As filed with the Securities and Exchange Commission on May 25, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HOST MARRIOTT CORPORATION HOST MARRIOTT, L.P.
(Exact name of registrant as specified (Exact name of registrant as specified
in its governing instrument) in its governing instrument)
Maryland 53-0085950 Delaware 52-2095412
(State of (I.R.S. (State of (I.R.S.
Incorporation) Employer Organization) Employer
Identification Identification
Number) Number)
For additional co-registrants, see "table of co-registrants" immediately
following this cover page.
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10400 Fernwood Road
Bethesda, Maryland 20817-1109
301-380-9000
(Address and telephone number of principal executive offices)
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Robert E. Parsons, Jr.
Executive Vice President And Chief Financial Officer
10400 Fernwood Road
Bethesda, Maryland 20817-1109
(301) 380-9000
(Name, address and telephone number of agent for service)
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Copy to:
J. Warren Gorrell, Jr., Esq.
Bruce W. Gilchrist, Esq.
HOGAN & HARTSON L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
(202) 637-5600
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Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
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. [_]
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CALCULATION OF REGISTRATION FEE
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Proposed
Maximum
Aggregate Amount of
Offering Registration
Title of Class of Securities Being Registered Price(1) Fee(1)
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Common Stock, Preferred Stock, Depositary
Shares, Warrants, Subscription Rights(2) and
Preferred Stock Purchase Rights(3) of Host
Marriott Corporation......................... $ 550,000,000(4) $ -- (4)
Senior Notes of Host Marriott, L.P. .......... $1,000,000,000 $250,000
Guarantees of the Co-Registrants of the Senior
Notes(5)..................................... -- --
Total........................................ $1,550,000,000 $250,000(4)
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(1) Determined pursuant to Rule 457(o).
(2) Rights evidencing the right to purchase Common Stock, Preferred Stock,
Depositary Shares or Warrants.
(3) 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.
(4) This $550,000,000 in securities of Host Marriott Corporation was previously
registered on Registration Statement No. 333-67907 and is being carried
forward pursuant to Rule 429 under the Securities Act of 1933. A
registration fee of $162,250 for such $550,000,000 in securities has
already been paid.
(5) No separate consideration will be received from purchasers of Senior Notes
of Host Marriott, L.P. with respect to these Guarantees. Therefore, no
registration fee is attributable to the Guarantees.
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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.
Pursuant to Rule 429 under the Securities Act of 1933, the Host Marriott
Corporation prospectus included in this registration statement is a combined
prospectus relating also to up to $550,000,000 of unsold securities registered
under Registration Statement No. 333-67907 previously filed by Host Marriott
Corporation.
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TABLE OF CO-REGISTRANTS
Primary
State of Standard
other Industrial IRS
Jurisdiction Classification Employer
Name of Formation Code Number Number
---- ------------- -------------- ----------
HMH Rivers, L.P. ..................... Delaware 7011 52-2126158
HMH Marina LLC........................ Delaware 7011 52-2095412
HMC SBM Two LLC....................... Delaware 7011 52-2095412
HMC PLP LLC........................... Delaware 7011 52-2095412
HMC Retirement Properties, L.P. ...... Delaware 7011 52-2126159
HMH Pentagon LLC...................... Delaware 7011 52-2095412
Airport Hotels LLC.................... Delaware 7011 52-2095412
Chesapeake Financial Services LLC..... Delaware 7011 52-2095412
HMC Capital Resources LLC............. Delaware 7011 52-2095412
YBG Associates LLC.................... Delaware 7011 52-2059377
PRM LLC............................... Delaware 7011 52-2095412
Host Park Ridge LLC................... Delaware 7011 52-2095412
Host of Boston, Ltd................... Massachusetts 7011 59-0164700
Host of Houston, Ltd.................. Texas 7011 52-1874034
Host of Houston 1979.................. Delaware 7011 95-3552476
Philadelphia Airport Hotel LLC........ Delaware 7011 52-2095412
HMC Hartford LLC...................... Delaware 7011 52-2095412
HMH Norfolk LLC....................... Delaware 7011 52-2095412
HMH Norfolk, L.P. .................... Delaware 7011 52-2039042
HMC Park Ridge LLC.................... Delaware 7011 52-2095412
HMC Partnership Holdings LLC.......... Delaware 7011 52-2095412
HMC Suites LLC........................ Delaware 7011 52-2095412
HMC Suites Limited Partnership........ Delaware 7011 52-1632307
Wellsford-Park Ridge Host Hotel
Limited Partnership.................. Delaware 7011 52-6323494
City Center Interstate Partnership
LLC.................................. Delaware 7011 52-2095412
Farrell's Ice Cream Parlor Restaurants
LLC.................................. Delaware 7011 52-2095412
HMC Burlingame LLC.................... Delaware 7011 52-2095412
HMC California Leasing LLC............ Delaware 7011 52-2095412
HMC Capital LLC....................... Delaware 7011 52-2095412
HMC Grand LLC......................... Delaware 7011 52-2095412
HMC Hotel Development LLC............. Delaware 7011 52-2095412
HMC Mexpark LLC....................... Delaware 7011 52-2095412
HMC Polanco LLC....................... Delaware 7011 52-2095412
HMC NGL LLC........................... Delaware 7011 52-2095412
HMC OLS I L.P. ....................... Delaware 7011 52-2095412
HMC RTZ Loan I LLC.................... Delaware 7011 52-2095412
HMC RTZ II LLC........................ Delaware 7011 52-2095412
HMC Seattle LLC....................... Delaware 7011 52-2095412
HMC Swiss Holdings LLC................ Delaware 7011 52-2095412
HMC Waterford LLC..................... Delaware 7011 52-2095412
HMH Restaurants LLC................... Delaware 7011 52-2095412
HMH Rivers LLC........................ Delaware 7011 52-2095412
HMH WTC LLC........................... Delaware 7011 52-2095412
HMP Capital Ventures LLC.............. Delaware 7011 52-2095412
HMP Financial Services LLC............ Delaware 7011 52-2095412
Host La Jolla LLC..................... Delaware 7011 52-2095412
Primary
Standard
State of other Industrial IRS
Jurisdiction Classification Employer
Name of Formation Code Number Number
---- -------------- -------------- ----------
City Center Hotel Limited
Partnership......................... Minnesota 7011 41-1449758
MFR of Illinois LLC.................. Delaware 7011 52-2095412
MFR of Vermont LLC................... Delaware 7011 52-2095412
MFR of Wisconsin LLC................. Delaware 7011 52-2095412
PM Financial LLC..................... Delaware 7011 52-2095412
PM Financial LP...................... Delaware 7011 52-2131022
HMC Chicago LLC...................... Delaware 7011 52-2095412
HMC HPP LLC.......................... Delaware 7011 52-2095412
HMC Desert LLC....................... Delaware 7011 52-2095412
HMC Hanover LLC...................... Delaware 7011 52-2095412
HMC Diversified LLC.................. Delaware 7011 52-2095412
HMC Properties I LLC................. Delaware 7011 52-2095412
HMC Potomac LLC...................... Delaware 7011 52-2095412
HMC East Side II LLC................. Delaware 7011 52-2095412
HMC Manhattan Beach LLC.............. Delaware 7011 52-2095412
Chesapeake Hotel Limited
Partnership......................... Delaware 7011 52-1373476
HMH General Partner Holdings LLC..... Delaware 7011 52-2095412
HMC IHP Holdings LLC................. Delaware 7011 52-2095412
HMC OP BN LLC........................ Delaware 7011 52-2095412
S.D. Hotels LLC...................... Delaware 7011 52-2095412
HMC Gateway LLC...................... Delaware 7011 52-2095412
HMC Pacific Gateway LLC.............. Delaware 7011 52-2095412
MDSM Finance LLC..................... Delaware 7011 52-2065959
HMC Market Street LLC................ Delaware 7011 52-2095412
New Market Street LP................. Delaware 7011 52-2131023
Times Square LLC..................... Delaware 7011 52-2095412
Times Square GP LLC.................. Delaware 7011 52-2095412
HMC Atlanta LLC...................... Delaware 7011 52-2095412
Ivy Street LLC....................... Delaware 7011 52-2095412
HMC Properties II LLC................ Delaware 7011 52-2138453
Santa Clara HMC LLC.................. Delaware 7011 52-2095412
HMC BCR Holdings LLC................. Delaware 7011 52-2095412
HMC Palm Desert LLC.................. Delaware 7011 52-2095412
HMC Georgia LLC...................... Delaware 7011 52-2095412
HMC SFO LLC.......................... Delaware 7011 52-2095412
Market Street Host LLC............... Delaware 7011 52-2091669
HMC Property Leasing LLC............. Delaware 7011 52-2095412
HMC Host Restaurants LLC............. Delaware 7011 52-2095412
Durbin LLC........................... Delaware 7011 52-2095412
HMC HT LLC........................... Delaware 7011 52-2095412
HMC JWDC GP LLC...................... Delaware 7011 52-2095412
HMC JWDC LLC......................... Delaware 7011 52-2095412
HMC OLS I LLC........................ Delaware 7011 52-2095412
HMC OLS II L.P. ..................... Delaware 7011 52-2095412
HMT Lessee Parent LLC................ Delaware 7011 52-2095412
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EXPLANATORY NOTE
This registration statement contains two prospectuses. One is a prospectus
relating to common stock, preferred stock, depositary shares, warrants,
subscription rights and preferred stock purchase rights of Host Marriott
Corporation. The other is a prospectus relating to senior notes of Host
Marriott, L.P. Each offering of securities made under this registration
statement will be made with one or the other of these two prospectuses, along
with an appropriate prospectus supplement.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
(Subject to Completion, dated May 25, 2001)
$550,000,000
Host Marriott Corporation
Common Stock, Preferred Stock, Depositary Shares,
Warrants and Subscription Rights
By this prospectus, we may offer, from time to time, in one or more series or
classes the following securities:
. shares of our common stock
. shares of our preferred stock
. shares of our preferred stock represented by depositary shares
. our warrants exercisable for common stock, preferred stock or depositary
shares and
. subscription rights evidencing the right to purchase any of the above
securities.
The offered securities have an aggregate initial offering price of
$550,000,000. We may offer the offered securities in amounts, at prices and on
terms determined at the time of the offering. We will provide you with specific
terms of the applicable offered securities in supplements to this prospectus.
You should read this prospectus and any supplement carefully before you
decide to invest. This prospectus may not be used to consummate sales of the
offered securities unless it is accompanied by a prospectus supplement
describing the method and terms of the offering of those offered securities.
Investing in the offered securities involves risks. See "Risk Factors"
beginning on page 1.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered securities or determined
if this prospectus is truthful or complete. It is illegal for any person to
tell you otherwise.
The date of this prospectus is May , 2001.
TABLE OF CONTENTS
Risk Factors.. 1
About This
Prospectus... 12
Where You Can
Find More
Information.. 12
Disclosure
Regarding
Forward-
Looking
Statements... 14
The Company... 15
Use of
Proceeds..... 16
ERISA
Matters...... 16
Ratio of
Earnings to
Combined
Fixed Charges
and Preferred
Stock
Dividends.... 16
Description of
Common
Stock........ 17
Description of
Preferred
Stock........ 20
Restrictions
on Ownership
and
Transfer..... 27
Description of
Depositary
Shares....... 30
Description of
Warrants..... 34
Description of
Subscription
Rights....... 35
Plan of
Distribution.. 36
Legal
Matters...... 37
Experts....... 38
i
As used in this prospectus and in any accompanying prospectus supplement,
references to "we," "our," the "company" and "Host Marriott" and similar
references are to Host Marriott Corporation, a Maryland corporation, and its
consolidated subsidiaries from and after December 29, 1998 and to Host
Marriott Corporation, a Delaware corporation, and its consolidated
subsidiaries before December 29, 1998, unless otherwise expressly stated or
the context otherwise requires. References to the "Operating Partnership" are
to Host Marriott, L.P.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
material risks described below.
Risks of Ownership of our Common Stock
There are limitations on the acquisition of our common stock and changes in
control. Our charter and bylaws, the partnership agreement of the Operating
Partnership, our shareholder rights plan and the Maryland General Corporation
Law contain a number of provisions that could delay, defer or prevent a
transaction or a change in control of us that might involve a premium price
for our shareholders or otherwise be in their best interests, including the
following:
. Ownership limit. The 9.8% ownership limit described under "Risk Factors--
Risks of Ownership of our Common Stock--There are possible adverse
consequences of limits on ownership of our common stock" below may have
the effect of precluding a change in control of us by a third party
without the consent of our Board of Directors, even if the change in
control would be in the interest of our shareholders, and even if the
change in control would not reasonably jeopardize our real estate
investment trust, or "REIT," status.
. Staggered board. Our Board of Directors consists of nine members but our
charter provides that our number of directors may be increased or
decreased according to our bylaws, provided that the total number of
directors is not less than three nor more than 13. Pursuant to our
bylaws, the number of directors will be fixed by our Board of Directors
within the limits in our charter. Our Board of Directors is divided into
three classes of directors. Directors for each class are chosen for a
three-year term when the term of the current class expires. The staggered
terms for directors may affect shareholders' ability to effect a change
in control of us, even if a change in control would be in the interest of
our shareholders. Currently, there are nine directors.
. Removal of board of directors. Our charter provides that, except for any
directors who may be elected by holders of a class or series of shares of
capital stock other than our common stock, directors may be removed only
for cause and only by the affirmative vote of shareholders holding at
least two-thirds of our outstanding shares entitled to be cast for the
election of directors. Vacancies on the Board of Directors may be filled
by the concurring vote of a majority of the remaining directors and, in
the case of a vacancy resulting from the removal of a director by the
shareholders, by at least two-thirds of all the votes entitled to be cast
in the election of directors.
. Preferred shares; classification or reclassification of unissued shares
of capital stock without shareholder approval. Our charter provides that
the total number of shares of stock of all classes which we have
authority to issue is 800,000,000, initially consisting of 750,000,000
shares of common stock and 50,000,000 shares of preferred stock, of which
14,140,000 shares of preferred stock were issued and outstanding as of
May 1, 2001. Our Board of Directors has the authority, without a vote of
shareholders, to classify or reclassify any unissued shares of stock,
including common stock into preferred stock or vice versa, and to
establish the preferences and rights of any preferred or other class or
series of shares to be issued. The issuance of preferred shares or other
shares having special preferences or rights could delay or prevent a
change in control even if a change in control would be in the interests
of our shareholders. Because our Board of Directors has the power to
establish the
1
preferences and rights of additional classes or series of shares without a
shareholder vote, our Board of Directors may give the holders of any class
or series preferences, powers and rights, including voting rights, senior
to the rights of holders of our common stock.
. Consent rights of the limited partners. Under the partnership agreement
of the Operating Partnership, we generally will be able to merge or
consolidate with another entity with the consent of partners holding
percentage interests that are more than 50% of the aggregate percentage
interests of the outstanding limited partnership interests entitled to
vote on the merger or consolidation, including any limited partnership
interests held by us, as long as the holders of limited partnership
interests either receive or have the right to receive the same
consideration as our shareholders. We, as holder of a majority of the
limited partnership interests, would be able to control the vote. Under
our charter, holders of at least two-thirds of our outstanding shares of
common stock generally must approve the merger or consolidation.
. Maryland business combination law. Under the Maryland General Corporation
Law, specified "business combinations," including specified issuances of
equity securities, between a Maryland corporation and any person who owns
10% or more of the voting power of the corporation's then outstanding
shares, or an "interested shareholder," or an affiliate of the interested
shareholder are prohibited for five years after the most recent date in
which the interested shareholder becomes an interested shareholder.
Thereafter, any of these specified business combination must be approved
by 80% of outstanding voting shares, and by two-thirds of voting shares
other than voting shares held by an interested shareholder unless, among
other conditions, the corporation's common shareholders receive a minimum
price, as defined in the Maryland General Corporation Law, for their
shares and the consideration is received in cash or in the same form as
previously paid by the interested shareholder. We are subject to the
Maryland business combination statute.
. Maryland control share acquisition law. Under the Maryland General
Corporation Law, "control shares" acquired in a "control share
acquisition" have no voting rights except to the extent approved by a
vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror and by officers or directors who
are employees of the corporation. "Control shares" are voting shares
which, if aggregated with all other voting shares previously acquired by
the acquiror or over which the acquiror is able to exercise or direct the
exercise of voting power (except solely by virtue of a revocable proxy),
would entitle the acquiror to exercise voting power in electing directors
within one of the following ranges of voting power: (1) one-fifth or more
but less than one-third, (2) one-third or more but less than a majority
or (3) a majority or more of the voting power. Control shares do not
include shares the acquiring person is then entitled to vote as a result
of having previously obtained shareholder approval. A "control share
acquisition" means the acquisition of control shares, subject to
specified exceptions. We are subject to these control share provisions of
Maryland law, subject to an exemption for Marriott International pursuant
to its purchase right discussed below. See "Risk Factors--Risks of
Ownership of our Common Stock--There are limitations on the acquisition
of our common stock and changes in control--Marriott International
purchase right."
. Merger, consolidation, share exchange and transfer of our
assets. Pursuant to our charter, subject to the terms of any outstanding
class or series of capital stock, we can merge with or into another
entity, consolidate with one or more other entities, participate in a
share exchange or transfer our assets within the meaning of the Maryland
General Corporation Law if approved (1) by our Board of Directors in the
manner provided in the Maryland General Corporation Law and (2) by our
shareholders holding two-thirds of all the votes entitled to be cast on
the matter, except that any merger of us with or into a trust organized
for the purpose of changing our form of organization from a corporation
to a trust requires only the approval of our shareholders holding a
majority of all votes entitled to be cast on the merger. Under the
Maryland General Corporation Law, specified mergers may be approved
without a vote of shareholders and a share exchange is only required to
be approved by a Maryland corporation by its Board of Directors. Our
voluntary dissolution also would require approval of shareholders holding
two-thirds of all the votes entitled to be cast on the matter.
2
. Amendments to our charter and bylaws. Our charter contains provisions
relating to restrictions on transferability of our common stock, the
classified Board of Directors, fixing the size of our Board of Directors
within the range set forth in our charter, removal of directors and the
filling of vacancies, all of which may be amended only by a resolution
adopted by the Board of Directors and approved by our shareholders
holding two-thirds of the votes entitled to be cast on the matter. As
permitted under the Maryland General Corporation Law, our charter and
bylaws provide that directors have the exclusive right to amend our
bylaws. Amendments of this provision of our charter also would require
action of our Board of Directors and approval by shareholders holding
two-thirds of all the votes entitled to be cast on the matter.
. Marriott International purchase right. As a result of our spin-off of
Marriott International in 1993, Marriott International has the right to
purchase up to 20% of each class of our outstanding voting shares at the
then fair market value when specific change of control events involving
us occur, subject to specified limitations to protect our REIT status.
The Marriott International purchase right may have the effect of
discouraging a takeover of us, because any person considering acquiring a
substantial or controlling block of our common stock will face the
possibility that its ability to obtain or exercise control would be
impaired or made more expensive by the exercise of the Marriott
International purchase right.
. Shareholder rights plan. We adopted a shareholder rights plan which
provides, among other things, that when specified events occur, our
shareholders will be entitled to purchase from us a newly created series
of junior preferred shares, subject to our ownership limit described
below. The preferred share purchase rights are triggered by the earlier
to occur of (1) ten days after the date of a public announcement that a
person or group acting in concert has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of our outstanding shares of
common stock or (2) ten business days after 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 20% or more of our outstanding common stock. The
preferred share purchase rights would cause substantial dilution to a
person or group that attempts to acquire us on terms not approved by our
Board of Directors.
There are possible adverse consequences of limits on ownership of our common
stock. To maintain our qualification as a REIT for federal income tax purposes,
not more than 50% in value of our outstanding shares of capital stock may be
owned, directly or indirectly, by five or fewer individuals, as defined in the
Internal Revenue Code to include some entities. In addition, a person who owns,
directly or by attribution, 10% or more of an interest in a tenant of ours, or
a tenant of any partnership in which we are a partner, cannot own, directly or
by attribution, 10% or more of our shares without jeopardizing our
qualification as a REIT. Primarily to facilitate maintenance of our
qualification as a REIT for federal income tax purposes, the ownership limit
under our charter prohibits ownership, directly or by virtue of the attribution
provisions of the Internal Revenue Code, by any person or persons acting as a
group, of more than 9.8% of the issued and outstanding shares of our common
stock, subject to an exception for shares of our common stock held prior to our
conversion into a REIT (referred to as the "REIT conversion") so long as the
holder would not own more than 9.9% in value of our outstanding shares after
the REIT conversion, and prohibits ownership, directly or by virtue of the
attribution provisions of the Internal Revenue Code, by any person, or persons
acting as a group, of more than 9.8% of the issued and outstanding shares of
any class or series of our preferred shares. Together, these limitations are
referred to as the "ownership limit." Our Board of Directors, in its sole and
absolute discretion, may waive or modify the ownership limit with respect to
one or more persons who would not be treated as "individuals" for purposes of
the Internal Revenue Code if the Board of Directors is satisfied, based upon
information required to be provided by the party seeking the waiver and, if it
determines necessary or advisable, upon an opinion of counsel satisfactory to
our Board of Directors, that ownership in excess of this limit will not cause a
person who is an individual to be treated as owning shares in excess of the
ownership limit, applying the applicable constructive ownership rules, and will
not otherwise jeopardize our status as a REIT for federal income tax purposes
(for example, by causing any of our tenants to be considered a "related
3
party tenant" for purposes of the REIT qualification rules). Common stock
acquired or held in violation of the ownership limit will be transferred
automatically to a trust for the benefit of a designated charitable
beneficiary, and the person who acquired the common stock in violation of the
ownership limit will not be entitled to any distributions thereon, to vote
those shares of common stock or to receive any proceeds from the subsequent
sale of the common stock in excess of the lesser of the price paid for the
common stock or the amount realized from the sale. A transfer of shares of our
common stock to a person who, as a result of the transfer, violates the
ownership limit may be void under certain circumstances, and, in any event,
would deny that person any of the economic benefits of owning shares of our
common stock in excess of the ownership limit. The ownership limit may have the
effect of delaying, deferring or preventing a change in control and, therefore,
could adversely affect the shareholders' ability to realize a premium over the
then-prevailing market price for our common stock in connection with such
transaction.
