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As filed with the Securities and Exchange Commission on September 9, 2009
Registration No. 333-161068

 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Pre-effective
AMENDMENT NO. 1
to
FORM S-1
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933 

HYATT HOTELS CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	 	7011	 	20-1480589	
(State or other jurisdiction of
incorporation or organization)	 	(Primary Standard Industrial
Classification Code Number)	 	(I.R.S. Employer
Identification Number)	

71 South Wacker Drive, 12th Floor
Chicago, Illinois 60606
(312) 750-1234
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Mark S. Hoplamazian
President and Chief Executive Officer
Hyatt Hotels Corporation
71 South Wacker Drive, 12th Floor
Chicago, Illinois 60606
(312) 750-1234
(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Michael A. Pucker, Esq.
Cathy A. Birkeland, Esq.
Latham & Watkins LLP
233 S. Wacker Drive, Suite 5800
Chicago, Illinois 60606
(312) 876-7700	 	Harmit J. Singh
Chief Financial Officer
Hyatt Hotels Corporation
71 South Wacker Drive, 12th Floor
Chicago, Illinois 60606
(312) 750-1234	 	Andrew J. Pitts, Esq.
Craig F. Arcella, Esq.
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000	

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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.   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	  	¨	  	Accelerated filer	  	¨	
Non-accelerated filer	  	x (Do not check if a smaller reporting company)	  	Smaller reporting company	  	¨	

CALCULATION OF REGISTRATION FEE

 	
Title of Each Class of
Securities to be Registered	 	Proposed Maximum
Aggregate Offering
Price(1)(2)	 	Amount of
Registration Fee	
Class A Common Stock, par value $0.01 per share	 	$1,150,000,000	 	$64,170(3)	

(1)	Includes additional shares that the underwriters have the option to purchase. See “Underwriting.”	
(2)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act).	
(3)	The registration fee has been previously paid.	

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 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not  permitted.
 
Subject to Completion. Dated September 9, 2009.
             Shares

Hyatt Hotels Corporation
Class A Common Stock

This is an initial public offering of shares of Class A common stock of Hyatt Hotels Corporation.
Hyatt Hotels Corporation is offering              shares of Class A common stock to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional              shares of Class A common stock. Hyatt Hotels Corporation will not receive any of the proceeds from the sale of the shares of Class A common stock by the selling stockholders.
Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $             and $            . Hyatt Hotels Corporation intends to list the Class A common stock on the New York Stock Exchange under the symbol “H.”
Following this offering, Hyatt Hotels Corporation will have two classes of authorized common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. The Class A common stock is entitled to one vote per share. The Class B common stock is entitled to ten votes per share. Each share of Class B common stock is convertible at any time into one share of Class A common stock.

See “ Risk Factors ” beginning on page 16 to read about factors you should consider before buying shares of the Class A common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 
							
 	  	Per Share	  	Total	
Initial public offering price	  	$	            	  	$	            	
Underwriting discount	  	$	 	  	$	 	
Proceeds, before expenses, to Hyatt Hotels Corporation	  	$	 	  	$	 	
Proceeds, before expenses, to the selling stockholders	  	$	 	  	$	 	
If the underwriters sell more than             shares of Class A common stock, the underwriters have the option to purchase up to an additional             shares of Class A common stock from certain existing stockholders at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on or about                     , 2009.

					
        Goldman, Sachs & Co.	
Deutsche Bank Securities	 		 	J.P. Morgan	

Prospectus dated                     , 2009.

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 PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider in making your investment decision. You should read this entire prospectus carefully, including the section entitled “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Unless otherwise specified or the context otherwise requires, references in this prospectus to “we,” “our,” “us,” “Hyatt” and the “Company” refer to Hyatt Hotels Corporation and its consolidated subsidiaries. On June 30, 2009, we changed our name from Global Hyatt Corporation to Hyatt Hotels Corporation.
Our Company
We are a global hospitality company with widely recognized, industry leading brands and a tradition of innovation developed over our more than fifty-year history. Our mission is to provide authentic hospitality by making a difference in the lives of the people we touch every day. We focus on this mission in pursuit of our goal of becoming the most preferred brand in each segment that we serve for our associates, guests and owners. We support our mission and goal by adhering to a set of core values of mutual respect, intellectual honesty and integrity, humility, fun, creativity and innovation that characterize our culture. We believe that our mission, goal and values, together with the strength of our brands, strong capital and asset base and opportunities for expansion, provide us with a platform for long-term value creation.
We manage, franchise, own and develop Hyatt-branded hotels, resorts and residential and vacation ownership properties around the world. As of June 30, 2009, our worldwide portfolio consisted of 413 Hyatt-branded properties (119,509 rooms and units), including:
 
 	Ÿ 	 	158 managed properties (60,934 rooms), all of which we operate under management agreements with third-party property owners;	
 
 	Ÿ 	 	100 franchised properties (15,322 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;	
 
 	Ÿ 	 	96 owned properties (including 4 consolidated hospitality ventures) (25,786 rooms) and 6 leased properties (2,851 rooms), all of which we manage;	
 
 	Ÿ 	 	28 managed properties owned or leased by unconsolidated hospitality ventures (12,361 rooms);	
 
 	Ÿ 	 	15 vacation ownership properties (933 units), all of which we manage; and	
 
 	Ÿ 	 	10 residential properties (1,322 units), all of which we manage and some of which we own.	
Our full service hotels operate under four world-recognized brands, Park Hyatt, Grand Hyatt, Hyatt Regency and Hyatt. We recently introduced our fifth full service brand, Andaz. Our two select service brands are Hyatt Place and Hyatt Summerfield Suites (an extended stay brand). We develop, sell and manage vacation ownership properties in select locations as part of the Hyatt Vacation Club.
Our associates, whom we also refer to as members of the Hyatt family, consist of over 80,000 individuals working at our corporate and regional offices and our managed, franchised and owned properties in 45 countries around the world. Substantially all of our hotel general managers are trained professionals in the hospitality industry with extensive hospitality experience in their local markets and host countries. The general managers of our managed properties are empowered to manage their properties on an independent basis based on their market knowledge, management experience and

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understanding of our brands. Our associates and hotel general managers are supported by our divisional management teams located in cities around the world and our executive management team, headquartered in Chicago.
We primarily derive our revenues from hotel operations, management and franchise fees, other revenues from managed properties and sales of vacation ownership properties. For the year ended December 31, 2008, revenues totaled $3.8 billion, net income attributable to Hyatt Hotels Corporation totaled $168 million and Adjusted EBITDA totaled $687 million. For the six months ended June 30, 2009, revenues totaled $1.6 billion, net loss attributable to Hyatt Hotels Corporation totaled $36 million and Adjusted EBITDA totaled $210 million. See “—Summary Consolidated Financial Data” for our definition of Adjusted EBITDA and why we present it and “—Summary Consolidated Financial Data” for a reconciliation of our consolidated Adjusted EBITDA to net income attributable to Hyatt Hotels Corporation for the periods presented. For the year ended December 31, 2008 and the six months ended June 30, 2009, 79.9% and 81.3% of our revenues were derived from operations in the United States, respectively. As of June 30, 2009, 76.9% of our long-lived assets were located in the United States. As of June 30, 2009, and after giving effect to the August 2009 issuance and sale of $500 million aggregate principal amount of senior notes and the use of a portion of the proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements as described under “—Recent Developments,” we had total debt of $ 858 million and cash and cash equivalents of $ 1.2 billion. As of June 30, 2009 and after giving effect to the July 2009 amendment and extension of our revolving credit facility, we had undrawn borrowing capacity of $1.4 billion . These sources provide us with significant liquidity and resources for future growth.
Our History
Hyatt was founded by Jay Pritzker in 1957 when he purchased the Hyatt House motel adjacent to the Los Angeles International Airport. Over the following decade, the Pritzker family business interests grew the company into a North American management and hotel ownership company, which became a public company in 1962. In 1968, Hyatt International was formed and subsequently became a separate public company. Hyatt Corporation and Hyatt International Corporation were taken private by the Pritzker family business interests in 1979 and 1982, respectively. On December 31, 2004, substantially all of the hospitality assets owned by Pritzker family business interests, including Hyatt Corporation and Hyatt International Corporation, were consolidated under a single entity, now named Hyatt Hotels Corporation. For more information about this transaction, see “—Corporate Information.”
Commencing in 2007, third parties, including affiliates of Goldman, Sachs & Co. and Madrone GHC, LLC, made long-term investments in Hyatt. Pritzker family business interests, affiliates of Goldman Sachs and Madrone GHC, LLC and affiliates (Madrone GHC) currently own approximately 85.0%, 7.5% and 6.1%, respectively, of our common stock, and immediately following completion of this offering will own approximately     %,     % and     %, respectively, of our common stock, assuming no exercise of the underwriters’ option to purchase additional shares.

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Our Competitive Strengths
We have significant competitive strengths that support our goal of being the most preferred brand for our associates, guests and owners.
 
 	Ÿ 	 	World Class Brands. We believe that our widely recognized, industry leading brands provide us with a competitive advantage in attracting and driving preference for our associates, guests and owners. We have consistently received top rankings, awards and accolades for service and guest experience from independent publications and surveys, including Condé Nast Traveler, Travel and Leisure, Mobil and AAA . As an example, 54 properties across our Park Hyatt, Grand Hyatt and Hyatt Regency brands received the AAA four diamond lodging award in 2009.	
 
 	Ÿ 	 	Deep Culture and Experienced Management Teams. Hyatt has a strong culture rooted in values that have supported our past and form the foundation for our future. The members of the Hyatt family are united by shared values, a common mission and a common goal. The associates at our managed and owned properties are led by an experienced group of hotel general managers with average tenure of more than 21 years. Regional and divisional management teams located around the world support our hotel general managers by providing corporate resources, mentorship and coaching, owner support and other assistance necessary to help them achieve their goals. Senior operating management has an average of 27 years of experience in the industry. Our experienced executive management team sets overall policies for our company, supports our regional and divisional teams and our associates around the world, provides strategic direction and leads our growth initiatives worldwide.	
 
 	Ÿ 	 	Global Platform with Compelling Growth Potential. Our existing global presence is widely distributed and we operate in 20 of the 25 most populous urban centers around the globe based on demographic research. We believe that our existing hotels around the world provide us with a strong platform from which to selectively pursue new growth opportunities in markets where we are under-represented. We have a long history of executing on growth opportunities. Our dedicated global development executives in offices around the world apply their experience, judgment and knowledge to ensure that new Hyatt branded hotels enhance preference for our brands. An important aspect of our compelling growth potential is our strong brand presence in higher growth markets around the world such as India, China, Russia, the Middle East and Brazil. The combination of our existing presence and brands, experienced development team, established third-party relationships and significant access to capital provides us with a strong foundation for future growth and long-term value creation.	
 
 	Ÿ 	 	Strong Capital Base and Disciplined Financial Approach. As of June 30, 2009, we had cash and cash equivalents of $1.2 billion, after giving effect to the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements, as described under “—Recent Developments.” As of such date and after giving effect to the July 2009 amendment and extension of our revolving credit facility, we had undrawn borrowing capacity of $ 1.4 billion. We have a modest level of debt and no significant debt maturities through 2012. We believe that as a result of our balance sheet strength, we are uniquely positioned to take advantage of strategic opportunities to develop or acquire properties and brands, even in economic downturns such as the one we are currently experiencing.	
 
 	Ÿ 	 	Diverse Exposure to Hotel Management, Franchising and Ownership. We believe that our experience as a multi-brand manager, franchisor and owner of hotels makes us one of the best positioned lodging companies in the world. Our mix of managed, franchised and owned hotels provides a broad and diverse base of revenues, profits and cash flows and gives us flexibility to evaluate growth opportunities across these three lines of business.	

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 	Ÿ 	 	High Quality Owned Hotels Located in Desirable Markets. We own and operate a high quality portfolio of 96 owned properties and 28 managed properties owned or leased by unconsolidated hospitality ventures consisting of luxury and upper-upscale full service and select service hotels in key markets. A number of these hotels are unique assets with high recognition and a strong position in their local markets. As a significant owner of hotel assets, we believe we are well positioned for a recovery of demand as we expect earnings growth from owned properties to outpace growth in revenues due to their high fixed-cost structure. This benefit can be achieved either through increased earnings from our owned assets or through value realized from select asset sales.	
 
 	Ÿ 	 	A Track Record of Innovation. Successful innovation has been a hallmark of Hyatt since its founding. More than forty years ago, we opened the Hyatt Regency Atlanta, which was the first- ever large-scale atrium lobby hotel. We also have a long track record of creative approaches to food and beverage outlets at our hotels throughout the world, which have led to highly profitable venues that create demand for our hotel properties, particularly in Asian markets. We launched our Hyatt Place brand in 2006 and our Andaz brand in 2007, each of which features a unique internally developed service model that eliminates a number of de-personalized aspects of the hotel experience. We believe that our commitment to fostering a culture of innovation throughout Hyatt positions us as an industry leader.	
Our Business Strategy
Our goal is to be the most preferred brand in each customer segment that we serve for our associates, guests and owners. We enhance brand preference by understanding who our customers are and by focusing on what they need and want and how we can deliver value to them. This understanding and focus informs our strategy for improving the performance of our existing hotels and expanding the presence of the Hyatt brand in markets worldwide.
 
 	Ÿ 	 	Focus on Improvement in the Performance of Existing Hotels	
A key component of our strategy is to maximize revenues and manage costs at existing hotel properties. We strive to enhance revenues by focusing on increasing our share of hotel stays by our existing guests and increasing the number of new guests we serve on a regular basis, with the ultimate goal of establishing and increasing guest loyalty to our brands. We manage costs by setting performance goals for our hotel management teams and granting our general managers operational autonomy, which we believe leads to improved efficiency.
 
 	•	 	Increase Share of Hotel Stays. We intend to expand Hyatt’s share of hotel stays by continuously striving to provide genuine guest service and delivering value to our guests. We aim to provide differentiated service and product offerings targeted at each customer segment within each of our brands in order to satisfy our customers’ specific needs. Our Hyatt Gold Passport guest loyalty program is designed to attract new guests and to demonstrate our loyalty to our best guests. In 2009, we launched an initiative called “The Big Welcome,” which was targeted at increasing enrollment in our Hyatt Gold Passport program. During the six-month period ended June 30, 2009, new membership enrollment in our Hyatt Gold Passport program has increased by approximately 39% compared to new membership enrollment during the same period last year.	
 
 	•	 	Emphasize Associate Engagement. Our brands are defined, in large part, by the authentic hospitality that is delivered to our guests by our associates. We believe that while a great product is necessary for success, a service model that promotes genuine service for our guests and that is focused on our customers’ particular	

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 	needs is the key to a sustainable long-term advantage. Therefore, we strive to involve our associates in deciding how we serve our guests and what we can do to improve guest satisfaction. We align our associates’ interests with our goal of becoming the most preferred brand in each segment that we serve. We rely on our hotel general managers to lead by example and foster associate engagement.	
 
 	•	 	Enhance Operational Efficiency. We strive to align our staffing levels and expenses with demand without compromising our commitment to authentic hospitality and high levels of guest satisfaction. We have made significant changes in operations in response to recent declines in demand for hospitality products and services. We will continue to incentivize and assist our hotel general managers as they proactively manage both the customer experience and the operating costs at each of their properties.	
 
 	Ÿ 	 	Expanding Our Presence in Attractive Markets	
We intend to drive brand preference by expanding the presence of all of our brands in attractive markets worldwide. We believe that the scale of our presence around the world is small relative to the recognition of our brands and our excellent reputation for service and, therefore, we have a unique opportunity to expand. We believe that our mission, goal and values, together with the strength of our brands, people, strong capital and asset base and opportunities for expansion provide us with a platform for long-term value creation.
 
 	•	 	Increase Market Presence. We will focus our expansion efforts on under-penetrated markets where we already have an established presence. We will also seek to expand into locations where our guests are traveling but where we do not have a presence. We believe our extensive focus on the different customer groups that we serve and our understanding of how we can serve them in new locations will facilitate our growth.	
 
 	•	 	Expand our Select Service Presence . We intend to establish and expand Hyatt Place and Hyatt Summerfield Suites worldwide, which we believe will support our overall growth and enhance the performance of all of our brands. To pursue this strategy, we have a dedicated select service development team. We believe that the opportunity for properties that provide a select offering of services at a lower price point is particularly compelling in certain emerging markets, such as India, China, Russia and Brazil, where there is a large and growing middle class along with a meaningful number of local business travelers.	
 
 	•	 	Increase Focus on Franchising. We intend to increase our franchised hotel presence for our select service brands and our Hyatt Regency brand. By increasing our focus on franchising, we believe that we will gain access to capital from developers and property owners that specifically target franchising business opportunities. To pursue this strategy, we have established an internal team dedicated to supporting our franchise owners and driving the expansion of our franchised hotel presence. We plan to expand existing relationships and develop new relationships with franchise owners who demonstrate an ability to provide excellent customer service while maintaining our brand standards.	
 
 	•	 	Utilize our Capital and Asset Base for Targeted Growth. We intend to use our liquidity and strong capital base along with select asset dispositions to selectively redeploy capital to opportunities that will allow us to strengthen our management presence in key markets worldwide. We will continue to commit capital to fund the	

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 	renovation of certain assets in our existing owned portfolio. Given our focus and expertise as an owner, we expect to maintain significant ownership of hotel properties over time.	
 
 	•	 	Pursue Strategic Acquisitions and Alliances. We expect to evaluate potential acquisitions of other brands or hospitality management or franchising companies as a part of our efforts to expand our presence. These acquisitions may include hotel real estate. We expect to focus on acquisitions that complement our ability to serve our existing customer base and enhance customer preference by providing a greater selection of locations, properties and services. Furthermore, we may pursue these opportunities in alliance with existing or prospective owners of managed or franchised properties to strengthen our brand presence.	
Risk Related to the Hospitality Industry and Our Business
Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties summarized below, the risks described under “Risk Factors,” the other information contained in this prospectus and our consolidated financial statements and the related notes before you decide whether to purchase our Class A common stock.
 
 	Ÿ 	 	The hospitality industry is cyclical, and macroeconomic and other factors beyond our control such as hostilities, travel-related accidents and natural disasters can adversely affect and reduce demand for our hospitality products and services.	
 
 	Ÿ 	 	If the global economic downturn continues or worsens, our revenues and profitability could decline further.	
 
 	Ÿ 	 	Because we operate in a highly competitive industry, our revenues, profits or market share could be harmed if we are unable to compete effectively.	
 
 	Ÿ 	 	We are exposed to the risks resulting from significant investments in owned and leased real estate, which could increase our costs, reduce our profits, limit our ability to respond to market conditions or restrict our growth strategy.	
 
 	Ÿ 	 	In any particular period, our expenses may not decrease at the same rate that our revenues may decrease, which could have an adverse effect on our net cash flows, margins and profits.	
 
 	Ÿ 	 	If we or our third-party property owners are unable to repay or refinance mortgages secured by the related properties, our revenues could be reduced and our business could be harmed.	
 
 	Ÿ 	 	If we or our third-party owners, franchisees or development partners are unable to access the capital necessary to fund current operations or implement our plans for growth, our profits could be reduced and our ability to compete effectively could be diminished.	
 
 	Ÿ 	 	Because we derive a portion of our revenues from operations outside the United States, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.	
 
 	Ÿ 	 	We are exposed to risks related to our franchisees and third-party property owners, including risks relating to their ability or willingness to invest in properties, the risk of disagreements, risks associated with maintaining our relationships with these parties and the risks of contract termination.	
 
 	Ÿ 	 	Factors outside of our control, such as market conditions and the availability of financing, may adversely affect our ability to invest in, acquire or dispose of properties.	

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These risks and the other risks described under “Risk Factors” could  materially adversely affect our business, financial condition and results of operations.
Related Party Transactions with Pritzker Family Business Interests
As described under “Certain Relationships and Related Party Transactions,” we have entered into a number of related party transactions with various Pritzker family business interests, some of which will continue following completion of this offering. Examples of such transactions include:
 
 	Ÿ 	 	agreements related to our corporate headquarters at the Hyatt Center, such as our office lease, sublease and office sharing agreements for space at the Hyatt Center and an omnibus office services agreement for services provided by third parties to certain tenants of the Hyatt Center;	
 
 	Ÿ 	 	aircraft timeshare agreements;	
 
 	Ÿ 	 	certain tax sharing, transition services and employee benefits agreements; and	
 
 	Ÿ 	 	leases and other agreements with respect to certain gaming facilities and the related hotels located at, or adjacent to, such gaming facilities.	
For additional information, see “Certain Relationships and Related Party Transactions.”
Recent Developments
On August 14, 2009, we issued $250 million aggregate principal amount of 5.750% Senior Notes due 2015 (the 2015 notes) and $250 million aggregate principal amount of 6.875% Senior Notes due 2019 (the 2019 notes and, together with the 2015 notes, the senior notes). We used a portion of the net proceeds from the sale of the senior notes to repay $252 million of outstanding secured debt and settle certain related swap agreements. See “Description of Principal Indebtedness.”
Corporate Information
Prior to June 30, 2004, Hyatt Corporation, which primarily consisted of the North American hotel management and franchise companies, was owned by HG, Inc. (HG). H Group Holding, Inc. (H Group), which is owned by Pritzker family business interests, owns HG. In addition to owning Hyatt Corporation, HG owned various other North American hospitality related businesses (primarily consisting of hotel properties and the vacation ownership business) and on June 30, 2004 contributed these hospitality related businesses to Hyatt Corporation. Following such contribution, the stock of Hyatt Corporation was distributed to the Pritzker family business interests that owned H Group. We refer to this transaction as the “June 2004 Transaction.”
On August 4, 2004, Global Hyatt, Inc. was incorporated in Delaware and subsequently changed its name to Global Hyatt Corporation. On December 31, 2004, pursuant to a Master Contribution Agreement, the stock of Hyatt Corporation and the stock of AIC Holding Co. (AIC), the owner of Hyatt International Corporation and other international hospitality related assets and operations, as well as hospitality related assets and operations held by certain other entities owned by Pritzker family business interests, were contributed to Global Hyatt Corporation by their respective owners in exchange for shares of Global Hyatt Corporation common stock. As a result of this transaction, Hyatt Corporation, AIC and Hyatt International Corporation became wholly-owned subsidiaries of Global Hyatt Corporation. The contribution was reflected as a transaction between entities under common control as of January 1, 2004. On June 30, 2009, Global Hyatt Corporation changed its name to Hyatt Hotels Corporation.

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Our principal executive offices are located at 71 South Wacker Drive, 12 th Floor, Chicago, Illinois 60606. Our telephone number is (312) 750-1234. Our website address is www.hyatt.com. The information on, or that may be accessed through, our website is not a part of this prospectus.
Hyatt ® , Park Hyatt ® , Grand Hyatt ® , Hyatt Regency ® , Hyatt Place ® , Hyatt Summerfield Suites™, Hyatt Vacation Club ® , Andaz™, Hyatt Gold Passport ® , Hyatt Resorts™ and related trademarks, trade names and service marks of Hyatt appearing in this prospectus are the property of Hyatt. Unless otherwise noted, all other trademarks, trade names or service marks appearing in this prospectus are the property of their respective owners.
Terms Used In This Prospectus
As used in this prospectus, the term “Pritzker family business interests” means (1) various lineal descendants of Nicholas J. Pritzker (deceased) and spouses and adopted children of such descendants; (2) various trusts for the benefit of the individuals described in clause (1) and trustees thereof; and (3) various entities owned and/or controlled, directly and/or indirectly, by the individuals and trusts described in (1) and (2).
As used in this prospectus, the term “properties” refers to hotels that we manage, franchise, own or lease and our residential and vacation ownership units that we develop, sell and manage. “Hyatt-branded” refers to properties operated under our brands, including Park Hyatt, Grand Hyatt, Andaz, Hyatt Regency, Hyatt, Hyatt Place and Hyatt Summerfield Suites. Our Hyatt-branded property, room and unit counts exclude one non-Hyatt branded property that we own in California. Residential ownership units refers to Hyatt-branded residential units that we manage (such as serviced apartments), some of which we own, that are part of mixed-use projects and are often adjacent to a Hyatt-branded full service hotel. Vacation ownership units refers to the fractional and timeshare units that we develop, sell and manage that are part of the Hyatt Vacation Club. Hospitality ventures refers to entities in which we own less than a 100% equity interest.
As used in this prospectus, the term “associates” refers to the over 80,000 individuals working at our corporate and regional offices and our managed, franchised and owned properties. Of these 80,000 associates, we directly employ approximately 45,000. The remaining associates are employed by certain third-party owners and franchisees of our hotels.
Industry and Market Data
Market data and industry statistics and forecasts used throughout this prospectus are based on independent industry publications, reports by market research firms and other published independent sources. Smith Travel Research and the International Monetary Fund are the primary sources for third-party market data and industry statistics and forecasts. Some data and other information are also based on our good faith estimates, which are derived from our review of internal surveys and independent sources. Although we believe these sources are credible, we have not independently verified the data or information obtained from these sources.

