of, or premium, if any, on,
the HMH Senior Notes of that series when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise, (iii) the
failure by the Company, a Guarantor or any Subsidiary Guarantor to observe or
perform any other covenant or agreement contained in the HMH Senior Notes of
that series or the Indenture with respect to that series of HMH Senior Notes
and, subject to certain exceptions, the continuance of such failure for a
period of 30 days after written notice is given to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the HMH Senior Notes of that series outstanding, (iv)
certain events of bankruptcy, insolvency or reorganization in respect of the
Company or any of its Significant Subsidiaries, (v) a default in (I) Secured
Indebtedness of the Company or any of its Restricted Subsidiaries with an
aggregate principal amount in excess of 5% of Total Assets, or (II) other
Indebtedness of the Company or any of its Restricted Subsidiaries with an
aggregate principal amount in excess of $50 million, in either case, (a)
resulting from the failure to pay principal or interest when due (after giving
effect to any applicable extensions or grace or cure periods) or (b) as a
result of which the maturity of such Indebtedness has been accelerated prior
to its final Stated Maturity; and (vi) final unsatisfied judgments not covered
by insurance aggregating in excess of 0.5% of Total Assets, at any one time
rendered against the Company or any of its Significant Subsidiaries and not
stayed, bonded or discharged within 60 days. The HMH Indenture provides that
if a Default occurs and is continuing, the Trustee must, within 90 days after
the occurrence of such default, give to the Holders notice of such default;
provided that the Trustee may withhold from Holders of the HMH Senior Notes
notice of any continuing Default or Event of Default (except a Default or
Events of Default relating to the payment of principal or interest on the HMH
Senior Notes of that series) if it determines that withholding notice is in
their interest.
If an Event of Default with respect to the HMH Senior Notes of any series
occurs and is continuing (other than an Event of Default specified in clause
(iv), above, relating to the Company), then either the Trustee or the Holders
of 25% in aggregate principal amount of the HMH Senior Notes of that series
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) (an "Acceleration Notice"), may declare all principal,
determined as set forth below, and accrued interest thereon to be due and
payable immediately. If an Event of Default specified in clause (iv) above
relating to the Company occurs, all principal and accrued interest thereon
will be immediately due and payable on all outstanding HMH Senior Notes
without any declaration or other act on the part of Trustee or the Holders.
The Holders of a majority in aggregate principal amount of HMH Senior Notes of
any series generally are authorized to rescind such acceleration if all
existing Events of Default with respect to the HMH Senior Notes of such
series, other than the non-payment of the principal of, premium, if any, and
interest on the HMH Senior Notes of that series which have become due solely
by such acceleration, have been cured or waived. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
HMH Senior Notes of a series may direct the Trustee in its exercise of any
trust or power with respect to such series.
The Holders of a majority in aggregate principal amount of the HMH Senior
Notes of a series at the time outstanding may waive on behalf of all the
Holders any default with respect to such series, except a default with respect
to any provision requiring supermajority approval to amend, which default may
only be waived by such a supermajority with respect to such series, and except
a default in the payment of principal of or interest on any Senior Note of
that series not yet cured or a default with respect to any covenant or
provision which cannot be modified or amended without the consent of the
Holder of each outstanding Senior Note of that series affected.Subject to the
provisions of the Indenture relating to the duties of the Trustee, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless
such Holders have offered to the Trustee reasonable security or indemnity.
Subject to all provisions of the Indenture and applicable law, the Holders of
a majority in aggregate principal amount of the HMH Senior Notes of any series
at the time outstanding will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to such
series.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The HMH Indenture provides that the Company will not merge with or into, or
sell, convey, or transfer, or otherwise dispose of all or substantially of its
property and assets (as an entirety or substantially as an entirety in
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one transaction or a series of related transactions) to any Person or permit
any Person to merge with or into the Company, unless: (i) either the Company
shall be the continuing Person or the Person (if other than the Company)
formed by such consolidation or into which the Company is merged or that
acquired such property and assets of the Company shall be an entity organized
and validly existing under the laws of the United States of America or any
state or jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of the obligations of
the Company, on the HMH Senior Notes and under the Indenture; (ii) immediately
after giving effect, on a pro forma basis, to such transaction, no Default or
Event of Default shall have occurred and be continuing; and (iii) the Company
will have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company, in accordance with the foregoing, the successor
Person formed by such consolidation or into which the Company is merged or to
which such transfer is made, shall succeed to, be substituted for, and may
exercise every right and power of the Company under the HMH Indenture with the
same effect as if such successor Person had been named therein as the Company
and the Company shall be released from the obligations under the HMH Senior
Notes and the Indenture.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The HMH Indenture provides that the Company may, at its option, elect to
have its obligations and the obligations of the Guarantors and Subsidiary
Guarantors discharged with respect to the outstanding HMH Senior Notes of any
series ("Legal Defeasance"). Such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness
represented, and the Indenture shall cease to be of further effect as to all
outstanding HMH Senior Notes of such series and Guarantees thereof, except as
to (i) rights of Holders to receive payments in respect of the principal of,
premium, if any, and interest on such HMH Senior Notes when such payments are
due from the trust funds; (ii) the Company's obligations with respect to such
HMH Senior Notes concerning issuing temporary HMH Senior Notes, registration
of HMH Senior Notes, mutilated, destroyed, lost or stolen HMH Senior Notes,
and the maintenance of an office or agency for payment and money for security
payments held in trust; (iii) the rights, powers, trust, duties, and
immunities of the Trustee, and the Company's, the Guarantors' and the
Subsidiary Guarantors' obligations in connection therewith; and (iv) the Legal
Defeasance provisions of the Indenture. In addition, the Company may, at its
option and at any time, elect, with respect to any series of HMH Senior Notes,
to have the obligations of the Company, the Guarantors and the Subsidiary
Guarantors released with respect to certain covenants that are described in
the Indenture ("Covenant Defeasance") and thereafter any failure to comply
with such obligations shall not constitute a Default or Event of Default with
respect to the HMH Senior Notes of such series. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the HMH
Senior Notes of such series.
In order to exercise either Legal Defeasance or Covenant Defeasance, with
respect to any series of HMH Senior Notes, (i) the Company must irrevocably
deposit with the Trustee, in trust, for the benefit of the Holders of the HMH
Senior Notes of such series, U.S. legal tender, noncallable government
securities or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on such HMH Senior
Notes on the stated date for payment thereof or on the redemption date of such
principal or installment of principal of, premium, if any, or interest on such
HMH Senior Notes; (ii) in the case of the Legal Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to Trustee confirming that (A) the Company has received
from, or there has been published by the Internal Revenue Service, a ruling or
(B) since the date of the Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of such HMH
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Senior Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such Legal Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
such Trustee confirming that the Holders of such HMH Senior Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred with respect to such series and be continuing on
the date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a
default under the Indenture or any other material agreement or instrument to
which the Company or any of its Restricted Subsidiaries is a party or by which
the Company or any of its Restricted Subsidiaries is bound; (vi) the Company
shall have delivered to the Trustee an Officer's Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders
of such HMH Senior Notes over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and (vii) the Company shall have delivered to the
Trustee an Officer's Certificate stating that the conditions precedent
provided for have been complied with.
AMENDMENTS AND SUPPLEMENTS
The HMH Indenture contains provisions permitting the Company, the
Guarantors, the Subsidiary Guarantors and the Trustee to enter into a
supplemental indenture for certain limited purposes without the consent of the
Holders. Subject to certain limited exceptions, modifications and amendments
of the Indenture or any supplemental indenture with respect to any series may
be made by the Company, the Guarantors, the Subsidiary Guarantors and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding HMH Senior Notes of such series
(except that any amendments or supplements to the provisions relating to
security interests or with respect to the Guarantees of the Guarantors, the
Initial Subsidiary Guarantors and the Future Subsidiary Guarantors shall
require the consent of the Holders of not less than 66 2/3% of the aggregate
principal amount of the HMH Senior Notes of such series at the time
outstanding); provided that no such modification or amendment may, without the
consent of each Holder affected thereby, (i) change the Stated Maturity of the
principal of, or any installment of interest on, any Senior Note, (ii) reduce
the principal amount of, or premium, if any, or interest on, any Senior Note,
(iii) change the place of payment of principal of, or premium, if any, or
interest on, any Senior Note, (iv) impair the right to institute suit for the
enforcement of any payment on or after the Stated Maturity (or, in the case of
a redemption, on or after the Redemption Date) of any Note, (v) reduce the
above-stated percentages of outstanding HMH Senior Notes the consent of whose
Holders is necessary to modify or amend the Indenture, (vi) waive a default in
the payment of principal of, premium, if any, or interest on the HMH Senior
Notes, (vii) alter the provisions relating to the redemption of the HMH Senior
Notes at the option of the Company, (viii) reduce the percentage or aggregate
principal amount of outstanding HMH Senior Notes the consent of whose Holders
is necessary for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults or (ix) or make the HMH Senior Notes
subordinate in right of payment to any other Indebtedness.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The HMH Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the HMH Senior Notes or for any
claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company, the Guarantors or
the Subsidiary Guarantors in the Indenture, or in any of the HMH Senior Notes
or because of the creation of any Indebtedness represented thereby, shall be
had against any incorporator, partner, stockholder, officer, director,
employee or controlling Person of the Company, the Guarantors or the
Subsidiary Guarantors or of any successor Person thereof, except as an obligor
or Guarantor of the HMH Senior Notes pursuant to the Indenture. Each Holder,
by accepting the HMH Senior Notes, waives and releases all such liability.
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CONCERNING THE TRUSTEE
The HMH Indenture provides that, except during the continuance of a Default,
the Trustee will not be liable, except for the performance of such duties as
are specifically set forth in such Indenture. If an Event of Default has
occurred and is continuing, the Trustee will use the same degree of care and
skill in its exercise of the rights and powers vested in it under the
Indenture as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The HMH Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights
of the Trustee, should it become a creditor of the Company or the Guarantors,
to obtain payment of claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or otherwise. The
Trustee is permitted to engage in other transactions; provided that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the HMH Senior Notes will initially be issued in
the form of one or more registered HMH Senior Notes in global form (the
"Global Notes"). Each Global Note will be deposited on the date of the Closing
Date with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of Cede & Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the system of DTC is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable
to DTC and its Participants are on file with the Commission.
The Company expects that pursuant to procedures established by DTC (i) upon
deposit of the Global Notes, DTC will credit the accounts of Participants
designated by the Underwriters with an interest in the Global Note and (ii)
ownership of the HMH Senior Notes evidenced by the Global Notes will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the interests of Participants), the
Direct Participants and the Indirect Participants. The laws of some states
require that certain persons take physical delivery in definitive form of
securities that they own and that security interests in negotiable instruments
can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer HMH Senior Notes evidenced
by the Global Note will be limited to such extent.
So long as DTC or its nominee is the registered owner of a Senior Note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the HMH Senior Notes represented by the Global Notes for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have HMH Senior Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Notes, and will not
be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instructions
or approvals to the Trustee thereunder. As a result, the ability of a person
having a beneficial interest
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in the HMH Senior Notes represented by a Global Note to pledge such interest
to persons or entities that do not participate in DTC's system, or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
To facilitate subsequent transfers, all HMH Senior Notes deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the HMH Senior Notes with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the HMH Senior Notes. DTC's
records reflect only the identity of the Direct Participants to whose accounts
such HMH Senior Notes are credited, which may or may not be the beneficial
owners of the HMH Senior Notes. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to the beneficial owners of the HMH
Senior Notes will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
None of the Company, any Guarantor, any Subsidiary Guarantor, nor the
Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of HMH Senior Notes by DTC, or
for maintaining, supervising or reviewing any records of DTC relating to such
HMH Senior Notes.
Payments with respect to the principal of, premium, if any, and interest on,
any HMH Senior Note represented by a Global Note registered in the name of DTC
or its nominee on the applicable record date will be payable by the Trustee to
or at the direction of DTC or its nominee in its capacity as the registered
Holder of the Global Note representing such HMH Senior Notes under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the HMH Senior Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, none of
the Company, any Guarantor, any Subsidiary Guarantor, nor the Trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of HMH Senior Notes (including principal, premium, if any,
or interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Note as
shown on the records of DTC. Payments by the Direct Participants and the
Indirect Participants to the beneficial owners of HMH Senior Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary and the Company is unable to locate a
qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of HMH
Senior Notes in definitive form under the Indenture, then, upon surrender by
DTC of the Global Notes, Certificated Notes will be issued to each person that
DTC identifies as the beneficial owner of the HMH Senior Notes represented by
Global Notes. In addition, subject to certain conditions, any person having a
beneficial interest in a Global Note may, upon request to the Trustee,
exchange such beneficial interest for HMH Senior Notes in the form of
Certificated Notes. Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of such person or persons (or the
nominee of any thereof), and cause the same to be delivered thereto.
None of the Company, any Guarantor, any Subsidiary Guarantor, or the Trustee
shall be liable for any delay by DTC or any Direct Participant or Indirect
Participant in identifying the beneficial owners of the HMH Senior Notes, and
the Company, the Guarantors, the Subsidiary Guarantors, and the Trustee may
conclusively rely on, and shall be protected in relying on, instructions from
DTC for all purposes (including with respect to the registration and delivery,
and the respective principal amounts, of the HMH Senior Notes to be issued).
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable. The
Company will have no responsibility for the performance by DTC or its
Participants of their respective obligations as described hereunder or under
the rules and procedures governing their respective operations.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
The HMH Indenture requires that payments in respect of the HMH Senior Notes
represented by the Global Notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available funds to the
accounts specified by DTC. With respect to HMH Senior Notes represented by
Certificated Notes, the Company will make all payments of principal, premium,
if any, and interest, by mailing a check to each such Holder's registered
address. The HMH Senior Notes will trade in DTC's Same-Day Funds Settlement
System until maturity, or until the HMH Senior Notes are issued in
certificated form, and secondary market trading activity in the HMH Senior
Notes will therefore be required by DTC to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the HMH Senior Notes.
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PLAN OF DISTRIBUTION
The Company, HMH Properties and the other Co-Registrants may sell the
Offered Securities being offered hereby: (i) directly to purchasers; (ii)
through agents; (iii) through dealers; (iv) through underwriters; (v) directly
to the Company's shareholders; or (vi) through a combination of any such
methods of sale.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions either: (i) at a fixed price or prices, which may
be changed; (ii) at market prices prevailing at the time of sale; (iii) at
prices related to such prevailing market prices; or (iv) at negotiated prices.
Offers to purchase Offered Securities may be solicited directly by the
Company, HMH Properties and/or the other Co-Registrants. Offers to purchase
Offered Securities may also be solicited by agents designated by the Company,
HMH Properties and/or the other Co-Registrants from time to time. Any such
agent, who may be deemed to be an "underwriter" as that term is defined in the
Securities Act, involved in the offer or sale of the Offered Securities in
respect of which this Prospectus is delivered will be named, and any
commissions payable by the Company, HMH Properties and other Co-Registrants to
such agent will be set forth in the Prospectus Supplement.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, the Company, HMH Properties and/or the
other Co-Registrants will sell such Offered Securities to the dealer, as
principal. The dealer, who may be deemed to be an "underwriter" as that term
is defined in the Securities Act, may then resell such Offered Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
If an underwriter is, or underwriters are, utilized in the sale, the
Company, HMH Properties and/or the other Co-Registrants will execute an
underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters will be set forth in the Prospectus Supplement,
which will be used by the underwriter to make resales of the Offered
Securities in respect of which this Prospectus is delivered to the public. In
connection with the sale of Offered Securities, such underwriter may be deemed
to have received compensation from the Company, HMH Properties and/or the
other Co-Registrants in the form of underwriting discounts or commissions and
may also receive commissions from purchasers of Offered Securities for whom
they may act as agents. Underwriters may also sell Offered Securities 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. Any underwriting
compensation paid by the Company and/or HMH Properties to underwriters in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement.