We depend on external sources of capital for future growth. As with other
REITs, but unlike corporations generally, our ability to reduce our debt and
finance our growth largely must be funded by external sources of capital
because we generally will have to distribute to our shareholders 90% of our
taxable income in order to qualify as a REIT, including taxable income we
recognize for tax purposes but with regard to which we do not receive
corresponding cash. Our access to external capital will depend upon a number of
factors, including general market conditions, the market's perception of our
growth potential, our current and potential future earnings, cash distributions
and the market price of our common stock. Currently, our access to external
capital has been limited to the extent that our common stock is trading at what
we believe is a discount to our estimated net asset value.
Shares of our common stock that are or become available for sale could
affect the price for shares of our common stock. Sales of a substantial number
of shares of our common stock, or the perception that sales could occur, could
adversely affect prevailing market prices for our common stock. In addition,
holders of units of limited partnership interest in the Operating Partnership
(referred to as "OP Units"), who redeem their OP Units and receive common stock
upon redemption will be able to sell those shares freely, unless the person is
our affiliate and resale of the affiliate's shares is not covered by an
effective registration statement. There are currently approximately 41 million
OP Units outstanding, all of which are currently redeemable. Further, a
substantial number of shares of our common stock have been and will be issued
or reserved for issuance from time to time under our employee benefit plans,
including shares of our common stock reserved for options, and these shares of
common stock would be available for sale in the public markets from time to
time pursuant to exemptions from registration or upon registration. Moreover,
the issuance of additional shares of our common stock by us in the future would
be available for sale in the public markets. We can make no prediction about
the effect that future sales of our common stock would have on the market price
of our common stock.
Our earnings and cash distributions will affect the market price of shares
of our common stock. We believe that the market value of a REIT's equity
securities is based primarily upon the market's perception of the REIT's growth
potential and its current and potential future cash distributions, whether from
operations, sales, acquisitions, development or refinancings, and is
secondarily based upon the value of the underlying assets. For that reason,
shares of our common stock may trade at prices that are higher or lower than
the net asset value per share. To the extent we retain operating cash flow for
investment purposes, working capital reserves or other purposes rather than
distributing the cash flow to shareholders, these retained funds, while
increasing the value of our underlying assets, may negatively impact the market
price of our common stock. Our failure to meet the market's expectation with
regard to future earnings and cash distributions would likely adversely affect
the market price of our common stock.
Market interest rates may affect the price of shares of our common stock. We
believe that one of the factors that investors consider important in deciding
whether to buy or sell shares of a REIT is the distribution rate on the shares,
considered as a percentage of the price of the shares, relative to market
interest rates. If market interest rates increase, prospective purchasers of
REIT shares may expect a higher distribution rate. Thus, higher market interest
rates could cause the market price of our shares to go down.
4
Risks of Operation
We do not control our hotel operations, and we are dependent on the managers
of our hotels. Because federal income tax laws restrict REITs and their
subsidiaries from operating a hotel, we do not manage our hotels. Instead, we
retain third party managers to manage our hotels pursuant to management
agreements. Our income from the hotels may be adversely affected if the
managers fail to provide quality services and amenities and competitive room
rates at our hotels or fail to maintain the quality of the hotel brand names.
While HMT Lessee LLC, a taxable REIT subsidiary of the Operating Partnership
that is the lessee of substantially all of our full service properties,
oversees the hotel managers' performance, we have limited specific recourse if
we believe that the hotel managers are not performing adequately.
Underperformance by our hotel managers could adversely affect our results of
operations.
Our relationship with Marriott International may result in conflicts of
interest. Marriott International, a public hotel management company, manages a
significant number of our hotels. In addition, Marriott International manages
and in some cases may own or be invested in hotels that compete with our
hotels. As a result, Marriott International may make decisions regarding
competing lodging facilities which it manages that would not necessarily be in
our best interests. J.W. Marriott, Jr. is a member of our Board of Directors
and his brother, Richard E. Marriott, is our Chairman of the Board. Both J.W.
Marriott, Jr. and Richard E. Marriott serve as directors, and J.W. Marriott,
Jr. also serves as an officer, of Marriott International. J.W. Marriott, Jr.
and Richard E. Marriott beneficially owned, as determined for securities law
purposes, as of January 31, 2001, approximately 12.6% and 12.2%, respectively,
of the outstanding shares of common stock of Marriott International. As a
result, J.W. Marriott, Jr. and Richard E. Marriott have potential conflicts of
interest as our directors when making decisions regarding Marriott
International, including decisions relating to the management agreements
involving the hotels and Marriott International's management of competing
lodging properties.
Our Board of Directors follows appropriate policies and procedures intended
to limit the involvement of Messrs. J.W. Marriott, Jr. and Richard E. Marriott
in conflict situations, including requiring them to abstain from voting as
directors on matters which present a conflict between the companies. If
appropriate, these policies and procedures will apply to other directors and
officers.
We have substantial indebtedness. Our degree of leverage could adversely
affect our ability to:
. obtain financing in the future for working capital, capital expenditures,
acquisitions, development or other general business purposes
. undertake financings on terms and conditions acceptable to us
. pursue our acquisition strategy or
. compete effectively or operate successfully under adverse economic
conditions.
If our cash flow and working capital are 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 or fulfill our business
plan. Additionally, our debt contains performance related covenants that, if
not achieved, could require immediate repayment of our debt or significantly
increase the rate of interest on our debt.
5
There is no limitation on the amount of debt we may incur. There are no
limitations in our organizational documents or the Operating Partnership's
organizational documents that limit the amount of indebtedness that we may
incur. However, our existing debt instruments contain restrictions on the
amount of indebtedness that we may incur. Accordingly, we could incur
indebtedness to the extent permitted by our debt agreements. If we became more
highly leveraged, our debt service payments would increase and our cash flow
and our ability to service our debt and make distributions to our shareholders
would be adversely affected.
Our management agreements could impair the sale or other disposition of our
hotels. Under the terms of the management agreements, we generally may not
sell, lease or otherwise transfer the hotels unless the transferee assumes the
related management agreements and meets specified other conditions. Our ability
to finance, refinance or sell any of the properties may, depending upon the
structure of a particular transaction, require the manager's consent. If the
manager did not consent, we would be prohibited from financing, refinancing or
selling the property without breaching the management agreement.
The acquisition contracts relating to some hotels limit our ability to sell
or refinance those hotels. For reasons relating to federal income tax
considerations of the former owners of some of our hotels, we agreed to
restrictions on selling some hotels or repaying or refinancing the mortgage
debt on those hotels for varying periods depending on the hotel. We anticipate
that, in specified circumstances, we may agree to similar restrictions in
connection with future hotel acquisitions. As a result, even if it were in our
best interests to sell or refinance the mortgage debt on these hotels, it may
be difficult or impossible to do so during their respective lock-out periods.
Our ground lease payments may increase faster than the revenues we receive
on the hotels. As of January 31, 2001, we leased, as lessee, 46 of our hotels
pursuant to ground leases. These ground leases generally require increases in
ground rent payments every five years. Our ability to make distributions to
shareholders could be adversely affected to the extent that our revenues do not
increase at the same or a greater rate as the increases under the ground
leases. In addition, if we were to sell a hotel encumbered by a ground lease,
the buyer would have to assume the ground lease, which could result in a lower
sales price. Moreover, to the extent that the ground leases are not renewed at
their expiration, our revenues could be adversely affected.
New acquisitions may fail to perform as expected or we may be unable to make
acquisitions on favorable terms. We intend to acquire additional full-service
hotels. Newly acquired properties may fail to perform as expected, which could
adversely affect our financial condition and operating results. We may
underestimate the costs necessary to bring an acquired property up to standards
established for its intended market position. We expect to acquire hotels with
cash from secured or unsecured financings and proceeds from offerings of equity
or debt, to the extent available. We may not be in a position or have the
opportunity in the future to make suitable property acquisitions on favorable
terms or at all. Competition for attractive investment opportunities may
increase prices for hotel properties, thereby decreasing the potential return
on our investment.
We may be unable to sell 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. The inability to respond promptly to changes in
the performance of our investments could adversely affect our financial
condition, and ability to service debt and make distributions to shareholders.
In addition, there are limitations under the federal tax laws applicable to
REITs and agreements that we have entered into when we acquired some of our
properties that may limit our ability to recognize the full economic benefit
from a sale of our assets.
Our revenues and the value of our properties are subject to conditions
affecting the lodging industry. If our assets do not generate income sufficient
to pay our expenses, service our debt and maintain
6
our properties, we will be unable to make distributions to our shareholders.
Our revenues and the value of our properties are subject to conditions
affecting the lodging industry. These 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 rooms
. the attractiveness of our hotels to consumers and competition from
comparable hotels
. the quality, philosophy and performance of the managers of our hotels
. changes in room rates and increases in operating costs due to inflation
and other factors and
. the need to periodically repair and renovate our hotels.
Adverse changes in these conditions could adversely affect our financial
performance.
Our expenses may remain constant even if our revenue drops. The expenses of
owning property are not necessarily reduced when circumstances like 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. Our financial condition could be
adversely affected by:
. interest rate levels
. the availability of financing
. the cost of compliance with government regulation, including zoning and
tax laws and
. changes in governmental regulations, including those governing usage,
zoning and taxes.
We depend on our key personnel. We depend on the efforts of our executive
officers and other key personnel. 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 personnel.
Partnership and other litigation judgments or settlements could have a
material adverse effect on our financial condition. We and the Operating
Partnership are parties to various lawsuits relating to previous partnership
transactions, including transactions relating to the REIT conversion. While we
and the other defendants to these lawsuits believe all of the lawsuits in which
we are a defendant are without merit and we are vigorously defending against
the asserted claims, we can give no assurance as to the outcome of any of the
lawsuits. If any of the lawsuits were to be determined adversely to us or
settlement involving a payment of a material sum of money were to occur, there
could be a material adverse effect on our financial condition.
We may acquire hotel properties through joint ventures with third parties
that could result in conflicts. 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 the assets to additional risk, including:
. our co-venturer in an investment might have economic or business
interests or goals that are inconsistent with our interests or goals
. our co-venturers may be in a position to take action contrary to our
instructions or requests or contrary to our policies or objectives or
. a joint venture partner could go bankrupt, leaving us liable for its
share of joint venture liabilities.
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 of our joint venture partners. Also, our joint
venture partners could take actions binding on the joint venture without our
consent.
7
Environmental problems are possible and can be costly. We believe that our
properties are in compliance in all material respects with applicable
environmental laws. Unidentified environmental liabilities could arise,
however, and could have a material adverse effect on our financial condition
and performance. 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 product releases at the 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 the 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.
Compliance with other government regulations can also be costly. Our hotels
are subject to various forms of regulation, including Title III of the
Americans with Disabilities Act, building codes and regulations pertaining to
fire safety. Compliance with those laws and regulations could require
substantial capital expenditures. These regulations may be changed from time to
time, or new regulations adopted, resulting in additional or unexpected costs
of compliance. Any increased costs could reduce the cash available for
servicing debt and making distributions to our shareholders.
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. Some types of losses, such as
from earthquakes and environmental hazards, however, 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 that event, we might nevertheless remain obligated for any
mortgage debt or other financial obligations related to the property.
Federal Income Tax Risks
To qualify as a REIT, we are required to distribute at least 90% of our
taxable income, irrespective of our available cash or outstanding
obligations. To continue to qualify as a REIT, we currently are required to
distribute to our shareholders with respect to each year at least 90% of our
taxable income, excluding net capital gain (with respect to our taxable years
that ended prior to January 1, 2001, we were required to distribute 95% of the
amount to so qualify). In addition, we will be subject to a 4% nondeductible
excise tax on the amount, if any, by which distributions made by us with
respect to the calendar year are less than the sum of 85% of our ordinary
income and 95% of our capital gain net income for that year and any
undistributed taxable income from prior periods. We intend to make
distributions to our shareholders to comply with the distribution requirement
and to avoid the nondeductible excise tax and will rely for this purpose on
distributions from the Operating Partnership. However, there are differences in
timing between our recognition of taxable income and our receipt of cash
available for distribution due to, among other things, the seasonality of the
lodging industry and the fact that some taxable income will be "phantom"
income, which is taxable income that is not matched by cash flow or EBITDA to
us. Due to some transactions entered into in years prior to the REIT
conversion, we expect to recognize substantial amounts of "phantom" income.
There is a distinct
8
possibility that these timing differences could require us to borrow funds or
to issue additional equity to enable us to meet the distribution requirement
and, therefore, to maintain our REIT status, and to avoid the nondeductible
excise tax. In addition, because the REIT distribution requirements prevent us
from retaining earnings, we will generally be required to refinance debt that
matures with additional debt or equity. We cannot assure you that any of these
sources of funds, if available at all, would be sufficient to meet our
distribution and tax obligations.
Adverse tax consequences would apply if we failed to qualify as a REIT. We
believe that we have been organized and have operated in such a manner so as to
qualify as a REIT under the Internal Revenue Code, commencing with our taxable
year beginning January 1, 1999, and we currently intend to continue to operate
as a REIT during future years. No assurance can be provided, however, that we
qualify as a REIT or that new legislation, Treasury Regulations, administrative
interpretations or court decisions will not significantly change the tax laws
with respect to our qualification as a REIT or the federal income tax
consequences of our REIT qualification. If we fail to qualify as a REIT, we
will be subject to federal and state income tax, including any applicable
alternative minimum tax, on our taxable income at regular corporate rates. In
addition, unless entitled to statutory relief, we would not qualify as a REIT
for the four taxable years following the year during which REIT qualification
is lost. The additional tax burden on us would significantly reduce the cash
available for distribution by us to our shareholders, and we would no longer be
required to make any distributions to shareholders. Our failure to qualify as a
REIT could reduce materially the value of our common stock and would cause any
distributions to shareholders that otherwise would have been subject to tax as
capital gain dividends to be taxable as ordinary income to the extent of our
current and accumulated earnings and profits, or "E&P." However, subject to
limitations under the Internal Revenue Code, corporate distributees may be
eligible for the dividends received deduction with respect to our
distributions. Our failure to qualify as a REIT also would cause an event of
default under our credit facility that could lead to an acceleration of the
amounts due under the credit facility, which, in turn, would constitute an
event of default under our outstanding debt securities.
We will be disqualified as a REIT at least for taxable year 1999 if we
failed to distribute all of our E&P attributable to our non-REIT taxable
years. In order to qualify as a REIT, we cannot have at the end of any taxable
year any undistributed E&P that is attributable to one of our non-REIT taxable
years. A REIT has until the close of its first taxable year as a REIT in which
it has non-REIT E&P to distribute its accumulated E&P. We were required to have
distributed this E&P prior to the end of 1999, the first taxable year for which
our REIT election was effective. If we failed to do this, we will be
disqualified as a REIT at least for taxable year 1999. We believe that
distributions of non-REIT E&P that we made were sufficient to distribute all of
the non-REIT E&P as of December 31, 1999, but we cannot guarantee that we met
this requirement.
If our leases are not respected as true leases for federal income tax
purposes, we would fail to qualify as a REIT. To qualify as a REIT, we must
satisfy two gross income tests, under which specified percentages of our gross
income must be passive income, like rent. For the rent paid pursuant to the
leases, which constitutes substantially all of our gross income, to qualify for
purposes of the gross income tests, the leases must be respected as true leases
for federal income tax purposes and not be treated as service contracts, joint
ventures or some other type of arrangement. In addition, the lessees must not
be regarded as "related party tenants," as defined in the Internal Revenue
Code. We believe that the leases will be respected as true leases for federal
income tax purposes. There can be no assurance, however, that the IRS will
agree with this view. We also believe that Crestline was not a "related party
tenant" and, as a result of the changes in tax laws effective January 1, 2001,
HMT Lessee will not be treated as a "related party tenant" so long as it
qualifies as a "taxable REIT subsidiary." If the leases were not respected as
true leases for federal income tax purposes or if the lessees were regarded as
"related party tenants," we would not be able to satisfy either of the two
gross income tests applicable to REITs and we would lose our REIT status. See
"Risk Factors--Federal Income Tax Risks--Adverse tax consequences would apply
if we failed to qualify as a REIT" above.
9
If HMT Lessee LLC fails to qualify as a taxable REIT subsidiary, we would
fail to qualify as a REIT. For our taxable years beginning on and after January
1, 2001, as a result of REIT tax law changes under the specific provisions of
the Ticket to Work and Work Incentives Improvement Act of 1999 relating to
REITs (we refer to those provisions as the "REIT Modernization Act"), we are
permitted to lease our hotels to a subsidiary of the Operating Partnership that
is taxable as a corporation and that elects to be treated as a "taxable REIT
subsidiary." Accordingly, effective January 1, 2001, HMT Lessee directly or
indirectly acquired all but one of the full-service hotel leasehold interests
formerly held by Crestline. So long as HMT Lessee and other affiliated lessees
qualify as taxable REIT subsidiaries of ours, they will not be treated as
"related party tenants." We believe that HMT Lessee qualifies to be treated as
a taxable REIT subsidiary for federal income tax purposes. We cannot assure
you, however, that the IRS will not challenge its status as a taxable REIT
subsidiary for federal income tax purposes, or that a court would not sustain
such a challenge. If the IRS were successful in disqualifying HMT Lessee from
treatment as a taxable REIT subsidiary, we would fail to meet the asset tests
applicable to REITs and substantially all of our income would fail to qualify
for the gross income tests and, accordingly, we would cease to qualify as a
REIT. See "Risk Factors--Federal Income Tax Risks--Adverse tax consequences
would apply if we failed to qualify as a REIT" above.
Despite our REIT status, we remain subject to various taxes, including
substantial deferred and contingent tax liabilities. Notwithstanding our status
as a REIT, we are subject, through our ownership interest in the Operating
Partnership, to certain federal, state, local and foreign taxes on our income
and property. In addition, we will be required to pay federal tax at the
highest regular corporate rate upon our share of any "built-in gain" recognized
as a result of any sale before January 1, 2009, by the Operating Partnership of
assets, including the hotels, in which interests were acquired by the Operating
Partnership from our predecessor and its subsidiaries as part of the REIT
conversion. Built-in gain is the amount by which an asset's fair market value
exceeded our adjusted basis in the asset on January 1, 1999, the first day of
our first taxable year as a REIT. The total amount of gain on which we would be
subject to corporate income tax if the assets that we held at the time of the
REIT conversion were sold in a taxable transaction prior to January 1, 2009
would be material to us. In addition, at the time of the REIT conversion, we
expected that we or Rockledge Hotel Properties, Inc. or Fernwood Hotel Assets,
Inc. (each of which is a taxable corporation in which the Operating Partnership
owned a 95% nonvoting interest until April, 2001 when the Operating Partnership
purchased the remaining 5% voting interest) likely would recognize substantial
built-in gain and deferred tax liabilities in the next ten years without any
corresponding receipt of cash by us or the Operating Partnership. We may have
to pay certain state income taxes because not all states treat REITs the same
as they are treated for federal income tax purposes. We may also have to pay
certain foreign taxes to the extent we own assets or conduct operations in
foreign jurisdictions. The Operating Partnership is obligated under its
partnership agreement to pay all such taxes (and any related interest and
penalties) incurred by us, as well as any liabilities that the IRS may assert
against us for corporate income taxes for taxable years prior to the time we
qualified as a REIT. Our taxable REIT subsidiaries, including Rockledge,
Fernwood and HMT Lessee, are taxable as corporations and will pay federal,
state and local income tax on their net income at the applicable corporate
rates, and foreign taxes to the extent they own assets or conduct operations in
foreign jurisdictions.
If the IRS were to challenge successfully the Operating Partnership's status
as a partnership for federal income tax purposes, we would cease to qualify as
a REIT and suffer other adverse consequences. We believe that the Operating
Partnership qualifies to be treated as a partnership for federal income tax
purposes. As a partnership, it is not subject to federal income tax on its
income. Instead, each of its partners, including us, is required to pay tax on
its allocable share of the Operating Partnership's income. No assurance can be
provided, however, that the IRS will not challenge its status as a partnership
for federal income tax purposes, or that a court would not sustain such a
challenge. If the IRS were successful in treating the Operating Partnership as
a corporation for tax purposes, we would fail to meet the income tests and
certain of the asset tests applicable to REITs and, accordingly, cease to
qualify as a REIT. If the Operating Partnership fails to qualify as a
partnership for federal income tax purposes or we fail to qualify as a REIT,
either failure would cause an event of default under our credit facility that,
in turn, could constitute an event of default under our outstanding debt
securities. Also, the failure of the Operating Partnership to qualify as a
partnership would
10
cause it to become subject to federal and state corporate income tax, which
would reduce significantly the amount of cash available for debt service and
for distribution to its partners, including us. Finally, the classification of
the Operating Partnership as a corporation would cause us to recognize gain at
least equal to our "negative capital account," if any.
As a REIT, we are subject to limitations on our ownership of debt and equity
securities. Subject to the exceptions discussed in this paragraph, a REIT is
prohibited from owning securities in any one issuer if the value of those
securities exceeds 5% of the value of the REIT's total assets or the securities
owned by the REIT represent more than 10% of the issuer's outstanding voting
securities or more than 10% of the value of the issuer's outstanding
securities. A REIT is permitted to own securities of a subsidiary in an amount
that exceeds the 5% value test and the 10% vote or value test if the subsidiary
elects to be a "taxable REIT subsidiary," which is taxable as a corporation.
However, a REIT may not own securities of taxable REIT subsidiaries that
represent in the aggregate more than 20% of the value of the REIT's total
assets. Effective January 1, 2001, each of Fernwood, Rockledge and HMT Lessee
has elected to be treated as a taxable REIT subsidiary.
Our taxable REIT subsidiaries are subject to special rules that may result
in increased taxes. Several Internal Revenue Code provisions ensure that a
taxable REIT subsidiary is subject to an appropriate level of federal income
taxation. For example, a taxable REIT subsidiary is limited in its ability to
deduct interest payments made to an affiliated REIT. In addition, the REIT has
to pay a 100% penalty tax on some payments that it receives if the economic
arrangements between the REIT and the taxable REIT subsidiary are not
comparable to similar arrangements between unrelated parties.