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THE OFFERING

Class A common stock offered by Hyatt Hotels Corporation	  	             shares	
		
Class A common stock offered by the selling stockholders	  	             shares	
		
Class A common stock to be outstanding after this offering	  	             shares	
		
Class B common stock to be outstanding after this offering	  	             shares	
		
Total common stock to be outstanding after this offering	  	             shares	
		
Voting rights	  	Holders of our Class A common stock and our Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders. The holders of Class A common stock are entitled to one vote per share and the holders of Class B common stock are entitled to ten votes per share. Following this offering, assuming no exercise of the underwriters’ over-allotment option, (1) holders of Class A common stock will control approximately     % of our total voting power and will own     % of our total outstanding shares of common stock and (2) holders of Class B common stock will control approximately     % of our total voting power and will own     % of our total outstanding shares of common stock. However, if on any record date for determining the stockholders entitled to vote at an annual or special meeting of stockholders, the aggregate number of shares of our Class A common stock and Class B common stock owned, directly or indirectly, by the holders of our Class B common stock is less than 15% of the aggregate number of shares of Class A common stock and Class B common stock then outstanding, then at such time all shares of Class B common stock will automatically convert into shares of Class A common stock and all outstanding common stock will be entitled to one vote per share on all matters submitted to a vote of our stockholders. With the exception of voting rights and conversion rights, holders of Class A and Class B common stock have identical rights. See “Description of Capital Stock” for a description of the material terms of our common stock.	

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Option to purchase additional shares of Class A common stock	  	

Certain of our existing stockholders have granted the underwriters an option to purchase up to an additional              shares of Class A common stock.	
		
Use of proceeds	  	We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including capital expenditures. We may also use a portion of the net proceeds to acquire or invest in new properties or other businesses that complement our business. There are no agreements or commitments with respect to any such transaction at this time. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds.”	
		
Risk factors	  	You should read the “Risk Factors” section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our Class A common stock.	
		
Proposed New York Stock Exchange symbol	  	“H”	
The total number of shares of common stock to be outstanding after this offering is based on 336,063,783 shares of our common stock outstanding immediately prior to this offering. This number excludes 18,921,361 shares of Class A common stock reserved for issuance under our Amended and Restated Hyatt Hotels Corporation Long-Term Incentive Plan, as amended (the LTIP), and pursuant to a restricted stock unit agreement. See “Compensation Discussion and Analysis—Employee Benefits” and “Compensation Discussion and Analysis—Long-Term Incentive.”
Except as otherwise indicated, information in this prospectus:
 
 	Ÿ 	 	assumes the underwriters have not exercised their option to purchase              additional shares of Class A common stock; and	
 
 	Ÿ 	 	gives effect to the filing of our amended and restated certificate of incorporation, which will occur prior to the consummation of this offering, and which provides for, among other things, (1) the authorization of 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock; (2) the reclassification of 52,067 outstanding shares of our common stock into 52,067 shares of Class A common stock; and (3) the reclassification of 336,011,716 outstanding shares of our common stock into 336,011,716 shares of Class B common stock, of which              shares will convert into shares of Class A common stock at the time that they are sold by the selling stockholders in this offering.	

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SUMMARY CONSOLIDATED FINANCIAL DATA
Overview
The following tables summarize our consolidated financial data for the periods presented. We derived the summary consolidated statements of income data for the years ended December 31, 2008, 2007 and 2006 and the summary consolidated balance sheet data as of December 31, 2008 and 2007 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the summary consolidated statements of income data for the years ended December 31, 2005 and 2004 from our audited consolidated financial statements which are not included in this prospectus. We derived the summary consolidated statements of income data for the six months ended June 30, 2009 and June 30, 2008 and the summary consolidated balance sheet data as of June 30, 2009 from our unaudited consolidated interim financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated interim financial statements on the same basis as our audited financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.
Adjusted EBITDA 
We use the term Adjusted EBITDA throughout this prospectus. Adjusted EBITDA, as we define it, is not presented in accordance with generally accepted accounting principles in the United States of America (GAAP). We use Adjusted EBITDA as a supplement to our GAAP results in evaluating certain aspects of our business, as described below.
We define consolidated Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro-rata share of unconsolidated hospitality ventures Adjusted EBITDA based on our ownership percentage of each venture, adjusted to exclude the following items:
 
 	Ÿ 	 	equity earnings (losses) from unconsolidated hospitality ventures;	
 
 	Ÿ 	 	gains on sales of real estate;	
 
 	Ÿ 	 	asset impairments;	
 
 	Ÿ 	 	other income (loss), net;	
 
 	Ÿ 	 	a 2008 charge resulting from the termination of our supplemental executive defined benefit plans;	
 
 	Ÿ 	 	discontinued operations and changes in accounting principles, net of tax;	
 
 	Ÿ 	 	net (income) loss attributable to noncontrolling interests;	
 
 	Ÿ 	 	depreciation and amortization;	
 
 	Ÿ 	 	interest expense; and	
 
 	Ÿ 	 	benefit (provision) for income taxes.	
We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments to corporate and other Adjusted EBITDA. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

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Our Use of Adjusted EBITDA 
Our board of directors and executive management team focus on Adjusted EBITDA as a key performance and compensation measure both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance both on a segment and on a consolidated basis.
Our President and Chief Executive Officer, who is our chief operating decision maker, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment.
In addition, the annual variable compensation for certain members of our management is based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA or some combination of both.
Presentation to Investors 
We believe Adjusted EBITDA is useful to investors because it provides investors the same information that we use internally for purposes of assessing our core operating performance and making compensation decisions.
Limitations of Adjusted EBITDA 
Adjusted EBITDA is not a substitute for net income attributable to Hyatt Hotels Corporation, income from continuing operations, cash flows from operating activities or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance.
Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA supplementally. See our consolidated statements of income and consolidated statements of cash flows in our consolidated financial statements included elsewhere in this prospectus.

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You should read the summary historical financial data below together with the consolidated financial statements and related notes appearing elsewhere in this prospectus, as well as “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Principal Indebtedness” and the other financial information included elsewhere in this prospectus.

 	 	Six Months Ended
June 30,	 	Year Ended
December 31,	
(in millions, except per share
data)	 	2009	 	 	2008	 	2008	 	2007	 	2006	 	2005	 	2004(1)	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	 	
Consolidated statements of income data:	 				 			 			 			 			 			 			
Owned and leased hotel revenues	 	$	876	  	 	$	1,125	 	$	2,139	 	$	2,039	 	$	1,860	 	$	1,748	 	$	1,472	
Management and franchise fee revenues	 	 	109	  	 	 	162	 	 	290	 	 	315	 	 	294	 	 	227	 	 	202	
Other revenues	 	 	29	  	 	 	48	 	 	83	 	 	103	 	 	110	 	 	112	 	 	88	
Other revenues from managed properties (2)	 	 	623	  	 	 	674	 	 	1,325	 	 	1,281	 	 	1,207	 	 	1,080	 	 	920	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	 	 	1,637	  	 	 	2,009	 	 	3,837	 	 	3,738	 	 	3,471	 	 	3,167	 	 	2,682	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Direct and selling, general and administrative expenses	 	 	1,593	  	 	 	1,759	 	 	3,473	 	 	3,353	 	 	3,119	 	 	2,880	 	 	2,494	
Income (loss) from continuing operations	 	 	(38	) 	 	 	175	 	 	114	 	 	266	 	 	331	 	 	278	 	 	175	
Net income (loss) attributable to Hyatt Hotels Corporation	 	 	(36	) 	 	 	173	 	 	168	 	 	270	 	 	315	 	 	336	 	 	227	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from continuing operations per common share, basic and diluted	 	$	(0.14	) 	 	$	0.68	 	$	0.45	 	$	0.98	 	$	1.20	 	$	1.20	 	$	0.84	
Weighted average shares used in computing basic net income per share	 	 	265,673,636	  	 	 	256,057,671	 	 	256,074,029	 	 	269,170,628	 	 	275,117,476	 	 	231,756,431	 	 	208,224,397	
Weighted average shares used in computing diluted net income per share	 	 	265,673,636	  	 	 	256,057,671	 	 	256,122,294	 	 	269,268,039	 	 	275,117,476	 	 	231,756,431	 	 	208,224,397	
								
Other financial metric:	 				 			 			 			 			 			 			
Adjusted EBITDA(3)	 	$	210	  	 	$	417	 	$	687	 	$	708	 	$	628	 	$	519	 	$	363	

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 	  	As of June 30, 2009	  	As of December 31,	
(in millions)	  	     Actual     	 	As
Adjusted(4)	 	As Further
Adjusted(5)(6)	  	        2008        	  	        2007        	
 	  	(Unaudited)	  	 	  	 	
Consolidated balance sheet data:	  			 			 			  			  			
Cash and cash equivalents	  	$	968	 	$	1,220	 	$	            	  	$	428	  	$	409	
Total current assets	  	 	1,529	 	 	1,781	 			  	 	1,057	  	 	1,065	
Property and equipment, net	  	 	3,616	 	 	3,616	 			  	 	3,495	  	 	3,518	
Intangibles, net	  	 	276	 	 	276	 			  	 	256	  	 	359	
Total assets	  	 	  6,739	 	 	6,976	 			  	 	  6,119	  	 	  6,248	
	  	 	 	 	 	 	 	 	 	  	 	 	  	 	 	
Total current liabilities	  	 	574	 	 	559	 			  	 	653	  	 	697	
Long-term debt	  	 	595	 	 	847	 			  	 	1,209	  	 	1,288	
Other long-term liabilities	  	 	670	 	 	668	 			  	 	665	  	 	794	
Total liabilities	  	 	1,839	 	 	2,074	 			  	 	2,527	  	 	2,779	
Total stockholders’ equity	  	 	4,874	 	 	4,876	 			  	 	3,564	  	 	3,434	
	  	 	 	 	 	 	 	 	 	  	 	 	  	 	 	
Total liabilities and stockholders’ equity	  	 	6,739	 	 	6,976	 			  	 	6,119	  	 	6,248	

(1)	The consolidated statement of income for 2004 reflects the combined and consolidated full year operating results of Hyatt Corporation, AIC Holding Co. and various hospitality related entities owned, prior to their contribution to our predecessor, Global Hyatt Corporation, in 2004, by Pritzker family business interests. See “—Corporate Information” and note 1 to our consolidated financial statements included elsewhere in this prospectus.	
(2)	Represents revenues that we receive from third-party property owners who reimburse us for costs that we incur on their behalf, with no added margin. These costs relate primarily to payroll at managed properties where we are the employer. As a result, these revenues have no effect on our profit, although they do increase our total revenues and the corresponding costs increase our total expenses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Principal Factors Affecting our Results of Operations—Revenues.”	
(3)	The table below provides a reconciliation of consolidated Adjusted EBITDA to EBITDA and a reconciliation of EBITDA to net income (loss) attributable to Hyatt Hotels Corporation.	

 	 	Six Months Ended
June 30,	 	 	Twelve Months Ended December 31,	 	
(in millions)	 	  2009  	 	 	  2008  	 	 	  2008  	 	 	  2007  	 	 	  2006  	 	 	  2005  	 	 	  2004  	 	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	  210	  	 	$	  417	  	 	$	  687	  	 	$	  708	  	 	$	  628	  	 	$	  519	  	 	$	  363	  	
Equity earnings (losses) from unconsolidated hospitality ventures(a)	 	 	(13	) 	 	 	12	  	 	 	14	  	 	 	11	  	 	 	13	  	 	 	(3	) 	 	 	14	  	
Gains on sales of real estate(b)	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	22	  	 	 	57	  	 	 	94	  	 	 	26	  	
Asset impairments(b)	 	 	(8	) 	 	 	—  	  	 	 	(86	) 	 	 	(61	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Other income (loss), net(c)	 	 	(56	) 	 	 	55	  	 	 	23	  	 	 	145	  	 	 	126	  	 	 	112	  	 	 	80	  	
Charge resulting from the termination of our supplemental executive defined benefit plans	 	 	—  	  	 	 	—  	  	 	 	(20	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Discontinued operations and changes in accounting principles, net of tax(b)	 	 	—  	  	 	 	—  	  	 	 	56	  	 	 	5	  	 	 	(2	) 	 	 	69	  	 	 	50	  	
Net (income) loss attributable to noncontrolling interests(d)	 	 	2	  	 	 	(2	) 	 	 	(2	) 	 	 	(1	) 	 	 	(14	) 	 	 	(11	) 	 	 	2	  	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA(a)	 	 	(28	) 	 	 	(49	) 	 	 	(90	) 	 	 	(94	) 	 	 	(69	) 	 	 	(51	) 	 	 	(35	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA	 	 	107	  	 	 	433	  	 	 	582	  	 	 	735	  	 	 	739	  	 	 	729	  	 	 	500	  	
Depreciation and amortization	 	 	(130	) 	 	 	(125	) 	 	 	(249	) 	 	 	(214	) 	 	 	(195	) 	 	 	(174	) 	 	 	(134	) 	
Interest expense	 	 	(27	) 	 	 	(28	) 	 	 	(75	) 	 	 	(43	) 	 	 	(36	) 	 	 	(46	) 	 	 	(60	) 	
Benefit (provision) for income taxes	 	 	14	  	 	 	(107	) 	 	 	(90	) 	 	 	(208	) 	 	 	(193	) 	 	 	(173	) 	 	 	(79	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to Hyatt Hotels Corporation	 	$	(36	) 	 	$	173	  	 	$	168	  	 	$	270	  	 	$	315	  	 	$	336	  	 	$	227	  	

 
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 	(a)	Because management uses Adjusted EBITDA as a key performance and compensation measure for our business as a whole, we include our share of Adjusted EBITDA generated by our unconsolidated hospitality ventures in our calculation of segment and consolidated Adjusted EBITDA. Therefore, Adjusted EBITDA excludes equity earnings from unconsolidated hospitality ventures and includes our pro rata share of Adjusted EBITDA from unconsolidated hospitality ventures. Our pro rata share of Adjusted EBITDA from unconsolidated hospitality ventures represents our share of Adjusted EBITDA from these ventures, which is based on our ownership percentage in each respective unconsolidated hospitality venture.	
 	(b)	Adjusted EBITDA excludes gains on sales of real estate, asset impairments and discontinued operations and changes in accounting principles, net of tax from Adjusted EBITDA because they are not related to the performance of our core business.	
 	(c)	The below table provides a breakdown of items included in other income, net for the six months ended June 30, 2009 and 2008, and for the years ended December 31, 2008, 2007, 2006, 2005 and 2004:	

 	 	Six Months Ended
June 30,	 	 	Year Ended
December 31,	
(in millions)	 	    2009    	 	 	    2008    	 	 	    2008    	 	 	    2007    	 	 	    2006    	 	 	    2005    	 	 	    2004    	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income on interest-bearing cash and cash equivalents	 	$	10	  	 	$	     9	  	 	$	23	  	 	$	43	  	 	$	49	  	 	$	36	  	 	$	31	
Gains (losses) on other marketable securities	 	 	2	  	 	 	(13	) 	 	 	(37	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	7	
Income from cost method investments(i)	 	 	22	  	 	 	62	  	 	 	64	  	 	 	87	  	 	 	72	  	 	 	60	  	 	 	23	
Foreign currency gains (losses)	 	 	7	  	 	 	(3	) 	 	 	(23	) 	 	 	17	  	 	 	11	  	 	 	(11	) 	 	 	17	
Debt settlement costs(ii)	 	 	(93	) 	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	
Gain on extinguishment of hotel property debt	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	—	  	 	 	28	  	 	 	—	
Other	 	 	(4	) 	 	 	—	  	 	 	(4	) 	 	 	(2	) 	 	 	(6	) 	 	 	(1	) 	 	 	2	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income (loss), net	 	$	(56	) 	 	$	55	  	 	$	   23	  	 	$	 145	  	 	$	 126	  	 	$	112	  	 	$	  80	

 	(i)	Includes cash distributions received on investments accounted for under the cost method. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” and note 3 to our consolidated financial statements.	
 	(ii)	Reflects costs incurred in connection with the repurchase of senior subordinated notes and early settlement of a subscription agreement as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” The costs include $88 million of make-whole interest payments and early settlement premiums and a $5 million write-off of deferred financing costs.	
 	(d)	Adjusted EBITDA includes net income (loss) attributable to noncontrolling interests, which represents the income or loss attributable to noncontrolling partners in an entity that we consolidate in our financial results, given the controlling nature of our interests in these entities.	
(4)	Reflects the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements. See “—Recent Developments” and “Description of Principal Indebtedness.”	
(5)	Reflects the issuance and sale of              shares of our Class A common stock in this offering at an assumed initial public offering price of $              per share, the midpoint of the range set forth on the front cover of this prospectus, and our receipt of the net proceeds from this offering, after deducting the underwriting discount and estimated offering expenses payable by us.	
(6)	A $1.00 increase or decrease in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, would result in an approximately $              million increase or decrease in each of the as further adjusted cash and cash equivalents, total assets and total stockholders’ equity, assuming that the number of shares offered by us set forth on the front cover of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. Each increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease the as further adjusted cash and cash equivalents, total assets and total stockholders’ equity by approximately $              million, assuming that the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. The as further adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering.	

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 RISK FACTORS
Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below and the other information contained in this prospectus, including our consolidated financial statements and the related notes, before you decide whether to purchase our Class A common stock. These risks could materially adversely affect our business, financial condition and results of operations. As a result, the market price of our Class A common stock could decline, and you may lose part or all of your investment.
Risks Related to the Hospitality Industry
The hospitality industry is cyclical, and macroeconomic and other factors beyond our control can adversely affect and reduce demand for our hospitality products and services.
The hospitality industry is cyclical. For example, the last two business cycles in the hospitality industry, which we define as the period starting with the first calendar year of negative revenue per available room (RevPAR) growth and ending with the last calendar year of positive RevPAR growth, took place from 1991 to 2000 and 2001 to 2007. See “The Lodging Industry—Annual RevPAR Growth.” During the declining stages of these two business cycles, RevPAR growth was negative for one calendar year (1991) and two calendar years (2001 and 2002), respectively.
Macroeconomic and other factors beyond our control can reduce demand for hospitality products and services, including demand for rooms at properties that we manage, franchise, own and develop and for sales of vacation ownership properties. These factors include:
 
 	Ÿ 	 	changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets;	
 
 	Ÿ 	 	war, terrorist activities (such as the recent terrorist attacks in Jakarta, Indonesia and Mumbai, India) or threats and heightened travel security measures instituted in response to these events;	
 
 	Ÿ 	 	outbreaks of pandemic or contagious diseases, such as avian flu, severe acute respiratory syndrome (SARS) and H1N1 (swine) flu;	
 
 	Ÿ 	 	natural disasters, such as earthquakes, tsunamis, tornados, hurricanes and floods;	
 
 	Ÿ 	 	changes in the desirability of particular locations or travel patterns of customers;	
 
 	Ÿ 	 	decreased corporate budgets and spending and cancellations, deferrals or renegotiations of group business (e.g., industry conventions);	
 
 	Ÿ 	 	low consumer confidence;	
 
 	Ÿ 	 	depressed housing prices;	
 
 	Ÿ 	 	the financial condition of the airline, automotive and other transportation-related industries and its impact on travel;	
 
 	Ÿ 	 	decreased airline capacities and routes;	
 
 	Ÿ 	 	travel-related accidents;	
 
 	Ÿ 	 	oil prices and travel costs;	
 
 	Ÿ 	 	statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities;	
 
 	Ÿ 	 	domestic and international political and geo-political conditions;	
 
 	Ÿ 	 	cyclical over-building in the hotel and vacation ownership industries; and	
 
 	Ÿ 	 	organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of group business.	
 
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These factors can adversely affect, and from time to time have adversely affected, individual properties, particular regions or our business as a whole. In particular, lower consumer demand resulting from the current industry downturn resulted in a decline in RevPAR for the fourth quarter of 2008 and some of the most significant RevPAR declines we have experienced in recent history during the first half of 2009. Our RevPAR declines in this business cycle have been more severe compared to those of the last two business cycles, and have had a greater negative impact on our profitability. See “—If the global economic downturn continues or worsens, our revenues and profitability could decline further” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Principal Factors Affecting our Results of Operations—Factors Affecting our Revenues—Consumer demand and global economic conditions.” Any one or more of these factors could limit or reduce the demand, or the rates our properties are able to charge for rooms or services or the prices at which we are able to sell our vacation ownership properties, which could adversely affect our business, results of operations and financial condition.
If the global economic downturn continues or worsens, our revenues and profitability could decline further.
Consumer demand for our products and services is closely linked to the performance of the general economy and is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions can lower the revenues and profitability of our owned properties and the amount of management and franchising fee revenues we are able to generate from our managed and franchised properties. Declines in hotel profitability during an economic downturn directly impact the incentive portion of our management fees, which is based on hotel profit measures. Outside of the United States, our fees are often more dependent on hotel profitability measures, either through a single management fee that is based on a profitability measure, or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee. Because RevPAR depends directly on average daily rate (ADR) and occupancy, declines in ADR and occupancy relating to declines in consumer demand will lower RevPAR. For additional information regarding RevPAR and ADR, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics Evaluated by Management.” Our vacation ownership business is also linked to cycles in the general economy and consumer discretionary spending. As a result, changes in consumer demand and general business cycles can subject and have subjected our revenues to significant volatility.
Accordingly, the current global economic downturn has led to a significant decline in demand for hospitality products and services, lower occupancy levels and significantly reduced room rates, all of which has lowered our revenues and negatively affected our profitability. For the six months ended June 30, 2009, compared to the six months ended June 30, 2008, our revenues decreased by $372 million, driven by a 24% decline in RevPAR at comparable systemwide properties. See “Management’s Discussion and Analysis of Results of Operations—Principal Factors Affecting Our Results of Operations—Revenues—Factors Affecting our Revenues.”
We anticipate that recovery of demand for hospitality products and services will lag an improvement in economic conditions. We cannot predict how severe or prolonged the global economic downturn will be. Furthermore, current global economic conditions have significantly impacted consumer confidence and behavior and, as a result, historical marketing information that we have collected may be less effective as a means of predicting future demand and operating results. We cannot assure you that we will be able to increase room rates and RevPAR at the same rate at which they have recently declined, even after the current downturn ends. An extended period of economic weakness would likely have a further adverse impact on our revenues and negatively affect our profitability.
 
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We are subject to the business, financial and operating risks inherent to the hospitality industry, any of which could reduce our profits and limit our opportunities for growth.
Our business is subject to a number of business, financial and operating risks inherent to the hospitality industry, including:
 
 	Ÿ 	 	changes in taxes and governmental regulations that influence or set wages, prices, interest rates or construction and maintenance procedures and costs;	
 
 	Ÿ 	 	the costs and administrative burdens associated with complying with applicable laws and regulations;	
 
 	Ÿ 	 	the costs or desirability of complying with local practices and customs;	
 
 	Ÿ 	 	the availability and cost of capital necessary for us and potential hotel owners to fund investments, capital expenditures and service debt obligations;	
 
 	Ÿ 	 	delays in or cancellations of planned or future development projects;	
 
 	Ÿ 	 	foreign exchange rate fluctuations;	
 
 	Ÿ 	 	changes in operating costs, including, but not limited to, energy, food, workers’ compensation, benefits, insurance and unanticipated costs resulting from force majeure events;	
 
 	Ÿ 	 	significant increases in cost for healthcare coverage for employees and potential government regulation in respect of health coverage;	
 
 	Ÿ 	 	shortages of labor or labor disruptions;	
 
 	Ÿ 	 	shortages of desirable locations for development;	
 
 	Ÿ 	 	the financial condition of third-party property owners, franchisees, developers and hospitality venture partners, which may impact our ability to recover payments owed to us or their ability to fund operational costs, perform under management, franchise, development and hospitality venture agreements or satisfy other contractual commitments and obligations that may impact us;	
 
 	Ÿ 	 	relationships with our third-party property owners, franchisees and hospitality venture partners; and	
 
 	Ÿ 	 	the ability of third-party internet travel intermediaries to attract and retain customers.	
Any of these factors could limit or reduce the prices we charge for our hospitality products or services, including the rates our properties charge for rooms or the prices for which we are able to sell our vacation ownership properties. These factors can also increase our costs or affect our ability to develop new properties or maintain and operate our existing properties. As a result, any of these factors can reduce our profits and limit our opportunities for growth.
Risks Related to Our Business
Because we operate in a highly competitive industry, our revenues, profits or market share could be harmed if we are unable to compete effectively.
The segments of the hospitality industry in which we operate are subject to intense competition. Our principal competitors are other operators of full service and select service properties, including other major hospitality chains with well established and recognized brands. We also compete against smaller hotel chains and independent and local hotel owners and operators. If we are unable to compete successfully, our revenues or profits may decline or our ability to maintain or increase our market share may be diminished.
 