Pursuant to any standby underwriting agreement entered into in connection
with a Subscription Rights offering to the Company's shareholders, persons
acting as standby underwriters may receive a commitment fee for all securities
underlying the Subscription Rights that the underwriter commits to purchase on
a standby basis. Additionally, prior to the expiration date with respect to
any Subscription Rights, any standby underwriters in a Subscription Rights
offering to the Company's shareholders may offer such securities on a when-
issued basis, including securities to be acquired through the purchase and
exercise of Subscription Rights, at prices set from time to time by the
standby underwriters. After the expiration date with respect to such
Subscription Rights, the underwriters may offer securities of the type
underlying the Subscription Rights, whether acquired pursuant to a standby
underwriting agreement, the exercise of the Subscription Rights or the
purchase of such securities in the market, to the public at a price or prices
to be determined by the underwriters. The standby underwriters may thus
realize profits or losses independent of the underwriting discounts or
commissions paid by the Company. In the event that the Company does not enter
into a standby underwriting arrangement in connection with a Subscription
Rights offering to the Company's shareholders, the Company may elect to retain
a dealer-manager to manage such a Subscription Rights offering for the
Company. Any such dealer-manager may offer securities of the type underlying
the Subscription Rights acquired or to be acquired pursuant to the purchase
and exercise
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of Subscription Rights and may thus realize profits or losses independent of
any dealer-manager fee paid by the Company.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with the Company, HMH Properties and/or
the other Co-Registrants, to indemnification by the Company, HMH Properties
and/or the other Co-Registrants against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which they may be required to make in respect thereof. Underwriters
and agents may engage in transactions with, or perform services for, the
Company, HMH Properties and/or the other Co-Registrants in the ordinary course
of business.
If so indicated in the applicable Prospectus Supplement, the Company, HMH
Properties and/or the other Co-Registrants will authorize underwriters,
dealers or other persons to solicit offers by certain institutions to purchase
Offered Securities pursuant to contracts providing for payment and delivery on
a future date or dates. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others. The
obligations of any purchasers under any such contract will not be subject to
any conditions except that (i) the purchase of the Offered Securities shall
not at the time of delivery be prohibited under the laws of the jurisdiction
to which such purchaser is subject, and (ii) if the Offered Securities are
also being sold to underwriters, the Company, HMH Properties and/or the other
Co-Registrants shall have sold to such underwriters the Offered Securities not
sold for delayed delivery. The underwriters, dealers and such other persons
will not have any responsibility in respect of the validity or performance of
such contracts. The Prospectus Supplement relating to such contracts will set
forth the price to be paid for Offered Securities pursuant to such Contracts,
the commission payable for solicitation of such contracts and the date or
dates in the future for delivery of Offered Securities pursuant to such
contracts.
Any underwriter may engage in stabilizing and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act. Rule 104
permits stabilizing bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may over-
allot shares of the Common Stock in connection with an offering of Common
Stock, thereby creating a short position in the underwriters' account.
Syndicate covering transactions involve purchases of the Debt Securities in
the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing and syndicate covering transactions may
cause the price of the Debt Securities to be higher than it would otherwise be
in the absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
The anticipated date of delivery of Offered Securities will be set forth in
the applicable Prospectus Supplement relating to each offer.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for the Company,
HMH Properties and/or the other Co-Registrants by Christopher G. Townsend,
Esq., Senior Vice President and General Counsel of the Company or by other
counsel to the Company, HMH Properties and/or the other Co-Registrants. If the
Offered Securities are distributed in an underwritten offering or through
agents, certain legal matters may be passed upon for any agents or
underwriters by counsel for such agents or underwriters identified in the
applicable Prospectus Supplement.
EXPERTS
The audited consolidated financial statements and schedules of Host Marriott
Corporation, Host Marriott Hotels, Host Marriott L.P., HMC Senior Communities,
Inc., HMC Merger Corporation and HMH Properties, Inc. and the combined
financial statements of HMH Properties, Inc. and subsidiaries and HMC Capital
Resources Holding Corporation and subsidiaries incorporated by reference in
this prospectus and elsewhere in the registration statement to the extent and
for the periods indicated in their reports have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said reports.
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HMH PROPERTIES, INC.
$
% SERIES C SENIOR NOTES DUE 2008
----------------
PROSPECTUS
----------------
DONALDSON, LUFKIN & JENRETTE
BT ALEX. BROWN
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. IF ANY PERSON
DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT IS IN THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS ARE NOT, TOGETHER OR INDIVIDUALLY, AN OFFER TO SELL, NOR ARE
THEY SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY
CHANGE AFTER THAT DATE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 (i) Restated Certificate of Incorporation of Marriott Corporation
(incorporated by reference to Current Report on Form 8-K dated
October 23, 1993)
3.1(ii) Certificate of Correction filed to correct a certain error in the
Restated Certificate of Incorporation of Host Marriott
Corporation filed in the Office of the Secretary of State of
Delaware on August 11, 1992, filed in the Office of the Secretary
of State of Delaware on October 11, 1994 (incorporated by
reference to Registration Statement No. 33-54545)
3.2 Amended Marriott Corporation Bylaws (incorporated by reference to
Current Report on Form 8-K dated October 23, 1993)
4.1*** Form of Indenture
4.2* Specimen Common Stock Certificate
4.3* Certificate of Designation
4.4* Form of Preferred Stock Certificate
4.5* Form of Warrant Agreement
4.6* Form of Warrant
4.7* Form of Subscription Rights Certificate
4.8 Amended and Restated Indenture dated as of August 5, 1998, by and
among HMH Properties, Inc., the Guarantors (as defined therein),
the Subsidiary Guarantors (as defined therein) and Marine Midland
Bank, as Trustee (incorporated by reference to Current Report on
Form 8-K dated July 29, 1998, filed August 6, 1998)
4.9 First Supplemental Indenture to Amended and Restated Indenture
dated as of August 5, 1998 (including the form of 7 7/8% Series A
Senior Notes due 2005 and form of 7 7/8% Series B Notes due 2008)
(incorporated by reference to Current Report on Form 8-K dated
July 29, 1998, filed August 6, 1998)
4.10 Amended and Restated Credit Agreement dated as of June 19, 1997
and Amended and Restated as of August 5, 1998 among Host Marriott
Corporation, Host Marriott Hospitality, Inc., HMH Properties,
Inc., Host Marriott, L.P., HMC Capital Resources Corp., Various
Banks, Wells Fargo Bank, National Association, The Bank of Nova
Scotia and Credit Lyonnais New York Branch, as Co-Arrangers, and
Bankers Trust Company, as Arranger and Administrative Agent
(incorporated by reference to Current Report on Form 8-K dated
August 5, 1998, filed September 11, 1998)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.11 Pledge and Security Agreement, dated as of August 5, 1998, made by
pledgors signatory thereto in favor of Bankers Trust Company, as
Collateral Agent, for the benefit of the Secured Creditors (as
defined therein)
5.1*** Opinion of Latham & Watkins dated June 11, 1998 regarding the
legality of the securities to be issued
5.2 Opinion of Latham & Watkins dated November 30, 1998 regarding the
legality of the securities to be issued
8.1 Opinion of Latham & Watkins dated December 1, 1998 regarding
certain tax matters
12.1 Computation of Ratio of Earnings to Fixed Charges
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
12.3 Computation of Ratio of Earnings to Fixed Charges of HMH
Properties, Inc.
23.1*** Consent of Latham & Watkins (included as part of their opinions
listed as Exhibits 5.1, 5.2 and 8.1)
23.2 Consent of Arthur Andersen LLP, independent public accountants
24.1*** Powers of Attorney (included on signature pages)
25.1*** Statement of Eligibility of Trustee on Form T-1
25.2 Statement of Eligibility and Qualifications on Form T-1 of Marine
Midland Bank, as Trustee, under the Amended and Restated Indenture
dated as of August 5, 1998, by and among HMH Properties, Inc., the
Guarantors (as defined therein), the Subsidiary Guarantors (as
defined therein) and Marine Midland Bank, as Trustee (incorporated
by reference to Current Report on Form 8-K dated July 29, 1998,
filed August 6, 1998)
</TABLE>
- --------
* To be filed by amendment of by a Current Report on Form 8-K pursuant to
Regulation S-K, Item 601(b)
** To be filed separately pursuant to Trust Indenture Act Section 305(b)(2).
*** Filed previously
II-2
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host Marriott Corporation
*
By: _________________________________
ROBERT E. PARSONS, JR.
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
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>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President, Chief Executive November 30, 1998
______________________________________ Officer and Director
TERENCE C. GOLDEN (Principal Executive
Officer)
* Executive Vice President November 30, 1998
______________________________________ and Chief Financial
ROBERT E. PARSONS, JR. Officer (Principal
Financial Officer)
* Senior Vice President and November 30, 1998
______________________________________ Corporate Controller
DONALD D. OLINGER (Principal Accounting
Officer)
* Chairman of the Board of November 30, 1998
______________________________________ Directors
RICHARD E. MARRIOTT
* Director November 30, 1998
______________________________________
R. THEODORE AMMON
* Director November 30, 1998
______________________________________
ROBERT M. BAYLIS
* Director November 30, 1998
______________________________________
J.W. MARRIOTT, JR.
* Director November 30, 1998
______________________________________
ANNE DORE MCLAUGHLIN
* Director November 30, 1998
______________________________________
HARRY L. VINCENT, JR.
* Director November 30, 1998
______________________________________
JOHN SCHREIBER
*/s/ Christopher G. Townsend November 30, 1998
_____________________________________
CHRISTOPHER G. TOWNSEND
Attorney-in-fact
</TABLE>
II-3
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Farrell's Ice Cream Parlour
Restaurants, Inc.
Saga Property Leasing Corporation
Saga Restaurants, Inc.
Sparky's Virgin Islands, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer and
BRUCE D. WARDINSKI Principal Financial
Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC AP Canada, Inc.
HMC Toronto Air, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY, AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive, Financial and
ROBERT E. PARSONS, JR. Accounting Officer)
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Director November 30, 1998
______________________________________
JOAN C.G. KENNEDY
* Director November 30, 1998
______________________________________
ERNEST MCNEE
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Airport, Inc.
HMC Mexpark, Inc
HMC Polanco, Inc.
HMC Ventures, Inc.
HMC Waterford, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
ROBERT E. PARSONS, JR Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer and
BRUCE D. WARDINSKI Principal Financial
Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Retirement Properties, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
PRESIDENT AND DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Christopher G. Townsend President and Director November 30, 1998
______________________________________ (Principal Executive
CHRISTOPHER G. TOWNSEND Officer)
* Vice President, Chief November 30, 1998
______________________________________ Financial Officer and
ROBERT E. PARSONS, JR. Director (Principal
Financial Officer and
Principal Accounting
Officer)
* Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER J. NASSETTA
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC BN Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
ROBERT E. PARSONS, JR. Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
* Treasurer (Principal November 30, 1998
______________________________________ Financial Officer)
BRUCE D. WARDINSKI
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
* Director November 30, 1998
______________________________________
CHRISTOPHER J. NASSETTA
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-8
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Boyton Beach, Inc
Tecon Hotel Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS Financial Officer)
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer)
BRUCE D. WARDINSKI
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-9
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Capital Resources Corporation
YBG Associates LLC
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
PRESIDENT, SECRETARY AND DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Christopher G. Townsend President (Principal November 30, 1998
______________________________________ Executive Officer)
CHRISTOPHER G. TOWNSEND Secretary and Director
* Vice President (Principal November 30, 1998
______________________________________ Financial Officer) and
ROBERT E. PARSONS, JR Director
* Vice President and November 30, 1998
______________________________________ Director
DONALD D. OLINGER
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer)
BRUCE D. WARDINSKI
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-10
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Hartford, Inc.
HMC Manhattan Beach, Inc.
HMH Norfolk, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
ROBERT E. PARSONS, JR. Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Treasurer (Principal
BRUCE D. WARDINSKI Accounting Officer and
Principal Financial
Officer)
* Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER J. NASSETTA
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-11
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Charlotte (Calgary), Inc.
*
By: _________________________________
MUNGO HARDWICKE-BROWN
PRESIDENT, SECRETARY AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President, Secretary and November 30, 1998
______________________________________ Director (Principal
MUNGO HARDWICKE-BROWN Executive, Financial and
Accounting Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-12
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC East Side Financial Corporation
Marriott Properties, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
ROBERT E. PARSONS, JR. Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Director (Principal
CHRISTOPHER J. NASSETTA Financial Officer)
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer)
BRUCE D. WARDINSKI
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-13
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC East Side, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer)
ROBERT E. PARSONS, JR.
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice-President-Finance November 30, 1998
______________________________________ (Principal Accounting
BRUCE F. STEMERMAN Officer and Principal
Financial Officer) and
Director
* Director November 30, 1998
______________________________________
CHRISTOPHER J. NASSETTA
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-14
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Gateway, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer and
BRUCE F. STEMERMAN Principal Accounting
Officer) and Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-15
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Hotel Development Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
ROBERT E. PARSONS, JR. Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
* Vice President and November 30, 1998
______________________________________ Treasurer (Principal
BRUCE D. WARDINSKI Financial Officer)
/s/ Christopher G Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-16
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC SFO, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
CHRISTOPHER J. NASSETTA Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer and
DONALD D. OLINGER Principal Financial
Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-17
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH HPT Residence Inn, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer)
CHRISTOPHER J. NASSETTA
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer) and
BRUCE D. WARDINSKI Treasurer
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR Financial Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
</TABLE>
II-18
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Marina, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer)
ROBERT E. PARSONS, JR.
* Vice President and November 30, 1998
______________________________________ Director (Principal
CHRISTOPHER J. NASSETTA Financial Officer and
Principal Accounting
Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-19
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Pentagon Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer and
CHRISTOPHER J. NASSETTA Principal Financial
Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
* Vice President and November 30, 1998
______________________________________ Director
ROBERT E. PARSONS, JR.
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-20
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Properties, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
EXECUTIVE VICE PRESIDENT AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
ROBERT E. PARSONS, JR. Officer)
/s/ Christopher G. Townsend Executive Vice President November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Executive Vice President November 30, 1998
______________________________________
CHRISTOPHER J. NASSETTA
* Senior Vice President and November 30, 1998
______________________________________ Treasurer (Principal
BRUCE D. WARDINSKI Financial Officer)
* Vice President and November 30, 1998
______________________________________ Corporate Controller
DONALD D. OLINGER (Principal Accounting
Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-21
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Realty Company, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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 DATED INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Exeuctive
CHRISTOPHER J. NASSETTA Officer)
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
* Vice President and November 30, 1998
______________________________________ Treasurer (Principal
BRUCE D. WARDINSKI Accounting Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
* /s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-22
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Restaurants, Inc.
Marriott's Bickford's Family Fare,
Inc.
PM Financial Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Treasurer (Principal November 30, 1998
______________________________________ Accounting Officer)
BRUCE D. WARDINSKI
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-23
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMH Rivers, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Christopher G. Townsend President and Director November 30, 1998
______________________________________ (Principal Executive
CHRISTOPHER G. TOWNSEND Officer)
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-24
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host Airport Hotels, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
CHRISTOPHER J. NASSETTA Officer)
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer and
Principal Accounting
Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-25
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host LaJolla, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer)
ROBERT E. PARSONS, JR.
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer and
CHRISTOPHER J. NASETTA Principal Financial
Officer) and Director
* Director November 30, 1998
______________________________________
RICHARD E. MARRIOTT
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-26
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host Marriott Hospitality, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
SENIOR VICE PRESIDENT AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Chief November 30, 1998
______________________________________ Executive Officer
TERENCE C. GOLDEN (Principal Executive
Officer)
* Executive Vice President November 30, 1998
______________________________________ and Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
* Executive Vice President November 30, 1998
______________________________________ and Director
CHRISTOPHER J. NASSETTA
/s/ Christopher G. Townsend Senior Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
* /s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-27
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host Marriott, L.P.
HMC Real Estate Corporation as
General Partner
By:
*
By: _________________________________
CHRISTOPHER G. TOWNSEND
PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive, Financial and
ROBERT E. PARSONS, JR. Accounting Office)
Attorney-in-fact
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* /s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
</TABLE>
II-28
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott Financial Services, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
ROBERT E. PARSONS, JR. Officer)
* Vice President (Principal November 30, 1998
______________________________________ Financial Officer and
CHRISTOPHER J. NASSETTA Principal Accounting
Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-29
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Host of Boston, Ltd.
Host of Houston, Ltd.