We may be required to pay a penalty tax upon the sale of a hotel. The
federal income tax provisions applicable to REITs provide that any gain
realized by a REIT on the sale of property held as inventory or other property
held primarily for sale to customers in the ordinary course of business is
treated as income from a "prohibited transaction" that is subject to a 100%
penalty tax. Under existing law, whether property, including hotels, is held as
inventory or primarily for sale to customers in the ordinary course of business
is a question of fact that depends upon all of the facts and circumstances with
respect to the particular transaction. The Operating Partnership intends that
it and its subsidiaries will hold the hotels for investment with a view to
long-term appreciation, to engage in the business of acquiring and owning
hotels and to make occasional sales of hotels as are consistent with the
Operating Partnership's investment objectives. We cannot assure you, however,
that the IRS might not contend that one or more of these sales is subject to
the 100% penalty tax.
11
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process under
the Securities Act of 1933. Under the shelf process, we may, from time to time,
sell any combination of the offered securities described in this prospectus in
one or more offerings up to a total dollar amount of $550,000,000.
This prospectus and any accompanying prospectus supplement do not contain
all of the information included in the registration statement. We have omitted
parts of the registration statement in accordance with the rules and
regulations of the Commission. For further information, we refer you to the
registration statement on Form S-3, including its exhibits. Statements
contained in this prospectus and any accompanying prospectus supplement about
the provisions or contents of any agreement or other document are not
necessarily complete. If the Commission rules and regulations require that an
agreement or document be filed as an exhibit to the registration statement,
please see that agreement or document for a complete description of these
matters. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of each document.
This prospectus provides you with a general description of the offered
securities. Each time we sell offered securities, we will provide a prospectus
supplement that will contain specific information about the method and terms of
that offering. The prospectus supplement may add, update or change any
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with the additional information
described under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy materials that we have
filed with the Commission, including the registration statement, at the
following Commission public reference rooms:
450 Fifth Street, 7 World Trade Center 500 West Madison
N.W. Suite 1300 Street
Room 1024 New York, New York Suite 1400
Washington, D.C. 10048 Chicago, Illinois
20549 60661
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms.
Our Commission filings can also be read at the following address:
New York Stock Exchange,
20 Broad Street,
New York, New York 10005
Our Commission filings are also available to the public on the Commission's
Web Site at http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until we have sold all of the offered
securities to which this prospectus relates or the offering is otherwise
terminated.
1. Annual Report on Form 10-K for the fiscal year ended December 31, 2000
(filed with the Commission on April 2, 2001).
12
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (filed
with the Commission on May 7, 2001).
3. Current Report on Form 8-K (filed with the Commission on May 25, 2001).
4. Current Report on Form 8-K (filed with the Commission on May 8, 2001).
5. Current Report on Form 8-K (filed with the Commission on May 3, 2001).
6. Current Report on Form 8-K/A (filed with the Commission on May 2, 2001).
7. Current Report on Form 8-K (filed with the Commission on April 13, 2001).
8. Current Report on Form 8-K (filed with the Commission on March 23, 2001).
9. Current Report on Form 8-K (filed with the Commission on February 7,
2001).
10. Description of our common stock included in a Registration Statement on
Form 8-A (filed with the Commission on November 18, 1998) (as amended on
December 28, 1998).
11. Description of our Rights included in a Registration Statement on Form
8-A (filed with the Commission on December 11, 1998) (as amended on December
24, 1998).
Additional federal income tax consequences that are reasonably anticipated
to be material to prospective holders in connection with the purchase,
ownership and disposition of our securities are described in our Current Report
on Form 8-K, filed with the SEC on May 25, 2001 (together with any amendments
to such filing), which filing is incorporated by reference herein, as indicated
above.
You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning us at (301) 380-2070 between the hours of 9:00
a.m. and 4:00 p.m., Eastern Time.
Corporate Secretary, Host Marriott Corporation, 10400 Fernwood Road,
Bethesda, Maryland 20817
13
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference into this
prospectus include forward-looking statements. As well, any accompanying
prospectus supplement may include forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events.
We identify forward-looking statements in this prospectus, any accompanying
prospectus supplement and other materials filed or to be filed by us with the
Commission and incorporated by reference in this prospectus 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.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:
. national and local economic and business conditions that will affect,
among other things, demand for products and services at our hotels and
other properties, the level of room rates and occupancy that can be
achieved by such properties and the availability and terms of financing
. our 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 of accommodations and room rate structures
. our degree of leverage, which may affect our ability to obtain financing
in the future or maintain compliance with current debt covenants
. 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
. government approvals, actions and initiatives, including the need for
compliance with environmental and safety requirements, and changes in
laws and regulations or the interpretation thereof
. our ability to satisfy complex rules in order for us to qualify as a
REIT for federal income tax purposes, the Operating Partnership's
ability to satisfy the rules in order for it to qualify as a partnership
for federal income tax purposes, and the ability of certain of our
subsidiaries to qualify as taxable REIT subsidiaries for federal income
tax purposes, and our ability and the ability of our subsidiaries to
operate effectively within the limitations imposed by these rules, and
. other factors discussed under the heading "Risk Factors" in this
prospectus, any accompanying prospectus supplement and in our other
filings with the Commission.
Although we believe the expectations reflected in our forward-looking
statements are based upon reasonable assumptions, we can give you no assurance
that we will attain these expectations 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, any accompanying prospectus supplement or any information
incorporated by reference into them 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.
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THE COMPANY
We are a self-managed and self-administered REIT owning full-service hotel
properties. Through our subsidiaries, we currently own or hold controlling
interests in 125 hotels, containing approximately 60,000 rooms located
throughout the United States, in Toronto and Calgary, Canada and in Mexico
City, Mexico. These hotels are generally operated under the Marriott, Ritz-
Carlton, Hyatt, Four Seasons, Hilton and Swissotel brand names. We believe that
these brands are among the most respected and widely recognized names in the
lodging industry.
We were formed as a Maryland corporation in 1998. As part of our efforts to
reorganize our business operations to qualify as a REIT for federal income tax
purposes, on December 29, 1998 we succeeded by merger to the hotel ownership
business formerly conducted by Host Marriott Corporation, a Delaware
corporation. We conduct our business as an umbrella partnership REIT, or
UPREIT, through the Operating Partnership, which is a Delaware limited
partnership of which we are the sole general partner and in which we currently
hold approximately 86% of the partnership interests. The Operating Partnership
leases substantially all of our full-service hotels to a wholly owned
subsidiary of it that is taxed as a corporation.
Our principal executive offices are located at 10400 Fernwood Road,
Bethesda, Maryland 20817-1109, and our telephone number is (301) 380-9000.
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USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
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 or
repurchase of our indebtedness and our capital stock. The factors which we will
consider in any repayment or repurchase of indebtedness will include the amount
and characteristics of any offered securities issued and may include, among
others, the impact of such refinancing on our liquidity or on our debt-to-
equity ratio and earnings per share. When a particular series of securities is
offered, the related prospectus supplement 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, we expect to invest such proceeds in short-
term, interest-bearing instruments or other investment-grade debt securities.
ERISA MATTERS
We and our subsidiaries may each be considered a "party in interest," within
the meaning of the Employee Retirement Income Security Act, or a "disqualified
person," within the meaning of Section 4975 of the Internal Revenue Code, with
respect to many employee benefit plans that are subject to ERISA. The purchase
of offered securities by an ERISA plan, including an individual retirement
plan, that is subject to the fiduciary responsibility provisions of ERISA or
the prohibited transaction provisions of the Internal Revenue Code and with
respect to which we or any of our 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 the Internal Revenue Code,
unless such offered securities are acquired pursuant to and in accordance with
an applicable federal statutory exemption or administrative exemption issued on
a class-wide basis by the United States Department of Labor. Any pension or
other employee benefit plan proposing to acquire any offered securities should
consult with its counsel.
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our ratio of earnings to combined fixed
charges and preferred stock dividends on a historical basis for the periods
indicated.
Fiscal Year
------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of earnings to combined fixed charges and
preferred stock dividends(1)........................ 1.2x 1.5x 1.5x 1.3x 1.0x
--------
(1) 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.
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DESCRIPTION OF COMMON STOCK
The following description sets forth the general terms of the common stock
which Host Marriott may issue. The description set forth below and in any
prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to the Articles of Incorporation and
Bylaws, each of which will be made available upon request.
General
The Articles of Incorporation provide that the total number of shares of
stock of all classes which Host Marriott has authority to issue is 800,000,000
shares of stock, initially consisting of 750,000,000 shares of common stock and
50,000,000 shares of preferred stock. At May 1, 2001, 233,701,538 shares of
common stock were issued and outstanding.
Subject to the preferential rights of any other classes or series of shares
of capital stock and to the provisions of the Articles of Incorporation
regarding restrictions on transfers of shares of capital stock, holders of our
common stock are entitled to receive distributions if, as and when authorized
and declared by the Board of Directors, out of assets legally available
therefor and to share ratably in the assets of Host Marriott legally available
for distribution to its stockholders in the event of its liquidation,
dissolution or winding-up after payment of, or adequate provision for, all
known debts and liabilities of Host Marriott. Host Marriott currently intends
to pay regular quarterly distributions.
Subject to the provisions of the Articles of Incorporation regarding
restrictions on the transfer of shares of capital stock, each outstanding share
of common stock entitles the holder to one vote on all matters submitted to a
vote of stockholders, including the election of directors, and, except as
provided with respect to any other class or series of shares of Host Marriott's
capital stock, the holders of shares of common stock will possess the exclusive
voting power. There is no cumulative voting in the election of directors, which
means that the holders of a majority of the outstanding common stock can elect
all of the directors then standing for election.
Holders of shares of common stock have no preferences, conversion, sinking
fund, redemption rights or preemptive rights to subscribe for any securities of
Host Marriott. Subject to the provisions of the Articles of Incorporation
regarding restrictions on transfer of capital stock, shares of common stock
have equal distribution, liquidation and other rights.
Under the Maryland General Corporation Law, or MGCL, a Maryland corporation
generally cannot dissolve, amend its charter, merge, consolidate, effect a
share exchange or transfer its assets unless approved by the Board of Directors
and by stockholders holding at least two-thirds of the shares entitled to vote
on the matter unless a greater or lesser percentage, but not less than a
majority, is set forth in the corporation's charter. Under the Articles of
Incorporation, any merger, consolidation, share exchange or transfer of assets
must be approved by the Board of Directors and by stockholders. The Articles of
Incorporation generally provide for stockholder approval of such transactions
by a two-thirds vote of all the votes entitled to be cast, except that any
merger of Host Marriott with or into a trust organized for the purpose of
changing Host Marriott's form of organization from a corporation to a trust
will require the approval of stockholders of Host Marriott by the affirmative
vote only of a majority of all the votes entitled to be cast on the matter. In
addition, under the MGCL, certain mergers may be accomplished without a vote of
stockholders. For example, no stockholder vote is required for a merger of a
subsidiary of a Maryland corporation into its parent, provided the parent owns
at least 90% of the subsidiary. In addition, a merger need not be approved by
stockholders of a Maryland successor corporation if the merger does not
reclassify or change the outstanding shares or otherwise amend the charter, and
the number of shares to be issued or delivered in the merger is not more than
20% of the number of its shares of the same class or series outstanding
immediately before the merger becomes effective. A share exchange need be
approved by a Maryland corporation only by its Board of Directors. Any
amendments to the provisions contained in the Articles of Incorporation
relating to restrictions on transferability of stock, the classification of the
Board of Directors and fixing the size of the Board of Directors within the
range set forth in the Articles of Incorporation, as well as the provisions
relating to removal of directors, the filling of
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vacancies and the exclusive authority of the Board of Directors to amend the
Bylaws will require the approval of the Board of Directors and stockholders by
the affirmative vote of the holders of not less than two-thirds of the votes
entitled to be cast on the matter. Other amendments to the Articles of
Incorporation may be effected by requisite action of the Board of Directors
and approval by stockholders by the affirmative vote of not less than a
majority of the votes entitled to be cast on the matter.
The Articles of Incorporation authorize the Board of Directors to
reclassify any unissued shares of common stock into other classes or series of
capital stock, including preferred stock, and to establish the number of
shares in each class or series and to set the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications or terms or conditions of redemption for
each such class or series.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock will be First Chicago
Trust Company of New York.
Stockholder Rights Plan/Preferred Stock Purchase Rights
The Board of Directors has adopted a stockholder rights plan pursuant to a
Rights Agreement dated as of November 23, 1998 between Host Marriott and The
Bank of New York, as rights agent. Each share of common stock issued by Host
Marriott between the date of adoption of the Rights Agreement and the Rights
Distribution Date or the date, if any, on which the Rights are redeemed, would
have one preferred stock purchase right (a "Right") attached to it. The Rights
will expire on November 22, 2008, unless earlier redeemed or exchanged. Each
Right, when exercisable, would entitle the holder to purchase one unit of Host
Marriott Series A Junior Participating Preferred Stock, equal to one one-
thousandth of a share of such stock, at a purchase price equal to $55.00 per
unit, subject to adjustment. Until a Right is exercised, the holder of the
Right, as such, would have no rights as a stockholder of Host Marriott,
including, without limitation, the right to vote or to receive dividends.
The Rights Agreement provides that the Rights initially attach to all
certificates representing common stock then outstanding. The Rights would
separate from the common stock and a distribution of Rights certificates would
occur (a "Rights Distribution Date") upon the earlier to occur of:
. ten days following a public announcement that a person or group of
affiliated 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 (the "Stock Acquisition Date") or
. ten business days, or some later date as the Board of Directors may
determine, following the commencement of a tender offer or exchange
offer, the consummation of which would result in the beneficial
ownership by a person of 20% or more of the outstanding common stock.
For the purposes of determining the 20% threshold amount, the following
shares of common stock are not included:
. shares received pursuant to the Agreement and Plan of Merger, dated
November 23, 1998, pursuant to which Host Marriott Corporation, a
Delaware corporation, was merged into Host Marriott, in exchange for
shares of common stock of Host Marriott Corporation which the holder
beneficially owned on February 3, 1989 and owned continuously thereafter
. shares acquired by a person pursuant to a gift, bequest, inheritance or
distribution from a trust or from a corporation controlled by that
person where the shares of common stock were exempt shares under the
Rights Agreement immediately prior to their acquisition and where the
shares of common stock were beneficially owned by that person
continuously after their acquisition
. shares acquired as a result of a stock dividend, stock distribution or
other recapitalization relating to exempt shares under the Rights
Agreement and
. shares that can be acquired by Marriott International pursuant to the
Marriott International purchase right.
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Until the Rights Distribution Date, the Rights will be evidenced by the
common stock certificates, and will be transferred with, and only with, the
common stock certificates. The Rights are not exercisable until the Rights
Distribution Date.
If a person becomes the beneficial owner of 20% or more of the then
outstanding common stock, except in connection with an offer for all
outstanding common stock which the directors by a two-thirds vote determine to
be fair to and otherwise in the best interests of Host Marriott and its
stockholders, each holder of a Right would, after the end of a redemption
period, have the right to exercise the Right by purchasing, for an amount equal
to the purchase price, shares of common stock having a value equal to two times
the purchase price, subject to the ownership limit. All Rights acquired by the
Acquiring Person will be null and void.
Each holder of a Right would have the right to receive, upon exercise,
common shares of the acquiring company having a value equal to two times the
purchase price of the Right if, at any time following the Stock Acquisition
Date,
. Host Marriott is acquired in a merger or other business combination
transaction in which it is not the surviving corporation, other than a
merger which follows an offer described in the preceding paragraph or
. 50% or more of Host Marriott's assets or earning power is sold or
transferred.
At any time after a person becomes an Acquiring Person, the Board of
Directors may exchange the Rights at an exchange ratio of one share of Host
Marriott common stock per Right.
In general, the Board of Directors may redeem the Rights at a price of $.005
per Right at any time until ten days after an Acquiring Person has been
identified as an Acquiring Person. If the decision to redeem the Rights occurs
after a person becomes an Acquiring Person, the decision will require a two-
thirds vote of directors.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Host
Marriott. The Rights, however, would not interfere with any merger or other
business combination approved by the Board of Directors since the Board may, at
its option, at any time prior to any person becoming an Acquiring Person,
redeem all rights or amend the Rights Agreement to exempt the person from the
Rights Agreement.
Maryland Unsolicited Takeovers Act
The Maryland Unsolicited Takeovers Act applies to any Maryland corporation
that is a public reporting company with at least three independent directors.
Pursuant to the Maryland Unsolicited Takeovers Act, the board of directors of
such a Maryland corporation, without obtaining shareholder approval and
notwithstanding a contrary provision in its charter or bylaws, may elect to
provide that: (1) the number of directors may be fixed only by a vote of the
board of directors; (2) each vacancy on the board of directors (including a
vacancy resulting from the removal of a director by the shareholders) may be
filled only by the affirmative vote of a majority of the remaining directors in
office, even if the remaining directors do not constitute a quorum; and/or (3)
any director elected to fill a vacancy shall hold office for the full remainder
of the term, rather than until the next election of directors. The Maryland
Unsolicited Takeovers Act does not limit the power of a corporation to confer
on the holders of any class or series of preferred stock the right to elect one
or more directors.
Host Marriott has more than three independent directors and therefore our
board of directors could elect to provide for any of the foregoing provisions.
As of the date of this prospectus, our board of directors has not made such an
election.
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DESCRIPTION OF PREFERRED STOCK
The following description sets forth the general terms of the preferred
stock which Host Marriott may issue. The description set forth below and in any
prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to the Articles of Incorporation, the
applicable Articles Supplementary to the Articles of Incorporation determining
the terms of the related series of preferred stock and the Bylaws, each of
which will be made available upon request.
General
The Articles of Incorporation originally authorized the Board of Directors
to issue 50,000,000 shares of preferred stock. Host Marriott has made the
following issuances of preferred stock:
. on August 3, 1999, Host Marriott issued 4,160,000 shares of 10% Class A
Cumulative Redeemable Preferred Stock (which are referred to as the
"Class A Preferred Stock")
. on November 29, 1999, Host Marriott issued 4,000,000 shares of 10% Class
B Cumulative Redeemable Preferred Stock (which are referred to as the
"Class B Preferred Stock") and
. on March 27, 2001, Host Marriott issued 5,980,000 shares of 10% Class C
Cumulative Redeemable Preferred Stock (which are referred to as the
"Class C Preferred Stock").
Accordingly, 35,860,000 of the original 50,000,000 authorized shares of
preferred stock remain authorized but unissued. The Board of Directors has the
power to classify or reclassify any unissued preferred shares into one or more
classes or series of capital stock, including common stock. The Class A
Preferred Stock, the Class B Preferred Stock and the Class C Preferred Stock
are referred to collectively as the "Existing Preferred Stock."
Prior to issuance of shares of any class or series of stock other than
common stock, the Board of Directors is required, under the MGCL, to set,
subject to the provisions of the Articles of Incorporation regarding the
restriction on transfer of capital stock, the terms, preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption for the
class or series. Thus, the Board of Directors could authorize the issuance of
preferred stock or other capital stock with terms and conditions which could
have the effect of delaying, deferring or preventing a transaction or a change
in control of Host Marriott that might involve a premium price for holders of
shares of common stock or otherwise be in their best interest.
Reference is made to the prospectus supplement relating to the class or
series of preferred stock being offered for the specific terms thereof,
including:
. the title and stated value of such preferred stock
. the number of shares of such preferred stock offered, the liquidation
preference per share and the purchase price of such preferred stock
. the dividend rate, period and/or payment date or method of calculation
thereof applicable to such preferred stock
. whether dividends shall be cumulative or non-cumulative and, if
cumulative, the date from which dividends on such preferred stock shall
accumulate
. the procedures for any auction and remarketing, if any, for such
preferred stock
. the provisions for a sinking fund, if any, for such preferred stock
. the provisions for redemption, if applicable, of such preferred stock
. any listing of such preferred stock on any securities exchange or market
20
. the terms and conditions, if applicable, upon which such preferred stock
will be convertible into common stock of Host Marriott, including the
conversion price or manner of calculation thereof and conversion period
. 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
. voting rights, if any, of such preferred stock
. whether interests in such preferred stock will be represented by
depositary shares
. a discussion of any material and/or special United States federal income
tax considerations applicable to such preferred stock
. 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 Host Marriott
. 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 Host Marriott and
. any other specific terms, preferences, rights, limitations or
restrictions of such preferred stock.
Rank
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will, in terms of distribution rights and rights upon
liquidation, dissolution or winding up of Host Marriott, rank:
. senior to all classes or series of common stock of Host Marriott and to
all equity securities the terms of which specifically provide that such
equity securities rank junior to the preferred stock
. on a parity with all equity securities issued by Host Marriott other
than senior and junior preferred stock and
. junior to all equity securities issued by Host Marriott the terms of
which specifically provide that such equity securities rank senior to
the preferred stock.
The term "equity securities" does not include convertible debt securities.
Each class of the Existing Preferred Stock ranks, in terms of the payment of
dividends and the distribution of assets upon liquidation, dissolution or
winding up of Host Marriott:
. senior to our common stock and
. on a parity with each other class of Existing Preferred Stock.
Distributions
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, out of assets of Host
Marriott legally available for payment to stockholders, cash distributions, or
distributions in kind or in other property if expressly permitted and described
in the applicable prospectus supplement, at the rates and on the dates as will
be set forth in the applicable prospectus supplement. Each distribution shall
be payable to holders of record as they appear on the stock transfer books of
Host Marriott on the record dates fixed by the Board of Directors.
Distributions on any series of preferred stock, if cumulative, will be
cumulative from and after the date set forth in the applicable prospectus
supplement. If the Board of Directors fails to declare a distribution payable
on a distribution payment date on any series of the preferred stock for which
distributions are non-cumulative, then the holders of that series of preferred
stock will have no right to receive a distribution for the distribution period
ending on the distribution payment date, and Host Marriott will have no
obligation to pay the
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distribution accumulated for that period, whether or not distributions on that
series are declared payable on any future distribution payment date.