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Competition for Guests
We compete for guests based primarily on brand name recognition and reputation, location, customer satisfaction, room rates, quality of service, amenities, quality of accommodations and the ability to earn and redeem loyalty program points. Some of our competitors are larger than we are based on the number of properties they manage, franchise or own or based on the number of rooms or geographic locations where they operate. Some of our competitors also have significantly more members participating in their guest loyalty programs which may enable them to attract more customers and more effectively retain such guests. Our competitors may also have greater financial and marketing resources than we do, which could allow them to improve their properties and expand and improve their marketing efforts in ways that could affect our ability to compete for guests effectively. In addition, industry consolidation may exacerbate these risks.
Competition for Management and Franchise Agreements
We compete for management agreements based primarily on the value and quality of our management services, our brand name recognition and reputation, our ability and willingness to invest our capital in third-party owned or hospitality venture projects, the level of our management fees, the terms of our management agreements and the economic advantages to the property owner of retaining our management services and using our brand name. We compete for franchise agreements based primarily on brand name recognition and reputation, the room rate that can be realized and royalty fees charged. Other competitive factors for management and franchise agreements include relationships with property owners and investors, including institutional owners of multiple properties, marketing support, reservation and e-commerce system capacity and efficiency and the ability to make investments that may be necessary to obtain management and franchise agreements.
We believe that our ability to compete for management and franchise agreements primarily depends on the success of the properties that we currently manage or franchise. The terms of any new management or franchise agreements that we obtain also depend on the terms that our competitors offer for those agreements. In addition, if the availability of suitable locations for new properties decreases, planning or other local regulations change or the availability or affordability of financing is limited, the supply of suitable properties for our management or franchising could be diminished. We may also be required to agree to limitations on the expansion of one or more of our brands in certain geographic areas in order to obtain a management agreement for a property under development. We may be prohibited from managing, franchising or owning properties in areas where opportunities exist due to these restrictions. If the properties that we manage or franchise perform less successfully than those of our competitors, if we are unable to offer terms as favorable as those offered by our competitors or if the availability of suitable properties is limited, our ability to compete effectively for new management or franchise agreements could be reduced.
Competition for Sales of Vacation Ownership Properties
We compete for sales of our vacation ownership properties based principally on location, quality of accommodations, price, financing terms, quality of service, terms of property use, opportunity to exchange into time at other vacation properties and brand name recognition and reputation. In addition to competing with other hotel and resort properties, our vacation ownership properties compete with national and independent vacation ownership club operators as well as with owners reselling their interests in these properties. Our ability to attract and retain purchasers of our vacation ownership properties depends on our success in distinguishing the quality and value of our vacation ownership products and services from those offered by others. If we are unable to do so, our ability to compete effectively for sales of vacation ownership properties could be adversely affected.
 
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If third-party property owners or franchisees of the properties we manage or franchise fail to make investments necessary to maintain or improve their properties, preference for our brands and our reputation could suffer or our management or franchise agreements with those parties could terminate.
We manage and franchise properties owned by third parties under the terms of management and franchise agreements. Substantially all of these agreements require third-party property owners to comply with standards that are essential to maintaining our brand integrity and reputation. We depend on third-party property owners to comply with these requirements by maintaining and improving properties through investments, including investments in furniture, fixtures, amenities and personnel.
Third-party property owners or franchisees may be unable to access capital or unwilling to spend available capital when necessary, even if required by the terms of our management or franchise agreements. If our third-party property owners or franchisees fail to make investments necessary to maintain or improve the properties we manage or franchise, our brand preference and reputation could suffer. In addition, if third-party property owners or franchisees breach the terms of our agreements with them, we may elect to exercise our termination rights, which would eliminate our revenues from these properties and cause us to incur expenses related to terminating these relationships. These risks become more pronounced during economic downturns.
If our management or franchise agreements terminate prematurely due to failures to meet performance tests, at the request of third parties or upon the occurrence of other stated events, our revenues could decrease and our costs could increase.
Our management and franchise agreements may terminate prematurely in certain cases. Some of our management agreements provide early termination rights to owners of the hotels we manage upon the occurrence of a stated event, such as the sale of the hotel or our failure to meet a specified performance test.
Generally, termination rights under performance tests are based upon the property’s individual performance, its performance when compared to a specified set of competitive hotels branded by other hotel operators, or both. Some agreements require a failure of one test, and other agreements require a failure of more than one test, before termination rights are triggered. These termination rights are usually triggered if we do not meet the performance tests over multiple years. Generally, we have the option to cure performance failures by making an agreed upon cure payment. However, our cure rights may be limited in some cases and the failure to meet the performance tests may result in the termination of our management agreement. In the past we have (1) failed performance tests, received notices of termination and elected to cure and (2) failed performance tests and negotiated an alternative resolution. When any termination notice is received, we evaluate all relevant facts and circumstances at the time in deciding whether to cure or allow termination.
In addition, some of our management agreements give third-party property owners the right to terminate upon payments of a termination fee to us after a certain period of time or upon sale of the property or another stated event. In some of those cases, hotel owners may be obligated to pay a termination fee to us upon termination of the management agreement. Our franchise agreements typically require franchisees to pay a fee to us before terminating. In addition, if an owner files for bankruptcy, our management and franchise agreements may be terminable under applicable law. If a management or franchise agreement terminates, we could lose the revenues we derive from that agreement or incur costs related to ending our relationship with the third party and exiting the related property.
 
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If we are unable to maintain good relationships with third-party property owners and franchisees, our revenues could decrease and we may be unable to expand our presence.
We earn fees for managing and franchising hotels and other properties. Our management agreements typically provide a two-tiered fee structure that compensates us both for the volume of business we generate for the property as well as for the profitability of hotel operations. Our base compensation is a base fee that is usually an agreed upon percentage of gross revenues from hotel operations. We also earn an incentive fee that is typically calculated as a percentage of a hotel profitability measure, such as gross operating profit, adjusted profit or the amount by which gross operating profit or adjusted profit exceeds a fixed threshold. Outside of the United States, our fees are often more dependent on hotel profitability measures, either through a single management fee that is based on a profitability measure or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee. Our franchisees pay us an initial application fee and ongoing royalty and marketing fees.
The viability of our management and franchising business depends on our ability to establish and maintain good relationships with third-party property owners and franchisees. Third-party developers, property owners and franchisees are focused on maximizing the value of their investment and working with a management company or franchisor that can help them be successful. The effectiveness of our management, the value of our brands and the rapport that we maintain with our third-party property owners and franchisees impact renewals and are all important factors for new third-party property owners or franchisees considering doing business with us. Our relationships with these third parties generate additional property development opportunities that support our growth. If we are unable to maintain good relationships with our third-party property owners and franchisees, we may be unable to renew existing agreements or expand our relationships with these owners. Additionally, our opportunities for developing new relationships with additional third parties may be adversely impacted.
Contractual and other disagreements with third-party property owners or franchisees could make us liable to them or result in litigation costs or other expenses, which could lower our profits.
Our management and franchise agreements require us and third-party property owners or franchisees to comply with operational and performance conditions that are subject to interpretation and could result in disagreements. Additionally, some courts have applied principles of agency law and related fiduciary standards to managers of third-party hotel properties such as us, which means, among other things, that property owners may assert the right to terminate management agreements even where the agreements do not expressly provide for termination. In the event of any such termination, we may need to negotiate or enforce our right to a termination payment that may not equal expected profitability over the term of the agreement. These types of disagreements are more likely during an economic downturn.
We generally seek to resolve any disagreements with our third-party property owners or franchisees amicably. Formal dispute resolution occurs through arbitration, if provided under the applicable management or franchise agreement, or through litigation. Litigation often leads to higher expenses. We cannot predict the outcome of any such arbitration or litigation, the effect of any adverse judgment of a court or arbitrator against us or the amount of any settlement that we may be forced to enter into with any third party.
We are exposed to the risks resulting from significant investments in owned and leased real estate, which could increase our costs, reduce our profits, limit our ability to respond to market conditions or restrict our growth strategy.
 
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Our proportion of owned properties, as compared to the number of properties that we manage or franchise for third-party owners, is larger than that of some of our competitors. Real estate ownership and leasing is subject to risks not applicable to managed or franchised properties, including:
 
 	Ÿ 	 	governmental regulations relating to real estate ownership;	
 
 	Ÿ 	 	real estate, insurance, zoning, tax, environmental and eminent domain laws;	
 
 	Ÿ 	 	the ongoing need for owner funded capital improvements and expenditures to maintain or upgrade properties;	
 
 	Ÿ 	 	risks associated with mortgage debt, including the possibility of default, fluctuating interest rate levels and the availability of replacement financing;	
 
 	Ÿ 	 	fluctuations in real estate values or potential impairments in the value of our assets; and	
 
 	Ÿ 	 	the relative illiquidity of real estate compared to other assets.	
The negative impact on profitability and cash flow generation from a decline in revenues is significant in owned properties due to their high fixed-cost structure. The need to maintain and renovate owned properties can present challenges, especially when cash generated from operations has declined. The effectiveness of any cost-cutting efforts is limited by the fixed-cost nature of our business. As a result, we may not be able to offset further revenue reductions through cost cutting, which could further reduce our margins. During times of economic distress, declining demand and declining earnings often result in declining asset values.
In an unfavorable market, we may not be able to sell properties in the short term. Accordingly, we may not be able to adjust our portfolio promptly in response to economic or other conditions. In addition, because our strategy to use proceeds from sales of real property to support our growth partly depends on our ability to sell properties, any inability to do so could impair our growth strategy.
We have a limited ability to manage third-party risks associated with our hospitality venture investments, which could reduce our revenues, increase our costs and lower our profits.
We participate in hospitality ventures with third parties. In the future, we may also buy and develop properties in hospitality ventures with the sellers of the properties, affiliates of the sellers, developers or other third parties. Our hospitality venture partners may have shared or majority control over the operations of our hospitality ventures. As a result, our investments in hospitality ventures involve risks that are different from the risks involved in investing in real estate independently. These risks include the possibility that our hospitality ventures or our partners:
 
 	Ÿ 	 	go bankrupt or otherwise are unable to meet their capital contribution obligations;	
 
 	Ÿ 	 	have economic or business interests or goals that are or become inconsistent with our business interests or goals;	
 
 	Ÿ 	 	are in a position to take action contrary to our instructions, requests, policies or objectives;	
 
 	Ÿ 	 	subject the property to liabilities exceeding those contemplated;	
 
 	Ÿ 	 	take actions that reduce our return on investment; or	
 
 	Ÿ 	 	take actions that harm our reputation or restrict our ability to run our business.	
For these and other reasons, it could be more difficult for us to sell our interest in any hospitality venture, which could reduce our ability to address any problems we may have with those properties or respond to market conditions in the future. As a result, our investments in hospitality ventures could lead to impasses or situations that could harm the hospitality venture, which could reduce our revenues, increase our costs and lower our profits.
 
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If our hospitality ventures fail to provide information that is required to be included in our financial statements, we may be unable to accurately report our financial results.
Preparing our financial statements requires us to have access to information regarding the results of operations, financial position and cash flows of our hospitality ventures. Any deficiencies in our hospitality ventures’ internal controls over financial reporting may affect our ability to report our financial results accurately or prevent fraud. Such deficiencies could also result in restatements of, or other adjustments to, our previously reported or announced operating results, which could diminish investor confidence and reduce the market price for our shares. Additionally, if our hospitality ventures are unable to provide this information for any meaningful period or fail to meet expected deadlines, we may be unable to satisfy our financial reporting obligations or timely file our periodic reports.
Cash distributions from our hospitality ventures could be limited by factors outside our control that could reduce our return on investment and our ability to generate liquidity from these hospitality ventures.
Although our hospitality ventures may generate positive cash flow, in some cases these hospitality ventures may be unable to distribute that cash to the hospitality venture partners. Additionally, in some cases our hospitality venture partners control distributions, and may choose to leave capital in the hospitality venture rather than distribute it. Because our ability to generate liquidity from our hospitality ventures depends on the hospitality ventures’ ability to distribute capital to us, tax restrictions or decisions of our hospitality venture partners could reduce our return on these investments. We include our pro rata share of Adjusted EBITDA attributable to our unconsolidated hospitality ventures in our owned and leased hotels segment Adjusted EBITDA and our consolidated Adjusted EBITDA regardless of whether the cash flow of those ventures is, or can be, distributed to us.
We may seek to expand through acquisitions of and investments in other businesses and properties, or through alliances; and we may also seek to divest some of our properties and other assets, any of which may be unsuccessful or divert our management’s attention.
We intend to consider strategic and complementary acquisitions of and investments in other businesses, properties or other assets. Furthermore, we may pursue these opportunities in alliance with existing or prospective owners of managed or franchised properties. In many cases, we will be competing for these opportunities with third parties that may have substantially greater financial resources than we do. Acquisitions or investments in businesses, properties or assets as well as these alliances are subject to risks that could affect our business, including risks related to:
 
 	Ÿ 	 	issuing shares of stock that could dilute the interests of our existing stockholders;	
 
 	Ÿ 	 	spending cash and incurring debt;	
 
 	Ÿ 	 	assuming contingent liabilities;	
 
 	Ÿ 	 	creating additional expenses; or	
 
 	Ÿ 	 	high barriers to entry in many key markets and scarcity of available development and investment opportunities.	
We cannot assure you that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such acquisitions, investments or alliances. Similarly, we cannot assure you that we will be able to obtain financing for acquisitions or investments on attractive terms or at all, or that the ability to obtain financing will not be restricted by the terms of our revolving credit facility or other indebtedness we may incur.
 
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The success of any such acquisitions or investments will also depend, in part, on our ability to integrate the acquisition or investment with our existing operations. We may experience difficulty with integrating acquired businesses, properties or other assets, including difficulties relating to:
 
 	Ÿ 	 	coordinating sales, distribution and marketing functions;	
 
 	Ÿ 	 	integrating technology information systems; and	
 
 	Ÿ 	 	preserving the important licensing, distribution, marketing, customer, labor and other relationships of the acquired assets.	
Divestment of some of our properties or assets may yield returns below our investment criteria. In some circumstances, sales may result in investment losses.
In addition, any such acquisitions, investments, dispositions or alliances could demand significant attention from our management that would otherwise be available for our regular business operations, which could harm our business.
We may not be successful in executing our strategy of disposing of selected assets, which could hinder our ability to expand our presence in markets that will enhance and expand our brand preference.
We regularly review our business to identify properties or other assets that we believe are in markets or of a property type that may not benefit us as much as other markets or property types. One of our strategies is to selectively dispose of hotel properties and use sale proceeds to fund our growth in markets that will enhance and expand our brand presence. We cannot assure you that we will be able to consummate any such sales on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such sales. Dispositions of real estate assets are particularly difficult during the current economic downturn, as financing alternatives are extremely limited for potential buyers. The current economic downturn and credit crisis have adversely affected the real estate market and caused a significant reduction in sales of hotel properties. Our inability to sell assets, or to sell such assets at attractive prices, could have an adverse impact on our ability to realize proceeds for reinvestment.
Timing, budgeting and other risks could delay our efforts to develop, redevelop or renovate the properties that we own, or make these activities more expensive, which could reduce our profits or impair our ability to compete effectively.
We must maintain and renovate the properties that we own in order to remain competitive, maintain the value and brand standards of our properties and comply with applicable laws and regulations. These efforts are subject to a number of risks, including:
 
 	Ÿ 	 	construction delays or cost overruns (including labor and materials) that may increase project costs;	
 
 	Ÿ 	 	obtaining zoning, occupancy and other required permits or authorizations;	
 
 	Ÿ 	 	governmental restrictions on the size or kind of development;	
 
 	Ÿ 	 	force majeure events, including earthquakes, tornados, hurricanes, floods or tsunamis; and	
 
 	Ÿ 	 	design defects that could increase costs.	
Developing new properties typically involves lengthy development periods during which significant amounts of capital must be funded before the properties can begin to operate. If the cost of funding these developments or renovations exceeds budgeted amounts, profits could be reduced.
 
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Similarly, the timing of capital improvements can affect property performance, including occupancy and average daily rate, particularly if we need to close a significant number of rooms or other facilities, such as ballrooms, meeting spaces or restaurants. Moreover, the investments that we make may fail to improve the performance of the properties in the manner that we expect.
If we are not able to begin operating properties as scheduled, or if investments adversely affect or fail to improve performance, our ability to compete effectively would be diminished and our revenues could be reduced.
If we or our third-party property owners are unable to repay or refinance mortgages secured by the related properties, our revenues could be reduced and our business could be harmed.
Many of the properties that our third-party property owners own, and a small number of properties that we own, are pledged as collateral for mortgage loans entered into when the related properties were purchased or refinanced. If we or our third-party property owners are unable to repay or refinance maturing indebtedness on favorable terms or at all, the lenders could declare a default, accelerate the related debt and repossess the related property. In 2008, we made a $278 million loan to an entity in order to finance its purchase of the Hyatt Regency Waikiki Beach Resort and Spa. In the current economic environment, an increasing number of property owners are experiencing financial difficulties and the properties they own are increasingly vulnerable to financial stress. Debt defaults could lead third-party property owners to sell the property on unfavorable terms or, in the case of secured debt, to convey the mortgaged property to the lender. Any such sales or repossessions could, in certain cases, result in the termination of our management agreements or eliminate any anticipated income and cash flows from, and, if applicable, our invested capital in, such property, which could significantly harm our business.
If we or our third-party owners, franchisees or development partners are unable to access the capital necessary to fund current operations or implement our plans for growth, our profits could be reduced and our ability to compete effectively could be diminished.
The hospitality industry is a capital intensive business that requires significant capital expenditures to develop, operate, maintain and renovate properties. Access to the capital that we or our third-party owners, franchisees or development partners need to finance the construction of new properties or to maintain and renovate existing properties is critical to the continued growth of our business and our revenues.
Over the past twelve months, the credit markets and the financial services industry have experienced a period of significant disruption characterized by the bankruptcy, failure, collapse or sale of various financial institutions, increased volatility in securities prices, severely diminished liquidity and credit availability and a significant level of intervention by the governments of the United States and other countries. As a result of these market conditions, the cost and availability of capital has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. In particular, in the current environment, available capital for new development is extremely limited if available at all. The availability of capital or the conditions under which we or our third-party owners, franchisees or development partners can obtain capital can have a significant impact on the overall level and pace of future development and therefore the ability to grow our revenues. The recent disruption in the capital markets has diminished the ability and desire of existing and potential development partners to access capital necessary to develop properties actively. These disruptions could also result in reductions of our credit ratings, which would increase our cost of borrowing. Our ability to access additional capital could also be limited by the terms of our revolving credit facility, which restricts our ability to incur debt under certain circumstances. Additionally, if one or more of the financial institutions that support our revolving credit facility fails, we may not be able to find a replacement, which would reduce the availability of funds that we can borrow under the facility.
 
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If we are forced to spend larger amounts of cash from operating activities than anticipated to operate, maintain or renovate existing properties, then our ability to use cash for other purposes, including acquisition or development of properties, could be limited and our profits could be reduced. Similarly, if we cannot access the capital we need to fund our operations or implement our growth strategy, we may need to postpone or cancel planned renovations or developments, which could impair our ability to compete effectively and harm our business.
If we fail to meet performance standards under a contractual performance obligation, our profits could be reduced.
In connection with the acquisition of the AmeriSuites brand in 2005, we assumed obligations under a management agreement with a third-party owner of multiple properties to make payments based on specified thresholds for those properties. As a result of the removal of rooms from inventory during renovation of the subject properties upon conversion to the Hyatt Place brand and due to the decline for lodging products and services as a result of the economic downturn, we have had to make payments under this agreement and may be obligated to make additional payments under this agreement up to a maximum of $50.0 million (including the $15.0 million paid through June 30, 2009). These payments could lower our profits and reduce our cash flows.
If we become liable for losses related to loans we have provided or guaranteed to third parties, our profits could be reduced.
When we enter into management or franchise agreements with third parties, including hospitality ventures, from time to time we make loans for selected pre-opening expenses. Weak performance of or delays in operating properties that we may invest in through loans to third parties, particularly as a result of the economic recession or the financial condition of third-party property owners or franchisees, could result in losses if third-party property owners or franchisees default on loans that we provide.
To secure financing for four of our unconsolidated hospitality ventures, we have provided to third-party lenders financial guarantees related to the timely completion of the construction of the hotel or the timely repayment of the associated debt. The guarantees are limited to our portion of the underlying obligation. As of June 30, 2009 our maximum contingent liability was $22 million.
In one instance in the past, we incurred a significant loss as a result of a mezzanine loan we made to a developer of a hotel property. In 2005, in connection with the development of a hotel in Las Vegas, we provided a $50.0 million mezzanine loan to the developer of the property. In 2007, the entity that owned the hotel property defaulted on bank loans, which triggered a default on the mezzanine loan. In the fourth quarter of 2008, the loan was fully written off.
If we are liable for losses related to loans we have provided or guaranteed to third parties, our costs could increase and our profits could fall.
In any particular period, our expenses may not decrease at the same rate that our revenues may decrease, which could have an adverse effect on our net cash flows, margins and profits.
Many of the expenses associated with managing, franchising or owning hotels and residential and vacation ownership properties are relatively fixed. These expenses include:
 
 	Ÿ 	 	personnel costs;	
 
 	Ÿ 	 	interest;	
 
 	Ÿ 	 	rent;	
 
 	Ÿ 	 	property taxes;	
 
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 	Ÿ 	 	insurance; and	
 
 	Ÿ 	 	utilities.	
If we are unable to decrease these costs significantly or rapidly when demand for our hotels and other properties decreases, the decline in our revenues can have a particularly adverse effect on our net cash flows and profits. This effect can be especially pronounced during periods of economic contraction or slow economic growth, such as the current economic recession. Economic downturns generally affect the results derived from owned property more significantly than those derived by managers and franchisors given the greater exposure that the owners have to the properties’ performance. During the recent economic downturn, our revenues have declined at a greater rate than our costs. During the six months ended June 30, 2009, our consolidated revenues declined by 19% while our direct and selling, general and administrative expenses declined by 9%, compared to the same period in 2008. During the six months ended June 30, 2009, the revenues of our owned and leased hotels declined by 22%, while corresponding direct and selling, general and administrative expenses declined by 12%, compared to the same period in 2008. Where cost-cutting efforts are insufficient to offset declines in revenues, we could experience in a material decline in margins and potentially negative cash flows.
If we are unable to establish and maintain key distribution arrangements for our properties, the demand for our rooms and our revenues could fall.
Some of the rooms at hotels and resorts that we manage, franchise or own are booked through third-party internet travel intermediaries and online travel service providers. We also engage third-party intermediaries who collect fees by charging our hotels and resorts a commission on room revenues, including travel agencies and meeting and event management companies. A failure by our distributors to attract or retain their customer bases would lower demand for hotel rooms and, in turn, reduce our revenues.
If bookings by these third-party intermediaries increase, these intermediaries may be able to obtain higher commissions or other significant contract concessions from us, increasing the overall cost of these third-party distribution channels. Some of our distribution agreements are not exclusive, have a short term, are terminable at will, or are subject to early termination provisions. The loss of distributors, increased distribution costs, or the renewal of distribution agreements on significantly less favorable terms could adversely impact our business.
If the amount of sales made through third-party internet travel intermediaries increases significantly, consumer loyalty to our brand could decrease and our revenues could fall.
We expect to derive most of our business from traditional channels of distribution and our website. However, consumers now use internet travel intermediaries regularly. Some of these intermediaries are attempting to increase the importance of price and general indicators of quality (such as “four-star downtown hotel”) at the expense of brand identification. These agencies hope that consumers will eventually develop brand loyalties to their reservation system rather than to our brands. If the amount of sales made through internet travel intermediaries increases significantly and consumers develop stronger loyalties to these intermediaries rather than to our brands, our business and revenues could be harmed.
If we are not able to develop new initiatives, including new brands, successfully, our business and profitability could be harmed.
We often develop and launch new initiatives, including new brands or marketing programs, which can be a time-consuming and expensive process. For example, we launched our Andaz brand in 2007.
 