Host of Houston 1979
Host Airport Hotels, Inc. as General
Partner
By:
/s/ Christopher G. Townsend
By: ___________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
CHRISTOPHER J. NASSETTA Officer)
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial and Accounting
Officer)
/s/ Christopher Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-30
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Hot Shoppes, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
TERENCE C. GOLDEN Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Treasurer (Principal
BRUCE D. WARDINSKI Accounting Officer and
Principal Financial
Officer)
* Director November 30, 1998
______________________________________
RICHARD E. MARRIOT
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-31
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
MHP Acquisition Corporation
*
By: _________________________________
CHRISTOPHER J. NASSETTA
PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
* Secretary November 30, 1998
______________________________________
TRACY M. J. COLDEN
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer and
BRUCE D. WARDINSKI Principal Financial
Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-32
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
MHP II Acquisition Corporation
*
By: _________________________________
CHRISTOPHER J. NASSETTA
PRESIDENT AND DIRECTOR
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>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
* Secretary November 30, 1998
______________________________________
ANDREA MOREHOUSE JACOB
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer and
BRUCE D. WARDINSKI Principal Financial
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-33
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott Park Ridge Corporation
Marriott SBM One Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
BRUCE F. STEMERMAN Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
EARLA STOWE
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-34
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott Family Restaurants, Inc. of
Illinois
Marriott Family Restaurants, Inc. of
Vermont
Marriott Family Restaurants, Inc. of
Wisconsin
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
CHRISTOPHER J. NASSETTA Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-35
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott PLP Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
BRUCE F. STEMERMAN Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
/s/ Donald D. Olinger Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
* Vice President and November 30, 1998
______________________________________ Director (Principal
ROBERT E. PARSONS, JR. Financial Officer)
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-36
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott MDAH One Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President, Vice President November 30, 1998
______________________________________ (Principal Executive
BRUCE F. STEMERMAN Officer and Principal
Financial Officer) and
Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
/s/ Earla Stowe Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
EARLA STOWE
* Director November 30, 1998
______________________________________
ROBERT E. PARSONS, JR.
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-37
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott Marquis Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer and
BRUCE F. STEMERMAN Principal Financial
Officer) and Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
/s/ Earla Stowe Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
EARLA STOWE
* Director November 30, 1998
______________________________________
ROBERT E. PARSONS, JR.
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-38
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Marriott SBM Two Corporation.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President and Director November 30, 1998
______________________________________ (Principal Executive
ROBERT E. PARSONS, JR. Officer)
* Vice President and November 30, 1998
______________________________________ Director (Principal
CHRISTOPHER J. NASSETTA Financial Officer and
Principal Accounting
Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Director
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-39
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Philadelphia Airport Hotel
Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer and
ROBERT E. PARSONS, JR. Principal Financial
Officer) and Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President and November 30, 1998
______________________________________ Director
BRUCE F. STEMERMAN
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer)
DONALD D. OLINGER
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-40
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
Willmar Distributors, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND VICE
PRESIDENT AND DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
- ------------------------------------- Executive Officer)
ROBERT E. PARSONS, JR. and Director
/s/ Christopher G. Townsend Vice President, November 30, 1998
- ------------------------------------- Treasurer,
CHRISTOPHER G. TOWNSEND Secretary and
Director
* Vice President November 30, 1998
- ------------------------------------- (Principal
CHRISTOPHER J. NASSETTA Accounting Officer
and Principal
Financial Officer)
and Director
*/s/ Christopher G. Townsend
- -------------------------------------
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-41
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
HMC Partnership Holdings, Inc.
HMH General Partner Holdings, Inc.
HMH HPT Courtyard, Inc.
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT, SECRETARY AND
DIRECTOR
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive Officer) and
ROBERT E. PARSONS, JR. Director
/s/ Christopher G. Townsend Vice President, Secretary November 30, 1998
______________________________________ and Director
CHRISTOPHER G. TOWNSEND
* Vice President (Principal November 30, 1998
______________________________________ Accounting Officer and
BRUCE D. WARDINSKI Principal Financial
Officer) and Treasurer
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-42
<PAGE>
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 OF THE
REQUIREMENTS FOR 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 BETHESDA, STATE OF MARYLAND, ON NOVEMBER 30, 1998.
PRM Corporation
/s/ Christopher G. Townsend
By: _________________________________
CHRISTOPHER G. TOWNSEND
VICE PRESIDENT AND SECRETARY
POWER OF ATTORNEY
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>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
* President (Principal November 30, 1998
______________________________________ Executive, Financial and
ROBERT E. PARSONS, JR. Accounting Officer)
/s/ Christopher G. Townsend Vice President and November 30, 1998
______________________________________ Secretary
CHRISTOPHER G. TOWNSEND
*/s/ Christopher G. Townsend
______________________________________
CHRISTOPHER G. TOWNSEND
ATTORNEY-IN-FACT
</TABLE>
II-43
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1* Form of Underwriting Agreement
3.1 (i) Restated Certificate of Incorporation of Marriott Corporation
(incorporated by reference to Current Report on Form 8-K dated
October 23, 1993)
3.1(ii) Certificate of Correction filed to correct a certain error in the
Restated Certificate of Incorporation of Host Marriott Corporation
filed in the Office of the Secretary of State of Delaware on August
11, 1992, filed in the Office of the Secretary of State of Delaware
on October 11, 1994 (incorporated by reference to Registration
Statement No. 33-54545)
3.2 Amended Marriott Corporation Bylaws (incorporated by reference to
Current Report on Form 8-K dated October 23, 1993)
4.1*** Form of Indenture
4.2* Specimen Common Stock Certificate
4.3* Certificate of Designation
4.4* Form of Preferred Stock Certificate
4.5* Form of Warrant Agreement
4.6* Form of Warrant
4.7* Form of Subscription Rights Certificate
4.8 Amended and Restated Indenture dated as of August 5, 1998, by and
among HMH Properties, Inc., the Guarantors (as defined therein),
the Subsidiary Guarantors (as defined therein) and Marine Midland
Bank, as Trustee (incorporated by reference to Current Report on
Form 8-K dated July 29, 1998, filed August 6, 1998)
4.9 First Supplemental Indenture to Amended and Restated Indenture
dated as of August 5, 1998 (including the form of 7 7/8% Series A
Senior Notes due 2005 and form of 7 7/8% Series B Notes due 2008)
(incorporated by reference to Current Report on Form 8-K dated July
29, 1998, filed August 6, 1998)
4.10 Amended and Restated Credit Agreement dated as of June 19, 1997 and
Amended and Restated as of August 5, 1998 among Host Marriott
Corporation, Host Marriott Hospitality, Inc., HMH Properties, Inc.,
Host Marriott, L.P., HMC Capital Resources Corp., Various Banks,
Wells Fargo Bank, National Association, The Bank of Nova Scotia and
Credit Lyonnais New York Branch, as Co-Arrangers, and Bankers Trust
Company, as Arranger and Administrative Agent (incorporated by
reference to Current Report on Form 8-K dated August 5, 1998, filed
September 11, 1998)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.11 Pledge and Security Agreement, dated as of August 5, 1998, made by
pledgors signatory thereto in favor of Bankers Trust Company, as
Collateral Agent, for the benefit of the Secured Creditors (as
defined therein)
5.1*** Opinion of Latham & Watkins dated June 11, 1998 regarding the
legality of the securities to be issued
5.2 Opinion of Latham & Watkins dated November 30, 1998 regarding the
legality of the securities to be issued
8.1 Opinion of Latham & Watkins dated December 1, 1998 regarding certain
tax matters
12.1 Computation of Ratio of Earnings to Fixed Charges
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
12.3 Computation of Ratio of Earnings to Fixed Charges of HMH Properties,
Inc.
23.1*** Consent of Latham & Watkins (included as part of their opinions
listed as Exhibits 5.1, 5.2 and 8.1)
23.2 Consent of Arthur Andersen LLP, independent public accountants
24.1*** Powers of Attorney (included on signature pages)
25.1*** Statement of Eligibility of Trustee on Form T-1
25.2 Statement of Eligibility and Qualifications on Form T-1 of Marine
Midland Bank, as Trustee, under the Amended and Restated Indenture
dated as of August 5, 1998, by and among HMH Properties, Inc., the
Guarantors (as defined therein), the Subsidiary Guarantors (as
defined therein) and Marine Midland Bank, as Trustee (incorporated
by reference to Current Report on Form 8-K dated July 29, 1998,
filed August 6, 1998)
</TABLE>
- --------
* To be filed by amendment of by a Current Report on Form 8-K pursuant to
Regulation S-K, Item 601(b)
** To be filed separately pursuant to Trust Indenture Act Section 305(b)(2).
*** Filed previously
<PAGE>
Exhibit 4.11
PLEDGE AND SECURITY AGREEMENT
-----------------------------
PLEDGE AND SECURITY AGREEMENT, dated as of August 5, 1998 (as amended,
modified or supplemented from time to time, this "Agreement"), made by each of
the undersigned pledgors (each a "Pledgor", and together with any entity that
becomes a party hereto pursuant to Section 22 hereof, the "Pledgors"), in favor
of BANKERS TRUST COMPANY, as Collateral Agent, for the benefit of the Secured
Creditors (as defined below) (in such capacity, the "Pledgee"). Except as
otherwise defined herein, terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined.
WITNESSETH:
-----------
WHEREAS, Host Marriott Corporation ("Host Marriott"), Host Marriott
Hospitality, Inc. ("Hospitality"), HMH Properties, Inc. ("HMH"), Host Marriott,
L.P. (the "Operating Partnership"), HMC Capital Resources Corp. ("CRC"), various
lenders from time to time party thereto (the "Banks"), Wells Fargo Bank,
National Association, The Bank of Nova Scotia and Credit Lyonnais New York
Branch, as Co-Arrangers (in such capacity, the "Co-Arrangers"), and Bankers
Trust Company, as Arranger and Administrative Agent (in such capacity and
together with any successor thereto, the "Administration Agent" and, together
with the Pledgee, the Co-Arrangers and the Banks and their respective successors
and assigns, and together with any other lenders from time to time party to the
Credit Agreement hereinafter referred to, the "Bank Creditors"), have entered
into an Amended and Restated Credit Agreement, dated as of June 19, 1997 and
amended and restated as of August 5, 1998, providing for the making of Loans to
the Borrower as contemplated therein (as used herein, the term "Credit
Agreement" means the Amended and Restated Credit Agreement described above in
this paragraph, as the same may be amended, modified, extended, renewed,
replaced, restated, supplemented or refinanced from time to time, and including
any agreement extending the maturity of, or refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers or
guarantors thereunder or any increase in the amount borrowed) all or any portion
of, the indebtedness under such agreement or any successor agreement, whether or
not with the same agent, trustee, representative, lenders or holders- provided
that, with respect to any agreement providing for the refinancing or replacement
of indebtedness under the Credit Agreement, such agreement shall only be treated
as, or as part of, the Credit Agreement hereunder if (i) either (A) all
obligations under the Credit Agreement being refinanced or replaced shall be
paid in full at the time of such refinancing or replacement, and all commitments
pursuant to the refinanced or replaced Credit Agreement shall have terminated in
accordance with their terms or (B) the Required Banks shall have consented in
writing to the refinancing or replacement indebtedness being treated as
indebtedness pursuant to the Credit Agreement, and (ii) a notice to the effect
that the refinancing or replacement indebtedness shall be treated as issued
under the Credit Agreement shall be delivered by the Borrower to the Pledgee);
WHEREAS, the Borrower may from time to time be party to (or guaranty the
obligations of one or more of its Subsidiaries under) one or more Interest Rate
Protection Agreements and/or Other Hedging Agreements with a Bank Creditor or an
affiliate of a Bank Creditor (each such Bank Creditor or affiliate, even if the
respective Bank Creditor subsequently ceases to be a Bank under the Credit
Agreement for any reason, together with such Bank Creditor's or affiliate's
successors and assigns, collectively, the "Other Creditors");
WHEREAS, pursuant to the Parents Guaranty and the Subsidiaries Guaranty,
the Parent Guarantors and the Subsidiary Guarantors, respectively, have jointly
and severally guaranteed to the Bank Creditors and the Other Creditors the
payment when due of all obligations and liabilities of the
<PAGE>
Borrower under or with respect to (x) the Credit Documents (as used herein, the
term "Credit Documents" shall have the meaning provided in the Credit Agreement
and shall include any documentation executed and delivered in connection with
any replacement or refinancing Credit Agreement) and (y) each Interest Rate
Protection Agreement and Other Hedging Agreement with one or more of the Other
Creditors;
WHEREAS, after giving effect to the conclusion of the Existing HMH Notes
Tender Offers/Consent Solicitations, there remain outstanding on the date hereof
certain of HMH's (i) 91/2% Senior Secured Notes due 2005, (ii) 8 7/8% Senior
Notes due 2007 and (iii) 9% Senior Notes due 2007 (collectively, the "HMH
Notes") (with the holders from time to time of such HMH Notes being herein
called the "HMH Noteholders") which were issued pursuant to each of the
respective indentures entered into by HMH, the subsidiary guarantors named
therein and Marine Midland Bank, as trustee in connection with the HMH Notes
(collectively, the "HMH Note Indentures");
WHEREAS, with respect to those HMH Notes that remain outstanding on the
date hereof, various of the Pledgors continue to guaranty the payment when due
of all of the obligations and liabilities of HMH under or with respect to such
HMH Notes and the Note Indentures (with any such guarantees, together with the
HMH Notes and the Note Indentures being herein collectively called "HMH Note
Documents");
WHEREAS, pursuant to the HMH Note Documents, the capital stock or other
equity interests of certain of the Borrower's current and future Subsidiaries
(the "Currently Pledged Securities") have been pledged to equally and ratably
secure the obligations of the Borrower and certain Subsidiaries thereof under
the Senior Notes;
WHEREAS, it is contemplated that the Currently Pledged Securities will also
be pledged to secure the Credit Document Obligations, the Other Obligations, the
Senior Note Obligations, the Additional Debt Obligations and all other amounts
comprising "Obligations" (as each such term is hereinafter defined) on an equal
and ratable basis with the HMH Note Obligations (as hereinafter defined), as
contemplated hereby, and that in connection therewith (i) the fights and
responsibilities with respect to the Currently Pledged Securities pursuant to
the Note Indentures of the parties thereto shall be amended and restated as set
forth in this Agreement and (ii) the Pledgee, as collateral agent hereunder,
shall act as the "Collateral Agent" for the benefit of the Noteholders and the
other Secured Creditors;
WHEREAS, on or prior to the date hereof, will have issued $1,700,000,000 in
aggregate principal amount of (i) the $500,000,000 7 7/8% Series A Senior Notes
due 2005 of and (ii) the $1,200,000,000 7 7/8% Series B Senior Notes due 2008 of
HMH (collectively, the "Senior Notes") (with the holders from time to time of
such Senior Notes being herein called the "Senior Noteholders") pursuant to the
Indenture, dated as of August 5, 1998, among the guarantors and subsidiary
guarantors named therein and Marine Midland Bank, as trustee, in connection with
the Senior Notes (the "Senior Note Indenture");
WHEREAS, various of the Pledgors have issued, or in the future may enter
into, guarantees of the payment when due of all of the obligations and
liabilities of HMH under or with respect to the Senior Notes and the Senior Note
Indenture (with any such guarantees, together with the Senior Notes and Senior
Note Indenture being herein collectively called "Senior Note Documents");
WHEREAS, the Borrower may in the future incur Additional Debt (as
hereinafter defined) as provided in Sections 9.04(xi) and (xii) of the Credit
Agreement and Section 4.7 of the Senior
2
<PAGE>
Note Indenture that may be (in accordance with the terms thereof and to the
extent permitted pursuant to the Credit Agreement and the Senior Note Indenture)
(x) guaranteed by various of the Pledgors and (y) to the extent that such
Additional Debt constitutes senior obligations of the Borrower which rank pari
passu in right of payment with the Credit Document Obligations (as defined
below) and the Senior Note Obligations (as defined below), secured hereunder on
an equal and ratable basis with all of the Obligations as hereinafter provided
(with any holders of such Additional Debt from time to time being herein
collectively called "Additional Debtholders" and with all documentation
evidencing any such Additional Debt and any guarantees thereof being herein
called "Additional Debt Documents"). For purposes hereof, the term "Additional
Debt" shall mean Indebtedness incurred pursuant to Sections 9.04(xi) and/or
9.04(xii) of the Credit Agreement and Section 4.7 of the Senior Note Indenture
in the aggregate principal amount of up to $2,200,000,000, so long as such
Indebtedness is not otherwise secured;
WHEREAS, it is a condition precedent to the extensions of credit under the
Credit Agreement and the Senior Note Indenture that each Pledgor shall have
executed and delivered to the Pledgee this Agreement;
WHEREAS, each Pledgor desires to execute this Agreement to satisfy the
conditions described in the immediately preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each Pledgor,
the receipt and sufficiency of which are hereby acknowledged, each Pledgor
hereby makes the following representations and warranties to the Pledgee and
hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. (a) Subject to the provisions of the
following clause (b) of this Section 1, this Agreement is made by each Pledgor
in favor of the Pledgee for the benefit of the Bank Creditors, the Other
Creditors, the Other Noteholders, the Senior Noteholders, the Additional
Debtholders and any trustee, agent or other similar representative of any such
creditors or holders (collectively, together with the Pledgee, the "Secured
Creditors"), to secure on an equal and ratable basis:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Bank Creditors, whether
now existing or hereafter incurred under, arising out of or in connection
with the Credit Agreement and all other Credit Documents to which it is at
any time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under the Credit Agreement (if a party thereto)
and under any guaranty by it of the obligations under the Credit Agreement)
and the due performance and compliance by such Pledgor with the terms of
each such Credit Document (all such obligations and liabilities under this
clause (i) being herein collectively called the "Credit Document
Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities of such Pledgor (as
obligor or guarantor, as the case may be) to the Other
3
<PAGE>
Creditors, whether now existing or hereafter incurred under, arising out of
or in connection with any Interest Rate Protection Agreement or Other
Hedging Agreement (including, without limitation, all such obligations and
liabilities of such Pledgor under any guaranty by it of the obligations
under any Interest Rate Protection Agreement or Other Hedging Agreement)
and the due performance and compliance by such Pledgor with the terms of
each such Interest Rate Protection Agreement and Other Hedging Agreement
(all such obligations and liabilities under this clause (ii) being herein
collectively called the "Other Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Noteholders, whether now
existing or hereafter incurred under, arising out of or in connection with
the HMH Notes and the other HMH Note Documents to which such Pledgor is at
any time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under any guaranty with respect thereto) and
the due performance and compliance by such Pledgor with all of the terms,
conditions and agreements on its part contained in each such HMH Note
Document (all such obligations and liabilities under this clause (iii)
being herein collectively called the "HMH Note Obligations");
(iv) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Senior Noteholders,
whether now existing or hereafter incurred under, arising out of or in
connection with the Senior Note Documents to which such Pledgor is at any
time a party (including, without limitation, all such obligations and
liabilities of such Pledgor under the Senior Note Indenture or any guaranty
by it of the obligations under the Senior Note Indenture) and the due
performance and compliance by such Pledgor with all of the terms,
conditions and agreements on its part contained in each such Senior Note
Document (all such obligations and liabilities under this clause (iv) being
herein collectively called the "Senior Note Obligations");
(v) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of such Pledgor (as
obligor or guarantor, as the case may be) to the Additional Debtholders,
whether now existing or hereafter incurred under, arising out of or in
connection with the Additional Debt and the other Additional Debt Documents
to which such Pledgor is at any time a party (including, without
limitation, all such obligations and liabilities of such Pledgor under any
guaranty with respect thereto) and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements on its part
contained in each such Additional Debt Document (all such obligations and
liabilities under this clause (v) being herein collectively called the
"Additional Debt Obligations");
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(vi) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(vii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred to in
clauses (i) through (vi) above, after an Event of Default (such term, as
used in this Agreement, shall mean (a) any "Event of Default" at any time
under, and as defined in, any of the Credit Agreement, the HMH Note
Documents and the Senior Note Documents and, if the Additional Debt
Obligations are secured hereunder at such time, the Additional Debt
Documents, and (b) any payment default (after the expiration of any
applicable grace period) on any of the Obligations secured hereunder at
such time) shall have occurred and be continuing, the reasonable expenses
of retaking, holding, preparing for sale or lease, selling or otherwise
disposing or realizing on the Collateral, or of any exercise by the Pledgee
of its rights hereunder, together with reasonable attorneys' fees and court
costs; and
(viii) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (viii) of this Section 1, subject to the provisions of following clause
(b), being herein collectively called the "Obligations," it being acknowledged
and agreed that the "Obligations" shall include extensions of credit of the type
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.