Unless otherwise specified in the applicable prospectus supplement, if any
shares of preferred stock of any series are outstanding, no full distributions
shall be declared or paid or set apart for payment on any shares of capital
stock of Host Marriott of any other series ranking, as to distributions, on a
parity with or junior to the shares of preferred stock of that series for any
period unless full distributions, including any cumulative amount if
applicable, have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment of the distributions set apart for the
payment on the preferred stock of that series. When distributions are not paid
in full, or a sum sufficient for full payment is not so set apart, upon
preferred stock of any series and the shares of any other series of preferred
stock ranking on a parity as to distributions with the shares of preferred
stock of that series, all distributions declared upon preferred stock of that
series and any other series of preferred stock ranking on a parity as to
distributions with the shares of preferred stock shall be declared pro rata so
that the amount of distributions declared per share of preferred stock of that
series and the other series of preferred stock shall in all cases bear to each
other the same ratio that accumulated distributions per share on the preferred
stock of that series and the other series of preferred stock, which shall not
include any accumulation of unpaid distributions for prior distribution periods
if the shares of preferred stock do not have a cumulative distribution, bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
on any distribution payment or payments on shares of preferred stock of any
series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless full
distributions, including any cumulative amount if applicable, on the shares of
preferred stock have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment of the distribution set apart for
payment for the then current distribution period, then:
. no distributions, other than in common stock or other shares of capital
stock ranking junior to the shares of preferred stock of that series as
to distributions and upon liquidation, shall be declared or paid or set
aside for payment or other distribution upon the common stock, or any
other shares of capital stock of Host Marriott ranking junior to or on a
parity with the shares of preferred stock of that series as to
distributions or upon liquidation, and
. no common stock, or any other shares of capital stock of Host Marriott
ranking junior to or on a parity with the shares of preferred stock of
that series as to distributions or upon liquidation shall be redeemed,
purchased or otherwise acquired for any consideration or any money paid
to or made available for a sinking fund for the redemption of any such
shares, by Host Marriott, except by conversion into or exchange for
other shares of capital stock of Host Marriott ranking junior to the
shares of preferred stock of such series as to distributions and upon
liquidation.
If, for any taxable year, Host Marriott elects to designate as "capital gain
dividends" any portion (the "Capital Gains Amount") of the dividends paid or
made available for the year to holders of all classes of capital stock (the
"Total Dividends"), then the portion of the Capital Gains Amount that will be
allocable to the holders of preferred stock will be the Capital Gains Amount
multiplied by a fraction, the numerator of which will be the total dividends
paid or made available to the holders of the preferred stock for the year and
the denominator of which shall be the Total Dividends.
The holders of each class of the Existing Preferred Stock are entitled to
receive cumulative cash dividends on such class of Existing Preferred Stock at
a rate of 10% per year of the $25.00 per share liquidation preference
(equivalent to $2.50 per year per share). Dividends on each class of the
Existing Preferred Stock are payable quarterly in arrears on January 15, April
15, July 15 and October 15 of each year and are cumulative from the date of
original issuance.
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Redemption
If so provided in the applicable prospectus supplement, the preferred stock
will be subject to mandatory redemption or redemption at the option of Host
Marriott, in whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in the prospectus supplement.
The prospectus supplement relating to a series of preferred stock that is
subject to mandatory redemption will specify the number of shares of preferred
stock that will be redeemed by Host Marriott on the dates or during the periods
to be specified, at a redemption price per share to be specified in the
prospectus supplement. Notwithstanding the foregoing, the holders of record of
preferred stock at the close of business on a dividend record date will be
entitled to receive the dividend payable on their preferred stock on the
corresponding dividend payment date notwithstanding the redemption of their
preferred stock after such record date and on or prior to such payment date, in
which case the redemption price shall not include such dividend. The redemption
price may be payable in cash or other property, as specified in the applicable
prospectus supplement. If the redemption price for preferred stock of any
series is payable only from the net proceeds of the issuance of shares of
capital stock of Host Marriott, the terms of that preferred stock may provide
that, if no such shares of capital stock shall have been issued or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, that preferred stock shall automatically
and mandatorily be converted into the applicable shares of capital stock of
Host Marriott pursuant to conversion provisions specified in the applicable
prospectus supplement.
Notwithstanding the foregoing, unless full distributions, including any
cumulative amount if applicable, on the shares of preferred stock of that
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for the then
current distribution period, then:
. no preferred stock of any series shall be redeemed unless all
outstanding shares of preferred stock of that series are simultaneously
redeemed; provided, however, that the foregoing shall not prevent the
redemption, purchase or acquisition of shares of preferred stock of that
series to preserve the REIT status of Host Marriott or in connection
with a purchase or exchange offer made on the same terms to holders of
all outstanding preferred stock of that series, and
. Host Marriott shall not purchase or otherwise acquire directly or
indirectly any shares of preferred stock of that series, except by
conversion into or exchange for shares of capital stock of Host Marriott
ranking junior to the preferred stock of that series as to distributions
and upon liquidation; provided, however, that the foregoing shall not
prevent the redemption, purchase or acquisition of shares of preferred
stock of that series to assist in maintaining the REIT status of Host
Marriott or in connection with a purchase or exchange offer made on the
same terms to holders of all outstanding shares of preferred stock of
that series.
If fewer than all of the outstanding shares of preferred stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
Host Marriott and the shares may be redeemed pro rata from the holders of
record of the shares in proportion to the number of shares held or for which
redemption is requested by the holder or by lot in a manner determined by Host
Marriott.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of preferred stock of
any series to be redeemed at the address shown on the stock transfer books of
Host Marriott. Each notice shall state:
. the redemption date
. the number and series of shares of preferred stock to be redeemed
. the place or places where certificates for the preferred stock are to be
surrendered for payment of the redemption price
. that distributions on the shares to be redeemed will cease to accrue on
the redemption date and
. the date upon which the holders' conversion rights, if any, as to the
shares shall terminate.
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If fewer than all of the shares of preferred stock of any series are to be
redeemed, the notice mailed to each holder thereof shall also specify the
number of shares of preferred stock to be redeemed from each holder. If notice
of redemption of any preferred stock has been given and if the funds necessary
for the redemption have been set aside by Host Marriott in trust for the
benefit of the holders of any preferred stock so called for redemption, then
from and after the redemption date distributions will cease to accumulate on
that preferred stock, and all rights of the holders of those shares will
terminate, except the right to receive the redemption price.
Host Marriott may redeem each class of the Existing Preferred Stock as
follows:
. Host Marriott may not redeem the Class A Preferred Stock prior to August
3, 2004, except under the circumstances described below. On and after
April 3, 2004, Host Marriott may, at its option, redeem the Class A
Preferred Stock in whole or from time to time in part.
. Host Marriott may not redeem the Class B Preferred Stock prior to April
29, 2005, except under the circumstances described below. On and after
April 29, 2005, Host Marriott may, at its option, redeem the Class B
Preferred Stock in whole or from time to time in part.
. Host Marriott may not redeem the Class C Preferred Stock prior to March
27, 2006, except under the circumstances described below. On and after
March 27, 2006, Host Marriott may, at its option, redeem the Class C
Preferred Stock in whole or from time to time in part.
Notwithstanding the foregoing, Host Marriott may redeem any class of the
Existing Preferred Stock at any time under limited circumstances intended to
preserve its status as a REIT for federal income tax purposes and the Operating
Partnership's status as a partnership for federal income tax purposes.
The price for redemption of any class of the Existing Preferred Stock by
Host Marriott is $25.00 per share, plus accrued and unpaid dividends to, but
not including, the date of redemption.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of Host Marriott, then, before any distribution or payment shall be
made to the holders of any common stock or any other class or series of shares
of capital stock of Host Marriott ranking junior to the preferred stock in the
distribution of assets upon any liquidation, dissolution or winding up of Host
Marriott, the holders of each series of preferred stock shall be entitled to
receive out of assets of Host Marriott legally available for distribution to
shareholders liquidating distributions in the amount of the liquidation
preference set forth in the applicable prospectus supplement, plus an amount
equal to all accumulated and unpaid distributions. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of shares of preferred stock will have no right or claim to any of the
remaining assets of Host Marriott. If, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of Host Marriott
are insufficient to pay the amount of the liquidating distributions on all
outstanding shares of preferred stock and the corresponding amounts payable on
all shares of other classes or series of shares of capital stock of Host
Marriott ranking on a parity with the preferred stock in the distribution of
assets, then the holders of the preferred stock and all other such classes or
series of shares of capital stock shall share ratably in any such distribution
of assets in proportion to the full liquidating distributions to which they
would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
preferred stock, the remaining assets of Host Marriott shall be distributed
among the holders of any other classes or series of shares of capital stock
ranking junior to the preferred stock upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective number of shares. For such purposes, the
consolidation or merger of Host Marriott with or into any other corporation,
trust or entity, or the sale, lease or conveyance of all or substantially all
of the property or business of Host Marriott, shall not be deemed to constitute
a liquidation, dissolution or winding up of Host Marriott.
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If Host Marriott liquidates, dissolves or winds up, holders of each class of
the Existing Preferred Stock will have the right to receive $25.00 per share,
plus accrued and unpaid dividends to, but not including, the date of payment.
Payment of this liquidation preference must be made before any payment is made
to the holders of the common stock with respect to the distribution of assets
upon Host Marriott's liquidation, dissolution or winding up.
Voting Rights
Holders of preferred stock will not have any voting rights, except as set
forth below or as otherwise from time to time required by law or as indicated
in the applicable prospectus supplement.
Whenever distributions on any shares of preferred stock shall be in arrears
for six or more quarterly periods, whether or not consecutive:
. the holders of such preferred stock, voting together as a single class
with all other series of preferred stock upon which like voting rights
have been conferred and are exercisable, will be entitled to vote for the
election of two additional directors of Host Marriott at a special
meeting called by the holders of record of at least 10% of any series of
preferred stock so in arrears, unless such request is received less than
90 days before the date fixed for the next annual or special meeting of
the stockholders, or at the next annual meeting of stockholders, and at
each subsequent annual meeting and
. such voting rights will continue until all distributions accumulated on a
series of cumulative preferred stock for the past distribution periods
and the then current distribution period shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for
payment or four consecutive quarterly distributions on a non-cumulative
preferred series shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment.
Unless provided otherwise for any series of preferred stock, so long as any
shares of preferred stock remain outstanding, Host Marriott will not, without
the affirmative vote or consent of the holders of at least two-thirds of each
series of preferred stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting:
. authorize or create, or increase the authorized or issued amount of, any
class or series of shares of capital stock ranking senior to such series
of preferred stock with respect to the payment of distributions or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized shares of capital stock of Host Marriott into
such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares or
. amend, alter or repeal the provisions of the Articles of Incorporation or
the Supplementary for such series of preferred stock, whether by merger,
consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of such
series of preferred stock or the holders thereof; provided, however, with
respect to the occurrence of any Event, so long as the shares of
preferred stock remain outstanding or are converted into like securities
of the surviving entity, in each case with the terms thereof materially
unchanged, taking into account that upon the occurrence of an Event, Host
Marriott may not be the surviving entity and that the surviving entity
may be a non-corporate entity, such as a limited liability company,
limited partnership or business trust in which case the preferred stock
would be converted into an equity interest, other than stock, having
substantially equivalent terms, the occurrence of any such Event shall
not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers of holders of preferred stock;
and provided further that any increase in the amount of the authorized
preferred stock or any increase in the amount of authorized shares of
such series or any other series of preferred stock, in each case ranking
on a parity with or junior to the preferred stock of such series with
respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding up of Host Marriott, shall not be
deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
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The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of preferred stock of such series shall
have been converted or redeemed or called for redemption and sufficient funds
shall have been deposited in trust to effect such redemption.
The voting rights of each class of the Existing Preferred Stock are in
accordance with the general description of voting rights set forth above.
Conversion Rights
The terms and conditions, if any, upon which any series of preferred stock
is convertible into common stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number of shares of
common stock into which the shares of preferred stock are convertible, the
conversion price or the manner of calculating the conversion price, the
conversion date or period, provisions as to whether conversion will be at the
option of the holders of the preferred stock or Host Marriott, the events
requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such series of preferred stock.
No class of the Existing Preferred Stock is convertible into common stock.
Transfer Agent and Registrar
The transfer agent and registrar for the preferred stock will be set forth
in the applicable prospectus supplement.
26
RESTRICTIONS ON OWNERSHIP AND TRANSFER
For Host Marriott to qualify as a REIT under the Internal Revenue Code, no
more than 50% in value of its outstanding shares of stock may be owned,
actually or constructively, by five or fewer individuals, as defined in the
Internal Revenue Code to include certain entities:
. during the last half of a taxable year other than the first year for
which an election to be treated as a REIT has been made or
. during a proportionate part of a shorter taxable year.
In addition, if Host Marriott, or one or more owners of 10% or more of Host
Marriott, actually or constructively owns 10% or more of a tenant of Host
Marriott or a tenant of any partnership in which Host Marriott is a partner,
the rent received by Host Marriott either directly or through any such
partnership from such tenant generally will not be qualifying income for
purposes of the REIT gross income tests of the Internal Revenue Code unless the
tenant qualifies as a "taxable REIT subsidiary" and the leased property is a
"qualified lodging facility" under the Internal Revenue Code. A REIT's shares
also must be beneficially owned by 100 or more persons during at least 335 days
of a taxable year of twelve months or during a proportionate part of a shorter
taxable year other than the first year for which an election to be treated as a
REIT has been made.
Primarily because the Board of Directors believes it is desirable for Host
Marriott to qualify as a REIT, the Articles of Incorporation provide that,
subject to certain exceptions, no person or persons acting as a group may own,
or be deemed to own by virtue of the attribution provisions of the Internal
Revenue Code, more than:
. 9.8% of the lesser of the number or value of shares of common stock
outstanding or
. 9.8% of the lesser of the number or value of the issued and outstanding
preferred or other shares of any class or series of Host Marriott's
stock.
The foregoing are subject to:
. an exception for a holder of shares of common stock in excess of the
ownership limit solely by reason of the merger on December 29, 1998
between Host Marriott and Host Marriott Corporation, a Delaware
corporation and the predecessor of Host Marriott, so long as such holder
did not own, directly or by attribution under the Internal Revenue Code,
more than 9.9% by value of the outstanding capital stock of Host Marriott
as of December 30, 1998, and
. a limitation on the application of the "group" limitation, but no other
element of the ownership limit, to any "group" that otherwise exceeded
the ownership limit at the effective time of such merger solely by reason
of its status as a "group."
The ownership limit prohibits Marriott International and its subsidiaries
and affiliates, including members of the Marriott family, from collectively
owning shares of capital stock in excess of the ownership limit, but the Board
of Directors will grant an exception that will permit Marriott International to
exercise its right to purchase up to 20% of each class of Host Marriott's
voting stock at the then fair market value in connection with specified change
of control events of Host Marriott, subject to certain limitations intended to
protect our REIT status.
The ownership attribution rules under the Internal Revenue Code are complex
and may cause capital stock owned actually or constructively by a group of
related individuals and/or entities to be owned constructively by one
individual or entity. As a result, the acquisition of less than 9.8% of the
common stock or the acquisition or ownership of an interest in an entity that
owns, actually or constructively, common stock, by an individual or entity
could nevertheless cause that individual or entity, or another individual or
entity, to own constructively in excess of 9.8% of the outstanding common stock
and thus subject such common stock to the remedy provision under the ownership
limit. The Board of Directors may grant an exemption from the ownership limit
with respect to one or more persons who would not be treated as "individuals"
for purposes of the Internal Revenue
27
Code if it is satisfied, based upon an opinion of counsel and such other
evidence as is satisfactory to the Board of Directors in its sole discretion,
that:
. such ownership will not cause a person who is an individual to be
treated as owning capital stock in excess of the ownership limit,
applying the applicable constructive ownership rules, and
. will not otherwise jeopardize Host Marriott's status as a REIT by, for
example, causing any tenant of the Operating Partnership to be
considered a "related party tenant" for purposes of the REIT
qualification rules.
As a condition of such waiver, the Board of Directors may require
undertakings or representations from the applicant with respect to preserving
the REIT status of Host Marriott.
The Board of Directors will have the authority to increase the ownership
limit from time to time, but will not have the authority to do so to the extent
that after giving effect to such increase, five beneficial owners of capital
stock could beneficially own in the aggregate more than 49.5% of the
outstanding capital stock.
The Articles of Incorporation further prohibit:
. any person from actually or constructively owning shares of beneficial
interest of Host Marriott that would result in Host Marriott being
"closely held" under Section 856(h) of the Internal Revenue Code or
otherwise cause Host Marriott to fail to qualify as a REIT and
. any person from transferring shares of Host Marriott's capital stock if
such transfer would result in shares of Host Marriott's capital stock
being owned by fewer than 100 persons.
Any person who acquires or attempts or intends to acquire actual or
constructive ownership of shares of Host Marriott's capital stock that will or
may violate any of the foregoing restrictions on transferability and ownership
is required to give notice immediately to Host Marriott and provide Host
Marriott with such other information as Host Marriott may request in order to
determine the effect of such transfer on Host Marriott's status as a REIT.
If any purported transfer of shares of Host Marriott's capital stock or any
other event would otherwise result in any person violating the ownership limit
or the other restrictions in the Articles of Incorporation, then any such
purported transfer will be void and of no force or effect with respect to the
purported transferee (the "Prohibited Transferee") as to that number of shares
that exceeds the ownership limit (referred to as "excess shares") and
. the Prohibited Transferee shall acquire no right or interest in such
excess shares and
. in the case of any event other than a purported transfer, the person or
entity holding record title to any such shares in excess of the
ownership limit (the "Prohibited Owner") shall cease to own any right or
interest in such excess shares.
Any excess shares described above will be transferred automatically, by
operation of law, to a trust, the beneficiary of which will be a qualified
charitable organization selected by Host Marriott (the "Beneficiary"). The
automatic transfer shall be deemed to be effective as of the close of business
on the business day prior to the date of the violating transfer. Within 20 days
of receiving notice from Host Marriott of the transfer of shares to the trust,
the trustee of the trust, who shall be designated by Host Marriott and be
unaffiliated with Host Marriott and any Prohibited Transferee or Prohibited
Owner, will be required to sell the excess shares to a person or entity who
could own the shares without violating the ownership limit, and distribute to
the Prohibited Transferee an amount equal to the lesser of the price paid by
the Prohibited Transferee for the excess shares or the sales proceeds received
by the trust for the excess shares. In the case of any excess shares resulting
from any event other than a transfer, or from a transfer for no consideration,
such as a gift, the trustee will be required to sell the excess shares to a
qualified person or entity and distribute to the Prohibited Owner an amount
equal to the lesser of the fair market value of the excess shares as of the
date of the event or the sales proceeds received by the trust for the excess
shares. In either case, any proceeds in excess of the amount
28
distributable to the Prohibited Transferee or Prohibited Owner, as applicable,
will be distributed to the Beneficiary. Prior to a sale of any excess shares by
the trust, the trustee will be entitled to receive, in trust for the
Beneficiary, all dividends and other distributions paid by Host Marriott with
respect to those excess shares, and also will be entitled to exercise all
voting rights with respect to those excess shares. Subject to Maryland law,
effective as of the date that the shares have been transferred to the trust,
the trustee shall have the authority to rescind as void any vote cast by a
Prohibited Transferee prior to the discovery by Host Marriott that the shares
have been transferred to the trust and to recast the vote in accordance with
the desires of the trustee acting for the benefit of the Beneficiary.
However, if Host Marriott has already taken irreversible corporate action,
then the trustee shall not have the authority to rescind and recast its vote.
Any dividend or other distribution paid to the Prohibited Transferee or
Prohibited Owner, prior to the discovery by Host Marriott that the shares had
been automatically transferred to a trust as described above, will be required
to be repaid to the trustee upon demand for distribution to the Beneficiary. If
the transfer to the trust as described above is not automatically effective to
prevent violation of the ownership limit, then the Articles of Incorporation
provides that the transfer of the excess shares will be void.
In addition, shares of Host Marriott's stock held in the trust shall be
deemed to have been offered for sale to Host Marriott, or its designee, at a
price per share equal to the lesser of the price per share in the transaction
that resulted in the transfer to the trust or, in the case of a devise or gift,
the market value at the time of the devise or gift and the market value of the
shares on the date Host Marriott, or its designee, accepts the offer. Host
Marriott will have the right to accept the offer until the trustee has sold the
shares held in the trust. Upon such a sale to Host Marriott, the interest of
the Beneficiary in the shares sold will terminate and the trustee will
distribute the net proceeds of the sale to the Prohibited Owner.
The foregoing restrictions on transferability and ownership will not apply
if the Board of Directors determines that it is no longer in the best interests
of Host Marriott to attempt to qualify, or to continue to qualify, as a REIT.
All certificates representing shares of Host Marriott's capital stock will
bear a legend referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Internal Revenue Code, more than 5%, or some other percentage between 1/2
of 1% and 5% as provided in the rules and regulations under the Internal
Revenue Code, of the lesser of the number or value of the outstanding shares of
Host Marriott's capital stock must give a written notice to Host Marriott
within 30 days after the end of each taxable year. In addition, each
stockholder will, upon demand, be required to disclose to Host Marriott in
writing such information with respect to the direct, indirect and constructive
ownership of shares of Host Marriott's capital stock as the Board of Directors
deems reasonably necessary to comply with the provisions of the Internal
Revenue Code applicable to a REIT, to comply with the requirements of any
taxing authority or governmental agency or to determine any such compliance.
These ownership limitations could have the effect of delaying, deferring or
preventing a takeover or other transaction in which holders of some, or a
majority, of the common stock might receive a premium for their common stock
over the then prevailing market price or which such holders might believe to be
otherwise in their best interest.
29
DESCRIPTION OF DEPOSITARY SHARES
General
Host Marriott may issue 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 among Host Marriott and the
depositary named therein. 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 the depositary receipt, to all the rights
and preferences of the preferred stock represented by the 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 Host Marriott to the
depositary, Host Marriott will cause the depositary to issue, on behalf of Host
Marriott, the depositary receipts. Copies of the applicable form of deposit
agreement and depositary receipt may be obtained from Host Marriott 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 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 shares owned by those holders, subject to the
obligations of the holders to file various proofs, certificates and other
information and to pay various charges and expenses to the depositary.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary receipts
entitled thereto, subject to the obligations of holders to file various proofs,
certificates and other information and to pay various charges and expenses to
the depositary, unless the depositary determines that it is not feasible to
make such distribution, in which case the depositary may, with the approval of
Host Marriott, 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 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 the 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 the
surrendered 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 shares as specified in the applicable prospectus supplement, but
holders of the 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 depositary will deliver to such holder at the same time a new
depositary receipt evidencing such excess number of depositary shares.