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Since then, we have invested capital and resources in owned real estate, property development, brand development and brand promotion. If such initiatives are not well received by our associates, guests and owners, they may not have the intended effect. We may not be able to recover the costs incurred in developing Andaz or other development projects and initiatives or to realize their intended or projected benefits, which could lower our profits.
Labor shortages could restrict our ability to operate our properties or grow our business or result in increased labor costs that could reduce our profits.
Our success depends in large part on our ability to attract, retain, train, manage and engage our associates. Our properties are staffed 24 hours a day, seven days a week by approximately 80,000 associates around the world. If we and our franchisees are unable to attract, retain, train and engage skilled associates, our ability to manage and staff our properties adequately could be impaired, which could reduce customer satisfaction. Staffing shortages could also hinder our ability to grow and expand our business. Because payroll costs are a major component of the operating expenses at our properties, a shortage of skilled labor could also require higher wages that would increase our labor costs, which could reduce our profits and the profits of our third-party owners.
Negotiations of collective bargaining agreements, or changes in labor legislation, could disrupt our operations, increase our labor costs or interfere with the ability of our management to focus on executing our business strategies.
Certain of our properties are subject to collective bargaining agreements, similar agreements or regulations enforced by governmental authorities. If relationships with our associates, other field personnel or the unions that represent them become adverse, the properties we manage, franchise or own could experience labor disruptions such as strikes, lockouts and public demonstrations. Labor disruptions, which are generally more likely when collective bargaining agreements are being renegotiated, could harm our relationship with our associates or cause us to lose guests. Additionally, labor regulation could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on our ability or the ability of our third-party property owners and franchisees to take cost saving measures during economic downturns. We do not have the ability to control the negotiations of collective bargaining agreements covering unionized labor employed by third-party property owners and franchisees.
We and our third-party property owners and franchisees may also become subject to additional collective bargaining agreements in the future. Proposed legislation in Congress known as the Employee Free Choice Act could increase the likelihood of a union obtaining recognition by increasing the use of card check authorization and avoiding a secret ballot election. This legislation could also give third-party arbitrators the ability to impose collective bargaining agreement terms on us or our third-party property owners and franchisees, and our associates, if we, our third-party property owners or franchisees and a labor union are unable to agree upon a collective bargaining agreement. If this legislation or similar laws are passed, more of our associates or other field personnel could be subject to increased organizational efforts, which could potentially lead to disruptions or require more of our management’s time to address unionization issues. These or similar agreements or legislation could disrupt our operations, hinder our ability to cross-train and cross-promote our associates due to prescribed work rules and job classifications, reduce our profitability, or interfere with the ability of our management to focus on executing our business strategies.
The loss of our senior executives or key field personnel, such as our general managers, could significantly harm our business.
Our ability to maintain our competitive position is dependent to a large degree on the efforts and skills of our senior executives. We have entered into employment letter agreements with certain of our
 
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senior executives. However, we cannot guarantee that these individuals will remain with us. Finding suitable replacements for our senior executives could be difficult. We currently do not have a life insurance policy or key person insurance policy with respect to any of our senior executives. Losing the services of one or more of these senior executives could adversely affect our strategic relationships, including relationships with our third-party property owners, franchisees, hospitality venture partners and vendors, and limit our ability to execute our business strategies. See “Management.”
We also rely on the general managers at each of our owned and managed properties to run daily operations and oversee our associates. These general managers are trained professionals in the hospitality industry and have extensive experience in many markets worldwide. The failure to retain, train or successfully manage our general managers for our properties could negatively affect our operations.
Because we derive a portion of our revenues from operations outside the United States, the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.
We currently manage, franchise or own hotels and resorts in 45 countries located on six continents around the world. Our operations outside the United States represented approximately 19% of our revenues for the six months ended June 30, 2009. We expect that revenues from our international operations will continue to account for an increasing portion of our total revenues.
As a result, we are subject to the risks of doing business outside the United States, including:
 
 	Ÿ 	 	the laws, regulations and policies of foreign governments relating to investments and operations, as well as U.S. laws affecting the activities of U.S. companies abroad;	
 
 	Ÿ 	 	limitations/penalties on the repatriation of non-U.S. earnings;	
 
 	Ÿ 	 	changes in regulatory requirements, including imposition of tariffs or embargoes, export controls and other trade restrictions;	
 
 	Ÿ 	 	the difficulty of managing an organization doing business in many jurisdictions;	
 
 	Ÿ 	 	import and export licensing requirements and regulations, as well as unforeseen changes in export regulations;	
 
 	Ÿ 	 	uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract clauses; and	
 
 	Ÿ 	 	rapid changes in government, economic and political policies, political or civil unrest, acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation.	
While these factors and the impact of these factors are difficult to predict, any one or more of them could lower our revenues, increase our costs, reduce our profits or disrupt our business.
Exchange rate fluctuations could result in significant foreign currency gains and losses or lead to costs and risks related to exchange rate hedging activities.
Conducting business in currencies other than U.S. dollars subjects us to fluctuations in currency exchange rates that could have a negative impact on our financial results. We translate the value of foreign currency-denominated amounts into U.S. dollars and we report our consolidated financial results of operations in U.S. dollars. Because the value of the U.S. dollar fluctuates relative to other currencies, revenues that we generate or expenses that we incur in other currencies could significantly increase or decrease our revenues or expenses as reported in U.S. dollars. Our exposure to foreign currency exchange rate fluctuations will continue to grow if the relative contribution of our operations outside the United States increases.
 
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We enter into foreign exchange agreements with financial institutions to reduce our exposure to fluctuations in currency exchange rates referred to as hedging activities. However, these hedging activities may not eliminate foreign currency risk entirely and involve costs and risks of their own, such as ongoing management time and expertise and external costs related to executing hedging activities.
If purchasers default on the loans we provide to finance their purchases of our vacation ownership properties, the revenues and profits we derive from our vacation ownership business could be reduced.
We provide secured financing to some of the purchasers of our vacation ownership properties in respect of which we are subject to the risk of purchaser default. If a purchaser defaults under the financing we provide, we could be forced to write off the loan and reclaim ownership of the property. If the property has declined in value, we may incur impairment charges or losses as a result. In addition, we may be unable to resell the property in a timely manner or at the same price. As of June 30, 2009, we had $57 million of mortgage receivables, net of allowances associated with these activities. In addition, if a purchaser of a vacation ownership property defaults on the related loan during the early part of the amortization period, we may not have recovered the marketing, selling and general and administrative costs associated with the sale of such vacation ownership property. If we are unable to recover any of the principal amount of the loan from a defaulting purchaser, or if our allowances for losses from such defaults are inadequate, the profits we derive from our vacation ownership business could be reduced.
Private resales of our vacation ownership interests could lower the demand or prices for our vacation ownership properties, which could reduce our revenues and our profits.
We develop, sell and manage vacation ownership properties in select locations as part of the Hyatt Vacation Club. Private resales by owners of these vacation ownership interests in the secondary market could reduce demand or prices for new vacation ownership interests, particularly if the owners sell their interests at a significant discount. Lower demand or prices for our vacation ownership interests could reduce our revenues and our profits.
Our failure to comply with applicable laws and regulations may increase our costs, reduce our profits or limit our growth.
Our business, properties and associates are subject to a variety of laws and regulations. Generally, these laws and regulations address our sales and marketing efforts, our handling of privacy issues and customer data, our ability to obtain licenses for business operations such as sales of food and liquor, immigration matters, environmental, health and safety, gaming, competition and trade laws, among other things.
Our franchising and vacation ownership businesses and our operations outside the United States are also subject to particular laws and regulation affecting those businesses:
Franchising
Our franchising business is subject to various state laws as well as to regulations enacted by the Federal Trade Commission (FTC). A number of states require franchisors to register with the state or to make extensive disclosures to potential franchisees in connection with offers and sales in those states. The FTC also regulates the manner and substance of our disclosures to prospective franchisees. In addition, several states have “franchise relationship laws” or “business opportunity laws” that limit the ability of franchisors to terminate franchise agreements or to withhold consent to the renewal or transfer of those agreements.
 
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Vacation Ownership
Our vacation ownership properties are subject to extensive state regulation in both the state in which the property is located and the states in which the property is marketed and sold. Our marketing for these properties is also subject to federal regulation of certain marketing practices, including federal telemarketing regulations. In addition, the laws of most states in which we sell fractional vacation ownership interests give the purchaser the right to rescind the purchase contract within a specified time period.
International Operations
Our business operations in countries outside the United States are subject to a number of U.S. federal laws and regulations, including restrictions imposed by the Foreign Corrupt Practices Act (FCPA) as well as trade sanctions administered by the Office of Foreign Assets Control (OFAC) and the Commerce Department. The FCPA is intended to prohibit bribery of foreign officials or parties and requires public companies in the United States to keep books and records that accurately and fairly reflect those companies’ transactions. OFAC and the Commerce Department administer and enforce economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals.
If we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm, incarceration of our employees or restrictions on our operation or ownership of hotels and other properties, including the termination of our management, franchising and ownership rights. These restrictions could increase our costs of operations, reduce our profits or cause us to forgo development opportunities that would otherwise support our growth.
The extensive environmental requirements to which we are subject could increase our environmental costs and liabilities, reduce our profits or limit our ability to run our business.
Our operations and the properties we manage, own and develop are subject to extensive environmental laws and regulations of various federal, state, local and foreign governments, including requirements addressing:
 
 	Ÿ 	 	health and safety;	
 
 	Ÿ 	 	the use, management and disposal of hazardous substances and wastes;	
 
 	Ÿ 	 	discharges of waste materials into the environment, such as refuse or sewage; and	
 
 	Ÿ 	 	air emissions.	
We could be subject to liability under some of these laws for the costs of investigating or remediating hazardous substances or wastes on, under, or in real property we currently or formerly manage, own or develop, or third-party sites where we sent hazardous substances or wastes for disposal. We could be held liable under these laws regardless of whether we knew of, or were at fault in connection with, the presence or release of any such hazardous or toxic substances or wastes. Some of these laws make each covered person responsible for all of the costs involved, even if more than one person may have been responsible for the contamination. Furthermore, a person who arranges for hazardous substances or wastes to be transported, disposed of or treated offsite, such as at disposal or treatment facilities, may be liable for the costs of removal or remediation if those substances are released into the environment by third parties at such disposal or treatment facilities. The presence or release of hazardous or toxic substances or wastes, or the failure to properly clean up such materials, could cause us to incur significant costs, or jeopardize our ability to develop, use, sell or rent real property we own or operate or to borrow using such property as collateral.
 
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Other laws and regulations require us to manage, abate or remove materials containing hazardous substances such as mold, lead or asbestos during demolitions, renovations or remodeling at properties that we manage, own or develop or to obtain permits for certain of our equipment or operations. The costs of such management, abatement, removal or permitting could be substantial. Complying with these laws and regulations, or addressing violations arising under them, could increase our environmental costs and liabilities, reduce our profits or limit our ability to run our business. Existing environmental laws and regulations may be revised or new laws and regulations related to global climate change, air quality, or other environmental and health concerns may be adopted or become applicable to us. The identification of new areas of contamination, a change in the extent or known scope of contamination or changes in cleanup requirements, or the adoption of new requirements governing our operations could have a material adverse effect on our results or operations, financial condition and business.
If the insurance that we carry does not sufficiently cover damage or other potential losses involving properties that we manage or own, our profits could be reduced.
We carry insurance from solvent insurance carriers that we believe is adequate for foreseeable losses and with terms and conditions that are reasonable and customary. Nevertheless, market forces beyond our control could limit the scope of the insurance coverage that we can obtain or restrict our ability to buy insurance coverage at reasonable rates. In addition, the recent disruption in the financial markets makes it more difficult to evaluate the stability of insurance companies or their ability to meet their payment obligations. In the event of a substantial loss, the insurance coverage that we carry may not be sufficient to pay the full value of our financial obligations or the replacement cost of any lost investment. Because certain types of losses are significantly uncertain, they can be uninsurable or too expensive to insure. In some cases, these factors could result in certain losses being completely uninsured. As a result, we could lose some or all of the capital we have invested in a property, as well as the anticipated future revenues from the property, we could remain obligated for performance guarantees in favor of third-party property owners or for their debt or other financial obligations and we may not have sufficient insurance to cover awards of damages resulting from our liabilities. If the insurance that we carry does not sufficiently cover damages or other losses, our profits could be adversely affected.
Any failure to protect our trademarks and intellectual property could reduce the value of our brand names and harm our business.
The reputation and perception of our brands is critical to our success in the hospitality industry. If our trademarks or intellectual property are copied or used without authorization, the value of our brands, their reputation, our competitive advantages and our goodwill could be harmed. We regularly apply to register our trademarks in the United States and other countries. However, we cannot assure you that those trademark registrations will be granted or that the steps we take to protect our trademarks or intellectual property in the United States and other countries will be adequate to prevent others, including third parties or former employees, from copying or using our trademarks or intellectual property without authorization. Our intellectual property is also vulnerable to unauthorized use in some countries outside the United States, where local law may not adequately protect it.
Monitoring the unauthorized use of our intellectual property is difficult. As we have in the past, we may need to resort to litigation to enforce our intellectual property rights. Litigation of this type could be costly, force us to divert our resources, lead to counterclaims or other claims against us or otherwise harm our business. Any failure to maintain and protect our trademarks and other intellectual property could reduce the value of our brands and harm our business.
 
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Third-party claims that we infringe their intellectual property rights could subject us to damages and other costs and expenses.
Third parties may make claims against us for infringing their intellectual property rights. Any such claims, even those without merit, could:
 
 	Ÿ 	 	be expensive and time consuming to defend;	
 
 	Ÿ 	 	force us to stop providing products or services that use the intellectual property that is being challenged;	
 
 	Ÿ 	 	force us to redesign or rebrand our products or services;	
 
 	Ÿ 	 	divert our management’s attention and resources;	
 
 	Ÿ 	 	force us to enter into royalty or licensing agreements to obtain the right to use a third party’s intellectual property; or	
 
 	Ÿ 	 	force us to pay significant damages.	
In addition, we may be required to indemnify third-party owners of the hotels we manage or franchisees for any losses they incur as a result of any such infringement claims. Any necessary royalty or licensing agreements may not be available to us on acceptable terms. Any costs, lost revenues, changes to our business or management attention related to intellectual property claims against us, whether successful or not, could impact our business.
Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of our business could reduce our profits or limit our ability to operate our business.
In the normal course of our business, we are often involved in various legal proceedings. The outcome of these proceedings cannot be predicted. If any of these proceedings were to be determined adversely to us or a settlement involving a payment of a material sum of money were to occur, there could be a material adverse effect on our financial condition and results of operations. Additionally, we could become the subject of future claims by third parties, including current or former third-party property owners, guests who use our properties, our employees, our investors or regulators. Any significant adverse litigation judgments or settlements would reduce our profits and could limit our ability to operate our business.
Information technology system failures, delays in the operation of our information technology systems or system enhancement failures could reduce our revenues and profits and harm the reputation of our brands and our business.
Our success depends on the efficient and uninterrupted operation of our information technology systems. For example, we internally developed the technology for our central reservation system, which allows bookings by hotels directly, via telephone through our call centers, by travel agents, online through our website www.hyatt.com , and through our online reservations partners. In addition, we depend on information technology to run our day-to-day operations, including, among others, hotel services and amenities such as guest check-in and check-out, housekeeping and room service and systems for tracking and reporting financial results of our hotels and the company.
Our information technology systems are vulnerable to damage or interruption from fire, floods, hurricanes, power loss, telecommunications failures, computer viruses, break-ins and similar events. The occurrence of any of these natural disasters or unanticipated problems at any of our information technology facilities or any of our call centers could cause interruptions or delays in our business or loss of data, or render us unable to process reservations.
 
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In addition, if our information technology systems are unable to provide the information communications capacity that we need, or if our information technology systems suffer problems caused by installing system enhancements, we could experience similar failures or interruptions. If our information technology systems fail and our redundant systems or disaster recovery plans are not adequate to address such failures, or if our property and business interruption insurance does not sufficiently compensate us for any losses that we may incur, our revenues and profits could be reduced and the reputation of our brands and our business could be harmed.
Failure to maintain the integrity of internal or customer data could result in faulty business decisions, harm to our reputation or subject us to costs, fines or lawsuits.
We are required to collect and retain large volumes of internal and customer data, including credit card numbers and other personally identifiable information as our various information technology systems enter, process, summarize and report such data. We also maintain personally identifiable information about our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our customers expect that we will adequately protect their personal information, and the regulations applicable to security and privacy is increasingly demanding, both in the United States and in other jurisdictions where we operate. A theft, loss, fraudulent or unlawful use of customer, employee or company data could harm our reputation or result in remedial and other costs, fines or lawsuits.
If we fail to stay current with developments in technology necessary for our business, our operations could be harmed and our ability to compete effectively could be diminished.
Sophisticated information technology and other systems are instrumental for the hospitality industry, including systems used for our central reservations, revenue management, property management and our Hyatt Gold Passport program, as well as technology systems that we make available to our guests. These information technology and other systems must be refined, updated, or replaced with more advanced systems on a regular basis. Developing and maintaining these systems may require significant capital. If we are unable to replace or introduce information technology and other systems as quickly as our competitors or within budgeted costs or schedules when these systems become outdated or need replacing, or if we are unable to achieve the intended benefits of any new information technology or other systems, our operations could be harmed and our ability to compete effectively could be diminished.
We may be liable for proposed tax liabilities and the final amount of taxes paid may exceed the amount of applicable reserves, which could reduce our profits.
The Internal Revenue Service (IRS) recently completed its examinations of the consolidated federal income tax returns of Hyatt Hotels Corporation, Hyatt Corporation, AIC and H Group for the taxable years ended December 31, 2003, 2004 and 2005. Based on these examinations (and on examination adjustments for the taxable year ended January 31, 2001), we could be liable for up to $ 42 million of additional taxes and penalties (plus accrued interest). We and our affiliates have filed protests with the IRS Appeals Office contesting these proposed tax liabilities. We are also subject to ongoing tax audits and disputes in various state, local and foreign jurisdictions. We believe we have established adequate reserves for potential tax liabilities, but the final amount of taxes assessed and paid could exceed the amount of such reserves, which could reduce our profits.
Changes in federal, state, local or foreign tax law, interpretations of existing tax law or agreements with tax authorities could affect our profitability and financial condition by increasing our tax costs.
We are subject to taxation at the federal, state or provincial and local levels in the United States and various other countries and jurisdictions. Our future tax rates could be affected by changes in the
 
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composition of earnings in jurisdictions with differing tax rates, changes in the valuation of our deferred tax assets and liabilities, or changes in determinations regarding the jurisdictions in which we are subject to tax. From time to time the U.S. federal, state, local and foreign governments make substantive changes to tax rules and the application thereof, which could result in materially higher corporate taxes than would be incurred under existing tax law or interpretation and could adversely impact profitability. The current U.S. administration has put forth several revenue raising proposals, some of which target tax provisions that benefit us, including proposals to limit the ability of U.S. companies to continue to defer U.S. taxes on foreign income. State and local tax authorities have also increased their efforts to increase revenues through changes in tax law and audits. Such changes and proposals, if enacted, could increase our future effective income tax rates.
We are a party to certain agreements with foreign tax authorities that reduce or defer the amount of tax we pay. The expiration of such agreements, or changes in circumstances or in interpretation of such agreements, could increase our tax costs.
The terms of our revolving credit facility and the indenture governing our senior notes place restrictions on us and certain of our subsidiaries, reducing operational flexibility and creating default risks.
The terms of our revolving credit facility and the indenture governing our senior notes contain covenants that place restrictions on us and certain of our subsidiaries. The covenants under our revolving credit facility restrict, among other things, our ability to:
 
 	Ÿ 	 	incur additional debt, due to a requirement that we satisfy a maximum leverage ratio test, a minimum interest coverage ratio test and a maximum secured debt ratio test;	
 
 	Ÿ 	 	engage in other business activities or engage in certain transactions with affiliates; and	
 
 	Ÿ 	 	change our fiscal year or change our organizational documents.	
Similarly, the covenants under our revolving credit facility and the indenture governing our senior notes restrict, among other things, our ability to:
 
 	Ÿ 	 	create any liens on certain assets to secure debt;	
 
 	Ÿ 	 	enter into certain sale and leaseback transactions; or	
 
 	Ÿ 	 	enter into mergers or consolidations or transfer all or substantially all of our assets.	
Failure to comply with these restrictive covenants could result in an event of default that, if not waived or cured, if applicable, could result in the acceleration of all or a substantial portion of our outstanding debt under our revolving credit facility and our senior notes. For a detailed description of the covenants and restrictions imposed by the documents governing our indebtedness, see “Description of Principal Indebtedness.”
An increase in interest rates would increase interest costs on our revolving credit facility and any variable rate debt we incur, which could adversely impact our ability to refinance existing debt or acquire assets.
Borrowings under our revolving credit facility bear interest at the London Interbank Offered Rate (LIBOR) or an alternative base rate (defined as the greatest of (a) the federal funds rate plus 0.5%, (b) the prime rate and (c) one-month LIBOR plus 1.0%) plus an additional margin that is based on our credit ratings. To the extent we borrow under the revolving credit facility, any increase in the interest rate applicable to such borrowings will reduce our cash flows available for other corporate purposes including investments in our portfolio. Further, rising interest rates could limit our ability to refinance
 
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existing debt when it matures and increase interest costs on any debt that is refinanced. We may from time to time enter into agreements such as interest rate swaps or other interest rate hedging contracts. While these agreements may lessen the impact of rising interest rates, they also expose us to the risk that other parties to the agreements will not perform or that the agreements will be unenforceable. In addition, an increase in interest rates could decrease the amount third parties are willing to pay for our assets, thereby limiting our ability to dispose of assets as part of our business strategy. Our revolving credit facility also imposes an additional fee paid to revolving lenders whose loans mature on June 29, 2012 if the calculation of LIBOR falls below 1.00% in the case of LIBOR-based borrowings (including alternative base rate borrowings based on the one-month LIBOR). For a detailed description of the interest margin and fees imposed by the documents governing our indebtedness, see “Description of Principal Indebtedness.”
Rating agency downgrades may increase our cost of capital.
The interest rate of borrowings and the facility fee under our revolving credit facility are determined by a pricing grid which is dependent on our credit ratings by Standard & Poor’s Rating Group and Moody’s Investors Service, Inc. Lower ratings result in a higher cost of funds. Therefore, if these independent rating agencies were to downgrade our credit ratings or if we no longer have a credit rating from either agency, the cost of our borrowing and the amount of the facility fee under our revolving credit facility will increase as specified in the pricing grid. Additionally, any future downgrade of our credit ratings by the rating agencies could reduce or limit our access to capital and increase our cost of capital. We and a number of our competitors have had either a rating or outlook downgrade by the rating agencies as a result of the economic downturn and decreased demand for hospitality products and services. Given the cyclical nature of the hospitality industry and its dependence on the underlying health of the economy, we could be subject to frequent changes in our credit rating. As the economic recovery is expected to be slow in the near term there is a heightened risk of our credit ratings being revised downward.
We have a large amount of cash and cash equivalents and are exposed to counterparty risk with respect to these deposits.
All of our cash that is not required to fund our daily operating activities is invested in interest bearing investments with a greater focus placed on capital preservation than on investment return. The majority of our cash balances are held on deposit with high quality financial institutions that hold long-term ratings of at least A or A2 from Standard & Poor’s Rating Group or Moody’s Investor Service, Inc., respectively, and in AAA-rated money market funds. As such, we are exposed to counterparty risk on our $1.2 billion of cash and cash equivalents as of June 30, 2009, after giving effect to the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements, as described under “Prospectus Summary—Recent Developments.”
Risks Related to Share Ownership and this Offering
Our stock price is likely to be volatile, and you may not be able to resell shares of your Class A common stock at or above the price you paid.
The stock market in general, and hospitality companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the underlying businesses. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. In addition, the financial services industry recently experienced a period of significant disruption characterized by the bankruptcy, failure, collapse or sale of various financial institutions, which led to increased volatility in securities prices and a significant level of intervention from the U.S. and other governments in securities markets. These
 
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broad market and industry factors may seriously harm the market price of our Class A common stock, regardless of our actual operating performance.
In addition to the risks described in this section, several factors that could cause the price of our Class A common stock in the public market to fluctuate significantly include, among others, the following:
 
 	Ÿ 	 	quarterly variations in our operating results compared to market expectations;	
 
 	Ÿ 	 	announcements of new services or products or significant price reductions by us or our competitors;	
 
 	Ÿ 	 	size of the public float;	
 
 	Ÿ 	 	stock price performance of our competitors;	
 
 	Ÿ 	 	fluctuations in stock market prices and volumes;	
 
 	Ÿ 	 	default on our indebtedness or foreclosure of our properties;	
 
 	Ÿ 	 	changes in senior management or key personnel;	
 
 	Ÿ 	 	changes in financial estimates by securities analysts;	
 
 	Ÿ 	 	negative earnings or other announcements by us or other hospitality companies;	
 