(b) Notwithstanding anything to the contrary contained above in this
Section I or elsewhere in this Agreement, obligations and liabilities which
would otherwise constitute Additional Debt Obligations as defined in clause (v)
of Section l(a) of this Agreement shall not constitute Obligations for purposes
of (or be secured pursuant to) this Agreement unless the Borrower shall have
delivered to the Pledgee a written "Notice of Pledge Agreement Entitlement'
(each, a "Notice of Pledge Agreement Entitlement") with respect thereto at least
5 days (or such shorter number of days as may be reasonably acceptable to the
Pledgee) prior to the date of the incurrence of the respective Indebtedness, as
follows:
Such written notice from the Borrower (i) shall state that it is a "Notice
of Pledge Agreement Entitlement", (ii) shall be delivered to the Pledgee,
(iii) shall describe the new Additional Debt Obligations (and shall
describe the Pledgors obligated, as obligors or guarantors, with respect
thereto) to be secured hereby, (iv) shall state that it is delivered
pursuant to Section l(b) of this Pledge and Security Agreement, (v) shall
reference the aggregate principal amount of such new Indebtedness and the
aggregate principal amount of all other Indebtedness constituting
Additional Debt Obligations hereunder, and (vi) shall state that the new
Indebtedness and the incurrence thereof does not violate, and may be
incurred and secured hereunder in accordance with, the applicable
provisions of Sections 9.01 and 9.04 of the Credit Agreement and, to the
extent still in effect, Section 4.7 of the Senior Note Indenture.
2. DEFINITION OF STOCK, LIMITED LIABILITY COMPANY INTERESTS, PARTNERSHIP
INTERESTS, SECURITIES, ETC. (a) As used herein: (i) the term "Stock" shall mean
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(x) with respect to corporations incorporated under the laws of the United
States or any State or territory thereof (each a "Domestic Corporation'), all of
the issued and outstanding shares of capital stock of any Domestic Corporation
at any time owned by any Pledgor and (y) with respect to corporations that are
not Domestic Corporations (each a "Foreign Corporation"), all of the issued and
outstanding shares of capital stock of any Foreign Corporation at any time owned
by any Pledgor, provided that, (A) except as provided in the last sentence of
this Section 2(a) and except for Foreign Subsidiaries that are Look-Through
Subsidiaries, such Pledgor shall not be required to pledge hereunder more than
65% of the total combined voting power of all classes of capital stock entitled
to vote for the directors of such Foreign Corporation (herein called "Voting
Stock") owned by such Pledgor of any Foreign Corporation and (B) the Pledgor
shall be required to pledge hereunder 100% of the issued and outstanding shares
of all capital stock which is not Voting Stock (herein called "Non-Voting
Stock") at any time owned by the Pledgor of any Foreign Corporation; (ii) the
term "Limited Liability Company Interest" shall mean the entire limited
liability company interests or membership interests at any time owned by each
Pledgor in any limited liability company (each such limited liability company, a
"Pledged Limited Liability Company"); (iii) the term "Partnership Interest"
shall mean the entire partnership interests (whether general and/or limited
partnership interests) at any time owned by each Pledgor in any partnership
(whether a general or limited partnership) (each such partnership, a "Pledged
Partnership"); and (iv) the term "Securities" shall mean all of the Stock,
Limited Liability Company Interests and Partnership Interests. Notwithstanding
anything to the contrary contained in this Agreement, (x) Host Marriott shall
not be required to pledge the capital stock of Hospitality hereunder until March
31, 1999, although no such pledge shall be required in the event that the REIT
Conversion has occurred on or before such date, and (y) from and after the.
consummation of the REIT Transaction and the issuance of the IRS Ruling, only
Securities of Persons that are Look-Through Subsidiaries shall be "Securities"
subject to the terms of this Agreement.
Each Pledgor represents and warrants that on the date hereof (i) the Stock
held by such Pledgor consists of the number and type of shares of the stock of
the corporations as described in Annex A hereto; (ii) such Stock constitutes
that percentage of the issued and outstanding capital stock of the issuing
corporation as is set forth in Annex A hereto; (iii) the Limited Liability
Interests held by such Pledgor consist of the number and type of interest of the
issuing Pledged Limited Liability Company as described in Annex B hereto; (iv)
such Limited Liability Company Interests constitute that percentage of the
issued and outstanding equity interests of the respective issuing Pledged
Limited Liability Company as is set forth in Annex B hereto; and (v) the
Partnership Interests held by such Pledgor constitute that percentage of the
entire Partnership Interest of the respective Pledged Partnership as is set
forth in Annex C hereto for such Pledgor. In the circumstances and to the extent
provided in Section 8.17 of the Credit Agreement, the limitation set forth in
part (A) of the proviso to clause (i)(y) of this Section 2(a) and in Section 3.2
hereof shall no longer be applicable and such Pledgor shall duly pledge and
deliver to the Pledgee such of the Securities not theretofore required to be
pledged hereunder.
(b) All Stock at any time pledged or required to be pledged hereunder is
hereinafter called the "Pledged Stock," all Limited Liability Company Interests
at any time pledged or required to be pledged hereunder are hereinafter called
the "Pledged Limited Liability Company Interests," all Partnership Interests at
any time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Partnership Interests," all of the Pledged Stock, Pledged Limited
Liability Interests and Pledged Partnership Interests together are hereinafter
called the "Pledged Securities," which together with (i) all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, (ii) the entries on the books of any securities intermediary
pertaining to the Pledged Stock, Pledged Limited Liability Company Interests and
Pledged Partnership Interests, (iii) all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Stock,
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Pledged Limited Liability Company Interests and Pledged Partnership Interests
and (iv) all rights under Section 3. 1 (a)(iv) and (v) are hereinafter called
the "Collateral".
(c) Notwithstanding anything to the contrary contained in this Agreement,
no Pledgor shall be required to pledge hereunder the Securities of a Person that
is not a Wholly-Owned Subsidiary if such pledge would violate the provisions of
any Indebtedness of such Person or any other material contract binding upon such
Person.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. (a) To secure all Obligations of such Pledgor and for the
purposes set forth in Section I hereof, each Pledgor hereby: (i) grants to the
Pledgee a first priority security interest in all of the Collateral owned by
such Pledgor- (ii) pledges and deposits as security with the Pledgee the
certificate Securities owned by such Pledgor on the date hereof, and delivers to
the Pledgee all certificates or instruments therefor, if any, accompanied by
undated stock powers duly executed in blank by such Pledgor in the case of
Stock, or such other instruments of transfer as are reasonably acceptable to the
Pledgee; (iii) assigns, transfers, hypothecates, mortgages, charges and sets
over to the Pledgee all of such Pledgor's right, title and interest in and to
such Securities (and in and to all certificates or instruments evidencing such
Securities), to be held by the Pledgee, upon the terms and conditions set forth
in this Agreement; (iv) transfers and assigns to the Pledgee all of such
Pledgor's Limited Liability Company Interests (and delivers any certificates or
instruments evidencing such limited liability company or membership interests,
duly endorsed in blank) and all of such Pledgor's right, title and interest in
each limited liability company to which such interests relate, whether now
existing or hereafter acquired, including, without limitation:
(A) all the capital thereof and its interest in all profits, losses,
Limited Liability Company Assets (as defined below) and other distributions
to which such Pledgor shall at any time be entitled in respect of such
Limited Liability Company Interests;
(B) all other payments due or to become due to such Pledgor in
respect of Limited Liability Company Interests, whether under any limited
liability company agreement or otherwise, whether as contractual
obligations, damages, insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any limited
liability company agreement or operating agreement, or at law or otherwise
in respect of such Limited Liability Company Interests (except any rights
as managing member of a limited liability company which is not a Wholly-
Owned Subsidiary, to the extent the applicable limited liability company
agreement or operating agreement prohibits a pledge of such rights);
(D) all present and future claims, if any, of such Pledgor against
any Pledged Limited Liability Company for moneys loaned or advanced, for
services rendered or otherwise;
(E) subject to Section 5 hereof, all of such Pledgor's rights under
any limited liability company agreement or operating agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to any Limited Liability Company
Interest (except any rights as managing member of a limited
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liability company which is not a Wholly-Owned Subsidiary, to the extent the
applicable limited liability company agreement or operating agreement
prohibits a pledge of such rights), including any power to terminate,
cancel or modify any limited liability company agreement or operating
agreement, to execute any instruments and to take any and all other action
on behalf of and in the name of such Pledgor in respect of such Limited
Liability Company Interest and any Pledged Limited Liability Company, to
make determinations, to exercise any election (including, but not limited
to, election of remedies) or option or to give or receive any notice,
consent, amendment, waiver of approval, together with full power and
authority to demand, receive, enforce, collect or receipt for any of the
foregoing or for any Limited Liability Company Assets, to enforce or
execute any checks, or other instruments or orders, to file any claims and
to take any action in connection with any of the foregoing;
(F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the foregoing; and
(G) to the extent not otherwise included, all proceeds of any or all
of the foregoing;
and (v) transfers and assigns to the Pledgee such Pledgor's Partnership
Interests (and delivers any certificates or instruments evidencing such
partnership interests, duly endorsed in blank) and all of such Pledgor's right,
title and interest in each Pledged Partnership including, without limitation:
(A) all of the capital thereof and its interest in all profits,
losses, Partnership Assets (as defined below) and other distributions to
which such Pledgor shall at any time be entitled in respect of any such
Partnership Interests;
(B) all other payments due or to become due to such Pledgor in
respect of any such Partnership Interests, whether under any partnership
agreement or otherwise, whether as contractual obligations, damages,
insurance proceeds or otherwise;
(C) all of its claims, rights, powers, privileges, authority,
options, security interests, liens and remedies, if any, under any
partnership or other agreement or at law or otherwise in respect of any
such Partnership Interests (except any rights as general partner of a
limited partnership which is not a Wholly-Owned Subsidiary, to the extent
the applicable partnership agreement prohibits a pledge of such rights);
(D) all present and future claims, if any, of such Pledgor against
any Pledged Partnership for moneys loaned or advanced, for services
rendered or otherwise;
(E) subject to Section 5 hereof, all of such Pledgor's rights under
any partnership agreement or at law to exercise and enforce every right,
power, remedy, authority, option and privilege of such Pledgor relating to
any Partnership Interest (except any rights as general partner of a limited
partnership which is not a Wholly-Owned Subsidiary, to the extent the
applicable partnership agreement prohibits a pledge of such rights),
including any power, if any, to terminate, cancel or modify any general or
limited partnership agreement, to execute any instruments and to take any
and all other action on behalf of and in the name of such
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<PAGE>
Pledgor in respect of such Partnership Interest and any Pledged
Partnership, to make determinations, to exercise any election (including,
but not limited to, election of remedies) or option or to give or receive
any notice, consent, amendment, waiver or approval, together with full
power and authority to demand, receive, enforce collect or receipt for any
of the foregoing or for any Partnership Assets, to enforce or execute any
checks, or other instruments or orders, to file any claims and to take any
action in connection with any of the foregoing;
(F) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, rights and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all thereof, and
(G) to the extent not otherwise included, all proceeds of any or all
of the foregoing.
(a) As used herein, the term "Limited Liability Company Assets" shall
mean all assets, whether tangible or intangible and whether real, personal or
mixed (including, without limitation, all limited liability company capital and
interests in other limited liability companies), at any time owned by any
Pledged Limited Liability Company.
(b) As used herein, the term "Partnership Assets" shall mean all assets,
whether tangible or intangible and whether real, personal or mixed (including,
without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership.
(c) As used herein, the term "Partnership Assets" shall mean all assets,
whether tangible or intangible and whether real, personal or mixed (including,
without limitation, all partnership capital and interests in other
partnerships), at any time owned by any Pledged Partnership.
3.2. Subsequently Acquired Securities. Subject to Section 2(c) hereof if
--------------------------------
any Pledgor shall acquire (by purchase, stock dividend or otherwise) any
additional Securities at any time or from time to time after the date hereof,
such Securities shall automatically (and without any further action being
required to be taken) be subject to the pledge and security interests created
pursuant to Section 3.1(a) hereof and, furthermore, such Pledgor will forthwith
deliver and deposit such Securities (or any certificates or instruments
representing such Securities) as security with the Pledgee and deliver to the
Pledgee all certificates therefor or instruments thereof, if any, accompanied by
undated stock powers duly executed in blank in the case of certificated Stock,
Limited Liability Company Interests or Partnership Interests or such other
instruments of transfer as are reasonably acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by any
Authorized Officer of such Pledgor describing such Securities and certifying
that the same have been duly pledged with the Pledgee hereunder. Subject to the
last sentence of Section 2(a) hereof, any pledge of Voting Stock of any Foreign
Corporation shall be subject to the provisions of part (A) of the proviso to
clause (i)(y) of Section 2(a) hereof.