30
Redemption of Depositary Shares
Whenever Host Marriott redeems shares of preferred stock held by the
depositary, the depositary will redeem, as of the same redemption date, the
number of depositary shares representing shares of the preferred stock so
redeemed, provided Host Marriott shall have paid in full to the 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 Host Marriott.
From and after the date fixed for redemption, all dividends on 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 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 depositary will mail the information contained
in the notice of meeting to the record holders of the depositary receipts
evidencing the depositary shares which represent the 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 depositary as to the exercise of the voting
rights pertaining to the amount of preferred stock represented by such holder's
depositary shares. The depositary will vote the amount of preferred stock
represented by the depositary shares in accordance with the instructions, and
Host Marriott will agree to take all reasonable action which may be deemed
necessary by the depositary in order to enable the depositary to do so. The
depositary will abstain from voting the amount of preferred stock represented
by the depositary shares to the extent it does not receive specific
instructions from the holders of depositary receipts evidencing the depositary
shares. The 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 depositary.
Liquidation Preference
In the event of the liquidation, dissolution or winding up of Host Marriott,
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 the
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 Host Marriott. 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
depositary with written instructions to the depositary to instruct Host
Marriott to cause conversion of the preferred stock represented by the
depositary shares evidenced by the depositary receipts into whole shares of
common stock, other shares of preferred stock of Host Marriott or other shares
of stock, and Host Marriott has agreed that upon receipt of the instructions
and any amounts payable in respect thereof, it will cause the conversion
thereof utilizing the same procedures as those provided for delivery of
preferred stock to effect the 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
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issued for any depositary shares not to be converted. No fractional shares of
common stock will be issued upon conversion, and if the conversion would result
in a fractional share being issued, an amount will be paid in cash by Host
Marriott 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 Host Marriott and the 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 the 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 deposit 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 the receipt,
to consent and agree to the amendment and to be bound by the deposit agreement
as amended thereby.
The deposit agreement may be terminated by Host Marriott upon not less than
30 days prior written notice to the depositary if the holders of a majority of
the depository shares representing each series of preferred stock affected by
such termination consents to the termination, whereupon the depositary shall
deliver or make available to each holder of depositary receipts, upon surrender
of the depositary receipts held by that holder, the 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 depositary with respect to such depositary receipt. In addition,
the deposit agreement will automatically terminate if:
. all outstanding depositary shares shall have been redeemed,
. there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or
winding up of Host Marriott and such distribution shall have been
distributed to the holders of depositary receipts evidencing the
depositary shares representing such preferred stock or
. each share of the related preferred stock shall have been converted into
securities of Host Marriott not so represented by depositary shares.
Charges of Preferred Stock Depositary
Host Marriott will pay all transfer and other taxes and governmental charges
arising solely from the existence of the deposit agreement. In addition, Host
Marriott will pay the fees and expenses of the 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 depositary for any
duties requested by the holders to be performed which are outside of those
expressly provided for in the deposit agreement.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to Host Marriott notice
of its election to do so, and Host Marriott may at any time remove the
depositary, any such resignation or removal to take effect upon the appointment
of a successor depositary. A successor 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.
32
Miscellaneous
The depositary will forward to holders of depositary receipts any reports
and communications from Host Marriott which are received by the depositary with
respect to the related preferred stock.
Neither the depositary nor Host Marriott 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 Host Marriott
and the depositary under the deposit agreement will be limited to performing
their duties thereunder in good faith and without gross negligence. Host
Marriott and the 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. Host Marriott and the 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 depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and Host
Marriott, on the other hand, the depositary shall be entitled to act on such
claims, requests or instructions received from Host Marriott.
33
DESCRIPTION OF WARRANTS
General
Host Marriott may issue warrants to purchase preferred stock, depositary
shares or common stock. 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 to be
entered into between Host Marriott and a bank or trust company, as warrant
agent, as specified in the prospectus supplement relating to the warrants being
offered pursuant thereto. The warrant agent will act solely as an agent of Host
Marriott in connection with the warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms of
warrants in respect of which this prospectus is being delivered:
. the title of such warrants
. the securities for which such warrants are exercisable
. the price or prices at which such warrants will be issued
. the number of such warrants issued with each share of preferred stock or
common stock
. 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
. if applicable, the date on and after which such warrants and the related
preferred stock or common stock will be separately transferable
. if applicable, a discussion of the material United States federal income
tax considerations applicable to the exercise of such warrants
. any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants
. the date on which the right to exercise such warrants shall commence, and
the date on which such right shall expire, and
. 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
amount of shares of preferred stock, shares of 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, Host Marriott will, as soon as practicable, forward the shares of
preferred stock, shares of common stock or depositary shares 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.
34
DESCRIPTION OF SUBSCRIPTION RIGHTS
General
Host Marriott may issue subscription rights to purchase common stock,
preferred stock, depositary shares or warrants to purchase preferred stock or
common stock. 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 Host Marriott's stockholders, Host Marriott 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 Host Marriott's stockholders, certificates
evidencing the subscription rights and a prospectus supplement will be
distributed to Host Marriott's stockholders on the record date for receiving
subscription rights in such subscription rights offering set by Host Marriott.
The applicable prospectus supplement will describe the following terms of
subscription rights in respect of which this prospectus is being delivered:
. the title of such subscription rights
. the securities for which such subscription rights are exercisable
. the exercise price for such subscription rights
. the number of such subscription rights issued to each stockholder
. the extent to which such subscription rights are transferable
. if applicable, a discussion of the material United States federal income
tax considerations applicable to the issuance or exercise of such
subscription rights
. any other terms of such subscription rights, including terms, procedures
and limitations relating to the exchange and exercise of such
subscription rights
. the date on which the right to exercise such subscription rights shall
commence, and the date on which such right shall expire
. the extent to which such subscription rights includes an over-
subscription privilege with respect to unsubscribed securities, and
. if applicable, the material terms of any standby underwriting
arrangement entered into by Host Marriott in connection with the
subscription 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, 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 subscription rights agent or any
other office indicated in the prospectus supplement, Host Marriott will, as
soon as practicable, forward the shares of preferred stock or common stock,
depository shares or warrants purchasable upon such exercise. In the event that
not all of the subscription rights issued in any offering are exercised, Host
Marriott may determine to offer any unsubscribed offered securities directly to
persons other than stockholders, 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.
35
PLAN OF DISTRIBUTION
We may sell the securities being offered by this prospectus and any
accompanying prospectus supplement:
. directly to purchasers
. through agents
. through dealers
. through underwriters
. directly to our stockholders or
. through a combination of any such methods of sale.
In addition, the offered securities may be issued by us as a dividend or
distribution.
The distribution of the offered securities may be effected from time to
time in one or more transactions either:
. at a fixed price or prices, which may be changed
. at market prices prevailing at the time of sale
. at prices related to such prevailing market prices or
. at negotiated prices.
Offers to purchase offered securities may be solicited directly by us.
Offers to purchase offered securities may also be solicited by agents
designated by us 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 us 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, Host Marriott 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, we 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 us 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 us 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 our stockholders, 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 our stockholders 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
36
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 us. If we do
not enter into a standby underwriting arrangement in connection with a
subscription rights offering to our stockholders, we may elect to retain a
dealer-manager to manage such a subscription rights offering for us. 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 of
subscription rights and may thus realize profits or losses independent of any
dealer-manager fee paid by us.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with us, to indemnification by us 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, us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we 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 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, if the offered
securities are also being sold to underwriters, we 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 offered securities in connection with an offering of
offered securities, thereby creating a short position in the underwriters'
account. Syndicate covering transactions involve purchases of the offered
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 offered 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 us by our
general counsel or by other counsel to Host Marriott. 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.
37
EXPERTS
Our consolidated financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement 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.
38
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
(Subject to Completion, dated May 25, 2001)
$1,000,000,000
Host Marriott, L.P.
Senior Notes
By this prospectus, we may offer, from time to time, one or more series of
senior notes.
The senior notes have an aggregate initial offering price of $1,000,000,000.
We may offer senior notes in amounts, at prices and on terms determined at the
time of the offering. We will provide you with specific terms of each series of
senior notes in supplements to this prospectus.
You should read this prospectus and any supplement carefully before you
decide to invest. This prospectus may not be used to consummate sales of any
series of senior notes unless it is accompanied by a prospectus supplement
describing the method and terms of the offering of those senior notes.
Investing in senior notes involves risks. See "Risk Factors" beginning on
page 1.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the senior notes or determined if
this prospectus is truthful or complete. It is illegal for any person to tell
you otherwise.
The date of this prospectus is May , 2001.
TABLE OF CONTENTS
Risk Factors................................................................ 1
About This Prospectus....................................................... 6
Where You Can Find More Information......................................... 6
Disclosure Regarding Forward-looking Statements............................. 8
The Company................................................................. 9
Use of Proceeds............................................................. 10
ERISA Matters............................................................... 10
Ratio of Earnings to Fixed Charges.......................................... 10
Description of Senior Notes................................................. 11
Plan of Distribution........................................................ 55
Legal Matters............................................................... 56
Experts..................................................................... 56
i
As used in this prospectus and in any accompanying prospectus supplement,
references to "we," "our," the "company" and the "Operating Partnership" and
similar references are to Host Marriott, L.P. References to "Host Marriott"
are to Host Marriott Corporation, a Maryland corporation, and its consolidated
subsidiaries from and after December 29, 1998 and to Host Marriott
Corporation, a Delaware corporation, and its consolidated subsidiaries before
December 29, 1998, unless otherwise expressly stated or the context otherwise
requires.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
material risks described below.
Risks of Operation
We do not control our hotel operations, and we are dependent on the
managers of our hotels. Because federal income tax laws restrict real estate
investment trusts, or "REITs," and their subsidiaries from operating a hotel,
we do not manage our hotels. Instead, we retain third party managers to manage
our hotels pursuant to management agreements. Our income from the hotels may
be adversely affected if the managers fail to provide quality services and
amenities and competitive room rates at our hotels or fail to maintain the
quality of the hotel brand names. While HMT Lessee LLC, a taxable REIT
subsidiary of ours that is the lessee of substantially all of our full service
properties, oversees the hotel managers' performance, we have limited specific
recourse if we believe that the hotel managers are not performing adequately.
Underperformance by our hotel managers could adversely affect our results of
operations.
Our relationship with Marriott International may result in conflicts of
interest. Marriott International, a public hotel management company, manages a
significant number of our hotels. In addition, Marriott International manages
and in some cases may own or be invested in hotels that compete with our
hotels. As a result, Marriott International may make decisions regarding
competing lodging facilities which it manages that would not necessarily be in
our best interests. J.W. Marriott, Jr. is a member of Host Marriott's Board of
Directors and his brother, Richard E. Marriott, is Host Marriott's Chairman of
the Board. Both J.W. Marriott, Jr. and Richard E. Marriott serve as directors,
and J.W. Marriott, Jr. also serves as an officer, of Marriott International.
J.W. Marriott, Jr. and Richard E. Marriott beneficially owned, as determined
for securities law purposes, as of January 31, 2001, approximately 12.6% and
12.2%, respectively, of the outstanding shares of common stock of Marriott
International. As a result, J.W. Marriott, Jr. and Richard E. Marriott have
potential conflicts of interest as Host Marriott's directors when making
decisions regarding Marriott International, including decisions relating to
the management agreements involving the hotels and Marriott International's
management of competing lodging properties.
Host Marriott's Board of Directors follows appropriate policies and
procedures intended to limit the involvement of Messrs. J.W. Marriott, Jr. and
Richard E. Marriott in conflict situations, including requiring them to
abstain from voting as directors on matters which present a conflict between
the companies. If appropriate, these policies and procedures will apply to
other directors and officers.
We have substantial indebtedness. Our degree of leverage could adversely
affect our ability to:
. obtain financing in the future for working capital, capital
expenditures, acquisitions, development or other general business
purposes
. undertake financings on terms and conditions acceptable to us
. pursue our acquisition strategy or
. compete effectively or operate successfully under adverse economic
conditions.
1
If our cash flow and working capital are not sufficient to fund our
expenditures or service our indebtedness, we would have to raise additional
funds through:
. the sale of equity by Host Marriott
. 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 or fulfill our business
plan. Additionally, our debt contains performance related covenants that, if
not achieved, could require immediate repayment of our debt or significantly
increase the rate of interest on our debt.
There is no limitation on the amount of debt we may incur. There are no
limitations in our organizational documents or Host Marriott's organizational
documents that limit the amount of indebtedness that we may incur. However, our
existing debt instruments contain restrictions on the amount of indebtedness
that we may incur. Accordingly, we could incur indebtedness to the extent
permitted by our debt agreements. If we became more highly leveraged, our debt
service payments would increase and our cash flow and our ability to service
our debt might be adversely affected.
Our management agreements could impair the sale or other disposition of our
hotels. Under the terms of the management agreements, we generally may not
sell, lease or otherwise transfer the hotels unless the transferee assumes the
related management agreements and meets specified other conditions. Our ability
to finance, refinance or sell any of the properties may, depending upon the
structure of such transactions, require the manager's consent. If the manager
did not consent, we would be prohibited from financing, refinancing or selling
the property without breaching the management agreement.
The acquisition contracts relating to some hotels limit our ability to sell
or refinance those hotels. For reasons relating to federal income tax
considerations of the former owners of some of our hotels, we agreed to
restrictions on selling some hotels or repaying or refinancing the mortgage
debt on those hotels for varying periods depending on the hotel. We anticipate
that, in specified circumstances, we may agree to similar restrictions in
connection with future hotel acquisitions. As a result, even if it were in our
best interests to sell or refinance the mortgage debt on these hotels, it may
be difficult or impossible to do so during their respective lock-out periods.
Our ground lease payments may increase faster than the revenues we receive
on the hotels. As of January 31, 2001, we leased, as lessee, 46 of our hotels
pursuant to ground leases. These ground leases generally require increases in
ground rent payments every five years. Our ability to service our debt could be
adversely affected to the extent that our revenues do not increase at the same
or a greater rate as the increases under the ground leases. In addition, if we
were to sell a hotel encumbered by a ground lease, the buyer would have to
assume the ground lease, which could result in a lower sales price. Moreover,
to the extent that such ground leases are not renewed at their expiration, our
revenues could be adversely affected.
New acquisitions may fail to perform as expected or we may be unable to make
acquisitions on favorable terms. We intend to acquire additional full-service
hotels. Newly acquired properties may fail to perform as expected, which could
adversely affect our financial condition and operating results. We may
underestimate the costs necessary to bring an acquired property up to standards
established for its intended market position. We expect to acquire hotels with
cash from secured or unsecured financings and proceeds from offerings of equity
or debt, to the extent available or at all. We may not be in a position or have
the opportunity in the future to make suitable property acquisitions on
favorable terms. Competition for attractive investment opportunities may
increase prices for hotel properties, thereby decreasing the potential return
on our investment.
2
We may be unable to sell 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. The inability to respond promptly to changes in
the performance of our investments could adversely affect our financial
condition and ability to service debt. In addition, there are limitations under
the federal tax laws applicable to REITs and agreements that we have entered
into when we acquired some of our properties that may limit our ability to
recognize the full economic benefit from a sale of our assets.
Our revenues and the value of our properties are subject to conditions
affecting the lodging industry. If our assets do not generate income sufficient
to pay our expenses, we will be unable to service our debt and maintain our
properties. Our revenues and the value of our properties are subject to
conditions affecting the lodging industry. These 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 rooms
. the attractiveness of our hotels to consumers and competition from
comparable hotels
. the quality, philosophy and performance of the managers of our hotels
. changes in room rates and increases in operating costs due to inflation
and other factors and
. the need to periodically repair and renovate our hotels.
Adverse changes in these conditions could adversely affect our financial
performance.
Our expenses may remain constant even if our revenue drops. The expenses of
owning property are not necessarily reduced when circumstances like 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. Our financial condition could be
adversely affected by:
. interest rate levels
. the availability of financing
. the cost of compliance with government regulation, including zoning and
tax laws and
. changes in governmental regulations, including those governing usage,
zoning and taxes.
We depend on our key personnel. We depend on the efforts of our executive
officers and other key personnel. 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 personnel.
Partnership and other litigation judgments or settlements could have a
material adverse effect on our financial condition. We and Host Marriott are
parties to various lawsuits relating to previous partnership transactions,
including transactions relating to the conversion of Host Marriott into a REIT.
While we and the other defendants to such lawsuits believe all of the lawsuits
in which we are a defendant are without merit and we are vigorously defending
against such claims, we can give no assurance as to the outcome of any of the
lawsuits. If any of the lawsuits were to be determined adversely to us or
settlement involving a payment of a material sum of money were to occur, there
could be a material adverse effect on our financial condition.
We may acquire hotel properties through joint ventures with third parties
that could result in conflicts. 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 the assets to additional risk, including:
. our co-venturer in an investment might have economic or business
interests or goals that are inconsistent with our interests or goals
3
. our co-venturers may be in a position to take action contrary to our
instructions or requests or contrary to our policies or objectives or
. a joint venture partner could go bankrupt, leaving us liable for its
share of joint venture liabilities.
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 of our joint venture partners. Also, our joint
venture partners could take actions binding on the joint venture without our
consent.
Environmental problems are possible and can be costly. We believe that our
properties are in compliance in all material respects with applicable
environmental laws. Unidentified environmental liabilities could arise,
however, and could have a material adverse effect on our financial condition
and performance. 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 product releases at the 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 the 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.
Compliance with other government regulations can also be costly. Our hotels
are subject to various forms of regulation, including Title III of the
Americans with Disabilities Act, building codes and regulations pertaining to
fire safety. Compliance with those laws and regulations could require
substantial capital expenditures. These regulations may be changed from time to
time, or new regulations adopted, resulting in additional or unexpected costs
of compliance. Any increased costs could reduce the cash available for
servicing debt.
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. Some types of losses, such as
from earthquakes and environmental hazards, however, 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 that event, we might nevertheless remain obligated for any
mortgage debt or other financial obligations related to the property.
Federal Income Tax Risks
Adverse consequences would apply if we failed to qualify as a
partnership. We believe that we qualify to be treated as a partnership for
federal income tax purposes. As a partnership, we are not subject to federal
income tax on our income. Instead, each of our partners is required to pay tax
on its allocable share of our income. No assurance can be provided, however,
that the IRS will not challenge our status as a partnership for federal income
tax purposes, or that a court would not sustain such a challenge. If the IRS
were successful in treating us as a corporation for tax purposes, we would be
subject to federal, state and local, and possibly foreign, corporate income
tax, which would reduce significantly the amount of cash available for debt
service and for distribution to our partners, including Host Marriott. In
addition, our classification as a corporation
4
would cause some of our partners, including Host Marriott, to recognize gain at
least equal to such partner's "negative capital account," and possibly more,
depending upon the circumstances. Finally, Host Marriott would fail to meet the
income tests and certain of the asset tests applicable to REITs and,
accordingly, would cease to qualify as a REIT. If Host Marriott fails to
qualify as a REIT or we fail to qualify as a partnership, such failure would
cause an event of default under our credit facility that could lead to an
acceleration of the amounts due under such credit facility, which in turn would
constitute an event of default under our outstanding debt securities.
Adverse consequences would apply if Host Marriott failed to qualify as a
REIT. We believe that Host Marriott has been organized and has operated in such
a manner so as to qualify as a REIT under the Internal Revenue Code, commencing
with the taxable year beginning January 1, 1999, and Host Marriott currently
intends to continue to operate as a REIT during future years. A REIT generally
is not taxed at the corporate level on income it currently distributes to its
shareholders as long as it distributes at least 90% of its taxable income,
excluding net capital gain. No assurance can be provided, however, that Host
Marriott will qualify as a REIT or that new legislation, Treasury Regulations,
administrative interpretations or court decisions will not significantly change
the tax laws with respect to its qualification as a REIT or the federal income
tax consequences of such qualification. Host Marriott's failure to qualify as a
REIT would cause an event of default under our credit facility that could, in
turn, cause an event of default under our outstanding debt securities.
Our obligations to Host Marriott potentially may increase our indebtedness or
cause us to liquidate investments on adverse terms. To continue to qualify as a
REIT, Host Marriott currently is required to distribute to its shareholders
with respect to each year at least 90% of its taxable income, excluding net
capital gain. In addition, Host Marriott will be subject to a 4% nondeductible
excise tax on the amount, if any, by which distributions made by it with
respect to the calendar year are less than the sum of 85% of its ordinary
income and 95% of its capital gain net income for that year and any
undistributed taxable income from prior periods. Host Marriott intends to make
distributions to its shareholders to comply with the distribution requirement
and to avoid the nondeductible excise tax and will rely for this purpose on
distributions from us. Host Marriott's sole source of cash to make these
distributions is with respect to its partnership interest in us. Our
partnership agreement requires us to distribute to our partners an amount of
our available cash sufficient to enable Host Marriott to pay shareholder
dividends that will satisfy the requirements applicable under the Internal
Revenue Code to REITs and to avoid any federal income or excise tax liability
for Host Marriott. There are differences in timing between our recognition of
taxable income and our receipt of cash available for distribution due to, among
other things, the seasonality of the lodging industry and the fact that some
taxable income will be "phantom" income (which is taxable income that is not
matched by cash flow or EBITDA to us) attributable to our deferred tax
liabilities arising from certain transactions entered into by Host Marriott in
years prior to the conversion of Host Marriott to a REIT. There is a distinct
possibility that these differences could require us to arrange for short-term,
or possibly long-term, borrowings or to issue additional equity to enable us to
meet this distribution requirement to Host Marriott. In addition, because the
REIT distribution requirements prevent Host Marriott from retaining earnings,
we effectively are prohibited from retaining earnings, as well. Accordingly, we
will generally be required to refinance debt that matures with additional debt
or equity. We cannot assure you that any of the sources of funds described
herein, if available at all, would be sufficient to meet the distribution
obligations of Host Marriott, in which case we may be required to liquidate
investments on adverse terms in order to satisfy such obligations of Host
Marriott.