 	Ÿ 	 	downgrades in our credit ratings or the credit ratings of our competitors;	
 
 	Ÿ 	 	issuances of capital stock; and	
 
 	Ÿ 	 	global economic, legal and regulatory factors unrelated to our performance.	
The initial public offering price of our Class A common stock will be determined by negotiations between us and the underwriters based upon a number of factors and may not be indicative of prices that will prevail following the consummation of this offering. Volatility in the market price of our Class A common stock may prevent investors from being able to sell their Class A common stock at or above the initial public offering price. As a result, you may suffer a loss on your investment.
Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in substantial costs, reduce our profits, divert our management’s attention and resources and harm our business.
After this offering, Pritzker family business interests will continue to have substantial control over us and will maintain the ability to control the election of directors and other matters submitted to stockholders for approval, which will limit your ability to influence corporate matters or result in actions that you do not believe to be in our interests or your interests.
Our Class B common stock is entitled to ten votes per share and our Class A common stock is entitled to one vote per share. Following this offering, Pritzker family business interests will beneficially own, in the aggregate, approximately     % of our Class B common stock, representing approximately     % of the outstanding shares of our common stock and approximately     % of the total voting power of our outstanding common stock. As a result, Pritzker family business interests will be able to exert a significant degree of influence or actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets and any other significant transaction. Because of our dual class ownership structure, Pritzker family business interests will continue to exert a significant degree of influence or actual control over matters requiring stockholder approval, even if they own less than 50% of the outstanding shares of our common stock. This concentrated control will limit your ability to influence corporate matters, and the interests of Pritzker family business interests may not coincide
 
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with our interests or your interests. As a result, we may take actions that you do not believe to be in our interests or your interests and that could depress our stock price.
In addition, the difference in the voting rights between our Class A common stock and Class B common stock could diminish the value of the Class A common stock to the extent that investors or any potential future purchasers of our common stock ascribe value to the superior voting rights of the Class B common stock.
Voting agreements entered into with or among our major stockholders, including Pritzker family business interests, will result in a substantial number of our shares being voted consistent with the recommendation of our board of directors, and may limit your ability to influence the election of directors and other matters submitted to stockholders for approval.
Pritzker family business interests have entered into (or in the case of common stock owned indirectly by non-U.S. situs trusts, have expressed their desire that the trustee of such trusts and the directors of IHE, INC. and its subsidiaries act in accordance with) a voting agreement with respect to all shares of common stock beneficially owned by Pritzker family business interests. During the term of the voting agreement, which expires on the later to occur of January 1, 2015, and the date upon which more than 75% of the company’s voting power is held by non-Pritzker family business interests, Pritzker family business interests have agreed to vote (or in the case of common stock owned indirectly by non-U.S. situs trusts, have expressed their desire that the trustee of such trusts and the directors of IHE, INC. and its subsidiaries act in accordance with) their shares of our common stock consistent with the recommendation of our board of directors, assuming that a majority of our independent directors agree with the recommendation. In addition, following this offering, other existing stockholders, including entities affiliated with Goldman Sachs & Co. and Madrone GHC, will beneficially own, in the aggregate, approximately     % of our outstanding Class B common stock, representing approximately     % of the outstanding shares of our common stock and approximately     % of the total voting power of our outstanding common stock. These entities have entered into a voting agreement with us, with respect to the shares of Class B common stock that they beneficially own, and have agreed to vote their shares of Class B common stock consistent with the recommendation of our board of directors, without any separate requirement that our independent directors agree with the recommendation. These voting agreements expire on the later to occur of December 31, 2013 and the date that Thomas J. Pritzker is no longer chairman of our board of directors. See “Stockholder Agreements” and “Principal and Selling Stockholders.”
While the voting agreements are in effect, they may provide our board of directors with effective control over matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets and any other significant transaction. This is because the number of our shares that are required by the voting agreements to be voted consistent with the recommendation of our board of directors will be sufficient to determine the outcome of the election of directors and other matters submitted to stockholders for approval. This will limit your ability to influence the election of directors and other matters submitted to stockholders for approval, even if you do not believe those actions to be in our interests or your interests. For instance, the voting agreements may have the effect of delaying or preventing a transaction that would result in a change of control, if our board of directors does not recommend that our stockholders vote in favor of the transaction, even if you or some or all of our major stockholders believe that the transaction is in our interests or your interests. On the other hand, the voting agreements may result in our stockholders approving a transaction that would result in a change of control, if our board of directors recommends that our stockholders vote in favor of the transaction, even if you or some or all of our major stockholders believe that the transaction is not in our interests or your interests.
 
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You will experience immediate and substantial dilution in the book value of your investment.
The initial public offering price of our Class A common stock is higher than the net tangible book value per share of our outstanding Class A common stock immediately after this offering. Therefore, if you purchase our Class A common stock in this offering, you will incur an immediate dilution of $             in net tangible book value per share based on an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus. Further dilution will result if rights to purchase our Class A common stock that we have issued or may issue in the future are exercised, or if we issue additional shares of our Class A common stock, at prices lower than our net tangible book value at such time. For additional information regarding the dilution effects of this offering, see “Dilution.”
We have broad discretion in the use of the net proceeds from this offering and may not use them in ways that enhance the value of your investment.
Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not necessarily improve our results of operations or enhance the value of our Class A common stock. We cannot predict with certainty all of the particular uses for the proceeds from this offering. Any failure by our management to apply these funds effectively could result in financial losses that could harm our business and depress the price of our Class A common stock. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. Regardless of whether our application of the net proceeds results in financial losses, our stock price could drop if the market does not view our use of the net proceeds favorably.
A significant number of shares of our Class A common stock could be sold into the market, which could depress our stock price even if our business is doing well.
Future sales of our Class A common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Based on shares of common stock outstanding as of June 30, 2009, we will have              shares of Class A common stock outstanding upon completion of this offering, including              shares of Class A common stock to be sold in this offering, and              shares of Class B common stock outstanding upon completion of this offering.
Of the outstanding shares, all              shares of Class A common stock sold in this offering and any shares sold upon exercise of the underwriters’ option to purchase additional shares will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by any of our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining                      outstanding shares of Class A common stock and              outstanding shares of Class B common stock will be deemed “restricted securities,” as that term is defined in Rule 144 under the Securities Act. All of these restricted securities will be subject to the 180-day lock-up period, which may be extended in specified circumstances. Restricted securities may be sold in the public market only if they are registered under the Securities Act or they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act, which rules are summarized in “Shares Eligible For Future Sale.”
Substantially all of these restricted securities are subject to contractual lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock and the 2007 Stockholders’ Agreement in addition to the 180-day lock-up period as described in “Stockholder Agreements” and “Shares Eligible For Future Sale—Lock-Up Agreements.” These additional restrictions may be amended, waived or terminated by the parties to those lock-up agreements in accordance with the terms of those agreements or, with respect to the
 
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Global Hyatt Agreement and the Foreign Global Hyatt Agreement, the 20% limitation on sales of our common stock may, on an annual basis, be increased to a higher percentage or waived entirely by the unanimous affirmative vote of our independent directors, without the consent of the underwriters or us and without notice. As a result, following the expiration of the 180-day lock-up period agreed to with the underwriters, all shares of Class A common stock, including shares of Class A common stock that are required to be issued upon conversion of shares of Class B common stock, will be eligible for resale in compliance with Rule 144 or Rule 701 to the extent the lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock or 2007 Stockholders’ Agreement, as applicable, are waived or terminated with respect to such shares.
Assuming the lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock and the 2007 Stockholders’ Agreement are not amended, waived or terminated and assuming the parties to these agreements sell the maximum amount permitted to be sold during the first time period that such shares are eligible to be sold, following the expiration of the 180-day lock-up period, and subject to the provisions of Rules 144 and 701 under the Securities Act described in “Shares Eligible For Future Sale,” these restricted securities will be available for sale in the public market as follows:

Number of Shares	  	Time Period	
	  	After 180 days and up to 12 months from the date of this prospectus.	
		
	  	After 12 months and up to 24 months from the date of this prospectus.	
		
	  	After 24 months and up to 36 months from the date of this prospectus.	
		
	  	After 36 months and up to 42 months (3  1 / 2 years) from the date of this prospectus.	
		
	  	After 42 months (3  1 / 2 years) and up to 48 months from the date of this prospectus.	
		
	  	After 48 months and up to 54 months (4  1 / 2 years) from the date of this prospectus.	
		
	  	After 54 months (4  1 / 2 years) and up to 60 months from the date of this prospectus.	
		
	  	After 60 months and up to 66 months (5  1 / 2 years) from the date of this prospectus.	
		
	  	After 66 months (5  1 / 2 years) and up to 72 months from the date of this prospectus.	
		
	  	At various times after 72 months from the date of this prospectus.	
If shares are not sold during the first time period that they become eligible for sale as set forth above, the number of shares eligible for sale during future periods will increase.
Moreover, after this offering, certain holders of our common stock will have rights, subject to some conditions, to require us to file registration statements registering sales of their shares or to include sales of their shares in registration statements that we may file for ourselves or other stockholders. Shares sold under these registration statements can be freely sold in the public market, subject to the lock-up agreements described in “Underwriting.” In addition, 18,921,361 shares of our Class A common stock reserved for issuance under our LTIP and under a restricted stock unit agreement will become eligible for sale in the public market once those shares are issued and subject to provisions relating to various vesting agreements, lock-up agreements and Rule 144, as applicable.
If any of these holders causes a large number of securities to be sold in the public market, the sales could reduce the trading price of our Class A common stock. These sales also could impede our ability to raise future capital.
We also may issue shares of our Class A common stock from time to time as consideration for future acquisitions and investments. If any such acquisition or investment is significant, the number of shares that we may issue may in turn be significant.
 
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No public market for our Class A common stock currently exists, and we cannot assure you that an active, liquid trading market will develop or be sustained following this offering.
Before this offering, there has been no public market for our Class A common stock. An active, liquid trading market for our Class A common stock may not develop or be sustained following this offering. We have applied to have our Class A common stock listed on the New York Stock Exchange, but we cannot assure you that our application will be approved. In addition, we cannot assure you as to the liquidity of any such market that may develop or the price that our stockholders may obtain for their shares of our Class A common stock.
Reports published by securities or industry analysts, including projections in those reports that exceed our actual results, could adversely affect our stock price and trading volume.
We currently expect securities research analysts, including those affiliated with our underwriters, will establish and publish their own quarterly projections for our business. These projections may vary widely from one another and may not accurately predict the results we actually achieve. Our stock price may decline if our actual results do not match securities research analysts’ projections. Similarly, if one or more of the analysts who writes reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price could decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, our stock price or trading volume could decline. While we expect securities research analyst coverage, if no securities or industry analysts commence coverage of our company, the trading price for our stock and the trading volume could decline.
If we are unable to assess favorably the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls, our stock price could be adversely affected.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and beginning with our Annual Report on Form 10-K for the year ending December 31, 2010, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We are currently in the process of reviewing, documenting and testing our internal control over financial reporting. We may encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of our internal control over financial reporting. In addition, in connection with the attestation process by our independent registered public accounting firm, we may encounter problems or delays in completing the implementation of any requested improvements and receiving a favorable attestation. If we cannot favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified attestation report on our internal controls, investor confidence and our stock price could be reduced.
Anti-takeover provisions in our organizational documents and Delaware law, as well as agreements with our major stockholders, may discourage or prevent a change of control, even if a sale of Hyatt would be beneficial to our stockholders, which could cause our stock price to decline and prevent attempts by our stockholders to replace or remove our current board of directors or management.
Upon the consummation of this offering, our amended and restated certificate of incorporation and bylaws, as well as agreements with our major stockholders, will contain provisions that may make it difficult to remove our board of directors and management and may discourage or delay “change of
 
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control” transactions that certain stockholders may view as beneficial or could involve the payment of a premium over prevailing market prices for our Class A common stock. These provisions include, among others:
 
 	Ÿ 	 	Our amended and restated certificate of incorporation provides for a dual class ownership structure, in which our Class B common stock is entitled to ten votes per share and our Class A common stock is entitled to one vote per share. As a result of this structure, our major stockholders have significant influence or actual control over matters requiring stockholder approval.	
 
 	Ÿ 	 	Voting agreements entered into with or among our major stockholders require these stockholders to vote their shares consistent with the recommendation of our board of directors, assuming in certain instances that a majority of our independent directors agree with the recommendation. While the voting agreements are in effect, they may provide our board of directors with effective control over matters requiring stockholder approval.	
 
 	Ÿ 	 	Lock-up agreements entered into with or among our major stockholders limit the ability of these stockholders to sell their shares to any person who would be required to file a Schedule 13D with the SEC disclosing an intent to acquire the shares other than for investment purposes and, in certain instances, to competitors of ours in the hospitality, lodging or gaming industries.	
 
 	Ÿ 	 	Stockholders party to our 2007 Stockholders’ Agreement have agreed, subject to certain limited exceptions, to “standstill” provisions that prevent the stockholders from acquiring additional shares of our common stock, making or participating in acquisition proposals for us or soliciting proxies in connection with meetings of our stockholders, unless the stockholders are invited to do so by our board of directors.	
 
 	Ÿ 	 	Our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting.	
 
 	Ÿ 	 	Our directors may be removed only for cause, which prevents stockholders from being able to remove directors without cause other than those directors who are being elected at an annual meeting.	
 
 	Ÿ 	 	Our amended and restated certificate of incorporation does not provide for cumulative voting in the election of directors. As a result, upon completion of this offering, holders of our Class B common stock will control the election of directors and the ability of holders of our Class A common stock to elect director candidates will be limited.	
 
 	Ÿ 	 	Vacancies on our board of directors, and any newly created director positions created by the expansion of the board of directors, may be filled only by a majority of remaining directors then in office.	
 
 	Ÿ 	 	Actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent.	
 
 	Ÿ 	 	Special meetings of our stockholders can be called only by the chairman of the board or by our corporate secretary at the direction of our board of directors.	
 
 	Ÿ 	 	Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.	
 
 	Ÿ 	 	Our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.	
 
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 	Ÿ 	 	An affirmative vote of the holders of at least 80% of the voting power of our outstanding capital stock entitled to vote is required to amend any provision of our certificate of incorporation or bylaws.	
We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.
As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act of 2002 and related rules implemented by the Securities and Exchange Commission and the New York Stock Exchange. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
We do not intend to pay dividends on our Class A common stock for the foreseeable future and, consequently, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.
We have never declared or paid cash dividends on our common stock. In addition, we must comply with the covenants in our revolving credit facility if we want to pay cash dividends. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments and such other factors as our board of directors deems relevant.
Non-U.S. holders who own more than 5% of our Class A common stock may be subject to U.S. federal income tax on gain realized on the disposition of such stock.
Because we have significant U.S. real estate holdings, we may be a “United States real property holding corporation” (USRPHC) for U.S. federal income tax purposes, but we have made no determination to that effect. There can be no assurance that we do not currently constitute or will not become a USRPHC. As a result, a “non-U.S. holder” (as defined in “Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Class A Common Stock”) may be subject to U.S. federal income tax on gain realized on a disposition of our Class A common stock if such non-U.S. holder has owned, actually or constructively, more than 5% of our Class A common stock at any time during the shorter of (a) the five-year period ending on the date of disposition and (b) the non-U.S. holder’s holding period in such stock.
 
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 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Dividend Policy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “The Lodging Industry,” “Business” and “Shares Eligible For Future Sale”, contains forward-looking statements. These statements include statements about our plans, strategies and prospects and involve known and unknown risks that are difficult to predict. Therefore, our actual results, performance or achievements may differ materially from those expressed in or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:
 
 	Ÿ 	 	the factors discussed in this prospectus set forth under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;”	
 
 	Ÿ 	 	the depth and duration of the current economic downturn;	
 
 	Ÿ 	 	levels of spending in the business, travel and leisure industries as well as consumer confidence;	
 
 	Ÿ 	 	declines in occupancy and average daily rate;	
 
 	Ÿ 	 	hostilities, including future terrorist attacks, or fear of hostilities that affect travel;	
 
 	Ÿ 	 	travel-related accidents;	
 
 	Ÿ 	 	natural disasters, such as earthquakes, tsunamis, tornados, hurricanes or floods;	
 
 	Ÿ 	 	the seasonal and cyclical nature of the real estate and hospitality businesses;	
 
 	Ÿ 	 	changes in distribution arrangements, such as through internet travel intermediaries;	
 
 	Ÿ 	 	changes in the tastes and preferences of our customers;	
 
 	Ÿ 	 	relationships with associates and labor unions and changes in labor law;	
 
 	Ÿ 	 	financial condition of, and our relationships with, third-party property owners, franchisees and hospitality venture partners;	
 
 	Ÿ 	 	risk associated with potential acquisitions and dispositions and the introduction of new brand concepts;	
 
 	Ÿ 	 	changes in federal, state, local or foreign tax law;	
 
 	Ÿ 	 	increases in interest rates and operating costs;	
 
 	Ÿ 	 	fluctuations in currency exchange rates;	
 
 	Ÿ 	 	lack of acceptance of new brands or innovation;	
 
 	Ÿ 	 	general volatility of the capital markets and our ability to access the capital markets;	
 
 	Ÿ 	 	changes in the competitive environment in our industry and the markets where we operate;	
 
 	Ÿ 	 	outcomes of legal proceedings; and	
 
 	Ÿ 	 	violation of regulations or laws related to our franchising business.	
These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update publicly any of these statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
 
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 USE OF PROCEEDS
We estimate that the net proceeds to us from our sale of              shares of Class A common stock in this offering will be approximately $             million, based on an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us. A $1.00 increase or decrease in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $             million, assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease the net proceeds to us by $             million assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.
We will not receive any of the proceeds from the sale of shares of Class A common stock by the selling stockholders.
We currently intend to use the net proceeds to us from this offering primarily for working capital and other general corporate purposes, including capital expenditures. Additionally, we may use a portion of the net proceeds for the acquisition of, or investment in, new properties or businesses that complement our business. We currently do not have any understandings, commitments or agreements to enter into any acquisitions or investments. We cannot assure you that we will complete any acquisitions or investments or that, if completed, any such acquisition or investment will be successful. Our management will have broad discretion over the uses of the net proceeds from this offering. Pending application of the net proceeds as described above, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing securities.
 DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. In addition, we must comply with the covenants in our revolving credit facility if we want to pay cash dividends. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and, therefore, do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, capital requirements, restrictions contained in current or future financing instruments and such other factors as our board of directors deems relevant. Accordingly, you may need to sell your shares of our Class A common stock to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them.
 
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 CAPITALIZATION
The following table sets forth our capitalization and cash and cash equivalents as of June 30, 2009:
 
 	Ÿ 	 	on an actual basis;	
 
 	Ÿ 	 	on an as adjusted basis to give effect to the August 2009 issuance and sale of $500 million aggregate principal amount of senior notes and the use of a portion of the proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements as described under “Prospectus Summary—Recent Developments;”	
 
 	Ÿ 	 	on an as further adjusted basis to give effect to:	
 
 	Ÿ 	 	the filing of our amended and restated certificate of incorporation, which will occur prior to the consummation of this offering, and that provides for, among other things, (1) the authorization of 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock; (2) the authorization of 10,000,000 shares of preferred stock; (3) the reclassification of 52,067 outstanding shares of common stock into 52,067 shares of Class A common stock; and (4) the reclassification of 336,011,716 outstanding shares of common stock into 336,011,716 shares of Class B common stock, of which              shares will convert into shares of Class A common stock at the time that they are sold by the selling stockholders in this offering; and	
 
 	Ÿ 	 	the receipt of the net proceeds from the sale of              shares of Class A common stock by us in this offering at an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.	
 
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You should read this capitalization table together with “Use of Proceeds,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.

 	  	As of June 30, 2009	
(in millions)	  	Actual	 	 	As
Adjusted	 	 	As Further
Adjusted(1)	
Cash and cash equivalents (excluding restricted cash)	  	$	968	  	 	$	1,220	  	 	$	 	
	  	 	 	 	 	 	 	 	 	 	 	
Long-term debt, including current portion	  	$	612	  	 	$	858	  	 	$	 	
Stockholders’ equity:	  				 				 			
Preferred stock; $0.01 par value; 9,900,000 shares authorized and no shares issued and outstanding, actual; 10,000,000 shares authorized and no shares issued and outstanding, as adjusted	  	 	—	  	 	 	—	  	 			
Common stock; $0.01 par value; 400,000,000 shares authorized and 336,063,783 shares issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted	  	 	3	  	 	 	3	  	 			
Class A common stock; $0.01 par value; no shares authorized, issued and outstanding, actual; 1,000,000,000 shares authorized and              shares issued and outstanding, as adjusted	  	 	—	  	 	 	—	  	 			
Class B common stock; $0.01 par value; no shares authorized, issued and outstanding, actual; 500,000,000 shares authorized and                      shares issued and outstanding, as adjusted	  	 	—	  	 	 	—	  	 			
Additional paid-in capital	  	 	3,590	  	 	 	3,590	  	 			
Retained earnings	  	 	1,345	  	 	 	1,345	  	 			
Accumulated other comprehensive loss	  	 	(64	) 	 	 	(62	) 	 			
	  	 	 	 	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	4,874	  	 	 	4,876	  	 			
	  	 	 	 	 	 	 	 	 	 	 	
Total capitalization	  	$	5,486	  	 	$	5,734	  	 	$	            	

(1)	A $1.00 increase or decrease in the assumed initial public offering price of $            , the midpoint of the range set forth on the front cover of this prospectus, would result in an approximately $             million increase or decrease in each of the as further adjusted cash and cash equivalents, as further adjusted additional paid-in capital, as further adjusted total stockholders’ equity and as further adjusted total capitalization, assuming the number of shares offered by us set forth on the front cover of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease as further adjusted cash and cash equivalents, as further adjusted additional paid-in capital, as further adjusted total stockholders’ equity and as further adjusted total capitalization by approximately $             million assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. The as further adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and terms of this offering determined at pricing.	
 
    	The number of shares of common stock in the table above does not include 13,921,361 shares of common stock reserved for issuance under our LTIP and a restricted stock unit agreement as of June 30, 2009 or an additional 5,000,000 shares of common stock reserved under the LTIP in July 2009. See “Compensation Discussion and Analysis—Employee Benefits” and “Compensation Discussion and Analysis—Long-Term Incentive.”	
 
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 DILUTION
If you invest in our Class A common stock in this offering, your ownership interest will be diluted to the extent of the difference between the amount per share paid by purchasers of shares of Class A common stock in this initial public offering and the adjusted net tangible book value per share of Class A common stock immediately after completion of this offering.
The net tangible book value of our common stock as of June 30, 2009, was approximately $4.5 billion, or approximately $13.40 per share, based on 336,063,783 shares of common stock outstanding as of June 30, 2009. Net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding.
After giving effect to our issuance of              shares of Class A common stock in this offering at an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus and after deducting the underwriting discount and estimated offering expenses payable by us, our as adjusted net tangible book value as of June 30, 2009 would have been approximately $             million, or approximately $             per share of common stock. This represents an immediate increase in net tangible book value per share of $             to our existing stockholders and an immediate dilution of $             per share to purchasers of Class A common stock in this offering. If the initial public offering price is higher or lower than $             per share, the dilution to new stockholders will be higher or lower. The following table illustrates this per share dilution:

Assumed initial public offering price per share	  		  	$	            	
Net tangible book value per share as of June 30, 2009	  	$13.40	  			
Increase in net tangible book value per share attributable to this offering	  		  			
	  	 	  			
As adjusted net tangible book value per share after this offering	  		  			
	  		  	 	 	
Dilution per share to new investors in this offering	  		  	$	 	
	  		  	 	 	
Dilution per share to new investors is determined by subtracting as adjusted net tangible book value per share after this offering from the initial public offering price per share paid by a new investor.
A $1.00 increase or decrease in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, would increase or decrease as adjusted net tangible book value per share by approximately $             million, or approximately $             per share, and the dilution per share to investors in this offering by approximately $             per share, assuming that the number of shares offered by us set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase of 1.0 million shares in the number of shares offered by us would result in an as adjusted net tangible book value of approximately $             million, or approximately $             per share, and the dilution per share to investors in this offering would be approximately $             per share, assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, a decrease of 1.0 million shares in the number of shares offered by us would result in an as adjusted net tangible book value of approximately $             million, or approximately $             per share, and the dilution per share to investors in this offering would be approximately $             per share, assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. The as adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering.
 