3.3. Uncertificated Securities. If any Securities (whether now owned or
--------------------------
hereafter acquired) are uncertificated securities, the respective Pledgor shall
promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-106 and 9-115 of the New York UCC, if
applicable). Each Pledgor further agrees to take such actions as the Pledgee
deems reasonably necessary or desirable to effect the foregoing and to permit
the Pledgee to exercise any of its rights and remedies hereunder, and agrees to
provide an opinion of counsel reasonably satisfactory to the Pledgee with
respect to any such pledge of uncertificated Securities promptly upon request of
the Pledgee.
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4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have the
right to appoint one or more sub-agents for the purpose of retaining physical
possession of any Pledged Securities that are represented by certificates, which
may be held (in the discretion of the Pledgee) in the name of such Pledgor,
endorsed or assigned in blank or in favor of the Pledgee or any nominee or
nominees of the Pledgee or a sub-agent appointed by the Pledgee. The Pledgee
agrees to promptly notify the relevant Pledgor after the appointment of any
sub-agent; provided, however, that the failure to give such notice shall not
affect the validity of such appointment.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until an Event of
Default shall have occurred and be continuing, each Pledgor shall be entitled to
(i) exercise any and all voting and other consensual rights pertaining to the
Pledged Stock and to give all consents, waivers or ratifications in respect
thereof and (ii) exercise any and all voting, consent, administration,
management and other rights and remedies under (x) any limited liability company
agreement or operating agreement or otherwise with respect to the Pledged
Limited Liability Interests of such Pledgor and (y) any partnership agreement or
otherwise with respect to the Pledged Partnership Interests of such Pledgor, in
each case together with all other rights assigned pursuant to Sections 3.
1(a)(iv)(E) and 3. 1 (a)(v)(E) hereof; provided, that no vote shall be cast or
any consent, waiver or ratification given or any other action taken which would
violate or be inconsistent with any of the terms of this Agreement or any other
Secured Debt Agreement (as hereinafter defined), or which would have the effect
of impairing the rights, priorities or remedies of the Pledgee or any other
Secured Creditor under this Agreement or any other Secured Debt Agreement. All
such rights of such Pledgor to vote and to give consents, waivers and
ratification's shall cease in case an Event of Default shall occur and be
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless an Event of Default shall have
occurred and be continuing and subject to the terms of the Secured Debt
Agreements, all cash dividends and other cash distributions payable in respect
of the Pledged Securities shall be paid to the respective Pledgor; provided,
that all cash dividends and other cash distributions payable in respect of any
Pledged Security which represent in whole or in part an extraordinary,
liquidating or other distribution in return of capital shall be paid to the
Pledgee and retained by it as part of the Collateral (except as otherwise
permitted to be retained or distributed by such Pledgor pursuant to the
respective Secured Debt Agreements). The Pledgee shall also be entitled to
receive directly (with all necessary endorsements), and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or property
(other than cash) paid or distributed by way of dividend or otherwise in
respect of the Pledged Stock, Pledged Limited Liability Company Interests
and Pledged Partnership Interests;
(ii) all other or additional stock or other securities or property
(including cash) paid or distributed in respect of the Pledged Stock,
Pledged Limited Liability Company Interests or Pledged Partnership
Interests by way of stock-split, spin-off, split-up, reclassification,
combination of shares or similar rearrangement or in connection with 6
reduction of capital, capital surplus or paid-in surplus; and
(iii) except as provided in the Secured Debt Agreements, all other or
additional stock or other securities or property (including cash) which may
be paid in respect of the Collateral by reason of any consolidation,
merger, exchange of stock, conveyance of assets, partial or total
liquidation or similar corporate reorganization.
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Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in accordance
with Section 3 of this Agreement. All dividends, distributions or other payments
which are received by the Pledgor contrary to the provisions of this Section 6
and Section 7 below shall be received in trust for the benefit of the Pledgee,
shall be segregated from other property or funds of the Pledgor and shall be
forthwith paid over to the Pledgee as Collateral in the same form as so received
(with any necessary endorsement).
7. REMEDIES IN CASE OF EVENT OF DEFAULT. In case an Event of Default shall
have occurred and be continuing, the Pledgee shall be entitled to exercise all
of its rights, powers and remedies (whether vested in it by this Agreement, by
any other Credit Document, by any HMH Note Document, by any Senior Note Document
or, to the extent then in effect and secured hereby, any Interest Rate
Protection Agreement or Other Hedging Agreement or any Additional Debt Document
(with all of the Documents listed above being herein collectively called the
"Secured Debt Agreements") or by law) for the protection and enforcement of its
rights in respect of the Collateral, and the Pledgee shall be entitled to
exercise all the rights and remedies of a secured party under the UCC and also
shall be entitled, without limitation, to exercise the following rights, which
each Pledgor hereby agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the Collateral
otherwise payable to such Pledgor under Section 6 hereof,
(ii) to transfer all or any part of the Pledged Securities into the
Pledgee's name or the name of its nominee or nominees;
(iii) to vote all or any part of the Pledged Stock, Pledged Limited
Liability Company Interests or Pledged Partnership Interests (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto as though it were the outright owner thereof, and
(iv) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided, that at. least 10 Business
Days' notice of the time and place of any such sale shall be given to such
Pledgor. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshaling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Pledgor, and
each Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. The Pledgee may adjourn any public or private sale from time to
time
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by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives any claims against the Pledgee
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Pledgee accepts the first
offer received and does not offer such Collateral to more than one offeree.
If the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all the Obligations, the Pledgors shall be liable for
the deficiency and the fees of any attorneys employed by the Pledgee to
collect such deficiency. Neither the Pledgee nor any other Secured Creditor
shall be liable for failure to collect or realize upon any or all of the
Collateral or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the Pledgee
provided for in this Agreement or in any other Secured Debt Agreement or now or
here after existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or in any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. The Secured Creditors agree that
this Agreement may be enforced only by the Pledgee acting upon the instructions
of the Required Secured Creditors (as defined in Annex G hereto) and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Pledgee for the benefit of the Secured Creditors upon the terms of this
Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee upon
any sale or other disposition of the Collateral of each Pledgor, together with
all other moneys received by the Pledgee hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Pledgee of
the type provided in clauses (vi), (vii) and (viii) of the definition of
Obligations in Section I hereof,
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations (as hereinafter defined) shall be paid to the Secured
Creditors as provided in Section 9(e) hereof, with each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations of such
Pledgor or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share (as hereinafter defined) of the
amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations (as hereinafter defined) shall be paid to
the Secured Creditors as provided in Section 9(e) hereof, with each Secured
Creditor receiving an amount equal to its outstanding
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Secondary Obligations of such Pledgor or, if the proceeds are insufficient
to pay in full all such Secondary Obligations, its Pro Rata Share of the
amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 18 hereof,
to the relevant Pledgor or to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligation" shall mean (i) in the case of the
Credit Document Obligations, all Obligations arising out of or in connection
with (including, without limitation, as obligor or guarantor, as the case may
be) the principal of, and interest on, all Loans, all unreimbursed drawings or
payments in respect of any letters of credit (together with all interest accrued
thereon), and the aggregate stated amounts of all letters of credit issued under
the Credit Agreement, and all regularly accruing fees, (ii) in the case of the
HMH Note Obligations, all Obligations secured hereby arising out of or in
connection with (including, without limitation, as obligor or guarantor, as the
case may be) the principal of, and interest on, the HMH Notes, and all regularly
accruing fees, (iii) in the case of the Senior Note Obligations, all Obligations
secured hereby arising out of or in connection with (including, without
limitation, as obligor or guarantor, as the case may be) the principal of, and
interest on, the Senior Notes, and all regularly accruing fees, (iv) in the case
of the Additional Debt Obligations, all Obligations secured hereby arising out
of or in connection with (including, without limitation, as obligor or
guarantor, as the case may be) the principal of, and interest on, the Additional
Debt, and all regularly accruing fees, and (v) in the case of the Other
Obligations, all Obligations arising out of or in connection with (including,
without limitation, as a direct obligor or a guarantor, as the case may be)
Interest Rate Protection Agreements or Other Hedging Agreements secured hereby
(other than indemnities, fees (including, without limitation, attorneys' fees)
and similar obligations and liabilities), and (z) "Secondary Obligations" shall
mean all Obligations of such Pledgor secured hereby other than Primary
Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be deemed to be applied (for purposes of making determinations
under this Section 9 only) (i) first, to the Primary Obligations and (ii)
second, to the Secondary Obligations.
(d) If the Bank Creditors are to receive a distribution in
accordance with the procedures set forth above in this Section 9 on account of
undrawn amounts with respect to letters of credit issued under the Credit
Agreement, such amounts shall be paid to the Administrative Agent under the
Credit Agreement and held by it, for the equal and ratable benefit of the Bank
Creditors as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
letters of credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Bank Creditors after giving effect to
the termination of all such letters of credit, if there remains any excess cash,
such excess cash shall be returned by the Administrative Agent to the Pledgee
for distribution in accordance with Section 9(a) hereof.
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(e) Except as set forth in Section 9(d) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Administrative Agent under the Credit Agreement for the account of the Bank
Creditors, and (ii) if to any other Secured Creditors (other than the Pledgee),
to the trustee, paying agent or other similar representative (each a
"Representative") for such Secured Creditors or, in the absence of such a
Representative, directly to the other Secured Creditors.
(f) For purposes of applying payments received in accordance with
this Section 9, the Pledgee shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
any other Secured Creditors or, in the absence of such a Representative, upon
the respective Secured Creditors for a determination (which the Administrative
Agent, each Representative for any other Secured Creditors and the Secured
Creditors agree (or shall agree) to provide upon request of the Pledgee) of the
outstanding Primary Obligations and Secondary Obligations owed to the Secured
Creditors. Unless it has actual knowledge (including by way of written notice
from a Representative for any Secured Creditor or directly from a Secured
Creditor) to the contrary, the Pledgee, in acting hereunder, shall be entitled
to assume that no Interest Rate Protection Agreements or Other Hedging
Agreements are in existence.
(g) It is understood and agreed that each Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral pledged by it hereunder and the aggregate amount of the Obligations
of such Pledgor.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or non-application thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to indemnify
and hold harmless the Pledgee in such capacity, each Representative of a Secured
Creditor in its capacity as such and each other Secured Creditor that is an
indemnitor under Section 6 of Annex G hereto from and against any and all
claims, demands, losses, judgments and liabilities of whatsoever kind or nature,
and (ii) to reimburse the Pledgee in such capacity, each Representative of a
Secured Creditor in its capacity as such and each other Secured Creditor that is
an indemnitor under Section 6 of Annex G hereto for all reasonable costs and
expenses, including reasonable attorneys' fees, in each case to the extent
growing out of or resulting from the exercise by the Pledgee of any right or
remedy granted to it hereunder except, with respect to clauses (i) and (ii)
above, to the extent arising from the Pledgee's or such other Secured Creditor's
gross negligence or willful misconduct. In no event shall the Pledgee be liable,
in the absence of gross negligence or willful misconduct on its part, for any
matter or thing in connection with this Agreement other than to account for
moneys actually received by it in accordance with the terms hereof If and to the
extent that the obligations of the Pledgors under this Section 11 are
unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
12. FURTHER ASSURANCES; POWER OF ATTORNEY. (a) Each Pledgor agrees that it
will join with the Pledgee in executing and, at such Pledgor's own expense, file
and refile under the applicable UCC or such other law such financing statements,
continuation statements and other documents in such offices as the Pledgee may
reasonably deem necessary or appropriate and wherever
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required or permitted by law in order to perfect and preserve the Pledgee's
security interest in the Collateral and hereby authorizes the Pledgee to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of such Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Pledgee such additional conveyances, assignments, agreements and instruments as
the Pledgee may reasonably deem necessary or advisable to carry into effect the
purposes of this Agreement or to further assure and confirm unto the Pledgee its
rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor or otherwise, to act from time to time after the
occurrence and during the continuance of an Event of Default in the Pledgee's
reasonable discretion to take any action and to execute any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes of this
Section 12.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on the
terms and conditions set forth herein and in Annex G hereto, the terms of which
shall be deemed incorporated herein by reference as fully as if same were set
forth herein in their entirety.
14. TRANSFER BY PLEDGORS. No Pledgor will sell or otherwise dispose of,
grant any option with respect to, or mortgage, pledge or otherwise encumber any
of the Collateral or any interest therein (except in accordance with the terms
of this Agreement and as permitted by the terms of the Secured Debt Agreements).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS. (a) Each Pledgor
represents, warrants and covenants that:
(i) it is the legal, record and beneficial owner of, and has good
title to, all Pledged Securities purported to be owned by such Pledgor
(including as shown on Annexes A, B and C hereof, subject to no Lien,
except the Liens created by this Agreement;
(ii) it has full power, authority and legal right to pledge all the
Pledged Securities;
(iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes the legal, valid and binding obligation of
such Pledgor enforceable in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law);
(iv) no consent of any other party (including, without limitation, any
stockholder or creditor of such Pledgor or any of its Subsidiaries and any
other partners or members of such Pledgor's partnerships or limited
liability companies) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to,
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or registration, filing (except any filings required under the UCC, which
filings have been made (or will be made within 5 days after the date hereof
or declaration with, any governmental authority is required to be obtained
by such Pledgor in connection with the execution, delivery or performance
of this Agreement, or in connection with the exercise of its rights and
remedies pursuant to this Agreement, in each case except those which have
been obtained or made or as may be required by laws affecting the offer and
sale of securities generally in connection with the exercise by the Pledgee
of certain of its remedies hereunder;
(v) the execution, delivery and performance of this Agreement by
such Pledgor does not violate any provision of any applicable law or
regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of the
certificate of incorporation or by-laws (or analogous organizational
documents) of such Pledgor or of any securities issued by such Pledgor or
any of its Subsidiaries, or of any mortgage, indenture, lease, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which such Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in
the creation or imposition (or the obligation to create or impose) of any
lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement;
(vi) all the shares of Stock have been duly and validly issued, are
fully paid and nonassessable and subject to no options to purchase or
similar rights;
(vii) the pledge, assignment and delivery (which delivery has been
made) to the Pledgee of the Pledged Stock creates a valid and perfected
first priority security interest in such Stock, subject to no prior lien or
encumbrance or to any agreement purporting to grant to any third party
(except the Secured Creditors) a lien or encumbrance on the property or
assets of such Pledgor which would include the Securities;
(viii) each Pledged Partnership Interest and each Pledged Limited
Liability Company Interest has been validly acquired and is fully paid for
(to the extent applicable) and is duly and validly pledged hereunder;
(ix) each partnership agreement and each limited liability company
or operating agreement is the legal, valid and binding obligation of the
applicable Pledgor, enforceable in accordance with its terms;
(x) no Pledgor is in default in the payment of any portion of any
mandatory capital contribution, if any, required to be made under any
general or limited partnership agreement or any limited liability company
or operating agreement to which such Pledgor is a party, and no Pledgor is
in violation of any other material provisions of any partnership agreement
or any limited liability company or operating agreement to which such
Pledgor is a party, or is otherwise in default or violation thereunder in
any material respect;
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(xi) the pledge and assignment of the Pledged Partnership Interests
and/or Pledged Limited Liability Company Interests pursuant to this
Agreement, together with the relevant filings or recordings under the UCC
(or other steps described in any applicable version of the UCC) (which
filings, recordings or other steps have been made (or will be made) within
5 days after the date hereof), create a valid perfected and continuing
first priority security interest in such Partnership Interests and/or
Limited Liability Company Interests and the proceeds thereof, subject to no
prior lien or encumbrance or to any agreement purporting to grant to any
third party (except the Secured Creditors) a lien or encumbrance on the
property or assets of such Pledgee or which would include the Securities;
(xii) there are no currently effective financing statements under the
UCC covering property which is now or hereafter may be included in the
Collateral and such Pledgor will not, without the prior written consent of
the Pledgee, execute and, until the Termination Date (as hereinafter
defined), there will not ever be on file in any public office any
enforceable financing statement or statements covering any or all of the
Collateral, except financing statements filed or to be filed in favor of
the Pledgee as secured party;
(xiii) each Pledgor shall give the Pledgee prompt notice of any
written claim it receives relating to the Collateral- and
(xiv) each Pledgor shall deliver to the Pledgee a copy of each other
demand, notice or document received by it which may adversely affect the
Pledgee's interest in the Collateral promptly upon, but in any event within
10 days after, such Pledgor's receipt thereof.