Notwithstanding Host Marriott's status as a REIT, it is subject to various
taxes on its income and property for which we are responsible for paying or
reimbursing Host Marriott. Among other things, Host Marriott will be required
to pay federal tax at the highest regular corporate rate upon its share of any
"built-in gain" recognized as a result of any sale before January 1, 2009, by
us of assets, including the hotels, in which interests were owned by Host
Marriott, directly or indirectly, immediately prior to January 1, 1999, the
first day of Host Marriott's first taxable year as a REIT. Built-in gain is the
amount by which an asset's fair market value exceeded the adjusted basis in the
asset on January 1, 1999. The total amount of gain on which we would be subject
to corporate income tax if the assets that we held at the time of the REIT
conversion were
5
sold in a taxable transaction prior to January 1, 2009 would be material to us.
In addition, notwithstanding its status as a REIT, Host Marriott may have to
pay certain state income taxes because not all states treat REITs the same as
they are treated for federal income tax purposes. Host Marriott may also have
to pay certain foreign taxes to the extent we own assets or conduct operations
in foreign jurisdictions. Under the terms of the REIT conversion and our
partnership agreement, we are responsible for paying, or reimbursing Host
Marriott for the payment of, any corporate income tax imposed on built-in gain,
as well as any other taxes or other liabilities, including contingent
liabilities and liabilities attributable to litigation that Host Marriott may
incur, whether such liabilities are incurred by reason of activities prior to
the REIT conversion or activities subsequent thereto. Accordingly, we will pay,
or reimburse Host Marriott for the payment of, all taxes incurred by Host
Marriott (and any related interest and penalties), except for taxes imposed on
Host Marriott by reason of its failure to qualify as a REIT or to distribute to
its shareholders an amount equal to its "REIT taxable income," including net
capital gains. We cannot assure you that any of the sources of funds described
herein, if available at all, would be sufficient to meet the tax obligations of
Host Marriott, in which case we may be required to liquidate investments on
adverse terms in order to satisfy such obligations of Host Marriott.
6
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process under
the Securities Act of 1933. Under the shelf process, we may, from time to time,
sell the senior notes described in this prospectus in one or more offerings up
to a total dollar amount of $1,000,000,000.
This prospectus and any accompanying prospectus supplement do not contain
all of the information included in the registration statement. We have omitted
parts of the registration statement in accordance with the rules and
regulations of the Commission. For further information, we refer you to the
registration statement on Form S-3, including its exhibits. Statements
contained in this prospectus and any accompanying prospectus supplement about
the provisions or contents of any agreement or other document are not
necessarily complete. If the Commission rules and regulations require that such
agreement or document be filed as an exhibit to the registration statement,
please see such agreement or document for a complete description of these
matters. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of each document.
This prospectus provides you with a general description of the senior notes.
Each time we sell senior notes, we will provide a prospectus supplement that
will contain specific information about the method and terms of that offering.
The prospectus supplement may add, update or change any information contained
in this prospectus. You should read both this prospectus and any prospectus
supplement together with the additional information described under the heading
"Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
Commission. You may read and copy materials that we have filed with the
Commission, including the registration statement, at the following Commission
public reference rooms:
450 Fifth Street, 7 World Trade Center 500 West Madison
N.W. Suite 1300 Street
Room 1024 New York, New York Suite 1400
Washington, D.C. 10048 Chicago, Illinois
20549 60661
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms.
Our Commission filings are also available to the public on the Commission's
Web Site at http://www.sec.gov.
The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until we have sold all of the senior notes to
which this prospectus relates or the offering is otherwise terminated.
1. Annual Report on Form 10-K for the fiscal year ended December 31, 2000
(filed with the Commission on April 2, 2001).
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
(filed with the Commission on May 7, 2001).
3. Current Report on Form 8-K (filed with the Commission on May 8, 2001).
4. Current Report on Form 8-K/A (filed with the Commission on May 2, 2001).
5. Current Report on Form 8-K (filed with the Commission on April 13,
2001).
6. Current Report on Form 8-K (filed with the Commission on February 7,
2001).
You may request a copy of these filings, at no cost, by writing us at the
following address or telephoning us at (301) 380-2070 between the hours of 9:00
a.m. and 4:00 p.m., Eastern Time.
Corporate Secretary, Host Marriott Corporation, 10400 Fernwood Road,
Bethesda, Maryland 20817
7
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference into this
prospectus include forward-looking statements. As well, any accompanying
prospectus supplement may include forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events.
We identify forward-looking statements in this prospectus, any accompanying
prospectus supplement and other materials filed or to be filed by us with the
Commission and incorporated by reference in this prospectus 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.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:
. national and local economic and business conditions that will affect,
among other things, demand for products and services at our hotels and
other properties, the level of room rates and occupancy that can be
achieved by such properties and the availability and terms of financing
. our 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 of accommodations and room rate structures
. our degree of leverage, which may affect our ability to obtain financing
in the future or maintain compliance with current debt covenants
. 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
. government approvals, actions and initiatives, including the need for
compliance with environmental and safety requirements, and changes in
laws and regulations or the interpretation thereof
. Host Marriott's ability to satisfy complex rules in order for it to
qualify as a REIT for federal income tax purposes, our ability to
satisfy the rules for us to qualify as a partnership for federal income
tax purposes, and the ability of certain of our subsidiaries to qualify
as taxable REIT subsidiaries for federal income tax purposes, and our
ability and the ability of our subsidiaries to operate effectively
within the limitations imposed by these rules, and
. other factors discussed under the heading "Risk Factors" in this
prospectus, any accompanying prospectus supplement and in our other
filings with the Commission.
Although we believe the expectations reflected in our forward-looking
statements are based upon reasonable assumptions, we can give you no assurance
that we will attain these expectations 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, any accompanying prospectus supplement or any information
incorporated by reference into them 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.
8
THE COMPANY
We are a limited partnership owning full-service hotel properties. Our sole
general partner is Host Marriott, a self-managed and self-administered REIT.
Through our subsidiaries, we currently own or hold controlling interests in 125
hotels, containing approximately 60,000 rooms located throughout the United
States, in Toronto and Calgary, Canada and in Mexico City, Mexico. These hotels
are generally operated under the Marriott, Ritz-Carlton, Hyatt, Four Seasons,
Hilton and Swissotel brand names. We believe that these brands are among the
most respected and widely recognized names in the lodging industry.
Together with Host Marriott, we were formed primarily to continue, in an
UPREIT structure, the full-service hotel ownership business formerly conducted
by Host Marriott Corporation, a Delaware corporation. Host Marriott is our sole
general partner and currently the holder of approximately 86% of our
partnership interests. We lease substantially all of our full-service hotels to
a wholly owned subsidiary of ours that is taxed as a corporation.
Our principal executive offices are located at 10400 Fernwood Road,
Bethesda, Maryland 20817-1109, and our telephone number is (301) 380-9000.
9
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of senior notes will be used for
general operational purposes, which may include, but are not limited to,
working capital, capital expenditures, acquisitions and the repayment or
repurchase of our indebtedness and our units of limited partnership interest.
The factors which we will consider in any repayment or repurchase of
indebtedness will include the amount and characteristics of any senior notes
issued and may include, among others, the impact of such refinancing on our
liquidity or on our debt-to-equity ratio and earnings per share. When a
particular series of senior notes is offered, the related prospectus supplement
will set forth the intended use for the net proceeds received from the sale of
such senior notes. Pending the application of the net proceeds, we expect to
invest such proceeds in short-term, interest-bearing instruments or other
investment-grade debt securities.
ERISA MATTERS
We and our subsidiaries may each be considered a "party in interest," within
the meaning of the Employee Retirement Income Security Act, or a "disqualified
person," within the meaning of Section 4975 of the Internal Revenue Code, with
respect to many employee benefit plans that are subject to ERISA. The purchase
of senior notes by an ERISA plan, including an individual retirement plan, that
is subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of the Internal Revenue Code and with respect
to which we or any of our 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 the Internal Revenue Code, unless such
senior notes are acquired pursuant to and in accordance with an applicable
federal statutory exemption or administrative exemption issued on a class-wide
basis by the United States Department of Labor. Any pension or other employee
benefit plan proposing to acquire any senior notes should consult with its
counsel.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges on a
historical basis for the periods indicated.
Fiscal Year
------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of earnings to fixed charges(1)............... 1.2x 1.5x 1.5x 1.3x 1.0x
--------
(1) 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.
10
DESCRIPTION OF SENIOR NOTES
Pursuant to this prospectus we may issue additional senior notes pursuant to
an indenture dated as of August 5, 1998, by and among the Operating
Partnership, the Subsidiary Guarantors signatory thereto and HSBC Bank USA
(formerly Marine Midland Bank), as trustee, as amended or supplemented from
time to time. The terms of the indenture include those made part of the
indenture by reference to the Trust Indenture Act of 1939, as amended. The
following description is a summary of the material provisions of the indenture
and the related amended and restated pledge and security agreement, dated as of
August 5, 1998 and amended and restated as of May 31, 2000, which governs
property securing, among other things, the obligations on the notes. 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 notes. You may obtain copies of the
indenture and the pledge agreement from the Operating Partnership upon request.
The indenture is also listed as an exhibit to a registration statement on Form
S-3 of HMH Properties, Inc. (file no. 333-50729). You can find out how to
obtain these documents by looking at the section of this prospectus titled
"Where You Can Find More Information." You can find the definitions of certain
terms used in this description under the subheading "Certain Definitions."
General
The terms of each series of senior notes that may be issued under the
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 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 senior notes in respect of which this prospectus is
delivered, to the extent different from the terms described below in this
section:
. the title of such senior notes
. the price or prices at which the senior notes will be issued
. any limit on the aggregate principal amount of such senior notes
. the date or dates on which principal on such senior notes will be
payable
. 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 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
. the place or places where principal of, premium, if any, and interest,
if any, on such senior notes will be payable
. the period or periods within which, the price or prices at which and the
terms and conditions upon which the senior notes may be redeemed, in
whole or in part, at the option of the Company
. the obligation, if any, of the Company to redeem or purchase senior
notes, in whole or in part, pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof
. the dates, if any, on which and the price or prices at which the 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
. the denominations in which such senior notes may be issuable, if other
than denominations of $1,000 and any integral multiple thereof
. whether the senior notes are to be issuable in the form of Certificated
Notes or Global Notes
. the portion of principal amount of senior notes that shall be payable
upon declaration of acceleration of the maturity date thereof, if other
than the principal amount thereof
11
. the currency of denomination of such senior notes, if other than U.S.
dollars
. the designation of the currency, currencies or currency units in which
payment of principal of, premium, if any, and interest, if any, on such
senior notes will be made, if other than U.S. dollars
. if payments of principal of, premium, if any, or interest, if any, on
the senior notes are to be made in one or more currencies or currency
units other than that or those in which such senior notes are
denominated, the manner in which the exchange rate with respect to such
payments will be determined
. the manner in which the amounts of payment of principal of, premium, if
any, or interest, if any, on such 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 senior notes are
denominated or designated to be payable or by reference to a commodity,
commodity index, stock exchange index or financial index
. the provisions, if any, relating to any security provided for such
senior notes
. any addition to or change in the Events of Default described herein or
in the indenture with respect to such senior notes
. any addition to or change in the covenants described herein or in the
indenture with respect to such senior notes and any change in the
acceleration provisions described herein or in the indenture with
respect to such senior notes
. any other terms of such senior notes which may supplement, modify or
delete any provision of the indenture insofar as it applies to such
series
. any depositories, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the senior notes if
other than those appointed herein and
. the form and terms of any guarantee of the senior notes.
The Series A senior notes, Series B senior notes, Series C senior notes, the
Series E senior notes and the Series G senior notes are, and any series of
senior notes offered hereby will be, senior, general obligations of the
Operating Partnership. The Series A through Series G senior notes are, and any
series of senior notes offered hereby will be, initially secured by a pledge of
all the Capital Stock of certain of our subsidiaries, which Capital Stock also
equally and ratably secures our obligations under the Credit Facility and
certain other Indebtedness ranking on an equitable and ratable basis with the
senior notes. See "--Security." The Series A through Series G senior notes are,
and any series of senior notes offered hereby will be, pari passu with all of
our other existing and future unsubordinated Indebtedness and will rank senior
to all of our subordinated obligations. The Series A through Series G senior
notes are, and any series of senior notes offered hereby will be, jointly and
severally guaranteed on a senior basis by the Subsidiary Guarantors. The
Guarantee of the Subsidiary Guarantors with respect to the notes, and the
pledges of equity interests, are subject to release upon satisfaction of
certain conditions.
Interest on any series of notes issued under the indenture is or will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The 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 the notes will be payable at the office or agency of
the Operating Partnership maintained for such purpose, in the Borough of
Manhattan, The City of New York. Except as provided below, at our option
payment of interest may be made by check mailed to the holders of any notes at
the addresses set forth upon our registry books; provided, however, holders of
certificated notes will be entitled 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, will remain in effect until revoked
by such holder. No service charge will be made for any registration of transfer
or exchange of notes, but we may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Until we
designate otherwise our office or agency will be the corporate trust office of
the trustee presently located at 140 Broadway, New York, New York 10005-1180.
12
Guarantees
The Series A through Series G senior notes are, and any series of senior
notes offered hereby will be, fully and unconditionally guaranteed as to
principal, premium, if any, and interest, jointly and severally, by the
Subsidiary Guarantors. If the Operating Partnership defaults in the payment of
the principal of, or premium, if any, or interest on, a guaranteed series of
notes issued under the indenture when and as the same shall become due, whether
upon maturity, acceleration, call for redemption, Change of Control, offer to
purchase or otherwise, without the necessity of action by the trustee or any
holder, the Subsidiary Guarantors shall be required promptly to make such
payment in full. The indenture provides that the Subsidiary Guarantors will be
released from their obligations as guarantors under such series of notes under
certain circumstances. The obligations of the Subsidiary Guarantors 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 Operating Partnership
that subsequently guarantees any Indebtedness (the "Guaranteed Indebtedness")
of the Operating Partnership (each a "Future Subsidiary Guarantor") will be
required to guarantee the Series A through Series G senior notes and any series
of senior notes offered hereby. If the Guaranteed Indebtedness is (1) pari
passu in right of payment with the 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 (2) subordinated in right of
payment to the 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 notes.
Subject to compliance with the preceding paragraph, the indenture also
provides that any guarantee by a Subsidiary Guarantor shall be automatically
and unconditionally released upon (1) the sale or other disposition of Capital
Stock of the Subsidiary Guarantor, if, as a result of such sale or disposition,
such Subsidiary Guarantor ceases to be a Subsidiary of the Operating
Partnership, (2) the consolidation or merger of any such Subsidiary Guarantor
with any Person other than the Operating Partnership or a Subsidiary of the
Operating Partnership, if, as a result of such consolidation or merger, such
Subsidiary Guarantor ceases to be Subsidiary of the Operating Partnership, (3)
a Legal Defeasance or Covenant Defeasance, or (4) the unconditional and
complete release of such Subsidiary Guarantor from its guarantee of all
Guaranteed Indebtedness.
Security
The obligations of the Operating Partnership to pay the principal of,
premium, if any, and interest on the Series A through Series G senior notes and
any series of senior notes offered hereby is secured by a pledge of the Capital
Stock of certain of our direct and indirect subsidiaries, which pledge is, and
will be, shared equally and ratably with the credit facility, the Series A
through Series G senior notes and certain other of our Indebtedness ranking
pari passu in right of payment with the senior notes. The indenture also
provides that, unless otherwise provided in a supplemental indenture with
respect to a series of 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 notes on an equal and ratable basis with respect
to the 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 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) currently serves as the
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.
13
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 notes shall be released; provided that should the
obligations of the Operating Partnership under the credit facility subsequently
be secured by a pledge of such Capital Stock at any time, the Operating
Partnership must cause such Capital Stock to be pledged ratably and with at
least the same priority for the benefit of holders of the notes.
Ranking
The Series A through Series G senior notes are, and any series of senior
notes offered hereby will be, senior, general obligations of the Operating
Partnership, ranking pari passu in right of payment with any other outstanding
or future unsubordinated Indebtedness of the Operating Partnership, including,
without limitation, the obligations of the Operating Partnership under the
credit facility. The Series A through Series G senior notes are, and any series
of senior notes offered hereby will be, senior to all subordinated obligations
of the Operating Partnership. Each of the Subsidiary Guarantees of the Series A
through Series G senior notes and any other series of guaranteed notes,
including any series of senior notes offered hereby, 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
the notes will be direct creditors of the Subsidiary Guarantors by virtue of
such guarantees of the notes.
Optional Redemption
The dates, if any, on which, and the price or prices at which, any series of
senior notes may be redeemed, in whole or in part, at the option of the
Operating Partnership, and other detailed terms and provisions of such
redemption obligation will be set forth in a prospectus supplement with respect
to such series. In the case of a partial redemption of any series of senior
notes, the trustee shall select the 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 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 senior notes, no series of senior notes will have the benefit of any
sinking fund.
Notice
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder of notes to be
redeemed at its registered address. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes called for redemption.
Certain Definitions
Set forth below are certain defined terms used in the covenants and other
provisions of the indenture. Reference is made to the indenture for the full
definition of all such 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:
(1) existing at the time such Person becomes a Restricted Subsidiary of
the Company or
(2) 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.
14
"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:
(1) 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
(2) 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
(3) Marriott International and its Subsidiaries shall not be deemed to be
Affiliates of the Company or its Parent or Restricted Subsidiaries.
"Asset Acquisition" means:
(1) 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
(2) 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.
"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:
(1) all or any of the Capital Stock of any Restricted Subsidiary
(including by issuance of such Capital Stock)
(2) 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
(3) 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 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."
15
"Average Life" means at any date of determination with respect to any debt
security, the quotient obtained by dividing:
(1) 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:
(2) 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:
(1) 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
(2) 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
(3) 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
(4) in the case of a limited liability company (an "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
(5) 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.
"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.
16
"Cash Equivalent" means:
(1) 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)
(2) 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
(3) 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
(4) liquid investments in money market funds substantially all of the
assets of which are securities of the type described in clauses (1)
through (3) inclusive
provided that the securities described in clauses (1) through (3) inclusive
have a maturity of one year or less after the date of acquisition.
"Change of Control" means:
(1) 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
Marriott (for so long as Host or Host Marriott 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
(2) 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 Marriott for so long as Host or Host
Marriott 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
(3) during any period of 12 consecutive months after the Issue Date (for
so long as Host or Host Marriott 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 Marriott (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 Marriott,
as applicable, then in office or
(4) Host Marriott 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 Marriott's other
Subsidiaries nor
(y) the REIT Conversion (or any element thereof)
17
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.
"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 Host Marriott, L.P., and its successors and assigns (and,
from the Issue Date to the consummation of the Merger, HMH Properties, Inc.,
and its successors and assigns).
"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:
(1) "consolidation" will not include consolidation of the accounts of any
other Person other than a Restricted Subsidiary of such Person with
such Person and
(2) "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:
(1) 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:
(2) 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:
(a) 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
(b) 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
18
(c) 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
(d) 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:
(1) the sum of:
(a) Consolidated Interest Expense
(b) provisions for taxes based on income (to the extent of such
Person's proportionate interest therein)
(c) depreciation and amortization expense (to the extent of such
Person's proportionate interest therein)
(d) 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)
(e) 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 the equity method of
accounting (other than a Non-Consolidated Restricted Entity), to
the extent that:
1. such dividends or distributions are not included in the
Consolidated Net Income of such Person for such period and
2. 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 (e), do not exceed 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
(f) 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 (2) of this definition and
(g) any nonrecurring expenses incurred in connection with the REIT
Conversion
minus:
(2) the sum of:
(a) 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
19
(b) 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 did not reduce the Consolidated Net
Income of such Person for such period and 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:
(1) 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 the notes issued under the indenture or to establish the
Credit Facility) of such Person and its Consolidated Subsidiaries
during such period, including:
(a) original issue discount and noncash interest payments or accruals
on any Indebtedness
(b) the interest portion of all deferred payment obligations and
(c) 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
(2) 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 (1) or (2)) 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:
(1) 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
(2) 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
20
(3) 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 disposition of assets or from the
issuance or sale of any Capital Stock) shall be excluded and
(4) 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 (2), (3) and (4), 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 December 29, 1998.
"Credit Facility" means the credit facility established pursuant to the
Credit Agreement, dated as of August 5, 1998 among the Company, Host, certain
other Subsidiaries party thereto, 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:
(1) required to be redeemed on or prior to the Stated Maturity of the
notes for cash or property other than Qualified Capital Stock
(2) 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 notes or
(3) convertible into or exchangeable mandatorily or at the option of the
holder for Capital Stock referred to in clause (1) or (2) above or
Indebtedness of the Company or a Restricted Subsidiary having a
scheduled maturity prior to the Stated Maturity of the 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 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 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
21
such notes as are required to be repurchased pursuant to the "Limitation on
Asset Sales" and "Repurchase of 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 Operating Partnership to Host Marriott
shall not be deemed to be Disqualified Stock solely by reason of a
right by Host Marriott to require the Company to make a payment to it
sufficient to enable Host Marriott to satisfy its concurrent
obligation with respect to Capital Stock of Host Marriott, provided
such Capital Stock of Host Marriott 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:
(1) one or more distributions to the shareholders of Host and/or Host
Marriott of:
(a) shares of SLC and
(b) cash, securities or other property, with a cumulative aggregate
value equal to the amount estimated in good faith by Host or Host
Marriott from time to time as being necessary to assure that Host
and Host Marriott 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
Marriott's election to be taxed as a REIT is effective and
(2) the distributions from the Operating Partnership to:
(a) Host Marriott necessary to enable Host Marriott to make the
distributions described in clause (1) and
(b) holders of Units (other than Host Marriott) required as a result
of or a condition to such distributions made pursuant to clause
(2)(a).
"Excluded Person" means, in the case of the Company, Host, Host Marriott or
any Wholly Owned Subsidiary of Host or Host Marriott.