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The following table sets forth as of June 30, 2009, on the as adjusted basis described above, the number of Class A shares purchased from us, the total consideration paid and the average price per share paid by our existing stockholders and by the investors purchasing shares in this offering based on an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, before deducting the underwriting discount and estimated expenses payable by us (dollars in thousands, except per share amounts):

 	  	Shares Purchased	 	 	Total Consideration	 	 	Average Price
Per Share	
   	  	Number	  	Percent	 	 	Amount	  	Percent	 	 		
Existing stockholders	  		  	            	% 	 	$	            	  	            	% 	 	$	            	
New investors	  		  			 			  			 	$	 	
	  	 	  	 	 	 	 	 	  	 	 	 			
Totals	  		  	100	% 	 	$	 	  	100	% 	 			
	  	 	  	 	 	 	 	 	  	 	 	 			
A $1.00 increase or decrease in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, would increase or decrease total consideration paid by new investors and total consideration paid by all stockholders by $             million, assuming that the number of shares offered by us set forth on the front cover of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease the total consideration paid to us by new investors and total consideration paid to us by all stockholders by $             million, assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.
The discussion and tables above are based on 336,063,783 shares of common stock outstanding as of June 30, 2009. This number excludes 13,921,361 shares of common stock reserved for issuance under the LTIP and a restricted stock unit agreement as of June 30, 2009 and an additional 5,000,000 shares of common stock reserved under the LTIP in July 2009. See “Compensation Discussion and Analysis—Employee Benefits ” and “Compensation Discussion and Analysis—Long-Term Incentive.”
 
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 SELECTED CONSOLIDATED FINANCIAL DATA
We derived the selected consolidated statements of income data for the years ended December 31, 2008, 2007 and 2006 and the selected consolidated balance sheet data as of December 31, 2008 and 2007 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the selected consolidated statements of income data for the years ended December 31, 2005 and 2004 and the selected consolidated balance sheet data as of December 31, 2006, 2005 and 2004 from our audited consolidated financial statements which are not included in this prospectus. We derived the summary consolidated statements of income data for the six months ended June 30, 2009 and June 30, 2008 and the consolidated balance sheet data as of June 30, 2009 from our unaudited consolidated interim financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated interim financial statements on the same basis as our audited financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Additionally, our historical results are not necessarily indicative of the results expected for any future period.
You should read the selected historical financial data together with the consolidated financial statements and related notes appearing elsewhere in this prospectus, as well as “Summary Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Principal Indebtedness” and the other financial information included elsewhere in this prospectus.

 	  	Six Months
Ended
June 30,	  	Year Ended
December 31,	
(in millions, except per share data)	  	2009	 	 	2008	  	2008	  	2007	  	2006	  	2005	  	2004(1)	
 	  	(Unaudited)	  	 	  	 	  	 	  	 	  	 	
Consolidated statements of income data:	  				 			  			  			  			  			  			
Owned and leased hotel revenues	  	$	876	  	 	$	1,125	  	$	2,139	  	$	2,039	  	$	1,860	  	$	1,748	  	$	1,472	
Management and franchise fee revenues	  	 	109	  	 	 	162	  	 	290	  	 	315	  	 	294	  	 	227	  	 	202	
Other revenues	  	 	29	  	 	 	48	  	 	83	  	 	103	  	 	110	  	 	112	  	 	88	
Other revenues from managed properties (2)	  	 	623	  	 	 	674	  	 	1,325	  	 	1,281	  	 	1,207	  	 	1,080	  	 	920	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total revenues	  	 	1,637	  	 	 	2,009	  	 	3,837	  	 	3,738	  	 	3,471	  	 	3,167	  	 	2,682	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Direct and selling, general and administrative expenses	  	 	1,593	  	 	 	1,759	  	 	3,473	  	 	3,353	  	 	3,119	  	 	2,880	  	 	2,494	
Income (loss) from continuing operations	  	 	(38	) 	 	 	175	  	 	114	  	 	266	  	 	331	  	 	278	  	 	175	
Net income (loss) attributable to Hyatt Hotels Corporation	  	 	(36	) 	 	 	173	  	 	168	  	 	270	  	 	315	  	 	336	  	 	227	
	  	 	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Income (loss) from continuing operations per common share, basic and diluted	  	$	(0.14	) 	 	$	0.68	  	$	0.45	  	$	0.98	  	$	1.20	  	$	1.20	  	$	0.84	
 
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 	  	As of June 30, 2009	  	As of December 31,	
(in millions)	  	  Actual  	  	As
Adjusted(3)	  	As Further
Adjusted
(4)(5)	  	  2008  	  	  2007  	  	  2006  	  	  2005  	  	  2004  	
 	  	(Unaudited)	  	 	  	 	  	 	  	 	  	 	
Consolidated balance sheet data:	  			  			  			  			  			  			  			  			
Cash and cash equivalents	  	$	968	  	$	1,220	  	$	         	  	$	428	  	$	409	  	$	801	  	$	960	  	$	1,067	
Total current assets	  	 	1,529	  	 	1,781	  			  	 	1,057	  	 	1,065	  	 	1,501	  	 	1,645	  	 	2,158	
Property and equipment, net	  	 	3,616	  	 	3,616	  			  	 	3,495	  	 	3,518	  	 	2,769	  	 	2,296	  	 	1,646	
Intangibles, net	  	 	276	  	 	276	  			  	 	256	  	 	359	  	 	154	  	 	102	  	 	43	
Total assets	  	 	6,739	  	 	6,976	  			  	 	6,119	  	 	6,248	  	 	5,522	  	 	5,081	  	 	4,658	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total current liabilities	  	 	574	  	 	559	  			  	 	653	  	 	697	  	 	1,001	  	 	600	  	 	890	
Long-term debt	  	 	595	  	 	847	  			  	 	1,209	  	 	1,288	  	 	173	  	 	500	  	 	514	
Other long-term liabilities	  	 	670	  	 	668	  			  	 	665	  	 	794	  	 	588	  	 	519	  	 	258	
Total liabilities	  	 	1,839	  	 	2,074	  			  	 	2,527	  	 	2,779	  	 	1,762	  	 	1,619	  	 	1,662	
Total stockholders’ equity	  	 	4,874	  	 	4,876	  			  	 	3,564	  	 	3,434	  	 	3,731	  	 	3,430	  	 	2,957	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total liabilities and stockholders’ equity	  	 	6,739	  	 	6,976	  			  	 	6,119	  	 	6,248	  	 	5,522	  	 	5,081	  	 	4,658	

(1)	The consolidated statement of income for 2004 reflects the combined and consolidated full year operating results of Hyatt Corporation, AIC Holding Co. and various hospitality related entities owned, prior to their contribution to our predecessor, Global Hyatt Corporation, in 2004, by Pritzker family business interests. See “Prospectus Summary—Corporate Information” and note 1 to our consolidated financial statements included elsewhere in this prospectus.	
(2)	Represents revenues that we receive from third-party property owners who reimburse us for costs that we incur on their behalf, with no added margin. These costs relate primarily to payroll at managed properties where we are the employer. As a result, these revenues have no effect on our profit, although they do increase our total revenues and the corresponding costs increase our total expenses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Principal Factors Affecting our Results of Operations—Revenues.”	
(3)	Reflects the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements. See “Prospectus Summary—Recent Developments” and “Description of Principal Indebtedness.”	
(4)	Reflects the issuance and sale of              shares of our Class A common stock in this offering at an assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, and our receipt of the net proceeds from this offering, after deducting the underwriting discounts and estimated offering expenses payable by us.	
(5)	A $1.00 increase or decrease in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, would result in an approximately $             million increase or decrease in each of the as further adjusted cash and cash equivalents, total assets and total stockholders’ equity, assuming that the number of shares offered by us set forth on the front cover of this prospectus, remains the same, and after deducting underwriting discounts and estimated offering expenses payable by us. Each increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease the as further adjusted cash and cash equivalents, total assets and total stockholders’ equity by approximately $              million assuming the assumed initial public offering price of $             per share, the midpoint of the range set forth on the front cover of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. The as further adjusted information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering.	
 
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 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Prospectus Summary—Summary Consolidated Financial Data,” “Selected Consolidated Financial Data” and our consolidated financial statements included elsewhere in this prospectus. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” included elsewhere in this prospectus.
Overview
We are a global hospitality company engaged in the management, franchising, ownership and development of Hyatt-branded hotels, resorts and residential and vacation ownership properties around the world. As of June 30, 2009, our worldwide property portfolio consisted of 413 Hyatt-branded properties ( 119,509 rooms and units), including:
 
 	Ÿ 	 	158 managed properties (60,934 rooms), all of which we operate under management agreements with third-party property owners;	
 
 	Ÿ 	 	100 franchised properties (15,322 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;	
 
 	Ÿ 	 	96 owned properties (including 4 consolidated hospitality ventures) (25,786 rooms) and 6 leased properties (2,851 rooms), all of which we manage;	
 
 	Ÿ 	 	28 managed properties owned or leased by unconsolidated hospitality ventures (12,361 rooms);	
 
 	Ÿ 	 	15 vacation ownership properties (933 units), all of which we manage; and	
 
 	Ÿ 	 	10 residential properties (1,322 units), all of which we manage and some of which we own.	
Our full service hotels operate under four world-recognized brands, Park Hyatt, Grand Hyatt, Hyatt Regency and Hyatt. We recently introduced our fifth full service brand, Andaz, geared toward today’s individual business and leisure travelers. In addition, we own, operate and franchise hotels under two select service brands, Hyatt Place and Hyatt Summerfield Suites. Our select service hotels provide guests with many of the amenities available at full service hotels but on a smaller scale. Compared to our full service hotels, our select service hotels have limited food and beverage outlets and do not offer comprehensive business or banquet facilities but rather are suited to serve smaller business meetings. Hyatt Place and Hyatt Summerfield Suites have been well received in the United States and we believe have significant growth potential both in the United States and internationally. We develop, sell and manage vacation ownership properties in select locations as part of the Hyatt Vacation Club. We also manage Hyatt-branded residential properties that are often adjacent to Hyatt-branded full service hotels. We assist third parties in the design and development of such mixed-use projects based on our expertise as a manager and owner of vacation ownership properties, residential properties and hotels. 
We have adopted a business model that entails both ownership of properties and management and franchising of third-party owned properties in order to pursue more diversified revenue and income streams that balance both the advantages and risks associated with these lines of business.
 
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For the year ended December 31, 2008 and the six months ended June 30, 2009, 79.9% and 81.3% of our revenues were derived from operations in the United States, respectively. As of June 30, 2009, 76.9% of our long-lived assets were located in the United States.
We report our consolidated operations in U.S. dollars and manage our business within three reportable segments as described below:
 
 	Ÿ 	 	Owned and leased hotels, which consists of our owned and leased full service and select service hotels and, for purposes of segment Adjusted EBITDA, our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture.	
 
 	Ÿ 	 	North American management and franchising, which consists of our management and franchising of properties located in the United States, Canada and the Caribbean, except for Park Hyatt and Andaz branded hotels.	
 
 	Ÿ 	 	International management and franchising, which consists of our management and franchising of properties located outside of the United States, Canada and the Caribbean. All of our Park Hyatt and Andaz branded hotels are managed by our international management and franchising segment and the management of these hotels is reported in this segment.	
In addition to our three reportable segments, Corporate and other includes the results of our vacation ownership business and unallocated corporate expenses.
Key Business Metrics Evaluated by Management
Revenues
We primarily derive our revenues from hotel operations, management and franchise fees, other revenues from managed properties and vacation ownership properties. Management uses revenues to assess the overall performance of our business and analyze trends such as consumer demand, brand preference and competition. For a detailed discussion of the factors that affect our revenues, see “—Principal Factors Affecting our Results of Operations.”
Net Income Attributable to Hyatt Hotels Corporation
Net income attributable to Hyatt Hotels Corporation represents the total earnings or profits generated by our business. Management uses net income to analyze the performance of our business on a consolidated basis.
Adjusted EBITDA
We use the term Adjusted EBITDA throughout this prospectus. Adjusted EBITDA, as we define it, is a non-GAAP measure. We define consolidated Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro-rata share of unconsolidated hospitality ventures Adjusted EBITDA based on our ownership percentage of each venture, adjusted to exclude the following items:
 
 	Ÿ 	 	equity earnings (losses) from unconsolidated hospitality ventures;	
 
 	Ÿ 	 	gains on sales of real estate;	
 
 	Ÿ 	 	asset impairments;	
 
 	Ÿ 	 	other income (loss), net;	
 
 	Ÿ 	 	a 2008 charge resulting from the termination of our supplemental executive defined benefit plans;	
 
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 	Ÿ 	 	discontinued operations and changes in accounting principles, net of tax;	
 
 	Ÿ 	 	net (income) loss attributable to noncontrolling interests;	
 
 	Ÿ 	 	depreciation and amortization;	
 
 	Ÿ 	 	interest expense; and	
 
 	Ÿ 	 	benefit (provision) for income taxes.	
We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments to corporate and other Adjusted EBITDA. See “—Results of Operations.”
Our board of directors and executive management team focus on Adjusted EBITDA as a key performance and compensation measure both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operating performance both on a segment and on a consolidated basis. Our President and Chief Executive Officer, who is our chief operating decision maker, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA or some combination of both.
We believe Adjusted EBITDA is useful to investors because it provides investors the same information that we use internally for purposes of assessing our core operating performance and making compensation decisions.
Adjusted EBITDA is not a substitute for net income attributable to Hyatt Hotels Corporation, income from continuing operations, cash flows from operating activities or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by reference to our GAAP results and using Adjusted EBITDA supplementally. See our consolidated statements of income and consolidated statements of cash flows in our consolidated financial statements included elsewhere in this prospectus.
For a reconciliation of consolidated Adjusted EBITDA to EBITDA and a reconciliation of EBITDA to its most directly comparable GAAP measure, net income (loss) attributable to Hyatt Hotels Corporation, see “Prospectus Summary—Summary Consolidated Financial Data” and “—Results of Operations.”
Revenue per Available Room (RevPAR)
RevPAR is the product of the average daily rate and the average daily occupancy percentage. RevPAR does not include non-room revenues, which consist of ancillary revenues generated by a hotel property, such as food and beverage, parking, telephone and other guest service revenues. Our management uses RevPAR to identify trend information with respect to room revenues from comparable properties and to evaluate hotel performance on a regional and segment basis. RevPAR is a commonly used performance measure in the industry.
 
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RevPAR changes that are driven predominately by changes in occupancy have different implications for overall revenue levels and incremental profitability than do changes that are driven predominately by changes in average room rates. For example, increases in occupancy at a hotel would lead to increases in room revenues and additional variable operating costs (including housekeeping services, utilities and room amenity costs), and could also result in increased ancillary revenues (including food and beverage). In contrast, changes in average room rates typically have a greater impact on margins and profitability as there is no substantial effect on variable costs.
Average Daily Rate (ADR)
ADR represents hotel room revenues, divided by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and we use ADR to assess the pricing levels that we are able to generate by customer group, as changes in rates have a different effect on overall revenues and incremental profitability than changes in occupancy, as described above.
Occupancy
Occupancy represents the total number of rooms sold divided by the total number of rooms available at a hotel or group of hotels. Occupancy measures the utilization of our hotels’ available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help us determine achievable ADR levels as demand for hotel rooms increases or decreases.
Comparable Hotels
“Comparable systemwide hotels” represents all properties we manage or franchise (including owned and leased properties) and that are operated for the entirety of the periods being compared and that have not sustained substantial damage, business interruption or undergone large scale renovations during the periods being compared or for which comparable results are not available. We may use variations of comparable systemwide hotels to specifically refer to comparable systemwide North American full service or select service hotels or comparable systemwide international full service hotels for those properties that we manage or franchise within the North American and international management and franchising segments, respectively. “Comparable owned and leased hotels” represents all properties we own or lease and that are operated and consolidated for the entirety of the periods being compared and have not sustained substantial damage, business interruption or undergone large scale renovations during the periods being compared or for which comparable results are not available. Comparable systemwide hotels and comparable owned and leased hotels are commonly used as a basis of measurement in the industry. “Non-comparable systemwide hotels” or “Non-comparable owned and leased hotels” represent all hotels that do not meet the respective definition of “comparable” as defined above.
Principal Factors Affecting our Results of Operations
Revenues
Principal Components
We primarily derive our revenues from the following sources:
Revenues from hotel operations.     Represents revenues derived from hotel operations, including room rentals and food and beverage sales and other ancillary revenues at our owned and leased properties. Revenues from the majority of our hotel operations depend heavily on demand from group and transient travelers, as discussed below. Revenues from our owned and leased hotels segment are primarily derived from hotel operations.
 
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Revenues from room rentals and ancillary revenues are primarily derived from three categories of customers: transient, group and contract. Transient guests are individual travelers who are traveling for business or leisure. Our group guests are traveling for group events that reserve a minimum of 10 rooms for meetings or social functions sponsored by associations, corporate, social, military, educational, religious or other organizations. Group business usually includes a block of room accommodations as well as other ancillary services, such as catering and banquet services. Our contract guests are traveling under a contract negotiated for a block for rooms for more than 30 days in duration at agreed-upon rates. Airline crews are typical generators of contract demand for our hotels.
Management and franchise fees.     Represents revenues derived from fees earned from hotels and residential properties managed worldwide (usually under long-term management agreements), franchise fees received in connection with the franchising of our brands (usually under long-term franchise agreements), termination fees and the amortization of deferred gains related to sold properties for which we have significant continuing involvement.
 
 	Ÿ 	 	Our management agreements typically provide for a two-tiered fee structure that compensates us both for the volume of business we generate for the property as well as for the profitability of hotel operations. In these two-tier fee structures, our base compensation is a base fee that is usually an agreed upon percentage of gross revenues from hotel operations. In addition, we are paid an incentive fee that is typically calculated as a percentage of a hotel profitability measure, as defined in the applicable agreement. Outside of the United States, our fees are often more dependent on hotel profitability measures, either through a single management fee structure where the entire fee is based on a profitability measure, or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee.	
 
 	Ÿ 	 	Franchise fees generally consist of an initial application fee and continuing royalty fees calculated as a percentage of gross room revenues. Royalty fees for our full service brands also include a percentage of gross food and beverage revenues and gross spa revenues, where applicable.	
Other revenues from managed properties.     Represents revenues related primarily to payroll costs at managed properties where we are the employer and are fully reimbursed by the third-party property owner based on the costs incurred, with no added margin. As a result, these revenues have no effect on our profit, although they do increase our total revenues and the corresponding costs increase our total expenses. We record these revenues in “Other revenues from managed properties” and the corresponding costs in “Other costs from managed properties” in our consolidated statements of income.
Intersegment eliminations.     We evaluate our reportable segments with intersegment revenues and expenses included in their results. These intersegment revenues and expenses represent management fees earned by our North American and international management and franchising segments for managing our owned and leased hotels. As presented throughout this prospectus, the individual segment results for the management and franchising businesses include the intersegment fee revenues and our owned and leased hotels include the intersegment fee expenses. Both the fee revenues and expenses are eliminated in consolidation.
Factors Affecting our Revenues
The following factors affect the revenues we derive from our operations. For other factors affecting our revenues, see “Risk Factors—Risks Related to Our Business.”
Consumer demand and global economic conditions .    Consumer demand for our products and services is closely linked to the performance of the general economy and is sensitive to business and
 
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personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence and adverse political conditions can lower the revenues and profitability of our owned operations and the amount of management and franchising fee revenues we are able to generate from our managed and franchised properties. Also, declines in hotel profitability during an economic downturn directly impact the incentive portion of our management fees, which is based on hotel profit measures. Our vacation ownership business is also linked to cycles in the general economy and consumer discretionary spending. As a result, changes in consumer demand and general business cycles can subject and have subjected our revenues to significant volatility. See “Risk Factors—Risks Related to the Hospitality Industry.”
During the second half of 2008 and the first half of 2009, the ongoing global economic recession and its negative effect on demand by transient business and leisure travelers and associations and other group customers depressed demand throughout the hospitality industry. These conditions resulted in a decline in RevPAR for the fourth quarter of 2008 and some of the most significant RevPAR declines we have experienced in recent history during the first half of 2009. This reduced demand has resulted in and may continue to result in decreases in occupancy levels and ADR.
We believe that the economic recession will continue to significantly affect all of our customer segments. During the first six months of 2009, our systemwide RevPAR declined by 24% compared to the first six months of 2008. We believe that, during the remainder of the year, occupancy could stabilize. However, we expect that there will likely be continued pressure on average room rates. The current economic environment makes it difficult for us to predict future demand for our hospitality products and services.
We anticipate that recovery of demand for hospitality products and services will lag an improvement in current economic conditions. We cannot predict how severe or prolonged the global economic downturn will be. Furthermore, current global economic conditions have significantly impacted consumer confidence and behavior and, as a result, historical marketing information that we have collected may be less effective as a means of predicting future demand and operating results.
Competition .    The global lodging industry is highly competitive. As a result of the decreased demand for hospitality products and services in the current economic environment, competition in the industry has become increasingly fierce. While we generally try to maintain rates whenever possible, the overall reduction in business travel since the second half of 2008 has placed significant pressure on occupancy levels at our properties as well as those of our competitors. Accordingly, we have increased the number of promotional offers and expanded individual hotels’ use of internet distribution channels , which offer different customer price points , in an effort to attract guests. While declines in occupancy levels have recently begun to stabilize, room rates continue to be under pressure. Continued competition for a reduced pool of travelers will make it difficult to regain previous ADR levels in a short period of time even if demand and occupancy levels begin to rise. We believe that our brand strength and ability to manage our operations in an efficient manner will help us to compete successfully within the global hospitality industry.
Agreements with third-party owners and franchisees and relationships with developers .    We depend on our long-term management and franchise agreements with third-party owners and franchisees for a significant portion of our management and franchising fee revenues. The success and sustainability of our management and franchising business depends on our ability to perform under our management and franchising agreements and maintain good relationships with third-party owners and franchisees. Our relationships with these third parties also generate new relationships with developers and opportunities for property development that can support our growth. We believe that we have good relationships with our third-party owners, franchisees and developers and are committed
 
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to the continued growth and development of these relationships. These relationships exist with a diverse group of owners, franchisees and developers and are not heavily concentrated with any particular third party.
Access to capital .    The hospitality industry is a capital intensive business that requires significant amounts of capital expenditures to develop, maintain and renovate properties. Third-party owners are required to fund these capital expenditures for the properties they own in accordance with the terms of the applicable management or franchise agreement. Access to the capital that we or our third-party owners, franchisees or development partners need to finance the construction of new properties or to maintain and renovate existing properties is critical to the continued growth of our business and our revenues. Over the past twelve months, the credit markets and the financial services industry have experienced a period of significant disruption characterized by the bankruptcy, failure, collapse or sale of various financial institutions, increased volatility in securities prices, severely diminished liquidity and credit availability and a significant level of intervention from the governments of the U.S. and other countries. As a result of these market conditions, the cost and availability of capital has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. In particular, in the current environment, available capital for new development is extremely limited if available at all. The availability of capital or the conditions under which we or our third-party owners, franchisees or development partners can obtain capital can have a significant impact on the overall level and pace of future development and therefore the ability to grow our revenues. The recent disruption in the capital markets has diminished the ability and desire of existing and potential development partners to access capital necessary to develop properties actively. We believe that a continued normalization of credit markets as well as significant improvements in the global economy and overall business environment will be necessary before we see a material increase in development activity with third parties.
Expenses
Principal Components
We primarily incur the following expenses:
Owned and leased hotel expenses.     Owned and leased hotel expenses comprise the largest portion of our total direct and selling, general and administrative expenses and reflect the expenses of our consolidated owned and leased hotels. Expenses to operate our hotels include room expense, food and beverage costs, other support costs and property expenses. Room expense includes compensation costs for housekeeping, laundry and front desk staff and supply costs for guest room amenities and laundry. Food and beverage costs include costs for wait and kitchen staff and food and beverage products. Other support expenses consist of costs associated with property-level management, utilities, sales and marketing, operating hotel spas, telephones, parking and other guest recreation, entertainment and services. Property expenses include property taxes, repairs and maintenance, rent and insurance.
Depreciation and amortization expense.     These are non-cash expenses that primarily consist of depreciation of fixed assets such as buildings, furniture, fixtures and equipment at our consolidated owned and leased hotels. Amortization expense primarily consists of amortization of management agreement acquisition costs and franchise and brand intangibles, which are amortized over their estimated useful lives.
Selling, general and administrative expenses.     Selling, general and administrative expenses consist primarily of compensation expense for our corporate staff and personnel supporting our business segments (including divisional offices that support our management and franchising segments), professional fees (including consulting, audit and legal fees), travel and entertainment expenses, bad debt expenses, contractual performance obligations and office administrative and related expenses.
 