Each Pledgor covenants and agrees that it will defend the Pledgee's right,
title and security interest in and to the Collateral and the proceeds thereof
against the claims and demands of all persons whomsoever; and such Pledgor
covenants and agrees that it will have like title to and right to pledge any
other property at any time hereafter pledged to the Pledgee as Collateral
hereunder and will likewise defend the right thereto and security interest
therein of the Pledgee and the other Secured Creditors.
(b) Each Pledgor hereby further represents, warrants and covenants
that as of the date hereof, the chief executive office of such Pledgor is
located at the address indicated on Annex F hereto for such Pledgor. Such
Pledgor will not move its chief executive office except to such new location as
such Pledgor may establish in accordance with the last sentence of this Section
15(b). No Pledgor shall establish new locations for such offices until (i) it
shall have given to the Pledgee prior written notice of its intention to do so,
clearly describing such new location and providing such other information in
connection therewith as the Pledgee may reasonably request, (ii) it shall have
delivered to the Pledgee a written supplement to Annex F hereto in the form of
Exhibit A-1 hereto as provided in clause (c) below showing the new location of
its chief executive office and (iii) with respect to such new location, it shall
have taken all action, reasonably satisfactory to the Pledgee, to maintain all
security interest of the Pledgee in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
(c) Without in any way limiting Section 3.2 hereof, at any time and
from time to time that any Pledgor (x) determines that the information with
respect to it contained on Annex
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A, B, C and/or F, as the case may be, is inaccurate or (y) acquires any
additional Securities which have not already been pledged hereunder and
reflected on Annexes A through C, as appropriate, such Pledgor shall deliver a
supplement to this Agreement, substantially in the form of Exhibit A- I hereto
(each a "Pledge and Security Agreement Supplement") adding (or, in the case of
any Securities released pursuant to Section 18 hereof, deleting) such Securities
to (from) Annexes A through C hereto, as appropriate. The execution and delivery
of any such supplement shall not require the consent of any Pledgor hereunder.
It is understood and agreed that the pledge and security interests granted
hereunder shall apply to all Collateral as provided in Section 3.1 hereof
regardless of the failure of any Pledgor to deliver, or any inaccurate
information stated in, the Pledge and Security Agreement Supplement as otherwise
provided above.
(d) Each Pledgor hereby covenants and agrees that with respect to
all Partnership Interests or Limited Liability Company Interests, in each case
required to be pledged by it hereunder, such Pledgor will deliver to the
respective Pledged Partnerships or Pledged Limited Liability Companies, as the
case may be (with copies to the Pledgee) a notice (appropriately completed) in
the form of Annex D attached hereto (with such changes thereto as may be
acceptable to the Pledgee) and by this reference made a part hereof (each such
notice a "Partnership/LLC Notice") and such Pledgor will use its reasonable best
efforts to cause to be delivered to the Pledgee an acknowledgment in the form
set forth as Annex E attached hereto (with such changes thereto as may be
acceptable to the Pledgee) (each such acknowledgment, a "Pledge
Acknowledgment"), duly executed by the relevant Pledged Partnership and/or
Pledged Limited Liability Company, as the case may be, in each case within
forty-five days following the date of any pledge of any Pledged Partnership
Interests or Pledged Limited Liability Company Interests hereunder.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each Pledgor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof, (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
or instrument or this Agreement; (iii) any furnishing of any additional security
to the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (iv) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof, (v) any limitation on any other Pledgor's
liability or obligations under this Agreement or under any other Secured Debt
Agreement or any invalidity or unenforceability, in whole or in part, of this
Agreement or any other Secured Debt Agreement or any term thereof, or (vi) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to such Pledgor or any Subsidiary
of such Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not
such Pledgor shall have notice or knowledge of any of the foregoing.
17. REGISTRATION, ETC. If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7 hereof, such Pledged Securities or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under the Securities
Act, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without
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such registration; provided, that at least 10 Business Days' notice of the time
and place of any such sale shall be given to such Pledgor. Without limiting the
generality of the foregoing, in any such event the Pledgee, in its sole and
absolute discretion: (i) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Securities or part thereof shall have been filed under such Securities Act- (ii)
may approach and negotiate with a single possible purchaser to effect such sale;
and (iii) may restrict such sale to a purchaser who will represent and agree
that such purchaser is purchasing for its own account, for investment, and not
with a view to the distribution or sale of such Pledged Securities or part
thereof In the event of any such sale, the Pledgee shall incur no responsibility
or liability for selling all or any part of the Pledged Securities at a price
which the Pledgee, in its sole and absolute discretion, may in good faith deem
reasonable under. the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
18. TERMINATION, RELEASE. (a) After the Termination Date (as defined
below), this Agreement shall terminate (provided that all indemnities set forth
herein including, without limitation, in Section 11 hereof shall survive any
such termination) and the Pledgee, at the request and expense of the respective
Pledgor, will promptly execute and deliver to such Pledgor a proper instrument
or instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the earlier of (i) the date upon which the Total
Commitment and all Interest Rate Protection Agreements and Other Hedging
Agreements have been terminated, no Note under the Credit Agreement is
outstanding and all other Credit Document Obligations (excluding normal
continuing indemnity obligations which survive in accordance with their terms,
so long as no amounts are then due and payable in respect thereof) have been
indefeasibly paid in full (provided the terms of the other Secured Debt
Agreements do not otherwise prohibit the termination hereof), and (ii) the date
upon which the Credit Documents are amended to release all Collateral subject to
this Agreement.
(b) In the event that any part of the Collateral is sold (other than
to any Credit Party) in connection with a sale permitted by the Secured Debt
Agreements, is distributed in connection with the SLC Spinoff or is otherwise
released at the direction of the Required Secured Creditors), the Pledgee, at
the request and expense of such Pledgor will promptly execute and deliver to
such Pledgor a proper instrument or instruments acknowledging such release, and
will duly assign, transfer and deliver to such Pledgor (without recourse and
without any representation or warranty) such of the Collateral as is then being
(or has been) so sold, distributed or released and as may be in possession of
the Pledgee and has not theretofore been released pursuant to this Agreement.
Any proceeds of Collateral sold as contemplated by the immediately preceding
sentence shall be applied in accordance with, and to the extent required by, the
requirements of the applicable Secured Debt Agreements.
(c) Provided that (i) the REIT Transaction has been consummated
substantially in accordance with the applicable provisions of the Credit
Agreement and (ii) the IRS Ruling has been issued, that portion of the
Collateral consisting of ownership interests (and related Collateral) in
entities that are not Look-Through Subsidiaries shall (at the request and
expense of the Borrower) be released from the liens and security interests
created hereby (and the Pledgee will promptly execute and deliver to such
Pledgor a proper instrument or instruments acknowledging such releases and will
duly assign, transfer and deliver to the related Pledgors (without recourse and
without any
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representation or warranty) such portion of the Collateral at the expense of the
Borrower and the related Pledgors).
(d) At any time that a Pledgor desires that Collateral be released
as provided in the foregoing Section 18(a), (b) or (c), it shall deliver to the
Pledgee a certificate signed by an Authorized Officer of such Pledgor stating
that the release of the respective Collateral is permitted pursuant to Section
18(a), (b) or (c), and the Pledgee shall be entitled (but not required) to
conclusively rely thereon.
19. NOTICES, ETC. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been given or made when delivered to the party to
which such notice, request, demand or other communication is required or
permitted to be given or made under this Agreement, addressed as follows:
(a) if to any Pledgor, at:
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: General Counsel,
Asset Management, Dept. 923
Facsimile No.: (301) 380-3588
(b) if to the Pledgee, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Laura S. Burwick
Telephone No.: (212) 250-2568
Telecopier No.: (212) 669-0743
(c) if to any Bank Creditor (other than the Pledgee), (x) to the
Administrative Agent, at the address of the Administrative Agent specified in
the Credit Agreement or (y) at such address as such Bank Creditor shall have
specified in the Credit Agreement;
(d) if to any other Secured Creditor, (x) to the Representative for
such Secured Creditor or (y) if there is no such Representative, at such address
as such Secured Creditor shall have specified in writing to each Pledgor and the
Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this Agreement
may be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by each Pledgor directly affected thereby (it being
understood that additional Pledgors may be added as parties hereto from time to
time in accordance with Section 22 hereof and Pledgors may be released as
parties hereto in accordance with Sections 18 and 21 and that no consent of any
other Pledgor or of the Secured Creditors shall be required in connection
therewith) and the Pledgee (with the written consent of (x) the Required Banks
(or all the Banks if required by Section 13.12 of the Credit Agreement) at all
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times prior to the time at which all Credit Document Obligations have been paid
in full and all commitments pursuant to the Credit Agreement have terminated
(with such date being herein called the "Credit Document Obligations Termination
Date") and (y) thereafter, the holders of at least a majority of the outstanding
Other Obligations- provided, that (with respect to preceding clauses (x) and
(y)) the Borrower certifies that any such change, waiver, modification or
variance is otherwise permitted by the terms of the respective Secured Debt
Agreements or, if not so permitted, that the requisite consents therefor have
been obtained (it being understood that the terms of the Additional Debt
Documents as same relate to amending or modifying this Agreement shall be
substantially as set forth in the Senior Note Indenture). Notwithstanding
anything to the contrary contained above, it is understood and agreed that the
Required Banks may agree to modifications to this Agreement for the purpose,
among other things, of securing additional extensions of credit (including,
without limitation, pursuant to the Credit Agreement or any refinancing or
extension thereof), with such changes not being subject to the proviso to the
immediately preceding sentence. Furthermore, the proviso to the second preceding
sentence shall not apply to any release of Collateral effected in accordance
with the requirements of Section 18 of this Agreement, or any other release of
Collateral or termination of this Agreement so long as the Borrower certifies
that such actions will not violate the terms of any Secured Debt Agreement then
in effect.
21. RELEASE OF GUARANTORS. In the event any Pledgor party to any Guaranty
is released from such Guaranty, such Pledgor (so long as such Pledgor is not the
Borrower) shall be released from this Agreement and this Agreement shall, as to
such Pledgor only, have no further force or effect.
22. ADDITIONAL PLEDGORS. Pursuant to Section 8.18 of the Credit Agreement,
certain Subsidiaries of Holdings may after the date hereof be required to enter
into this Agreement as a Pledgor. Upon execution and delivery, after the date
hereof, by the Pledgee and such Subsidiary of an instrument in the form of
Exhibit A-2, such Subsidiary shall become a Pledgor hereunder with the same
force and effect as if originally named as a Pledgor hereunder. Each Subsidiary
which is required to become a party to this Agreement shall so execute and
deliver a copy of Exhibit A-2 to the Pledgee and, at such time, shall execute a
Pledge and Security Agreement Supplement in the form of Exhibit A- I to this
Agreement with respect to all Collateral of such Pledgor required to be pledged
hereunder, which Supplement shall be completed in accordance with Exhibit A-1.
The execution and delivery of any such instrument shall not require the consent
of any other Pledgor hereunder. Upon the execution and delivery by the Pledgee
and such Subsidiary of an instrument in the form of Exhibit A-2 as provided
above, it is understood and agreed that the pledge and security interests
hereunder shall apply to all Collateral of such additional Pledgor as provided
in Section 3.1 hereof regardless of any failure of any additional Pledgor to
deliver, or any inaccurate information stated in, the Pledge and Security
Agreement Supplement.
23. RECOURSE. This Agreement is made with full recourse to the Pledgors
and pursuant to and upon all representations, warranties, covenants and
agreements on the part of the Pledgors contained herein and otherwise in writing
in connection herewith.
24. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to make the
Pledgee or any other Secured Creditor liable as a member of any limited
liability company or a partner of any partnership and the Pledgee or any other
Secured Creditor by virtue of this Agreement or otherwise (except as referred to
in the following sentence) shall not have any of the duties, obligations or
liabilities of a member of any limited liability company or partner of any
partnership. The parties hereto expressly agree that, unless the Pledgee shall
become the absolute owner of the respective Pledged Limited Liability Company
Interest or Pledged Partnership Interest pursuant hereto, this Agreement shall
not be
21
<PAGE>
construed as creating a partnership or joint venture among the Pledgee, any
other Secured Creditor and/or any Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of this
Section 24, the Pledgee, by accepting this Agreement, did not intend to become a
member of any limited liability company or partner of any partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
limited liability company or partnership either before or after an Event of
Default shall have occurred. The Pledgee shall have only those powers set forth
herein and shall assume none of the duties, obligations or liabilities of a
member of any limited liability company or partnership or any Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of any Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under the Collateral.
25. CONTINUING PLEDGORS. The rights and obligations of each Pledgor (other
than the respective released Pledgor in the case of following clause (y))
hereunder shall remain in full force and effect notwithstanding (x) the addition
of any new Pledgor as a party to this Agreement as contemplated by Section 22
hereof or otherwise and/or (y) the release of any Pledgor under this Agreement
as contemplated by Section 21 hereof or otherwise.
26. NO FRAUDULENT CONVEYANCE. Each Pledgor hereby confirms that it is its
intention that this Agreement not constitute a fraudulent transfer or conveyance
for purposes of any bankruptcy, insolvency or similar law, the Uniform
Fraudulent Conveyance Act or any similar Federal, state or foreign law. To
effectuate the foregoing intention, each Pledgor hereby irrevocably agrees that
its obligations and liabilities hereunder shall be limited to the maximum amount
as will after giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Pledgor that are relevant under such laws, result
in the obligations and liabilities of such Pledgor hereunder in respect of such
maximum amount not constituting a fraudulent transfer or conveyance.
27. MISCELLANEOUS. This Agreement shall be binding upon the successors and
assigns of each Pledgor and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns; provided that no Pledgor may assign
any of its rights or obligations hereunder without the prior written consent of
the Pledgee (with the consent of the Required Banks and, if required by Section
13.12 of the Credit Agreement, all Banks). THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). The headings in this
Agreement are for purposes of reference only and shall not limit or define the
meaning hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered by its duly authorized officer on the date first above
written-
22
<PAGE>
HOST MARRIOTT CORPORATION
By
-------------------------------------
Name:
Title:
HOST MARRIOTT HOSPITALITY, INC.
By
-------------------------------------
Name:
Title:
HMH PROPERTIES, INC.
By
-------------------------------------
Name:
Title:
HOST MARRIOTT, L.P.
By: HMC Real Estate Corporation, its general
partner
By
-------------------------------------
Name:
Title:
HMC CAPITAL RESOURCES CORP.
By
-------------------------------------
Name:
Title:
HMH RIVERS, INC.
By
-------------------------------------
Name:
Title:
23
<PAGE>
MARRIOTT SBM TWO CORPORATION
By
-------------------------------------
Name:
Title:
MARRIOTT PLP CORPORATION
By
-------------------------------------
Name:
Title:
HMC RETIREMENT PROPERTIES, INC.
By
-------------------------------------
Name:
Title:
HMH PENTAGON CORPORATION
By
-------------------------------------
Name:
Title:
HMC SFO, INC.
By
-------------------------------------
Name:
Title:
HMH MARINA, INC.
By
-------------------------------------
Name:
Title:
24
<PAGE>
HOST AIRPORT HOTELS, INC.
By
-------------------------------------
Name:
Title:
HOST OF HOUSTON 1979
By Host Airport Hotels, Inc., a general partner
By
-------------------------------------
Name:
Title:
HOST OF HOUSTON, LTD.
By Host Airport Hotels, Inc., its general partner
By
-------------------------------------
Name:
Title:
HOST OF BOSTON, LTD.
By Host Airport Hotels, Inc., its general partner
By
-------------------------------------
Name:
Title:
MARRIOTT FINANCIAL SERVICES, INC.