"Exempted Affiliate Transaction" means:
(1) employee compensation arrangements approved by a majority of
independent (as to such transactions) members of the Board of the
Company
(2) payments of reasonable fees and expenses to the members of the Board
(3) transactions solely between the Company and any of its Subsidiaries or
solely among Subsidiaries of the Company
(4) Permitted Tax Payments
(5) Permitted Sharing Arrangements
(6) Procurement Contracts
(7) Operating Agreements
(8) Restricted Payments permitted under the "Limitation on Restricted
Payments" covenant and
22
(9) any and all elements of the REIT Conversion.
"Existing Senior Notes" means amounts outstanding from time to time of:
(1) the 9 1/2% Senior Secured Notes due 2005 of the Company
(2) the 8 7/8% Senior Notes due 2007 of the Company and
(3) 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:
(1) in good faith by the Board of the Company or the applicable Subsidiary
involved in such transaction or
(2) 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:
(1) in which the Company owns (directly or indirectly) at least 50% of the
aggregate economic interests
(2) in which the Company or a Restricted Subsidiary participates in
control as a general partner, a managing member or through similar
means and
(3) 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).
"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:
(1) 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
(2) 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)
23
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.
"HMH Properties" means HMH Properties, Inc, a Delaware corporation, which
was merged into the Operating Partnership on December 16, 1998.
"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 Marriott" (as used in this prospectus) and "Host REIT" (as used in the
indenture) each mean Host Marriott Corporation, a Maryland corporation and the
successor by merger to Host, which is the sole general partner of the Operating
Partnership following the REIT Conversion, and its successors and assigns.
"Host REIT Merger" means the merger of Host with and into Host Marriott,
with Host Marriott surviving the merger, which merger occurred on December 29,
1998.
"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:
(1) 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
(2) all net obligations of such Person under Interest Swap and Hedging
Obligations and
(3) all liabilities and obligations of others of the kind described in the
preceding clause (1) or (2) 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
24
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:
(1) "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
(2) 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
(3) 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 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 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 elected 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, which
merger occurred on December 16, 1998.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(1) 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)
25
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 Marriott)
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 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 Marriott 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 Marriott'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
(2) 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 attorney's fees, accountant's 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:
(1) 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:
(2) 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
26
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 Marriott'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 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 notes for sale by the Company.
"Officer's 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.
"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:
(1) an Investment in Cash Equivalents
(2) 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
27
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
(3) 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 (3) subsequent to the
Issue Date would exceed 5% of Total Assets
(4) Permitted Sharing Arrangement Payments
(5) securities received in connection with an Asset Sale so long as such
Asset Sale complied with the 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 (2) of the
first paragraph of the "Limitation on Asset Sales" covenant)
(6) Investments in the Company or in Restricted Subsidiaries of the
Company
(7) Permitted Mortgage Investments
(8) any Investments constituting part of the REIT Conversion and
(9) 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 (3) 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:
(1) 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
(2) 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 and
(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
(3) 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
(4) 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
(5) 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
28
(6) 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
(7) Liens securing on an equal and ratable basis the 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:
(1) the Company is able to consolidate the operations of the real estate
assets in its GAAP financial statements
(2) 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
(3) the aggregate amount of such Permitted Mortgage Investments (excluding
those referenced in clauses (1) and (2) 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:
(1) to Host Marriott that is necessary to maintain Host Marriott's status
as a REIT under the Code or to satisfy the distributions required to
be made by reason of Host Marriott'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
(2) 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 Marriott 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
Marriott and its Subsidiaries that hold only Qualified Assets in an amount
necessary and sufficient to permit Host Marriott and such Subsidiaries to 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.
29
"Permitted Tax Payments" means payment of any liability of the Company,
Host, Host Marriott 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, was 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.
"Public Partnerships" mean, collectively:
(1) Atlanta Marriott Marquis II Limited Partnership, a Delaware limited
partnership (with which HMC Atlanta Merger Limited Partnership was
merged)
(2) Desert Springs Marriott Limited Partnership, a Delaware limited
partnership (with which HMC Desert Merger Limited Partnership was
merged)
(3) Hanover Marriott Limited Partnership, a Delaware limited partnership
(with which HMC Hanover Merger Limited Partnership was merged)
(4) Marriott Diversified American Hotels, L.P., a Delaware limited
partnership (with which HMC Diversified Merger Limited Partnership was
merged)
(5) Marriott Hotel Properties Limited Partnership, a Delaware limited
partnership (with which HMC Properties I Merger Limited Partnership
was merged)
(6) Marriott Hotel Properties II Limited Partnership, a Delaware limited
partnership (with which HMC Properties II Merger Limited Partnership
was merged)
(7) Mutual Benefit Chicago Marriott Suite Hotel Partners, L.P., a Rhode
Island limited partnership (with which HMC Chicago Merger Limited
Partnership was merged)
30
(8) Potomac Hotel Limited Partnership, a Delaware limited partnership
(with which HMC Potomac Merger Limited Partnership was merged) and
(9) Marriott Suites Limited Partnership, a Delaware limited partnership
(with which MS Merger Limited Partnership was merged)
or, as the context may require, any such entity together with its Subsidiaries,
or any of such Subsidiaries.
"Qualified Assets" means:
(1) 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
(2) other assets related to corporate operations of the Guarantors 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 Marriott or
any Parent of the Company that is not Disqualified Stock.
"Qualified Exchange" means:
(1) 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
(2) 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
Marriott Financial Trust, a statutory business trust.
"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 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:
(1) with respect to S&P, any of the following categories: BB, B, CCC, CC,
C and D (or equivalent successor categories)
(2) with respect to Moody's, any of the following categories: Ba, B, Caa,
Ca, C and D (or equivalent successor categories) and
(3) the equivalent of any such category of S&P or Moody's used in another
Rating Agency.
In determining whether the rating of the 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:
(1) a Change of Control and
31
(2) 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:
(1) a Change of Control and
(2) 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
notes is under publicly announced consideration for possible downgrade
by any of the Rating Agencies), of:
(a) in the event the notes are rated by either Moody's or S&P on the
Rating Date as Investment Grade, a decrease in the rating, of the
notes by either of such Rating Agencies to a rating that is below
Investment Grade or
(b) in the event the notes are rated below Investment Grade by both
Rating Agencies on the Rating Date, a decrease in the rating of
the 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 securities or the indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Stock:
(1) 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
(2) constituting an amendment, modification or supplement to, or a
deferral or renewal of ((1) and (2) 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:
1. the principal amount or, in the case of Disqualified Stock,
liquidation preference, of the Indebtedness or Disqualified
Stock so refinanced and
2. 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:
(x) not have an Average Life shorter than the Indebtedness or Disqualified
Stock to be so refinanced at the time of such Refinancing and
(y) be subordinated in right of payment to the rights of holders of the
notes if the Indebtedness or Disqualified Stock to be refinanced was
so subordinated.
32
"REIT Conversion" means the various transactions which were carried out in
connection with Host's conversion to a REIT, as generally described in the S-4
Registration Statement, including without limitation:
(1) 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
(2) 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)
(3) the Partnership Mergers
(4) the Private Partnership Acquisitions
(5) the issuance of Limited Partner Notes in connection with the foregoing
(6) the Blackstone Acquisition
(7) the contribution, prior to or substantially concurrent with the
Conversion Date, to Non-Controlled Entities of Non-Conforming Assets
(8) the leases to SLC or Subsidiaries of SLC of the hotels owned by the
Operating Partnership and its Subsidiaries
(9) the Host REIT Merger
(10) the E&P Distribution and
(11) 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 Marriott to elect to be
treated as a REIT for Federal income tax purposes.
"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.
"Restricted Payment" means, with respect to any Person (but without
duplication):
(1) 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
(2) 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
(3) 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
(4) any Restricted Investment by such Person and
(5) 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
33
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 Marriott
(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
successor Crestline Capital Corporation, a Maryland corporation, and its
successors and assigns.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Stated Maturity" means:
(1) 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
(2) 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 Indebtedness of the Company or a
Subsidiary Guarantor that is expressly subordinated in right of payment to the
notes or a Subsidiary Guarantee thereof, as applicable.
34
"Subsidiary" means, with respect to any Person:
(1) 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
(2) 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
(3) any Non-Controlled Entity and
(4) any Fifty Percent Venture.
"Subsidiary Guarantee" means a Guarantee by each Subsidiary Guarantor for
payment of principal, premium and interest on the notes by such Subsidiary
Guarantor. Each Subsidiary Guarantee will be a senior obligation of the
Subsidiary Guarantor and will be full and unconditional regardless of the
enforceability of the notes and the indenture.
"Subsidiary Guarantors" means:
(1) the current Subsidiary Guarantors identified in the following sentence
and
(2) any Future Subsidiary Guarantors that become Subsidiary Guarantors
pursuant to the terms of the indenture
but in each case excluding any Persons whose guarantees have been released
pursuant to the terms of the indenture.
The current Subsidiary Guarantors are:
(1) Airport Hotels LLC
(2) Host of Boston, Ltd.
(3) Host of Houston, Ltd.
(4) Host of Houston 1979
(5) Chesapeake Financial Services LLC
(6) City Center Interstate Partnership LLC
(7) HMC Retirement Properties, L.P.
(8) HMH Marina LLC
(9) Farrell's Ice Cream Parlour Restaurants LLC
(10) HMC Atlanta LLC
(11) HMC BCR Holdings LLC
(12) HMC Burlingame LLC
(13) HMC California Leasing LLC
(14) HMC Capital LLC
(15) HMC Capital Resources LLC
35
(16) HMC Park Ridge LP
(17) HMC Partnership Holdings LLC
(18) Host Park Ridge LLC
(19) HMC Suites LLC
(20) HMC Suites Limited Partnership
(21) PRM LLC
(22) Wellsford-Park Ridge Host Hotel Limited Partnership
(23) YBG Associates LLC
(24) HMC Chicago LLC
(25) HMC Desert LLC
(26) HMC Palm Desert LLC
(27) MDSM Finance LLC
(28) HMC Diversified LLC
(29) HMC East Side II LLC
(30) HMC Gateway LLC
(31) HMC Grand LLC
(32) HMC Hanover LLC
(33) HMC Hartford LLC
(34) HMC Hotel Development LLC
(35) HMC HPP LLC
(36) HMC IHP Holding LLC
(37) HMC Manhattan Beach LLC
(38) HMC Market Street LLC
(39) New Market Street LP
(40) HMC Georgia LLC
(41) HMC Mexpark LLC
(42) HMC Polanco LLC
(43) HMC NGL LLC
(44) HMC OLS I L.P.
(45) HMC OP BN LLC
(46) HMC Pacific Gateway LLC
(47) HMC PLP LLC
(48) Chesapeake Hotel Limited Partnership
(49) HMC Potomac LLC
(50) HMC Properties I LLC
(51) HMC Properties II LLC
(52) HMC RTZ Loan I LLC
(53) HMC RTZ II LLC
(54) HMC SBM Two LLC
36
(55) HMC Seattle LLC
(56) HMC SFO LLC
(57) HMC Swiss Holdings LLC
(58) HMC Waterford LLC
(59) HMH General Partner Holdings LLC
(60) HMH Norfolk LLC
(61) HMH Norfolk, L.P.
(62) HMH Pentagon LLC
(63) HMH Restaurants LLC
(64) HMH Rivers LLC
(65) HMH Rivers, L.P.
(66) HMH WTC LLC
(67) HMP Capital Ventures LLC
(68) HMP Financial Services LLC
(69) Host La Jolla LLC
(70) City Center Hotel Limited Partnership
(71) Times Square LLC
(72) Ivy Street LLC
(73) Market Street Host LLC
(74) MFR of Illinois LLC
(75) MFR of Vermont LLC
(76) MFR of Wisconsin LLC
(77) Philadelphia Airport Hotel LLC
(78) PM Financial LLC
(79) PM Financial LP
(80) HMC Property Leasing LLC
(81) HMC Host Restaurants LLC
(82) Santa Clara HMC LLC
(83) S.D. Hotels LLC
(84) Times Square GP LLC
(85) Durbin LLC
(86) HMC HT LLC
(87) HMC JWDC GP LLC
(88) HMC JWDC LLC
(89) HMC OLS I LLC
(90) HMC OLS II L.P. and
(91) HMT Lessee Parent LLC
"Subsidiary Indebtedness" means, without duplication, all Unsecured
Indebtedness (including Guarantees (other than Guarantees by Restricted
Subsidiaries of Secured Indebtedness)) of which a Restricted Subsidiary
37
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:
(1) Undepreciated Real Estate Assets and
(2) 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:
(1) Undepreciated Real Estate Assets not securing any portion of Secured
Indebtedness and
(2) 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).
"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:
(1) 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
38
(2) either:
(a) the Subsidiary to be so designated has total assets of $1,000 or
less or
(b) 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
(3) if applicable, the Incurrence of Indebtedness and the Investment
referred to in clause (1) 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.
Covenants
The covenants set forth below and the provisions set forth under the caption
"Covenants upon Attainment and Maintenance of an Investment Grade Rating" are
applicable to the Series A through Series G senior notes and the senior notes
of any series offered hereby, 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 such covenants.
For the purposes of senior notes of any series, when used in these covenants,
the terms "senior notes" shall mean senior notes of that series, and the term
"guarantor" and "Subsidiary Guarantor" shall mean, respectively, a Guarantor
and Subsidiary Guarantor with respect to senior notes of that series.
Repurchase of 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
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 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").
39
On or before the Change of Control Payment Date, the Company will:
(1) accept for payment notes or portions thereof properly tendered
pursuant to the Change of Control Offer
(2) deposit with the Paying Agent cash sufficient to pay the Change of
Control Payment (together with accrued and unpaid interest) of all
notes so tendered and
(3) deliver to the trustee notes so accepted together with an Officer's
Certificate listing the aggregate principal amount of the notes or
portions thereof being purchased by the Company.
The Paying Agent will promptly mail to the holders of 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
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 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
Securities Exchange Act of 1934, as amended, and the rules thereunder and all
other applicable Federal and state securities laws.
Limitation on Incurrences of Indebtedness and Issuances of Disqualified Stock
(1) 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:
(a) the aggregate amount of all outstanding Indebtedness (other than
the QUIPs Debt) and Disqualified Stock of the Company, the
Subsidiary Guarantors and their respective Restricted Subsidiaries
(including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (4)(c) 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
(b) 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.
(2) In addition to the foregoing limitations set forth in (1) 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
40
Subsidiaries (including amounts of Refinancing Indebtedness outstanding
pursuant to paragraph (4)(c) 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.
(3) In addition to the limitations set forth in (1) and (2) 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 (4)(c) 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).
(4) Notwithstanding paragraphs (1) or (2), the Company, the Subsidiary
Guarantors and their respective Restricted Subsidiaries (except as
specified below) may Incur or issue each and all of the following:
(a) 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)
(b) Indebtedness or Disqualified Stock owed:
(i) to the Company or
(ii) 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)
(c) Refinancing Indebtedness with respect to outstanding Indebtedness
(other than Indebtedness Incurred under clause (a), (b), (d), (f)
or (h) of this paragraph) and any refinancings thereof
(d) Indebtedness:
(i) in respect of performance, surety or appeal bonds Incurred in
the ordinary course of business
(ii) 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
(iii) 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
41
of 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
(e) Indebtedness of the Company, to the extent the net proceeds thereof
are promptly:
(i) used to purchase all of the notes tendered in a Change of
Control Offer made as a result of a Change of Control or
(ii) deposited to defease the notes as described below under "Legal
Defeasance and Covenant Defeasance"
(f) Guarantees of the 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
(g) Indebtedness evidenced by the notes and the Guarantees thereof and
represented by the indenture up to the amounts issued pursuant
thereto as of the Issue Date
(h) the QUIPs Debt
(i) Limited Partner Notes and
(j) 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.
(5) For purposes of determining any particular amount of Indebtedness
under this covenant:
(a) Indebtedness Incurred under the Credit Facility on or prior to the
Issue Date shall be treated as Incurred pursuant to clause (a) of
paragraph (4) of this covenant and
(b) 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 notes equally and ratably with the Lien securing such Indebtedness
for so long as Indebtedness under the Credit Facility is secured by such Lien.
42
Limitation on Restricted Payments
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:
(1) a Default or Event of Default shall have occurred and be continuing
(2) the Company could not Incur at least $1.00 of Indebtedness under
paragraph (1) of the "Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock" covenant or
(3) 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:
(a) 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
(b) 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 notes), and the amount of any Indebtedness
(other than Indebtedness subordinate in right of payment to the
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
(c) 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")
(d) 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
(e) 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.
The Company estimates that as of March 23, 2001, the sum of the amounts
referenced in clauses (a) through (e) above was approximately $3.7 billion.
43
Limitation on Dividend and Other Payment Restrictions Affecting Subsidiary
Guarantors
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:
(1) 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
(2) pay any Indebtedness owed to the Company or any Subsidiary Guarantor
(3) make loans or advances to the Company or any Subsidiary Guarantor or
(4) transfer its property or assets to the Company or any Subsidiary
Guarantor.
The foregoing provisions shall not prohibit any encumbrances or
restrictions:
(1) imposed under the indenture as in existence immediately following the
Issue Date 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
(2) 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)
(3) existing under or by reason of applicable law
(4) 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
(5) in the case of clause (4) 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 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
(6) 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
(7) 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
materially more disadvantageous to the holders of the 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 notes or
(8) in connection with and pursuant to permitted refinancings thereof,
replacements of restrictions imposed pursuant to clause (4) 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.
44
Nothing contained in this covenant shall prevent the Company, the
Subsidiary Guarantors or any of their respective Restricted Subsidiaries
from:
(a) creating, incurring, assuming or suffering to exist any Permitted
Liens or Liens not prohibited by the "Limitation on Liens"
covenant or
(b) 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
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:
(1) transactions approved by a majority of the Board of the Company
(2) the payment of reasonable and customary fees and expenses to members
of the Board of the Company who are not employees of the Company
(3) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant or any payments specifically exempted
from the definition of Restricted Payments and
(4) 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 (2) through (4) of the preceding 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 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:
(1) 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
45
(2) 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 provided that, for purposes of this clause (2) the amount of:
(a) any Indebtedness (other than Indebtedness subordinated in right of
payment to the 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,
any Subsidiary Guarantors or such 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
Securities and Exchange Commission or provided to the trustee pursuant to the
"Reports" 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:
(1) 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:
(a) 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
(b) Permitted Mortgage Investments or
(c) a controlling interest in the Capital Stock of an entity engaged
in a Related Business
provided that concurrently with an Investment specified in clause (c),
such entity becomes a Restricted Subsidiary or
(2) 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 of the notes and holders of any other
46
Indebtedness of the Company ranking pari passu with the 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 notes and such other Indebtedness equal to the Excess Proceeds
on such date, at a purchase price in cash equal to 100% of the principal amount
(or accreted value, as applicable) of the 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 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 notes
and such other Indebtedness tendered pursuant to an Asset Sale Offer exceeds
the amount of Excess Proceeds, the 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:
(1) 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
(2) 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 indenture
(3) 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
(4) 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 (1) through (4) inclusive shall be deemed
to be an "Asset Sale."
Limitation on Merger of Subsidiary Guarantors and Release of Subsidiary
Guarantors
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:
(1) 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 indenture on the terms set forth in
the indenture and
(2) 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 notes by a Subsidiary Guarantor shall be automatically
released upon:
(a) 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
47
(b) 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
(c) a Legal Defeasance or Covenant Defeasance or
(d) the unconditional and complete release of such Subsidiary Guarantor
from its Guarantee of all Guaranteed Indebtedness other than the
notes.
Limitation on Status as Investment Company
The 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 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 notes are rated Investment Grade.
Reports
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
An Event of Default with respect to any series of notes issued under the
indenture is defined as:
(1) the failure by the Company to pay any installment of interest on the
notes of that series as and when the same becomes due and payable and
the continuance of any such failure for 30 days
(2) the failure by the Company to pay all or any part of the principal of,
or premium, if any, on, the notes of that series when and as the same
becomes due and payable at maturity, redemption, by acceleration or
otherwise
(3) the failure by the Company, a Guarantor or any Subsidiary Guarantor to
observe or perform any other covenant or agreement contained in the
notes of that series or the indenture with respect to that series of
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 notes of
that series outstanding
(4) certain events of bankruptcy, insolvency or reorganization in respect
of the Company or any of its Significant Subsidiaries
(5) a default in (a) Secured Indebtedness of the Company or any of its
Restricted Subsidiaries with an aggregate principal amount in excess
of 5% of Total Assets, or (b) other Indebtedness of the Company or any
of its Restricted Subsidiaries with an aggregate principal amount in
excess of $50
48
million, in either case, (i) resulting from the failure to pay principal
or interest when due (after giving effect to any applicable extensions
or grace or cure periods) or (ii) as a result of which the maturity of
such Indebtedness has been accelerated prior to its final Stated
Maturity
(6) 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 and
(7) any other Event of Default with respect to notes of that series, which
is specified in a Board Resolution, a supplemental indenture or an
Officer's Certificate, in accordance with the indenture.
The 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 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 notes of that series) if it determines that withholding notice
is in their interest.
If an Event of Default with respect to the notes of any series occurs and
is continuing (other than an Event of Default specified in clause (4), above,
relating to the Company), then either the trustee or the holders of 25% in
aggregate principal amount of the 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 (4) above relating to the Company occurs,
all principal and accrued interest thereon will be immediately due and payable
on all outstanding 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 notes of any series generally are authorized to rescind such
acceleration if (x) the Company has paid, or deposited with the trustee funds
sufficient to pay, all overdue interest, principal and premium (other than
amounts that have become due by the declaration of acceleration), and sums
paid or advanced by the trustee and compensation and expenses due to the
trustee, and (y) all existing Events of Default with respect to the notes of
such series, other than the non-payment of the principal on the notes of that
series which has 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 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 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 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 note of that series affected; provided that holders of a majority
or supermajority (as the case may be) in aggregate principal amount of
securities of a series may rescind an acceleration and its consequences
including any payment default that resulted from such acceleration, as
described above.
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 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.
49
Consolidation, Merger and Sale of Assets
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 one transaction or a series of
related transactions) to any Person or permit any Person to merge with or into
the Company, unless:
(1) 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 notes and under the indenture
(2) 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
(3) 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 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 notes
and the indenture.