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Other costs from managed properties.      Represents costs related primarily to payroll expenses at managed properties where we are the employer. These costs are reimbursed to us with no added margin. As a result, these costs have no effect on our profit, although they do increase our total expenses and the corresponding reimbursements increase our total revenues. We record these costs in “Other costs from managed properties” and the corresponding revenues in “Other revenues from managed properties” in our consolidated statements of income.
Factors Affecting our Costs and Expenses
The following are several principal factors that affect the costs and expenses we incur in the course of our operations. For other factors affecting our costs and expenses, see “Risk Factors—Risks Related to Our Business.”
Fixed nature of expenses.     Many of the expenses associated with managing, franchising, owning and developing hotels and residential and vacation ownership properties are relatively fixed. These expenses include personnel costs, rent, property taxes, insurance and utilities. If we are unable to decrease these costs significantly or rapidly when demand for our hotels and other properties decreases, the resulting decline in our revenues can have a particularly adverse effect on our net cash flow, margins and profits. This effect can be especially pronounced during periods of economic contraction or slow economic growth, such as the current economic recession. Economic downturns generally affect the results of our owned and leased hotel segment more significantly than the results of our management and franchising segments due to the high fixed costs associated with operating an owned or leased property. The effectiveness of any cost-cutting efforts is limited by the fixed-cost nature of our business. As a result, we may not be able to offset further revenue reductions through cost cutting. Employees at some of our owned hotels are parties to collective bargaining agreements that may also limit our ability to make timely staffing or labor changes in response to declining revenues. In addition, any of our efforts to reduce costs, or to defer or cancel capital improvements, could adversely affect the economic value of our properties and brands. Over the past year, we have taken steps to reduce our cost base to levels we feel are appropriate to respond to declining revenues without jeopardizing the overall customer experience or the value of our properties or brands. While we intend to pursue additional cost saving opportunities and maintain our cost structure at appropriate levels while business at our hotels remains depressed, we expect to see the reduced margin levels we have been experiencing to continue until revenues improve.
Changes in depreciation expenses.      Changes in depreciation expenses may be driven by renovations of existing properties, acquisition or development of new properties or the disposition of existing properties through sale or closure. We intend to consider strategic and complementary acquisitions of and investments in businesses, properties or other assets. If we consummate any asset acquisitions, we would likely add depreciable assets, which would result in an increase in depreciation expense.
Demand for vacation ownership properties.     The ongoing economic downturn has severely reduced consumer demand for vacation ownership properties. A significant portion of our costs to support our vacation ownership business relates to direct sales and marketing of these properties. Accordingly, we have significantly reduced these costs as a response to lower demand. These reductions have allowed us to maintain our profit margins in our vacation ownership business but may not be sufficient to offset further reductions in revenues.
Other Items
Asset impairments
We hold significant amounts of goodwill, intangible assets, long-lived assets and equity method investments. We evaluate these assets for impairment as further discussed in “—Critical Accounting
 
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Policies and Estimates.” These evaluations have, in the past, resulted in impairment charges for certain of these assets based on the specific facts and circumstances surrounding those assets. Based on a continuation of the current economic conditions or other factors, we may be required to take additional impairment charges to reflect further declines in our asset and/or investment values.
Acquisitions, divestitures and significant renovations
We periodically acquire, divest of or undertake significant renovations in hotel properties. The results of operations derived from these properties do not, therefore, meet the definition of “comparable hotels” as defined in “—Key Business Metrics Evaluated by Management.” The results of operations from these properties, however, may have a material effect on changes in our results from period to period and are, therefore, discussed separately in our discussion on results of operations when material.
In the six months ended June 30, 2009, we acquired our Hyatt Regency Boston property for a purchase price of $110 million. In 2007, we acquired three properties consisting of: (1) the remaining 50% interest in our Andaz Liverpool Street property (formerly the Great Eastern Hotel), for a purchase price of GBP 40 million ($83 million) and the assumption of GBP 55 million ($114 million) of debt, (2) our Hyatt Regency San Antonio property, for a purchase price of $161 million and the assumption of $67 million of debt, and (3) our Hyatt Regency Grand Cypress property, which we acquired through a capital lease.
In 2008, we sold US Franchise Systems, Inc., which franchised Microtel Inns & Suites and Hawthorn Suites, for a sale price of $131 million.
Effect of foreign currency exchange rate fluctuations
A significant portion of our operations are conducted in functional currencies other than our reporting currency which is the U.S. dollar. As a result, we are required to translate those results from the functional currency into U.S. dollars at market based average exchange rates during the period reported. When comparing our results of operations between periods, there may be material portions of the changes in our revenues or expense that are derived from fluctuations in exchange rates experienced between those periods.
 
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Results of Operations
Six Months Ended June 30, 2009 Compared with Six Months Ended June 30, 2008
Consolidated Results

 	  	Six Months Ended June 30,	 	
(in millions, except percentages)	  	2009	 	 	2008	 	 	Variance	 	
Revenues:	  				 				 				 			
Total revenues	  	$	1,637	  	 	$	2,009	  	 	$	(372	) 	 	(18.5	)% 	
					
Direct and Selling, General, and Administrative Expenses:	  				 				 				 			
Owned and leased hotels	  	 	710	  	 	 	807	  	 	 	(97	) 	 	(12.0	)% 	
Depreciation and amortization	  	 	130	  	 	 	125	  	 	 	5	  	 	4.0	 % 	
Other direct costs	  	 	8	  	 	 	15	  	 	 	(7	) 	 	(46.7	)% 	
Selling, general, and administrative	  	 	122	  	 	 	138	  	 	 	(16	) 	 	(11.6	)% 	
Other costs from managed properties	  	 	623	  	 	 	674	  	 	 	(51	) 	 	(7.6	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Direct and selling, general, and administrative expenses	  	 	1,593	  	 	 	1,759	  	 	 	(166	) 	 	(9.4	)% 	
					
Net gains (losses) and interest income from marketable securities held to fund operating programs	  	 	8	  	 	 	(7	) 	 	 	15	  	 	214.3	 % 	
Equity earnings (losses) from unconsolidated hospitality ventures	  	 	(13	) 	 	 	12	  	 	 	(25	) 	 	(208.3	)% 	
Interest expense	  	 	(27	) 	 	 	(28	) 	 	 	1	  	 	3.6	 % 	
Asset impairments	  	 	(8	) 	 	 	—  	  	 	 	(8	) 	 	(100.0	)% 	
Other income (loss), net	  	 	(56	) 	 	 	55	  	 	 	(111	) 	 	(201.8	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) before income taxes	  	 	(52	) 	 	 	282	  	 	 	(334	) 	 	(118.4	)% 	
(Provision) benefit for income taxes	  	 	14	  	 	 	(107	) 	 	 	121	  	 	113.1	 % 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income (loss) from continuing operations	  	 	(38	) 	 	 	175	  	 	 	(213	) 	 	(121.7	)% 	
Discontinued operations	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	—  	  	
Net income (loss)	  	 	(38	) 	 	 	175	  	 	 	(213	) 	 	(121.7	)% 	
Net loss (income) attributable to noncontrolling interests	  	 	2	  	 	 	(2	) 	 	 	4	  	 	200	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income (Loss) Attributable to Hyatt Hotels Corporation	  	$	(36	) 	 	$	173	  	 	$	(209	) 	 	(120.8	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues .    Consolidated revenues in the six months ended June 30, 2009 decreased $372 million, or 18.5%, compared to the six months ended June 30, 2008, including $49 million in net unfavorable currency effects and a $51 million decrease in other revenues from managed properties. The decrease in other revenues from managed properties was due to lower costs reimbursed by managed properties reflecting cost reductions implemented during the first half of 2009. Comparable owned and leased hotel revenue decreased $257 million over the same period, which includes net unfavorable currency effects of $39 million. The remaining decrease in revenues related primarily to reduced management fees in our management and franchising segments. Revenues for our owned and leased hotels and our management and franchising segments were negatively affected by widespread weakness in hotel results driven by sharply reduced demand. The table below provides a breakdown of revenues by segment for the six months ended June 30, 2009 and 2008. For further discussion of segment revenues for the periods presented, please refer to “—Segment Results.”
 
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 	  	Six Months Ended
June 30,	 	
(in millions, except percentages)	  	2009	 	 	2008	 	 	Variance	 	
Owned and leased hotels	  	$	876	  	 	$	1,125	  	 	$	(249	) 	 	(22.1	)% 	
North American management and franchising	  	 	680	  	 	 	764	  	 	 	(84	) 	 	(11.0	)% 	
International management and franchising	  	 	82	  	 	 	118	  	 	 	(36	) 	 	(30.5	)% 	
Corporate and other	  	 	37	  	 	 	59	  	 	 	(22	) 	 	(37.3	)% 	
Eliminations	  	 	(38	) 	 	 	(57	) 	 	 	19	  	 	33.3	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated revenues	  	$	1,637	  	 	$	2,009	  	 	$	(372	) 	 	(18.5	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Owned and leased hotels expense .    Expenses for owned and leased hotels decreased by $97 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. The decrease was driven primarily by reductions in compensation-related costs and other variable operating expenses at comparable owned and leased hotels of $104 million, as we reduced our costs in response to declines in hotel revenues. Non-comparable owned and leased hotels drove $8 million of increased expenses, due primarily to the 2009 acquisition of our Hyatt Regency Boston property and the opening of a re-branded hotel.
Depreciation and amortization expense .    Depreciation and amortization expense increased by $5 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, driven primarily by increased depreciation of $3 million related to the acquisition of our Hyatt Regency Boston property in 2009 and the opening of a re-branded hotel.
Other direct costs .    Other direct costs represent costs associated with our vacation ownership operations. These costs decreased by $7 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, due to reduced sales of our vacation ownership interests, which have slowed significantly due to reductions in demand.
Selling, general and administrative expenses .    Selling, general and administrative costs decreased by $16 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Through our cost reduction initiatives, we have decreased marketing costs by $12 million, which primarily related to our vacation ownership business, as well as travel and entertainment expenses by $5 million, corporate compensation and benefit related costs by $4 million and professional fee expenses by $3 million. Partially offsetting these decreased expenses were increased expenses under contractual performance obligations of $4 million at our select service hotels and increased bad debt expenses of $4 million.
Net gains (losses) and interest income from marketable securities held to fund operating programs .    Marketable securities held to fund operating programs generated a net gain of $8 million in the six months ended June 30, 2009, compared to the net loss of $7 million in the six months ended June 30, 2008 due to improved performance of the underlying securities.
Equity earnings (losses) from unconsolidated hospitality ventures .    Equity losses from unconsolidated hospitality ventures were $13 million in the six months ended June 30, 2009, compared to income of $12 million for the six months ended June 30, 2008. The decrease was due to a combination of factors, including the current year impairment charges of $10 million, including impairment of interests in a hospitality venture property of $7 million and a vacation ownership property of $3 million. There was a $15 million decline attributable to lower earnings generated by the underlying hotels, of which $2 million related to newly opened hotels.
Interest expense .    Interest expense decreased by $1 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. There was a $4 million reduction in interest
 
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expense relating to the repayment of $600 million of senior subordinated notes in the second quarter of 2009. Further information on this transaction is discussed in “—Liquidity and Capital Resources.” This reduction was offset by a $3 million gain on an interest rate swap which reduced prior year interest expense. The interest rate swap affected interest expense until the swap was designated for hedge accounting treatment in November 2008.
Asset impairments .    Asset impairments recorded for the six months ended June 30, 2009 and 2008 were $8 million and $0, respectively. The $8 million in impairment charges in 2009 included a charge of $5 million for the full impairment of an intangible asset relating to a management agreement covering certain select service hotels in our North American management and franchising segment. The remaining $3 million charge reflects the impairment of property and equipment in our owned and leased hotel segment.
Other income (loss), net .    Other income (loss), net decreased by $111 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, primarily due to $93 million comprised of $88 million of make-whole interest payments and early settlement premiums and a write-off of $5 million of deferred financing costs. Further information on this transaction is discussed in “—Liquidity and Capital Resources.” Additionally, cash distributions from cost method investments decreased $40 million for the comparable periods. These declines were partially offset by gains on marketable securities and foreign currency of $15 million and $10 million, respectively. The table below provides a breakdown of other income (loss), net for the six months ended June 30, 2009 and 2008:

 	  	Six months ended
June 30,	 	
(in millions, except percentages)	  	2009	 	 	2008	 	 	Variance	 	
Interest income on interest-bearing cash and cash equivalents	  	$	10	  	 	$	9	  	 	$	1	  	 	11	% 	
Gains (losses) on other marketable securities	  	 	2	  	 	 	(13	) 	 	 	15	  	 	115	% 	
Income from cost method investments(1)	  	 	22	  	 	 	62	  	 	 	(40	) 	 	(65	)% 	
Foreign currency gains (losses)	  	 	7	  	 	 	(3	) 	 	 	10	  	 	333	% 	
Debt settlement costs(2)	  	 	(93	) 	 	 	—  	  	 	 	(93	) 	 	(100	)% 	
Other(3)	  	 	(4	) 	 	 	—  	  	 	 	(4	) 	 	(100	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income (loss), net	  	$	(56	) 	 	 	55	  	 	 	(111	) 	 	(202	)% 	

(1)	Income from cost method investments for the six months ended June 30, 2009 included $22 million in cash distributions from certain non-hospitality real estate partnerships. The six months ended June 30, 2008 included $62 million in cash distributions from indirect investments in certain life sciences technology companies. We do not expect material distributions from these investments in the future. See note 3 to our unaudited consolidated interim financial statements.	
(2)	Amount relates to costs associated with the repurchase of senior subordinated notes and early settlement of a subscription agreement as described in “—Liquidity and Capital Resources.” The costs include $88 million of make-whole interest payments and early settlement premiums and a $5 million write-off of deferred financing costs.	
(3)	Includes gains (losses) on asset retirements for each period presented.	
(Provision) benefit for income taxes .    Income taxes for the six months ended June 30, 2009 and 2008 were a benefit of $14 million and a provision of $107 million, respectively. The effective tax rate for continuing operations for these periods was 27.1% and 38.0%, respectively. Our effective income tax rate is determined by the level and composition of actual and forecasted pre-tax income subject to varying foreign, state and local taxes and other items.
Operating losses at our U.S. operations, which included costs associated with the repurchase of senior subordinated notes and early settlement of a subscription agreement recognized during 2009,
 
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impacted the effective tax rate for the six months ended June 30, 2009. The resulting tax benefit was offset by additional taxes recorded against income earned by our foreign-based operations, plus $6 million of tax expense for unrecognized tax benefits and a charge of $3 million to write down certain U.S. deferred tax assets.
The effective tax rate for the six months ended June 30, 2008 was favorably impacted by foreign income tax benefits and general business credits. This was more than offset by an increase of $8 million in the liability for unrecognized tax benefits and a charge of $3 million recorded to certain foreign deferred tax assets.
Net loss (income) attributable to noncontrolling interests .    Net loss (income) attributable to noncontrolling interests decreased by $4 million compared to the first six months of 2008, primarily due to operating losses generated at hotels, which are partially owned by noncontrolling partners.
Segment Results
We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA, as described in note 20 to our unaudited consolidated interim financial statements. See “Prospectus Summary—Summary Consolidated Financial Data” for a discussion of our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness. The segment results presented below are presented before intersegment eliminations.
Owned and Leased Hotels .    Revenues decreased by $249 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Included in this decrease was $39 million of net unfavorable currency effects. Comparable owned and leased hotel revenues decreased $257 million, and were driven by a RevPAR decline of 23.8% largely due to reductions in occupancy and ADR across both group and transient business, as well as significant declines in food and beverage revenues. The decline in transient revenues was driven by lower rates as hotels have increased promotions to attract guests. The group revenue decline was primarily a result of significant shortfalls in occupancy from lower short-term bookings and increased meeting cancellations. Food and beverage revenues were down significantly as a result of both lower occupancy and reduced spending by guests compared to 2008. Non-comparable owned and leased hotel revenues increased $8 million primarily due to the acquisition of our Hyatt Regency Boston property during the first quarter of 2009.

 	 	Six Months Ended June 30,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Owned and Leased Hotels)	 	2009	 	2008	 	Variance	 	 	2009	 	 	2008	 	 	Change in
Occ % pts	 	 	2009	 	2008	 	 	Variance	 	
Full Service	 	$	112	 	$	149	 	(24.6	)% 	 	62.7	% 	 	71.2	% 	 	 	(8.5	)% 	 	$	179	 	$	209	  	 	(14.4	)% 	
Select Service	 	 	63	 	 	78	 	(19.4	)% 	 	64.2	% 	 	70.5	% 	 	 	(6.3	)% 	 	 	98	 	 	110	  	 	(11.4	)% 	
Total Owned and Leased Hotels	 	$	100	 	$	131	 	(23.8	)% 	 	63.1	% 	 	71.0	% 	 	 	(7.9	)% 	 	$	158	 	$	184	  	 	(14.3	)% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Six Months Ended June 30,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2009	 	 	2008	 	Variance	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(Unaudited)	 	
Segment Revenues	  	 	$	876	  	 	$	1,125	 	$	(249	) 	 	(22.1	)% 	
Segment Adjusted EBITDA	  	 	$	156	  	 	$	303	 	$	(147	) 	 	(48.5	)% 	
Adjusted EBITDA declined by $147 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, including $10 million in unfavorable currency effects. Comparable owned and leased hotel performance decreased by $118 million primarily due to revenue deterioration partially offset by cost-saving initiatives resulting in reductions in staffing and other hotel costs. The remaining decrease was primarily due to declining operating performance at our unconsolidated hospitality ventures of $19 million.
 
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North American management and franchising .    North American management and franchising revenues decreased by $84 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Other revenues from managed properties declined $48 million due to reductions in costs reimbursed by managed properties. Management and franchise fees declined $36 million. Both base and incentive management fees declined, mainly driven by the effects of a 19.7% decrease in comparable systemwide North American full service RevPAR. Our full service hotels experienced significant rate pressure during the first six months of 2009 due to competition for reduced transient business. Additionally, heavy promotions have shifted transient business to lower rates. We also experienced a significant decline in group business, largely reflected in lower occupancy as we continue to have cancellations and significantly fewer near-term bookings. We have responded to reduced revenue levels with cost reduction initiatives at our full service hotels. As a result, hotel-level operating costs declined by 13% in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. RevPAR at our select service hotels in the six months ended June 30, 2009 declined by 12% compared to the first six months of 2008.

 	  	Six Months Ended June 30,	 	
 	  	RevPAR	 	 	Occupancy	  	ADR	 	
(Comparable Systemwide Hotels)	  	2009	  	2008	  	Variance	 	 	2009	 	 	2008	 	 	Change in
Occ % pts	  	2009	  	2008	 	 	Variance	 	
North American Full Service	  	$	107	  	$	133	  	(19.7	)% 	 	65.6	% 	 	73.0	% 	 	 	(7.4)%	  	$	163	  	$	182	  	 	(10.6	)% 	
North American Select Service	  	 	65	  	 	74	  	(12.0	)% 	 	64.4	% 	 	66.7	% 	 	 	(2.3)%	  	 	101	  	 	110	  	 	(8.8	)% 	
							
 	  	 	  	 	  	 	 	 	 	 	 	 	 	 	Six Months Ended June 30,	 	
(in millions, except percentages)	  	 	  	 	  	 	 	 	 	 	 	 	 	 	2009	  	2008	  	Variance	 	
 	  	 	  	 	  	 	 	 	 	 	 	 	 	 	(Unaudited)	 	
Revenues	  			  			  			 			 			 			  			  				 			
Management, Franchise and Other Fees	  	 	$	92	  	$	128	  	$	(36	) 	 	(28.1	)% 	
Other Revenues from Managed Properties	  	 	 	588	  	 	636	  	 	(48	) 	 	(7.5	)% 	
	  			  			  			 			 			 	 	 	  	 	 	  	 	 	 	 	 	 	
Total Revenues	  	 	$	680	  	$	764	  	$	(84	) 	 	(11.0	)% 	
Adjusted EBITDA	  	 	$	63	  	$	101	  	$	(38	) 	 	(37.6	)% 	
Adjusted EBITDA declined by $38 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, primarily due to reduced management and franchise fees of $36 million. For the six months ended June 30, 2009, expenses under contractual performance obligations increased by $4 million and bad debt expense increased by $2 million. These expenses were offset by cost reduction initiatives resulting in a $5 million decline in compensation and related costs and travel and entertainment expenses.
 
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International management and franchising .     International management and franchising revenues decreased by $36 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, and included $10 million in net unfavorable currency impact. The $35 million decrease in fees was driven by fees from comparable systemwide international full service hotels due to decreased RevPAR of 31.6% in the six months ended June 30, 2009 compared to the six months ended June 30, 2008, driven by both ADR and occupancy declines.

 	  	Six Months Ended June 30,	 	
 	  	RevPAR	 	 	Occupancy	  	ADR	 	
(Comparable Systemwide Hotels)	  	2009	  	2008	  	Variance	 	 	2009	 	 	2008	 	 	Change in
Occ % pts	  	2009	  	2008	 	 	Variance	 	
International Full Service	  	$	116	  	$	169	  	(31.6	)% 	 	56.6	% 	 	66.0	% 	 	 	(9.4)%	  	$	205	  	$	256	  	 	(20.2	)% 	
							
 	  	 	  	 	  	 	 	 	 	 	 	 	 	 	Six Months Ended June 30,	 	
(in millions except percentages)	  	 	  	 	  	 	 	 	 	 	 	 	 	 	2009	  	2008	  	Variance	 	
 	  	 	  	 	  	 	 	 	 	 	 	 	 	 	(Unaudited)	 	
Revenues	  			  			  			 			 			 			  			  				 			
Management, Franchise and Other Fees	  	 	$	56	  	$	91	  	$	(35	) 	 	(38.5	)% 	
Other Revenues from Managed Properties	  	 	 	26	  	 	27	  	 	(1	) 	 	(3.7	)% 	
	  			  			  			 			 			 	 	 	  	 	 	  	 	 	 	 	 	 	
Total Revenues	  	 	$	82	  	$	118	  	$	(36	) 	 	(30.5	)% 	
Adjusted EBITDA	  	 	$	26	  	$	59	  	$	(33	) 	 	(55.9	)% 	
Adjusted EBITDA declined by $33 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008. Unfavorable foreign currency drove $9 million of the decline. The aforementioned management fee declines drove the decrease in Adjusted EBITDA as compared to the prior year.
Corporate and other.     Corporate and other includes unallocated corporate expenses and the results of our vacation ownership business. Revenues declined by $22 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008 due to significant decreases in demand for vacation ownership units as a result of weak economic conditions.

 	  	Six Months Ended June 30,	 	
(in millions, except percentages)	  	2009	 	 	2008	 	 	Variance	 	
 	  	(Unaudited)	 	
Corporate and other Revenues	  	$	37	  	 	$	59	  	 	$	(22	) 	 	(37.3	)% 	
Corporate and other Adjusted EBITDA	  	$	(35	) 	 	$	(46	) 	 	$	11	  	 	23.9	% 	
Adjusted EBITDA improved $11 million in the six months ended June 30, 2009 compared to the six months ended June 30, 2008 from reductions in unallocated corporate expenses due to lower professional fees and reduced compensation costs during this period over the same period in 2008. Lower vacation ownership revenues were offset by reduced vacation ownership expenses.
Eliminations .    Eliminations of $38 million and $57 million for the six months ended June 30, 2009 and 2008, respectively, primarily represent fees charged by our management and franchising segments to our owned and leased hotels for managing their operations.
 
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Non-GAAP Measure Reconciliation
The following table sets forth Adjusted EBITDA by segment in the six months ended June 30, 2009 and 2008. For a discussion of our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness, see “Prospectus Summary—Summary Consolidated Financial Data” and “—Key Business Metrics Evaluated by Management.”