By
-------------------------------------
Name:
Title:
25
<PAGE>
MARRIOTT SBM ONE CORPORATION
By
-------------------------------------
Name:
Title:
YBG ASSOCIATES LLC
By
-------------------------------------
Name:
Title:
PRM CORPORATION
By
-------------------------------------
Name:
Title:
MARRIOTT PARK RIDGE CORPORATION
By
-------------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
BANKERS TRUST COMPANY,
as Collateral Agent and Pledgee
By
-------------------------------------
Name:
Title:
26
<PAGE>
EXHIBIT 5.2
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
November 30, 1998
Host Marriott Corporation
10400 Fernwood Road
Bethesda, Maryland 20817-1109
Re: $2,500,000,000 Aggregate Offering Price of Securities of
Host Marriott Corporation, HMH Properties, Inc. and
certain other Co-Registrants
----------------------------------------
Ladies and Gentlemen:
In connection with the registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act") (File No. 333-50729)
of Host Marriott Corporation, a Delaware corporation ("Host Marriott"), HMH
Properties, Inc., a Delaware corporation ("HMH Properties") and the other
Co-Registrants (as defined below), as amended through the date hereof pursuant
to that certain post-effective amendment thereto filed on November 30, 1998 with
the Securities and Exchange Commission (as so amended, the "Registration
Statement"), you have requested our opinion with respect to the matters set
forth below.
You have provided us with the prospectus (the "Prospectus") which is a part
of the Registration Statement. The Prospectus provides that it will be
supplemented in the future by one or more supplements and you have provided us
with a form of prospectus supplement to the Prospectus for a proposed offering
of Series C Senior Notes (the "Series C Prospectus Supplement") which is part of
the Registration Statement (the Series C Prospectus Supplement and each other
prospectus supplement to the Prospectus, a "Prospectus Supplement"). The
Prospectus as supplemented by various Prospectus Supplements will provide for
(A) the issuance and sale by Host Marriott of up to $300,000,000 aggregate
offering price of: (i) debt securities of Host Marriott consisting of
debentures, notes or other evidences of indebtedness (the "Debt
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 2
Securities"); (ii) shares of common stock of Host Marriott, par value $1.00 per
share (the "Common Stock"); (iii) shares of preferred stock of Host Marriott,
without par value (the "Preferred Stock"); (iv) shares of Preferred Stock
represented by depositary shares (the "Depositary Shares"); (v) warrants to
purchase Debt Securities, Common Stock, Preferred Stock or Depositary Shares
(the "Warrants"); and (vi) subscription rights evidencing the right to purchase
Debt Securities, Common Stock, Preferred Stock, Depositary Shares or Warrants
(the "Subscription Rights") and (B) the issuance and sale by HMH Properties of
up to $2,200,000,000 aggregate offering price of debt securities consisting of
senior notes (the "HMH Senior Notes").
The Registration Statement provides that Debt Securities may be convertible
into shares of Common Stock, Preferred Stock or Depositary Shares, and that
shares of Preferred Stock may be convertible into shares of Common Stock or Debt
Securities. The Registration Statement provides that (A) Host Marriott's payment
obligations under any series of Debt Securities may be guaranteed by certain of
Host Marriott's direct or indirect wholly owned subsidiaries (including HMH
Properties and its direct and indirect subsidiaries) which are co-registrants on
the Registration Statement (each such subsidiary, a "Co-Registrant," and
collectively, the "Co-Registrants"), and (B) that the payment obligation of HMH
Properties under any HMH Senior Notes will be guaranteed by Host Marriott and
may be guaranteed by one or more of the other Co-Registrants (each entity
providing such a guarantee, a "Guarantor" and collectively, the "Guarantors").
The Debt Securities, the Common Stock, the Preferred Stock, the Depositary
Shares, the Warrants and the Subscription Rights of Host Marriott are referred
to herein as the "Host Marriott Offered Securities".
The Debt Securities will be issued pursuant to one or more indentures in
the form filed as an exhibit to the Registration Statement, as amended or
supplemented from time to time (each, an "Indenture") between Host Marriott as
obligor, and a trustee chosen by the Company and qualified to act as such under
the Trust Indenture Act of 1939, as amended (each, a "Trustee"). The Depositary
Shares will be issued under one or more deposit agreements (each, a "Deposit
Agreement"), by and among Host Marriott and a financial institution identified
therein as the depositary (each, a "Depositary"). The Warrants will be issued
under one or more warrant agreements (each, a "Warrant Agreement"), by and among
Host Marriott and a financial institution identified therein as warrant agent
(each, a "Warrant Agent").
On August 5, 1998, HMH Properties issued under the Registration Statement
pursuant to the Prospectus dated June 17, 1998, (i) $1,200,000,000 aggregate
principal amount of HMH Senior Notes due 2008 (the "HMH Series A Senior Notes")
and (ii) $500,000,000 aggregate principal amount of HMH Senior Notes due 2005
(the "HMH Series B Senior Notes" and, together with the HMH Series A Senior
Notes, the "Outstanding HMH Senior Notes"). The Outstanding HMH Senior Notes
were, and any other series of HMH Senior Notes which may be offered by HMH
Properties under the Registration Statement (the "Unissued HMH Senior Notes")
will be, issued pursuant to the indenture dated August 5, 1998 (the "HMH
Indenture")
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 3
by and among HMH Properties, Host Marriott (as Guarantor) and other
Co-Registrants (as Guarantor or Subsidiary Guarantors) and Marine Midland
Bank, as trustee (the "HMH Indenture Trustee").
For purposes of this opinion, we have assumed that (i) all proceedings
taken and proposed to be taken by Host Marriott in connection with the
authorization and issuance of the Host Marriott Offered Securities, (ii) all
proceedings taken and proposed to be taken by HMH Properties in connection with
the authorization and issuance of the Unissued HMH Senior Notes, and (iii) all
the proceedings taken and proposed to be taken by HMH Properties, Host Marriott
and each other Co-Registrant in connection with the authorization and issuance
of guarantees of Debt Securities or HMH Senior Notes will be timely and properly
completed, in accordance with all requirements of applicable Delaware and New
York laws, in the manner presently proposed.
We have made such legal and factual examinations and inquiries, including
an examination of originals and copies certified or otherwise identified to our
satisfaction, of all such documents, corporate records and instruments of Host
Marriott, HMH Properties and the other Co-Registrants as we have deemed
necessary or appropriate for purposes of this opinion. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies.
We have been furnished with, and with your consent have exclusively relied
upon, certificates of officers of Host Marriott, HMH Properties and the other
Co-Registrants with respect to certain factual matters. In addition, we have
obtained and relied upon such certificates and assurances from public officials
as we have deemed necessary.
We are opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of Delaware and, with respect to the
opinions set forth in paragraphs 1, 2, 5, 6, 8 and 9 below, the internal laws of
the State of New York, and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any local agencies within any state.
Subject to the foregoing and the other qualifications set forth herein, it
is our opinion that, as of the date hereof:
1. (a) When Host Marriott and the Trustee duly execute and deliver an
Indenture and the specific terms of a particular Debt Security have been duly
established in accordance with the terms of such Indenture, and such Debt
Securities have been duly authenticated by the Trustee and duly executed and
delivered on behalf of Host Marriott against payment therefor in accordance with
the terms and provisions of the Indenture and as contemplated by the
Registration Statement, the Prospectus and the related Prospectus Supplement(s),
and (b) when the Registration Statement and any required post-effective
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 4
amendments thereto have all become effective under the Securities Act, and (c)
assuming that the terms of the Debt Securities as executed and delivered are as
described in the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (d) assuming that the Debt Securities as executed
and delivered do not violate any law applicable to Host Marriott or result in a
default under or breach of any agreement or instrument binding upon Host
Marriott and (e) assuming that the Debt Securities as executed and delivered
comply with all requirements and restrictions, if any, applicable to Host
Marriott whether imposed by any court or governmental or regulatory body having
jurisdiction over Host Marriott and (f) assuming that the Debt Securities are
then issued and sold as contemplated in the Registration Statement, the
Prospectus and the related Prospectus Supplement(s), the Debt Securities will
constitute valid and binding obligations of Host Marriott enforceable against
Host Marriott in accordance with the terms of the Debt Securities.
2. (a) When Host Marriott, the Guarantors delivering Guarantees of Debt
Securities and the Trustee duly execute and deliver an Indenture and the
specific terms of the Guarantees and the related Debt Securities have been duly
established in accordance with the terms of the applicable Indenture, the
Guarantees have been duly executed and delivered and the related Debt Securities
have been duly authenticated by the Trustee and duly executed and delivered on
behalf of Host Marriott and such Guarantors against payment therefor in
accordance with the terms and provisions of the applicable Indenture and as
contemplated by the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (b) when the Registration Statement and any
required post-effective amendment thereto have all become effective under the
Securities Act, and (c) assuming that the terms of the Guarantees as executed
and delivered are as described in the Registration Statement, the Prospectus and
the related Prospectus Supplement(s), and (d) assuming that the Guarantees as
executed and delivered do not violate any law applicable to any Guarantor
delivering a Guarantee or result in a default under or breach of any agreement
or instrument binding upon any such Guarantor, and (e) assuming that the
Guarantees as executed and delivered comply with all requirements and
restrictions, if any, applicable to any Guarantor delivering a Guarantee,
whether imposed by any court or governmental or regulatory body having
jurisdiction over each such Guarantor, and (f) assuming that the Guarantees are
then issued as contemplated in the Registration Statement, the Prospectus and
the related Prospectus Supplement(s), the Guarantees will constitute valid and
binding obligations of each Guarantor delivering a Guarantee, enforceable
against each such Guarantor in accordance with the terms of the Guarantees.
3. (a) When the issuance of Common Stock has been duly approved by the
Board of Directors of Host Marriott by a resolution in form and content as
required by applicable law, and (b) when the Registration Statement and any
required post-effective amendments thereto have all become effective under the
Securities Act, and (c) assuming that the terms of the Common Stock as set forth
in Host Marriott's Restated Certificate of Incorporation (the "Certificate") are
as described in the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (d) assuming that the Common Stock as set forth in
the
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 5
Certificate does not violate any law applicable to Host Marriott or result in a
default under or breach of any agreement or instrument binding upon Host
Marriott, and (e) assuming that the Common Stock as set forth in the Certificate
complies with all requirements and restrictions, if any, applicable to Host
Marriott, whether imposed by any court or governmental or regulatory body having
jurisdiction over Host Marriott and (f) assuming that the Common Stock as set
forth in the Certificate is then issued as contemplated in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), then, upon
issuance and delivery of and payment for such Common Stock in the manner
contemplated by the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), such shares of Common Stock will be validly issued,
fully paid and nonassessable. For purposes of this opinion, we have assumed that
the total number of shares of Common Stock previously issued or reserved, in
addition to the shares of Common Stock to be issued and delivered pursuant to
such resolution and Prospectus Supplement, does not exceed the number of shares
of Common Stock authorized to be issued under the Certificate.
4. (a) When a series of Preferred Stock has been duly established in
accordance with the terms of the Certificate and applicable law and duly adopted
by the Board of Directors of Host Marriott by a resolution in form and content
as required by applicable law and as contemplated by the Registration Statement,
the Prospectus and the related Prospectus Supplement(s), and (b) when the
Registration Statement and any required post-effective amendments thereto have
all become effective under the Securities Act, and (c) assuming that the terms
of any series of Preferred Stock as set forth in the Certificate are as
described in the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (d) assuming that the series of Preferred Stock as
set forth in the Certificate does not violate any law applicable to Host
Marriott or result in a default under or breach of any agreement or instrument
binding upon Host Marriott, and (e) assuming that any series of Preferred Stock
as set forth in the Certificate complies with all requirements and restrictions,
if any, applicable to Host Marriott, whether imposed by any court or
governmental or regulatory body having jurisdiction over Host Marriott and (f)
assuming that any series of Preferred Stock as set forth in the Certificate is
then issued as contemplated in the Registration Statement, the Prospectus and
the related Prospectus Supplement(s), then, upon issuance and delivery of and
payment for such shares in the manner contemplated by the Registration
Statement, the Prospectus and the related Prospectus Supplement(s) and by such
resolution, such shares of such series of Preferred Stock will be validly
issued, fully paid and nonassessable. For purposes of this opinion, we have
assumed that the total number of shares of Preferred Stock previously issued or
reserved, in addition to the shares of Preferred Stock to be issued and
delivered pursuant to such resolution and Prospectus Supplement, does not exceed
the number of shares of Preferred Stock authorized to be issued under the
Certificate.
5. (a) When Host Marriott and the Depositary duly execute and deliver a
Deposit Agreement and the specific terms of a particular issuance of Depositary
Shares have been duly established in accordance with the terms of a Deposit
Agreement and have been duly executed and delivered by the Depositary and
delivered to and paid for by the purchasers thereof
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 6
in accordance with the terms and provisions of the Deposit Agreement, and as
contemplated by the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (b) when the Registration Statement and any
required post-effective amendments thereto have all become effective under the
Securities Act, and (c) assuming that the terms of the Depositary Shares as
executed and delivered are as described in the Registration Statement, the
Prospectus and the related Prospectus Supplement(s), and (d) assuming that the
Depositary Shares as executed and delivered do not violate any law applicable to
Host Marriott or result in a default under or breach of any agreement or
instrument binding upon Host Marriott, and (e) assuming that the Depositary
Shares as executed and delivered comply with all requirements and restrictions,
if any, applicable to Host Marriott, whether imposed by any court or
governmental or regulatory body having jurisdiction over Host Marriott, and (f)
assuming that the Depositary Shares are then issued and sold as contemplated in
the Registration Statement, the Prospectus and the related Prospectus
Supplement(s), the Depositary Shares will constitute valid and binding
obligations of Host Marriott, enforceable against Host Marriott in accordance
with their terms.
6. (a) When Host Marriott and the Warrant Agent duly execute and deliver
a Warrant Agreement and the specific terms of a particular Warrant have been
duly established in accordance with the terms of such Warrant Agreement, and
such Warrants have been duly authenticated by the Warrant Agent and duly
executed and delivered on behalf of Host Marriott against payment therefor in
accordance with the terms and provisions of the Warrant Agreement and as
contemplated by the Registration Statement, the Prospectus and the related
Prospectus Supplement(s), and (b) when the Registration Statement and any
required post-effective amendments thereto have all become effective under the
Securities Act, and (c) assuming that the terms of the Warrants as executed and
delivered are as described in the Registration Statement, the Prospectus and the
related Prospectus Supplement(s), and (d) assuming that the Warrants as executed
and delivered do not violate any law applicable to Host Marriott or result in a
default under or breach of any agreement or instrument binding upon Host
Marriott, and (e) assuming that the Warrants as executed and delivered comply
with all requirements and restrictions, if any, applicable to Host Marriott,
whether imposed by any court or governmental or regulatory body having
jurisdiction over Host Marriott, and (f) assuming that the Warrants are then
issued and sold as contemplated in the Registration Statement, the Prospectus
and the related Prospectus Supplement(s), the Warrants will constitute valid and
binding obligations of Host Marriott, enforceable against Host Marriott in
accordance with their terms.
7. (a) When the specific terms of Subscription Rights have been duly
established and a certificate bearing such terms (the "Subscription Right
Certificate") has been duly executed and delivered by or on behalf of Host
Marriott as contemplated in the Registration Statement, the Prospectus and the
related Prospectus Supplement(s), and (b) when the Registration Statement and
any required post-effective amendments thereto have all become effective under
the Securities Act, and (c) assuming that the terms of the Subscription Rights
as set forth in the Subscription Right Certificate are as described in the
Registration Statement, the Prospectus and the related Prospectus Supplement(s),
and (d) assuming that the terms of the Subscription Rights
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 7
as set forth in the Subscription Right Certificate do not violate any law
applicable to Host Marriott or result in a default under or breach of any
agreement or instrument binding upon Host Marriott, and (e) assuming that the
terms of the Subscription Rights as set forth in the Subscription Right
Certificate comply with all requirements and restrictions, if any, applicable to
Host Marriott, whether imposed by any court or governmental or regulatory body
having jurisdiction over Host Marriott and (f) assuming that the Subscription
Rights are then issued as contemplated in the Registration Statement, the
Prospectus and the related Prospectus Supplement(s), the Subscription Rights
will be validly issued.