Legal Defeasance and Covenant Defeasance
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 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 notes of such series and
Guarantees thereof, except as to:
(1) rights of holders to receive payments in respect of the principal of,
premium, if any, and interest on such notes when such payments are due
from the trust funds
(2) the Company's obligations with respect to such notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed,
lost or stolen notes, and the maintenance of an office or agency for
payment and money for security payments held in trust
(3) 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
(4) 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 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 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 notes of such series.
In order to exercise either Legal Defeasance or Covenant Defeasance, with
respect to any series of notes
(1) the Company must irrevocably deposit with the trustee, in trust, for
the benefit of the holders of the notes of such series, U.S. legal
tender, noncallable government securities or a combination thereof, in
50
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 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 notes
(2) 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 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
(3) 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 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
(4) 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
(5) 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
(6) 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 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
(7) the Company shall have delivered to the trustee an Officer's
Certificate stating that the conditions precedent provided for have
been complied with.
Amendments, Supplements and Waivers
The 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 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 Subsidiary Guarantors shall require the consent of the
holders of not less than 66 2/3% of the aggregate principal amount of the notes
of such series at the time outstanding) and waivers of compliance by the
Company with any provision of the indenture or any supplemental indenture with
respect to any series may be made by holders of at least a majority (or
supermajority, if applicable) in principal amount of such series; provided that
no such modification, amendment or waiver may, without the consent of each
holder affected thereby:
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any note
(2) reduce the principal amount of, or premium, if any, or interest on,
any note
51
(3) change the place of payment of principal of, or premium, if any, or
interest on, any note
(4) 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
(5) reduce the above-stated percentages of outstanding notes the consent
of whose holders is necessary to modify or amend the indenture
(6) waive a default in the payment of principal of, premium, if any, or
interest on the notes (except a recission of acceleration of the
securities of any series and a waiver of the payment default that
resulted from such acceleration)
(7) alter the provisions relating to the redemption of the notes at the
option of the Company
(8) reduce the percentage or aggregate principal amount of outstanding
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
(9) make the notes subordinate in right of payment to any other
Indebtedness.
No Personal Liability of Partners, Stockholders, Officers, Directors
No recourse for the payment of the principal of, premium, if any, or
interest on any of the 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 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 notes pursuant to the
indenture. Each holder, by accepting the notes, waives and releases all such
liability.
Concerning the Trustee
The 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 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; Form and Transfer
Except as set forth below, the senior notes will initially be issued in the
form of one or more registered senior notes in global form (the "Global
Notes"). Each Global Note will be deposited 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
52
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
(1) 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
(2) ownership of the 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 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 Global Note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the senior notes represented by such Global Note for all purposes
under the indenture. Except as provided below, owners of beneficial interests
in a Global Note will not be entitled to have 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 in the 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 senior notes deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the 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 senior notes. DTC's records
reflect only the identity of the Direct Participants to whose accounts such
senior notes are credited, which may or may not be the beneficial owners of the
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 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 senior notes by DTC, or for
maintaining, supervising or reviewing any records of DTC relating to such
senior notes.
Payments with respect to the principal of, premium, if any, and interest on,
any senior notes 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
53
Note representing such senior notes under the Indenture. Under the terms of the
indenture, the Company and the Trustee may treat the persons in whose names the
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 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 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:
(1) 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
(2) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of 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 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 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 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 senior notes to be issued).
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 Settlement and Payment
The indenture will require that payments in respect of the notes represented
by the Global Notes (including principal, premium, if any, interest and
liquidated damages, if any) be made by wire transfer of immediately available
same day funds to the accounts specified by the holder of interests in such
Global Note. With respect to Certificated Notes, we will make all payments of
principal, premium, if any, interest and liquidated damages, if any, by wire
transfer of immediately available same day funds to the accounts specified by
the holders thereof or, if no such account is specified, by mailing a check to
each such holder's registered address. We expect that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
54
PLAN OF DISTRIBUTION
We may sell the senior notes being offered by this prospectus and any
accompanying prospectus supplement:
. directly to purchasers
. through agents
. through dealers
. through underwriters
. directly to our unitholders or
. through a combination of any such methods of sale.
In addition, the senior notes may be issued by us as a dividend or
distribution.
The distribution of the senior notes may be effected from time to time in
one or more transactions either:
. at a fixed price or prices, which may be changed
. at market prices prevailing at the time of sale
. at prices related to such prevailing market prices or
. at negotiated prices.
Offers to purchase senior notes may be solicited directly by us. Offers to
purchase senior notes may also be solicited by agents designated by us 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
senior notes in respect of which this prospectus is delivered will be named,
and any commissions payable by us to such agent will be set forth in the
prospectus supplement.
If a dealer is utilized in the sale of the senior notes in respect of which
this prospectus is delivered, Host Marriott will sell such senior notes 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 senior notes
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, we 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
senior notes in respect of which this prospectus is delivered to the public.
In connection with the sale of senior notes, such underwriter may be deemed to
have received compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of senior notes
for whom they may act as agents. Underwriters may also sell senior notes 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 us to underwriters in connection with the offering of
senior notes, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
prospectus supplement.
Underwriters, dealers, agents and other persons may be entitled, under
agreements that may be entered into with us, to indemnification by us 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, us in the ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or other persons to solicit offers by certain
institutions to purchase senior notes pursuant to contracts providing for
55
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 the purchase of the
senior notes shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject and, if the senior notes
are also being sold to underwriters, we shall have sold to such underwriters
the senior notes 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 senior notes pursuant to such
contracts, the commission payable for solicitation of such contracts and the
date or dates in the future for delivery of senior notes 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 senior notes in connection with an offering of senior
notes, thereby creating a short position in the underwriters' account.
Syndicate covering transactions involve purchases of the senior notes 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 senior notes 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 senior notes will be set forth in the
applicable prospectus supplement relating to each offer.
LEGAL MATTERS
The validity of the senior notes will be passed upon for us by our general
counsel or by other counsel to Host Marriott. If the senior notes 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
Our consolidated financial statements and schedules incorporated by
reference in this prospectus and elsewhere in the registration statement 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.
56
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated fees and expenses, other than
underwriting discounts and commissions, payable by Host Marriott and the
Operating Partnership in connection with the issuance and distribution of the
securities being registered:
Registration Fee................................................... $395,200
Printing and Duplicating Expenses.................................. 100,000
Legal Fees and Expenses............................................ 125,000
Accounting Fees and Expenses....................................... 50,000
Miscellaneous...................................................... 50,000
--------
Total.............................................................. $720,200
========
Item 15. Indemnification of Directors and Officers
The Maryland General Corporation Law, as amended (the "MGCL"), permits a
Maryland corporation to indemnify and advance expenses to its directors,
officers, employees and agents, and permits a corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason
of their service in those or other capacities unless it is established that (a)
the act or omission of the director or officer was material to the matter
giving rise to the proceeding and (i) was committed in bad faith or (ii) was
the result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However,
under the MGCL, a Maryland corporation may not indemnify a director or officer
in a suit by or in the right of the corporation if such director or officer has
been adjudged to be liable to the corporation.
Host Marriott's Articles of Amendment and Restatement of Articles of
Incorporation (the "Articles of Incorporation") require it to indemnify its
directors and officers, whether serving Host Marriott or at Host Marriott's
request any other entity, to the full extent permitted by Maryland law,
including the advance of expenses to the full extent permitted by law. The
Articles of Incorporation permits Host Marriott to indemnify other employees
and agents of Host Marriott to such extent as shall be authorized by the Board
of Directors or Host Marriott's Bylaws (the "Bylaws") and be permitted by law.
The Bylaws require Host Marriott, to the maximum extent permitted by
Maryland law, to indemnify (i) any director or officer of Host Marriott or
former director or officer of Host Marriott, (including any individual who,
while a director or officer of Host Marriott and at the express request of Host
Marriott, serves or has served another corporation, partnership, joint venture,
trust, employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such entity) who has been successful, on the merits or
otherwise, in the defense of a proceeding to which the individual was made a
party by reason of service in such capacity, against reasonable expenses
incurred by him in connection with the proceeding, and (ii) any director or
officer or any former director or officer against any claim or liability to
which he or she may become subject by reason of such status unless it is
established that (a) his act or omission was material to the matter giving rise
to the proceeding and was committed in bad faith or was the result or active
and deliberate dishonesty, (b) he or she actually received an improper personal
benefit in money, property or services or (c) in the case of a criminal
proceeding, he or she had reasonable cause to believe that his act or omission
was unlawful.
Host Marriott's Bylaws obligate it to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to any
present or former director or officer who is made a party to the
II-1
proceeding by reason of his service in that capacity, provided that, in the
case of a director or officer, Host Marriott shall have received (a) a written
affirmation by the director or officer of the officer's good faith belief that
he or she has met the applicable standard of conduct necessary for
indemnification by Host Marriott as authorized by the Bylaws and (ii) a written
undertaking by or on his or her behalf to repay the amount paid or reimbursed
by Host Marriott if it shall ultimately be determined that the applicable
standard of conduct was not met.
The Amended and Restated Agreement of Limited Partnership of the Operating
Partnership also provides for indemnification of Host Marriott and its officers
and directors to the same extent that indemnification is provided to officers
and directors of Host Marriott in its Articles of Incorporation, and limits the
liability of Host Marriott and its officers and directors to the Operating
Partnership and its respective partners to the same extent that the liability
of the officers and directors of Host Marriott to the Company and its
stockholders is limited under Host Marriott's Articles of Incorporation.
Item 16. Exhibits
Exhibit Index
1.1* Form of Underwriting Agreement
4.1 Indenture, dated as of December 2, 1996, between Host Marriott
Corporation and IBJ Schroeder Bank & Trust Company, as Indenture Trustee
(incorporated herein by reference to Exhibit 4.3 of Host Marriott
Corporation's Registration Statement on Form S-3 (SEC File No. 333-
19923))
4.2 Guarantee Agreement, dated as of December 2, 1996, between Host Marriott
Corporation and IBJ Schroeder Bank & Trust Company, as Guarantee Trustee
(incorporated herein by reference to Exhibit 4.6 of Host Marriott
Corporation's Registration Statement on Form S-3 (SEC File No. 333-
19923))
4.3 Amended and Restated Trust Agreement, dated December 2, 1996, among Host
Marriott Corporation, IBJ Schroeder Bank & Trust Company, as Property
Trustee, Delaware Trust Capital Management, Inc., as Delaware Trustee,
and Robert E. Parsons, Jr., Bruce D. Wardinski and Christopher G.
Townsend, as Administrative Trustees (incorporated herein by reference to
Exhibit 4.2 of Host Marriott Corporation's Registration Statement on Form
S-3 (SEC File No. 333-19923))
4.4 Amended and Restated Indenture, dated as of August 5, 1998, by and among
HMH Properties, Marine Midland Bank and the guarantors named therein
(incorporated herein by reference to Exhibit 4.1 to Host Marriott's
Current Report on Form 8-K filed with the SEC on August 6, 1998)
4.5 Rights Agreement between Host Marriott and The Bank of New York, as
Rights Agent, dated as of November 23, 1998 (incorporated herein by
reference to Exhibit 4.1 to Host Marriott Corporation's Registration
Statement on Form 8-A filed with the SEC on December 11, 1998)
4.6 Articles Supplementary of the Company Classifying and Designating a
Series of Preferred Stock as Series A Junior Participating Preferred
Stock and Fixing Distribution and Other Preferences and Rights of Such
Series (incorporated herein by reference to Exhibit 4.2 to Host Marriott
Corporation's Registration Statement on Form 8-A filed with the SEC on
December 11, 1998)
4.7 Form of Rights Certificate (incorporated herein by reference to Exhibit
4.3 to Host Marriott Corporation's Registration Statement on Form 8-A
filed with the SEC on December 11, 1998)
4.8 Amendment No. 1 to Rights Agreement between Host Marriott and The Bank of
New York, as Rights Agent, dated as of December 18, 1998 (incorporated
herein by reference to Exhibit 4.2 to Host Marriott's Current Report on
Form 8-K filed with the SEC on December 24, 1998)
4.9 Amended and Restated Trust Agreement, dated as of December 29, 1998,
among HMC Merger Corporation, as Depositor, IBJ Schroder Bank & Trust
Company, as Property Trustee, Delaware Trust Capital Management, Inc., as
Delaware Trustee, and Robert E. Parsons, Jr., W. Edward Walter and
Christopher G. Townsend, as Administrative Trustees (incorporated herein
by reference to Exhibit 4.9 to Host Marriott's Annual Report on Form 10-K
for the year ended December 31, 1998)
II-2
4.10 Specimen Common Stock Certificate (incorporated herein by reference to
Exhibit 4.7 to Host Marriott's Registration Statement on Form S-4 (SEC
File No. 333-55807))
4.11 Articles Supplementary of Host Marriott Corporation Classifying and
Designating Preferred Stock of the Registrant as 10% Class A Cumulative
Redeemable Preferred Stock (incorporated herein by reference to Exhibit
4.1 to Host Marriott's Registration Statement on Form 8-A filed with the
SEC on July 30, 1999)
4.12 Articles Supplementary of Host Marriott Corporation Classifying and
Designating Preferred Stock of the Registrant as 10% Class B Cumulative
Redeemable Preferred Stock (incorporated herein by reference to Exhibit
4.1 to Host Marriott's Registration Statement on Form 8-A filed with the
SEC on November 23, 1999)
4.13 Articles Supplementary of Host Marriott Corporation Classifying and
Designating Preferred Stock of the Registrant as 10% Class C Cumulative
Redeemable Preferred Stock (incorporated herein by reference to Exhibit
4.2 to Host Marriott's Registration Statement on Form 8-A filed with the
SEC on March 23, 2001)
5.1* Opinion of Hogan & Hartson L.L.P. regarding the legality of the
securities being registered
8.1* Opinion of Hogan & Hartson L.L.P. regarding certain tax matters
12.1 Statement of Computation of Ratios
23.1 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1)
23.2 Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 8.1)
23.3 Consent of Arthur Andersen LLP, independent public accountants
24.1 Power of Attorney (included in signature page)
99.1 Description of Material Federal Income Tax Consequences (incorporated by
reference to Exhibit 99.1 to Host Marriott's Current Report on Form 8-K
filed with the SEC on May 25, 2001)
--------
* To be filed by amendment or by a Current Report on Form 8-K pursuant to
Regulation S-K, Item 601(b).
Item 17. Undertakings
(a) Each undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that subparagraphs (i) and (ii) above shall not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in the periodic reports filed with
II-3
or furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) Each undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Each undersigned Registrant hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set
forth the results of the subscription offer, the transactions by
the underwriters during the subscription period, the amount of
unsubscribed securities to be purchased by the underwriters, and
the terms of any subsequent reoffering thereof. If any public
offering by the underwriters is to be made on terms differing from
those set forth on the cover page of the prospectus, a post-
effective amendment will be filed to set forth the terms of such
offering.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to existing
provisions or arrangements whereby the Registrant may indemnify a
director, officer or controlling person of the Registrant against
liabilities arising under the Securities Act of 1933, or otherwise,
each Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(e) Each undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be a part of this registration
statement as of the time it was declared effective; and
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host Marriott Corporation
/s/ Robert E. Parsons, Jr.
By: _________________________________
Robert E. Parsons, Jr.
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Host Marriott Corporation, a
Delaware corporation, do hereby constitute and appoint Robert E. Parsons, Jr.,
our true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, to do any and all acts and things in our names and our
behalf in our capacities as directors and officers and to execute any and all
instruments for us and in our name in the capacities indicated below, which
said attorney and agent may deem necessary or advisable to enable said
corporation to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with this registration statement, or any registration statement for
this offering that is to be effective upon filing pursuant to Rule 462(b) under
the Securities Act of 1933, including specifically, but without limitation, any
and all amendments (including post-effective amendments) hereto; and we hereby
ratify and confirm all that said attorney and agent shall do or cause to be
done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED AS OF THE 25TH DAY OF MAY, 2001.
Signature Title
--------- -----
/s/ Christopher J. Nassetta President, Chief Executive Officer and Director
______________________________________ (principal executive officer)
Christopher J. Nassetta
/s/ Robert E. Parsons, Jr. Executive Vice President and Chief Financial
______________________________________ Officer (principal financial officer)
Robert E. Parsons, Jr.
/s/ Donald D. Olinger Senior Vice President and Corporate Controller
______________________________________ (principal accounting officer)
Donald D. Olinger
/s/ Richard E. Marriott Chairman of the Board of Directors
______________________________________
Richard E. Marriott
II-5
Signature Title
--------- -----
/s/ R. Theodore Ammon Director
______________________________________
R. Theodore Ammon
/s/ Robert M. Baylis Director
______________________________________
Robert M. Baylis
/s/ J.W. Marriott, Jr. Director
______________________________________
J.W. Marriott, Jr.
/s/ Ann McLaughlin Korologos Director
______________________________________
Ann Mclaughlin Korologos
/s/ Terence C. Golden Director
______________________________________
Terence C. Golden
/s/ John G. Schreiber Director
______________________________________
John G. Schreiber
/s/ Harry L. Vincent, Jr. Director
______________________________________
Harry L. Vincent, Jr.
II-6
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host Marriott, L.P.
By: Host Marriott Corporation, its
general partner
/s/ Robert E. Parsons, Jr.
By: _________________________________
Robert E. Parsons, Jr.
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Host Marriott Corporation, the
general partner of Host Marriott, L.P., do hereby constitute and appoint Robert
E. Parsons, Jr., our true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, to do any and all acts and things in
our names and our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the capacities
indicated below, which said attorney and agent may deem necessary or advisable
to enable said corporation to comply with the Securities Act of 1933 and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this registration statement, or any registration statement
for this offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act of 1933, including specifically, but without
limitation, any and all amendments (including post-effective amendments)
hereto; and we hereby ratify and confirm all that said attorney and agent shall
do or cause to be done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED AS OF THE 25TH DAY OF MAY, 2001.
Signature Title
--------- -----
/s/ Christopher J. Nassetta President, Chief Executive Officer and
______________________________________ Director (principal executive officer)
Christopher J. Nassetta
/s/ Robert E. Parsons, Jr. Executive Vice President and Chief
______________________________________ Financial Officer (principal financial
Robert E. Parsons, Jr. officer)
/s/ Donald D. Olinger Senior Vice President and Corporate
______________________________________ Controller (principal accounting officer)
Donald D. Olinger
II-7
Signature Title
--------- -----
/s/ Richard E. Marriott Chairman of the Board of Directors
______________________________________
Richard E. Marriott
/s/ R. Theodore Ammon Director
______________________________________
R. Theodore Ammon
/s/ Robert M. Baylis Director
______________________________________
Robert M. Baylis
/s/ J.W. Marriott, Jr. Director
______________________________________
J.W. Marriott, Jr.
/s/ Ann McLaughlin Korologos Director
______________________________________
Ann McLaughlin Korologos
/s/ Terence C. Golden Director
______________________________________
Terence C. Golden
/s/ John G. Schreiber Director
______________________________________
John G. Schreiber
/s/ Harry L. Vincent, Jr. Director
______________________________________
Harry L. Vincent, Jr.
II-8
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Rivers, L.P
By: HMH Rivers LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Marina LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC SBM Two LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-9
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Retirement Properties L.P.
By: Durbin LLC, its General Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Pentagon LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Airport Hotels LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-10
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Chesapeake Financial Services LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Capital Resources LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
PRM LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-11
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host Park Ridge LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Philadelphia Airport Hotel LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Hartford LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-12
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Norfolk LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Norfolk, L.P.
By: HMH Norfolk LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Partnership Holdings LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-13
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Suites LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Suites Limited Partnership
By: HMC Suites LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Wellsford-Park Ridge Host Hotel
Limited Partnership
By: Host Park Ridge LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-14
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
City Center Interstate Partnership
LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Farrell's Ice Cream Parlour
Restaurants LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Burlingame LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-15
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC California Leasing LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Capital LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Grand LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-16
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Mexpark LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Polanco LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC NGL LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-17
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC OLS I L.P.
By: HMC OLS I LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC RTZ Loan I LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC RTZ II LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-18
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Seattle LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Swiss Holdings LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Waterford LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-19
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Restaurants LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH Rivers LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH WTC LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-20
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMP Capital Ventures LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host La Jolla LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
City Center Hotel Limited
Partnership
By: Host La Jolla LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-21
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
MFR of Illinois LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
MFR of Vermont LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
MFR of Wisconsin LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL 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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
PM Financial LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
PM Financial LP
By: PM Financial LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Chicago LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-23
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC HPP LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Desert LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Hanover LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-24
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Diversified LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Properties I LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Potomac LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-25
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC East Side II LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Manhattan Beach LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Chesapeake Hotel Limited Partnership
By: HMC PLP LLC, its General Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-26
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMH General Partner Holdings LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC IHP Holding LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC OP BN LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-27
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
S.D. Hotels LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Gateway LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Pacific Gateway LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-28
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Market Street LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
New Market Street LP
By: HMC Market Street LLC, its
General Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Times Square LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-29
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Times Square GP LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Atlanta LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Ivy Street LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-30
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Properties II LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Santa Clara HMC LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC BCR Holdings LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-31
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Palm Desert LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Georgia LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC SFO LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-32
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Market Street Host LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Property Leasing LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Host Restaurants LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-33
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Durbin LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC HT LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC JWDC GP LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-34
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC JWDC LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC OLS I LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC OLS II L.P.
By: HMC OLS I LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-35
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Park Ridge LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host of Houston 1979
By: Airport Hotels LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host of Houston, Ltd.
By: Airport Hotels LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-36
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
Host of Boston, Ltd.
By: Airport Hotels LLC, its General
Partner
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
YBG Associates LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMT Lessee Parent LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-37
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC PLP LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMP Financial Services LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
HMC Hotel Development LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
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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, MARYLAND, ON THIS 25TH DAY OF MAY, 2001.
MDSM Finance LLC
*
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
* Executed below by Robert E.
Parsons, Jr. as President of each
of the Co-Registrants
/s/ Robert E. Parsons, Jr.
By: _________________________________
Name: Robert E. Parsons, Jr.
Title: President
II-39