8. (a) When the specific terms of Unissued HMH Senior Notes have been
duly established in accordance with the terms of the HMH Indenture, and such
Unissued HMH Senior Notes have been duly authenticated by the HMH Indenture
Trustee and duly executed and delivered on behalf of HMH Properties against
payment therefor in accordance with the terms and provisions of the HMH
Indenture and as contemplated by the Registration Statement, the Prospectus and
the related Prospectus Supplement(s), and (b) when the Registration Statement
and any required post-effective amendments thereto have all become effective
under the Securities Act, and (c) assuming that the terms of the Unissued HMH
Senior Notes as executed and delivered are as described in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), and (d)
assuming that the Unissued HMH Senior Notes as executed and delivered do not
violate any law applicable to HMH Properties or result in a default under or
breach of any agreement or instrument binding upon HMH Properties and (e)
assuming that the Unissued HMH Senior Notes as executed and delivered comply
with all requirements and restrictions, if any, applicable to HMH Properties
whether imposed by any court or governmental or regulatory body having
jurisdiction over HMH Properties and (f) assuming that the Unissued HMH Senior
Notes are then issued and sold as contemplated in the Registration Statement,
the Prospectus and the related Prospectus Supplement(s), the Unissued HMH Senior
Notes will constitute valid and binding obligations of HMH Properties
enforceable against HMH Properties in accordance with the terms of the Unissued
HMH Senior Notes.
9. (a) When the specific terms of the Guarantees and the related
Unissued HMH Senior Notes have been duly established in accordance with the
terms of the HMH Indenture, the Guarantees have been duly executed and delivered
and the related Unissued HMH Senior Notes have been duly authenticated by the
HMH Indenture Trustee and duly executed and delivered on behalf of HMH
Properties and the Guarantors delivering such Guarantees, against payment
therefor in accordance with the terms and provisions of the applicable Indenture
and as contemplated by the Registration Statement, the Prospectus and the
related Prospectus Supplement(s), and (b) when the Registration Statement and
any required post-effective amendment thereto have all become effective under
the Securities Act, and (c) assuming that the terms of the Guarantees as
executed and delivered are as described in the Registration Statement, the
Prospectus and the related Prospectus Supplement(s), and (d) assuming that the
Guarantees as executed and delivered do not violate any law applicable to any
Guarantor delivering a Guarantee or result in a default under or breach of any
agreement or instrument binding upon any
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 8
such Guarantor, and (e) assuming that the Guarantees as executed and delivered
comply with all requirements and restrictions, if any, applicable to any
Guarantor delivering a Guarantee, whether imposed by any court or governmental
or regulatory body having jurisdiction over each such Guarantor, and (f)
assuming that the Guarantees are then issued as contemplated in the Registration
Statement, the Prospectus and the related Prospectus Supplement(s), the
Guarantees will constitute valid and binding obligations of each Guarantor
delivering a Guarantee, enforceable against each such Guarantor in accordance
with the terms of the Guarantees.
The opinions set forth in paragraphs 1, 2, 5, 6, 8 and 9 above are subject
to the following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
rights and remedies of creditors; (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or at law,
and the discretion of the court before which any proceeding therefor may be
brought; (iii) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnification of, or
contribution to, a party with respect to a liability where such indemnification
or contribution is contrary to public policy; (iv) we express no opinion
concerning the enforceability of any waiver of rights or defenses contained in
Section 4.4 of the Indenture; and (v) the manner by which the acceleration of
Debt Securities or Unissued HMH Senior Notes may affect the collectibility of
that portion of the stated principal amount thereof which might be determined to
constitute unearned interest thereon.
To the extent that the obligations of Host Marriott or any of the
Guarantors under an Indenture may be dependent upon such matters, we assume for
purposes of this opinion that each of Host Marriott and each such Guarantor has
been duly organized and is validly existing under applicable state law, and has
the organizational power and authority to issue and sell Debt Securities; that
the applicable Indenture has been duly authorized by all necessary
organizational action by Host Marriott and the Guarantors and has been duly
executed and delivered by Host Marriott and the Guarantors; that the Trustee
under such Indenture is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization; that the Trustee is duly
qualified to engage in the activities contemplated by the Indenture; that the
Indenture has been duly authorized, executed and delivered by the Trustee and
constitutes a legally valid, binding and enforceable obligation of the Trustee,
enforceable against the Trustee in accordance with its terms; that the Trustee
is in compliance, generally and with respect to acting as Trustee under the
Indenture, with all applicable laws and regulations; and that the Trustee has
the requisite organizational and legal power and authority to perform its
obligations under the Indenture.
To the extent that the obligations of Host Marriott under a Deposit
Agreement may be dependent upon such matters, we assume for purposes of this
opinion that Host Marriott has been duly incorporated and is validly existing as
a corporation under the laws of the State of
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 9
Delaware and has the corporate power and authority to issue and sell the
Depositary Shares; that the applicable Deposit Agreement has been duly
authorized by all necessary corporate action by Host Marriott and has been duly
executed and delivered by Host Marriott; that the Depositary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; that the Depositary is duly qualified to engage in the activities
contemplated by the Deposit Agreement; that the Deposit Agreement has been duly
authorized, executed and delivered by the Depositary and constitutes the legally
valid, binding and enforceable obligation of the Depositary, enforceable against
the Depositary in accordance with its terms; that the Depositary is in
compliance, generally and with respect to acting as a Depositary under the
Deposit Agreement, with all applicable laws and regulations; and that the
Depositary has the requisite organizational and legal power and authority to
perform its obligations under the Deposit Agreement.
To the extent that the obligations of Host Marriott under a Warrant
Agreement may be dependent upon such matters, we assume for purposes of this
opinion that Host Marriott has been duly incorporated and is validly existing as
a corporation under the laws of the State of Delaware and has the corporate
power and authority to issue and sell the Warrants; that the applicable Warrant
Agreement has been duly authorized by all necessary corporate action by Host
Marriott and has been duly executed and delivered by Host Marriott; that the
Warrant Agent is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Warrant Agent is duly
qualified to engage in the activities contemplated by the Warrant Agreement;
that the Warrant Agreement has been duly authorized, executed and delivered by
the Warrant Agent and constitutes the legally valid, binding and enforceable
obligation of the Warrant Agent, enforceable against the Warrant Agent in
accordance with its terms; that the Warrant Agent is in compliance, generally
and with respect to acting as a Warrant Agent under the Warrant Agreement, with
all applicable laws and regulations; and that the Warrant Agent has the
requisite organizational and legal power and authority to perform its
obligations under the Warrant Agreement.
To the extent that the obligations of Host Marriott under Subscription
Rights may be dependent upon such matters, we assume for purposes of this
opinion that Host Marriott has been duly incorporated and is validly existing as
a corporation under the laws of the State of Delaware and has the corporate
power and authority to issue and sell the Subscription Rights; that the
Subscription Rights have been duly authorized by all necessary corporate action
by Host Marriott, and that the applicable Subscription Right Certificates have
been duly executed and delivered by Host Marriott.
To the extent that the obligations of HMH Properties or any of the
Guarantor under the HMH Indenture may be dependent upon such matters, we assume
for purposes of this opinion that each of HMH Properties and each such
Guarantor has been duly organized and is validly existing under applicable
state law, and has the organizational power and authority to issue and sell
Unissued HMH Senior Notes or the Guarantees (as applicable); that the HMH
Indenture has
<PAGE>
LATHAM & WATKINS
November 30, 1998
Page 10
been duly authorized by all necessary organizational action by HMH Properties
and the Guarantors and has been duly executed and delivered by HMH Properties
and the Guarantors; that the HMH Indenture Trustee is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; that the HMH Indenture Trustee is duly qualified to engage in the
activities contemplated by the HMH Indenture; that the HMH Indenture has been
duly authorized, executed and delivered by the HMH Indenture Trustee and
constitutes a legally valid, binding and enforceable obligation of the HMH
Indenture Trustee, enforceable against the HMH Indenture Trustee in accordance
with its terms; that the HMH Indenture Trustee is in compliance, generally and
with respect to acting as trustee under the HMH Indenture, with all applicable
laws and regulations; and that the HMH Indenture Trustee has the requisite
organizational and legal power and authority to perform its obligations under
the HMH Indenture.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters" in
the Prospectus included therein.
Very truly yours,
/s/ Latham and Watkins
<PAGE>
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
December 1, 1998
HMH Properties, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Re: Federal Income Tax Consequences
-------------------------------
Ladies and Gentlemen:
We have acted as tax counsel to HMH Properties, Inc., a
Delaware corporation (the "Company"), in connection with its issuance of Series
C Senior Notes (as defined in the Registration Statement) of the Company
pursuant to a registration statement on Form S-3 of Host Marriott Corporation,
the Company and certain other subsidiaries of Host Marriott Corporation (File
No. 333-50729), as amended through the date hereof, (the "Registration
Statement") filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), a
prospectus (the "Base Prospectus"), filed as part of the Registration Statement,
and a form of prospectus supplement, filed as part of the Registration Statement
(the "Prospectus Supplement" and, together with the Base Prospectus, the
"Prospectus").
You have requested our opinion concerning the statements in
the Prospectus Supplement under the caption "Certain United Stated Federal Tax
Considerations For Non-United States Holders." The facts, as we understand them,
and upon which with your permission we rely in rendering the opinion expressed
herein, are set forth in the Registration Statement. Based on such facts, it is
our opinion that the material federal income tax consequences are accurately set
forth under the heading "Certain United States Federal Tax Considerations For
Non-United States Holders" in the Prospectus Supplement. No opinion is expressed
as to any matter not discussed therein.
<PAGE>
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
HMH Properties, Inc.
December 1, 1998
Page 2
This opinion is rendered to you as of the date of this letter,
and we undertake no obligation to update this opinion subsequent to the date
hereof. This opinion is based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters all of which are
subject to change either prospectively or retroactively. Also, any variation or
difference in the facts from those set forth in the Registration Statement may
affect the conclusions stated herein.
This opinion is rendered to you solely for use in connection
with the Registration Statement. We consent to your filing this opinion as an
exhibit to the Registration Statement, and to the reference to our firm under
the headings "Certain United States Federal Tax Considerations" and "Legal
Matters."
Very truly yours,
<PAGE>
EXHIBIT 12.1
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, except ratio amounts)
<TABLE>
<CAPTION>
Thirty-six Thirty-six
weeks ended weeks ended
September 11, September 12, Fiscal Year
------------- ------------- --------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from operations before income taxes.................... $ 175 $ 66 $ 83 $ (8) $(75) $(16) $(65)
Add (deduct)
Fixed charges............................................... 298 251 378 285 206 184 157
Capitalized interest........................................ (1) -- (1) (3) (5) (10) (8)
Amortization of capitalized interest........................ 4 3 5 7 6 8 5
Net losses related to certain 50% or less owned affiliate... 1 (1) (1) 1 2 5 22
Minority interest in consolidated affiliates................ 36 36 32 6 2 1 1
------------- ------------- ------ ------ ------ ------ ------
Adjusted earnings............................................. $ 513 $ 355 $496 $288 $136 $172 $112
============= ============= ====== ====== ====== ====== ======
Fixed charges:
Interest on indebtedness and amortization of deferred
financing costs........................................... $ 245 $ 198 $302 $239 $178 $165 $147
Dividends on Convertible Preferred Securities of
Subsidiary Trust.......................................... 26 26 37 3 -- -- --
Portion of rents representative of the interest factor...... 27 27 39 33 17 11 2
Debt service guarantee interest expense of
unconsolidated affiliates................................. -- -- -- 10 11 8 8
------------- ------------- ------ ------ ------ ------ ------
Total fixed charges........................................... $ 298 $ 251 $378 $285 $206 $184 $157
============= ============= ====== ====== ====== ====== ======
Ratio of earnings to fixed charges............................ 1.72 1.41 1.31 1.01 -- -- --
Deficiency of earnings to fixed charges....................... -- -- -- -- 70 12 45
</TABLE>
<PAGE>
EXHIBIT 12.2
HOST MARRIOTT CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(In millions, except ratio amounts)
<TABLE>
<CAPTION>
Thirty-six Thirty-six
weeks ended weeks ended
September 11, September 12, Fiscal Year
------------- ------------- --------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from operations before income taxes.................... $ 175 $ 66 $ 83 $ (8) $(75) $(16) $(65)
Add (deduct)
Fixed charges............................................... 298 251 378 285 206 184 157
Capitalized interest........................................ (1) -- (1) (3) (5) (10) (8)
Amortization of capitalized interest........................ 4 3 5 7 6 8 5
Net losses related to certain 50% or less owned affiliate... 1 (1) (1) 1 2 5 22
Minority interest in consolidated affiliates................ 36 36 32 6 2 1 1
------------- ------------- ------ ------ ------ ------ ------
Adjusted earnings............................................. $ 513 $ 355 $496 $288 $136 $172 $112
============= ============= ====== ====== ====== ====== ======
Fixed charges and preferred stock dividends:
Interest on indebtedness and amortization of deferred
financing costs........................................... $ 245 $ 198 $302 $239 $178 $165 $147
Dividends on Convertible Preferred Securities of
Subsidiary Trust.......................................... 26 26 37 3 -- -- --
Portion of rents representative of the interest factor...... 27 27 39 33 17 11 2
Debt service guarantee interest expense of
unconsolidated affiliates................................. -- -- -- 10 11 8 8
------------- ------------- ------ ------ ------ ------ ------
Total fixed charges and preferred stock dividends............. $ 298 $ 251 $378 $285 $206 $184 $157
============= ============= ====== ====== ====== ====== ======
Ratio of earnings to fixed charges and preferred stock
dividends..................................................... 1.72 1.41 1.31 1.01 -- -- --
Deficiency of earnings to fixed charges and
preferred stock dividends..................................... -- -- -- -- 70 12 45
</TABLE>
<PAGE>
EXHIBIT 12.3
HMH PROPERTIES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In millions, except ratio amounts)
<TABLE>
<CAPTION>
Thirty-six Thirty-six
weeks ended weeks ended
September 11, September 12, Fiscal Year
------------- ------------- --------------------------------------
1998 1997 1997 1996 1995 1994 1993
------------- ------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from operations before income taxes.................... $ 110 $ 78 $ 78 $ 54 $ 43 $ 50 $ 23
Add (deduct)
Fixed charges............................................... 140 92 137 110 81 69 67
Capitalized interest........................................ -- -- -- (1) (2) (1) (5)
Amortization of capitalized interest........................ 2 1 1 2 1 2 3
Net losses related to certain 50% or less owned affiliate... -- -- 1 (1) -- (1) --
Minority interest in consolidated affiliates................ 7 -- -- -- -- -- --
------------- ------------- ------ ------ ------ ------ ------
Adjusted earnings............................................. $ 259 $ 171 $217 $164 $123 $119 $ 88
============= ============= ====== ====== ====== ====== ======
Fixed charges:
Interest on indebtedness and amortization of deferred
financing costs........................................... $ 131 $ 86 $128 $101 $ 77 $ 65 $ 65
Dividends on Convertible Preferred Securities of
Subsidiary Trust.......................................... -- -- -- -- -- -- --
Portion of rents representative of the interest factor...... 9 6 9 9 4 4 2
Debt service guarantee interest expense of
unconsolidated affiliates................................. -- -- -- -- -- -- --
------------- ------------- ------ ------ ------ ------ ------
Total fixed charges........................................... $ 140 $ 92 $137 $110 $ 81 $ 69 $ 67
============= ============= ====== ====== ====== ====== ======
Ratio of earnings to fixed charges............................ 1.85 1.86 1.58 1.49 1.52 1.72 1.31
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 27,
1998 for Host Marriott Corporation included in Host Marriott Corporation's
Form 10-K for the fiscal year ended January 2, 1998; February 27, 1998 for HMH
Properties, Inc. included in HMH Properties, Inc.'s Form 10-K for the year
ended January 2, 1998; June 25, 1998 for the combined financial statements of
HMH Properties, Inc. and Subsidiaries and HMC Capital Resources Holding
Corporation and Subsidiaries included in the Forms 8-K of Host Marriott
Corporation and HMH Properties, Inc. dated July 29, 1998; May 22, 1998 for
Host Marriott Hotels included in the Forms 8-K of Host Marriott Corporation
and HMH Properties, Inc. dated July 15, 1998 and in Host Marriott's Form 8-K
dated November 24, 1998; May 1, 1998 for HMC Senior Communities, Inc. included
in Host Marriott's Form 8-K dated November 24, 1998; August 5, 1998 for Host
Marriott, L.P. included in Host Marriott's Form 8-K dated November 24, 1998;
September 29, 1998 for HMC Merger Corporation included in Host Marriott's Form
8-K dated November 24, 1998, and to all references to our Firm included in
this registration statement.
Arthur Andersen LLP
Washington, D.C.
November 30, 1998