 	  	Six Months Ended June 30,	 	
(in millions, except percentages)	  	2009	 	 	2008	 	 	Variance	 	
Owned and leased hotels	  	$	156	  	 	$	303	  	 	$	(147	) 	 	(48.5	)% 	
North American management and franchising	  	 	63	  	 	 	101	  	 	 	(38	) 	 	(37.6	)% 	
International management and franchising	  	 	26	  	 	 	59	  	 	 	(33	) 	 	(55.9	)% 	
Corporate and other	  	 	(35	) 	 	 	(46	) 	 	 	11	  	 	23.9	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Adjusted EBITDA	  	$	210	  	 	$	417	  	 	$	(207	) 	 	(49.6	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below provides a reconciliation of our consolidated Adjusted EBITDA to EBITDA and a reconciliation of EBITDA to net income (loss) attributable to Hyatt Hotels Corporation in the six months ended June 30, 2009 and 2008:

 	  	Six Months Ended
June 30,	 	
(in millions)	  	2009	 	 	2008	 	
Adjusted EBITDA	  	$	210	  	 	$	417	  	
Equity earnings (losses) from unconsolidated hospitality ventures	  	 	(13	) 	 	 	12	  	
Asset impairments	  	 	(8	) 	 	 	—  	  	
Other income (loss), net	  	 	(56	) 	 	 	55	  	
Discontinued operations, net of tax	  	 	—  	  	 	 	—  	  	
Net loss (income) attributable to noncontrolling interests	  	 	2	  	 	 	(2	) 	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	  	 	(28	) 	 	 	(49	) 	
	  	 	 	 	 	 	 	 	
EBITDA	  	 	107	  	 	 	433	  	
Depreciation and amortization	  	 	(130	) 	 	 	(125	) 	
Interest expense	  	 	(27	) 	 	 	(28	) 	
(Provision) benefit for income taxes	  	 	14	  	 	 	(107	) 	
	  	 	 	 	 	 	 	 	
Net income (loss) attributable to Hyatt Hotels Corporation	  	$	(36	) 	 	$	173	  	

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Year Ended December 31, 2008 Compared with Year Ended December 31, 2007
Consolidated Results

 	  	Years Ended December 31,	 	
(in millions, except percentages)	  	2008	 	 	2007	 	 	Variance	 	
Revenues:	  				 				 				 			
Total revenues	  	$	3,837	  	 	$	3,738	  	 	$	99	  	 	2.6	% 	
					
Direct and Selling, General, and Administrative Expenses: 	  				 				 				 			
Owned and leased hotels	  	 	1,583	  	 	 	1,524	  	 	 	59	  	 	3.9	% 	
Depreciation and amortization	  	 	249	  	 	 	214	  	 	 	35	  	 	16.4	% 	
Other direct costs	  	 	26	  	 	 	42	  	 	 	(16	) 	 	(38.1	)% 	
Selling, general, and administrative	  	 	290	  	 	 	292	  	 	 	(2	) 	 	(0.7	)% 	
Other costs from managed properties	  	 	1,325	  	 	 	1,281	  	 	 	44	  	 	3.4	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Direct and selling, general, and administrative expenses	  	 	3,473	  	 	 	3,353	  	 	 	120	  	 	3.6	% 	
Net gains (losses) and interest income from marketable securities held to fund operating programs	  	 	(36	) 	 	 	15	  	 	 	(51	) 	 	(340.0	)% 	
Equity earnings from unconsolidated hospitality ventures	  	 	14	  	 	 	11	  	 	 	3	  	 	27.3	% 	
Interest expense	  	 	(75	) 	 	 	(43	) 	 	 	(32	) 	 	(74.4	)% 	
Gains on sales of real estate	  	 	—  	  	 	 	22	  	 	 	(22	) 	 	(100.0	)% 	
Asset impairments	  	 	(86	) 	 	 	(61	) 	 	 	(25	) 	 	(41.0	)% 	
Other income, net	  	 	23	  	 	 	145	  	 	 	(122	) 	 	(84.1	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	204	  	 	 	474	  	 	 	(270	) 	 	(57.0	)% 	
Provision for income taxes	  	 	(90	) 	 	 	(208	) 	 	 	118	  	 	56.7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	114	  	 	 	266	  	 	 	(152	) 	 	(57.1	)% 	
Discontinued operations	  	 	56	  	 	 	5	  	 	 	51	  	 	1020.0	% 	
Net income	  	 	170	  	 	 	271	  	 	 	(101	) 	 	(37.3	)% 	
Net (income) attributable to noncontrolling interests	  	 	(2	) 	 	 	(1	) 	 	 	(1	) 	 	(100.0	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation 	  	$	168	  	 	$	270	  	 	$	(102	) 	 	(37.8	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues.     Consolidated revenues increased by $99 million, or 2.6%, in 2008 compared to 2007, including $2 million in net unfavorable currency effects. Revenues from owned and leased hotels increased by $100 million, including $53 million of revenues from non-comparable owned and leased hotels and $51 million of revenues from comparable owned and leased hotels. Our North American management and franchising segment revenues increased by $35 million, all of which was attributable to an increase in other revenues from managed properties driven by increased costs reimbursed by managed properties due to growth in hotel operations primarily occurring during the first half of 2008. Corporate and other revenues decreased by $14 million, primarily attributable to a decline in revenues from our vacation ownership business. The table below provides a breakdown of revenues by segment for the years ended December 31, 2008 and 2007. For further discussion of segment revenues for the periods presented, please refer to “—Segment Results.”

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2008	 	 	2007	 	 	Variance	 	
Owned and leased hotels	  	$	2,139	  	 	$	2,039	  	 	$	100	  	 	4.9	% 	
North American management and franchising	  	 	1,475	  	 	 	1,440	  	 	 	35	  	 	2.4	% 	
International management and franchising	  	 	225	  	 	 	226	  	 	 	(1	) 	 	(0.4	)% 	
Corporate and other	  	 	105	  	 	 	119	  	 	 	(14	) 	 	(11.8	)% 	
Eliminations	  	 	(107	) 	 	 	(86	) 	 	 	(21	) 	 	(24.4	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated revenues	  	$	3,837	  	 	$	3,738	  	 	$	99	  	 	2.6	% 	

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Owned and leased hotels expense.     Owned and leased hotels expenses increased by $59 million, or 3.9%, in 2008 compared to 2007. Non-comparable owned and leased hotel expenses increased $41 million in 2008 due primarily to our hotel acquisitions in 2007. The remaining $18 million increase was primarily due to increased maintenance costs at comparable owned and leased hotels.
Depreciation and amortization expense.     Depreciation and amortization expense increased $35 million, or 16.4%, in 2008 compared to 2007, primarily driven by depreciation and amortization expense associated with our hotel acquisitions in 2007.
Other direct costs.     Other direct costs, which represent costs associated with the sales of our vacation ownership operations, decreased by $16 million, or 38.1%, in 2008 compared to 2007, consistent with the related decline in sales of vacation ownership properties in 2008.
Selling, general and administrative expenses.     Selling, general and administrative expenses were relatively flat in 2008 compared to 2007. The 2008 expenses included a $20 million charge resulting from the termination of our supplemental executive defined benefit plans, which was offset by decreased expenses for our employee benefit programs funded through rabbi trusts.
Net (losses) gains and interest income from marketable securities held to fund operating programs.     Market conditions resulted in net losses of $38 million in 2008 compared to a net gain of $10 million in 2007 from marketable securities held to fund our benefit programs funded through rabbi trusts and in a net gain of $2 million in 2008 compared to a net gain of $5 million in 2007 from marketable securities held for our Hyatt Gold Passport program.
Equity earnings from unconsolidated hospitality ventures.     Earnings from unconsolidated hospitality ventures increased by $3 million in 2008 compared to 2007. This increase in earnings was primarily due to the reversal of a previously recorded reserve for a non-refundable deposit of $9 million to purchase an equity interest in a hotel property in Hawaii, which had been reserved in full in 2007 due to uncertainty surrounding the transaction. The reversal of this reserve was partially offset by increased impairment charges in 2008 compared to charges recorded in 2007. In 2008, we recorded $19 million in impairment charges for three vacation ownership investments based on our analysis of the expected future cash flows compared to $12 million in charges recorded in 2007.
Interest expense.     Interest expense increased by $32 million in 2008 compared to 2007, due primarily to an increase of $25 million attributable to a full year of interest expense in respect of $600 million of senior subordinated notes issued in the second half of 2007 and an increase of $16 million attributable to a full year of interest expense associated with the debt acquired as part of the 2007 purchase of the Andaz Liverpool Street property (formerly the Great Eastern Hotel). The balance of the change over the same period related primarily to a decrease in interest expense of $11 million related to the retirement of debt in 2007.
Gains on sales of real estate.     We did not complete any sales of real estate during 2008 other than those recorded as part of discontinued operations. We recorded $22 million in gains on sales of real estate in 2007 resulting from the sale of seven AmeriSuites hotels that we continued to manage or franchise after the sale and the Hyatt Regency Woodfield property.
Asset impairments.     Asset impairments were $86 million in 2008, primarily due to goodwill impairments related to two hotels, including a $78 million impairment charge for our Andaz Liverpool Street property. We purchased the Andaz Liverpool Street property, which is located in London’s financial district, in 2007, before the inception of the global financial crisis. The value of this property at the time of purchase created goodwill that was fully impaired as of December 31, 2008. The goodwill impairments impacted segment results for the owned and leased hotel segment. In 2007, we recorded a reserve of $61 million on a loan to a hotel developer as a result of the developer’s default.
 
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Other income, net.     Other income, net decreased by $122 million in 2008 compared to 2007. The table below provides a breakdown of other income, net for 2008 and 2007:

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2008	 	 	2007	 	 	Variance	 	
Interest income on interest-bearing cash and cash equivalents	  	$	23	  	 	$	43	  	 	$	(20	) 	 	(46	)% 	
Gains (losses) on other marketable securities	  	 	(37	) 	 	 	—	  	 	 	(37	) 	 	(100	)% 	
Income from cost method investments(1)	  	 	64	  	 	 	87	  	 	 	(23	) 	 	(26	)% 	
Foreign currency gains (losses)	  	 	(23	) 	 	 	17	  	 	 	(40	) 	 	(235	)% 	
Other	  	 	(4	) 	 	 	(2	) 	 	 	(2	) 	 	(100	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	$	23	  	 	$	145	  	 	$	(122	) 	 	(84	)% 	

(1)	Income from cost method investments in 2008 related primarily to distributions of $62 million from indirect investments in certain life science technology companies. We do not expect material distributions from these investments in the future. The majority of income from cost method investments in 2007 related to $62 million in distributions from funds that owned the Extended Stay America and the Homestead Studio Suites investments, primarily as a result of the sale of those businesses, $14 million related to distributions from certain non-hospitality real estate partnerships and $6 million related to distributions from indirect investments in certain life science technology companies. See note 3 to our audited consolidated financial statements.	
Provision for income taxes.     The provision for income taxes was $90 million for 2008 and $208 million for 2007, which resulted in effective income tax rates of 44.0% for 2008 and 43.9% for 2007.
The effective rate for 2008 of 44.0% differed from the U.S. statutory rate of 35.0% due to the nondeductibility of goodwill impairment of $28 million, an increase in unrecognized tax benefits of $17 million and valuation allowances primarily related to foreign operating losses of $13 million. These impacts were partially offset by tax benefits related to IRS settlements and valuation allowance reversals totaling $29 million and foreign tax rate benefits of $9 million.
The effective rate for 2007 of 43.9% differed from the U.S. statutory rate of 35.0% due to an increase in state taxes, net of federal benefits, of $17 million, an increase in unrecognized tax benefits of $30 million and valuation allowances of $17 million, primarily related to foreign operating losses. These impacts were partially offset by foreign tax rate benefits totaling $26 million.
Discontinued operations.     During 2008, we sold US Franchise Systems, Inc., which franchised Microtel Inns & Suites and Hawthorn Suites, and recorded a pretax gain on sale of $78 million in discontinued operations and $1 million in earnings from discontinued operations. Additionally, we sold a hotel property and recorded a pretax gain of $4 million during 2008. Income tax expense related to these transactions was $28 million, resulting in a net gain of $55 million.
During 2007, we sold an AmeriSuites hotel that was classified as a discontinued operation and with which we no longer have a management or franchise relationship, recognizing a net gain of $2 million and net earnings of $3 million from discontinued operations.
Segment Results
We evaluate segment operating performance using segment revenues and segment Adjusted EBITDA as described in note 20 to our audited consolidated financial statements. See “Prospectus Summary—Summary Consolidated Financial Data” for a discussion of our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness. The segment results presented below are presented before intersegment eliminations.
 
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Owned and leased hotels.     Revenues increased by $100 million in 2008 compared to 2007, including $4 million in net unfavorable currency effects. Non-comparable owned and leased hotels accounted for $53 million of the increase in revenues over 2007, attributable to the inclusion of a full year of operations of our hotel acquisitions in 2007. Comparable owned and leased hotel revenues increased by $51 million in 2008 compared to 2007, primarily driven by performance improvements at newly converted Hyatt Place hotels and full service hotels.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Owned and Leased Hotels)	 	2008	 	2007	 	Variance	 	 	2008	 	 	2007	 	 	Change in
Occ % pts	 	 	2008	 	2007	 	Variance	 	
Full Service	 	$	139	 	$	138	 	0.9	% 	 	69.8	% 	 	70.3	% 	 	 	(0.5	)% 	 	$	200	 	$	197	 	1.5	% 	
Select Service	 	 	75	 	 	61	 	22.3	% 	 	69.6	% 	 	60.9	% 	 	 	8.7	% 	 	 	107	 	 	100	 	6.9	% 	
Total Owned and Leased Hotels	 	$	122	 	$	117	 	3.9	% 	 	69.8	% 	 	67.7	% 	 	 	2.1	% 	 	$	175	 	$	173	 	0.9	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2008	 	 	2007	 	Variance	 	
Revenues	  	 	$	2,139	  	 	$	2,039	 	$	100	 	4.9	% 	
Adjusted EBITDA	  	 	$	522	  	 	$	518	 	$	4	 	0.8	% 	
Adjusted EBITDA improved by $4 million in 2008 compared to 2007, including $1 million in net unfavorable currency effects. Results of non-comparable owned and leased hotels improved $10 million largely due to our hotel acquisitions in 2007. Comparable owned and leased hotels declined by $1 million in 2008 compared to 2007. However, the 2007 period included the resolution of disputed rent charges that resulted in a gain of $13 million. Our pro rata share of unconsolidated hospitality ventures Adjusted EBITDA decreased by $4 million in 2008 compared to 2007 due to lower performance of the underlying properties.
North American management and franchising.     North American management and franchising revenues increased by $35 million in 2008 compared to 2007, driven entirely by other revenues from managed properties resulting from increased costs reimbursed by managed properties due to growth in hotel operations primarily occurring during the first half of 2008. Base and incentive fees were flat.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Systemwide Hotels)	 	2008	 	2007	 	Variance	 	 	2008	 	 	2007	 	 	Change in
Occ % pts	 	 	2008	 	2007	 	 	Variance	 	
Systemwide Hotel Results:	 			 			 			 			 			 				 			 				 			
North American Full Service	 	$	128	 	$	129	 	(0.9	)% 	 	72.1	% 	 	73.0	% 	 	 	(0.9	)% 	 	$	177	 	$	177	  	 	0.4	% 	
North American Select Service	 	 	73	 	 	62	 	17.8	% 	 	66.9	% 	 	61.7	% 	 	 	5.2	% 	 	 	108	 	 	100	  	 	8.6	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2008	 	 	2007	 	Variance	 	
Revenues:	 			 			 			 			 			 				 			 				 			
Management, Franchise and Other Fees	  	 	$	229	  	 	$	229	 	$	—	  	 	0.0	% 	
Other Revenues from Managed Properties	  	 	 	1,246	  	 	 	1,211	 	 	35	  	 	2.9	% 	
	 			 			 			 			 			 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Revenues	  	 	$	1,475	  	 	$	1,440	 	$	35	  	 	2.4	% 	
Adjusted EBITDA	  	 	$	162	  	 	$	164	 	$	(2	) 	 	(1.2	)% 	
Adjusted EBITDA declined by $2 million in 2008 compared to 2007. Adjusted EBITDA in 2008 included a $18 million increase in bad debt expense and a $4 million increase, primarily due to employee benefits costs, while 2007 Adjusted EBITDA primarily included $15 million in additional performance cure expenses and $7 million in brand launch costs associated with the conversion of our Hyatt Place hotels.
 
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International management and franchising.     International management and franchising revenues were essentially flat in 2008 compared to 2007. However, 2008 included $2 million in net favorable currency effects and an increase of $4 million in other revenues from managed properties driven by increased costs reimbursed by managed properties due primarily to higher centralized support costs for managed hotel operations. Offsetting these amounts was a $5 million decline in fee revenue primarily due to a $8 million fee received in 2007 in connection with the sale of a managed property by a third-party owner.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Systemwide Hotels)	 	2008	 	2007	 	Variance	 	 	2008	 	 	2007	 	 	Change in
Occ % pts	 	 	2008	 	2007	 	 	Variance	 	
Systemwide Hotel Results:	 			 			 			 			 			 				 			 				 			
International Full Service	 	$	154	 	$	151	 	2.3	% 	 	65.3	% 	 	68.6	% 	 	 	(3.3	)% 	 	$	237	 	$	220	  	 	7.4	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2008	 	 	2007	 	Variance	 	
Revenues:	 			 			 			 			 			 				 			 				 			
Management, Franchise and Other Fees	  	 	$	167	  	 	$	172	 	$	(5	) 	 	(2.9	)% 	
Other Revenues from Managed Properties	  	 	 	58	  	 	 	54	 	 	4	  	 	7.4	% 	
	 			 			 			 			 			 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Revenues	  	 	$	225	  	 	$	226	 	$	(1	) 	 	(0.4	)% 	
Adjusted EBITDA	  	 	$	102	  	 	$	110	 	$	(8	) 	 	(7.3	)% 	
Adjusted EBITDA declined by $8 million in 2008 compared to 2007, including $1 million in favorable currency effects over the same period. The decline in 2008 was primarily driven by a $5 million decrease in fee revenues, as described above, combined with increased employment and professional service expenses.
Corporate and other.     Corporate and other included unallocated corporate expenses and the results of our vacation ownership business. Vacation ownership revenues declined by $14 million due to significant decreases in demand for vacation ownership units due to weak economic conditions.

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2008	 	 	2007	 	 	Variance	 	
Corporate and other Revenues	  	$	105	  	 	$	119	  	 	$	(14	) 	 	(11.8	)% 	
Corporate and other Adjusted EBITDA	  	$	(99	) 	 	$	(84	) 	 	$	(15	) 	 	(17.9	)% 	
Adjusted EBITDA declined by $15 million in 2008 compared to 2007, primarily due to higher corporate costs of $18 million, which includes $8 million of increased compensation and related costs and $6 million in increased legal and accounting fees. These increases were partially offset by a $3 million improvement in vacation ownership Adjusted EBITDA due to aggregate cost reductions.
Eliminations.     Eliminations increased by $21 million in 2008 compared to 2007, primarily representing fees charged by our management and franchising segments to our owned and leased hotels segment.
 
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Non-GAAP Measure Reconciliation
The following table sets forth Adjusted EBITDA by segment for 2008 and 2007. For a discussion of our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness, see “Prospectus Summary—Summary Consolidated Financial Data” and “—Key Business Metrics Evaluated by Management.”

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2008	 	 	2007	 	 	Variance	 	
Owned and leased hotels	  	$	522	  	 	$	518	  	 	$	4	  	 	0.8	% 	
North American management and franchising	  	 	162	  	 	 	164	  	 	 	(2	) 	 	(1.2	)% 	
International management and franchising	  	 	102	  	 	 	110	  	 	 	(8	) 	 	(7.3	)% 	
Corporate and other	  	 	(99	) 	 	 	(84	) 	 	 	(15	) 	 	(17.9	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Adjusted EBITDA	  	$	687	  	 	$	708	  	 	$	(21	) 	 	(3.0	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below provides a reconciliation of our consolidated Adjusted EBITDA to EBITDA and a reconciliation of EBITDA to net income attributable to Hyatt Hotels Corporation for 2008 and 2007:

 	  	Year Ended
December 31,	 	
 	  	2008	 	 	2007	 	
(in millions)	  	 	 	 	 	 	
Adjusted EBITDA 	  	$	687	  	 	$	708	  	
Equity earnings from unconsolidated hospitality ventures	  	 	14	  	 	 	11	  	
Gains on sales of real estate	  	 	—  	  	 	 	22	  	
Asset impairments	  	 	(86	) 	 	 	(61	) 	
Other income, net	  	 	23	  	 	 	145	  	
Charge resulting from the termination of our supplemental executive defined benefit plans	  	 	(20	) 	 	 	—  	  	
Discontinued operations and changes in accounting principles, net of tax	  	 	56	  	 	 	5	  	
Net income attributable to noncontrolling interests	  	 	(2	) 	 	 	(1	) 	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	  	 	(90	) 	 	 	(94	) 	
	  	 	 	 	 	 	 	 	
EBITDA 	  	 	582	  	 	 	735	  	
Depreciation and amortization	  	 	(249	) 	 	 	(214	) 	
Interest expense	  	 	(75	) 	 	 	(43	) 	
Provision for income taxes	  	 	(90	) 	 	 	(208	) 	
	  	 	 	 	 	 	 	 	
Net income attributable to Hyatt Hotels Corporation	  	$	168	  	 	$	270	  	

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Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
Consolidated Results

(in millions, except percentages)	  	Years Ended December 31,	 	
 	  	2007	 	 	2006	 	 	Variance	 	
Revenues:	  				 				 				 			
Total revenues	  	$	3,738	  	 	$	3,471	  	 	$	267	  	 	7.7	% 	
					
Direct and Selling, General, and Administrative Expenses:	  				 				 				 			
Owned and leased hotels	  	 	1,524	  	 	 	1,424	  	 	 	100	  	 	7.0	% 	
Depreciation and amortization	  	 	214	  	 	 	195	  	 	 	19	  	 	9.7	% 	
Other direct costs	  	 	42	  	 	 	46	  	 	 	(4	) 	 	(8.7	)% 	
Selling, general, and administrative	  	 	292	  	 	 	247	  	 	 	45	  	 	18.2	% 	
Other costs from managed properties	  	 	1,281	  	 	 	1,207	  	 	 	74	  	 	6.1	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Direct and selling, general, and administrative expenses	  	 	3,353	  	 	 	3,119	  	 	 	234	  	 	7.5	% 	
					
Net gains and interest income from marketable securities held to fund operating programs	  	 	15	  	 	 	12	  	 	 	3	  	 	25.0	% 	
Equity earnings from unconsolidated hospitality ventures	  	 	11	  	 	 	13	  	 	 	(2	) 	 	(15.4	)% 	
Interest expense	  	 	(43	) 	 	 	(36	) 	 	 	(7	) 	 	(19.4	)% 	
Gains on sales of real estate	  	 	22	  	 	 	57	  	 	 	(35	) 	 	(61.4	)% 	
Asset impairments	  	 	(61	) 	 	 	—  	  	 	 	(61	) 	 	(100.0	)% 	
Other income, net	  	 	145	  	 	 	126	  	 	 	19	  	 	15.1	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	  	 	474	  	 	 	524	  	 	 	(50	) 	 	(9.5	)% 	
Provision for income taxes	  	 	(208	) 	 	 	(193	) 	 	 	(15	) 	 	(7.8	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	266	  	 	 	331	  	 	 	(65	) 	 	(19.6	)% 	
Discontinued operations	  	 	5	  	 	 	(2	) 	 	 	7	  	 	350.0	% 	
Net income	  	 	271	  	 	 	329	  	 	 	(58	) 	 	(17.6	)% 	
Net (income) attributable to noncontrolling interests	  	 	(1	) 	 	 	(14	) 	 	 	13	  	 	92.9	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	270	  	 	$	315	  	 	$	(45	) 	 	(14.3	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenues.     Consolidated revenues increased by $267 million, or 7.7%, in 2007 compared to 2006, including $25 million in favorable currency effects, driven largely by a $179 million increase from owned and leased hotels. Our comparable owned and leased hotels reported an increase in revenues of $141 million driven by an increase in comparable owned and leased RevPAR of 11.1%. The RevPAR increase was primarily driven by an increase in average rate of 9.2%. Non-comparable owned and leased hotel revenues increased by $38 million for 2007 as compared to 2006 primarily due to acquisitions. North American management and franchising revenues increased by $64 million compared to 2006, driven by a $61 million increase in other revenues from managed properties and a $17 million increase in management fees, which were partially offset by contract termination fees of $16 million received in 2006. International management and franchising revenues increased by $38 million over the same period, driven by a $26 million increase in management fees and a $12 million increase in other revenues from managed properties. Management fees increased in both our North American and international businesses due in part to increases in RevPAR attributable to increases in ADR as well as limited occupancy gains in 2007. Other revenues from managed properties increased in North America and internationally due to greater costs reimbursed by managed properties incurred to support growth of the respective hotel operations. Vacation ownership revenues decreased by $5 million in 2007 compared to 2006. The table below provides a breakdown of revenues by segment for the years ended December 31, 2007 and 2006. For further discussion of segment revenues for the periods presented, please refer to “—Segment Results.”
 
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 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2007	 	 	2006	 	 	Variance	 	
Owned and leased hotels	  	$	2,039	  	 	$	1,860	  	 	$	179	  	 	9.6	% 	
North American management and franchising	  	 	1,440	  	 	 	1,376	  	 	 	64	  	 	4.7	% 	
International management and franchising	  	 	226	  	 	 	188	  	 	 	38	  	 	20.2	% 	
Corporate and other	  	 	119	  	 	 	124	  	 	 	(5	) 	 	(4.0	)% 	
Eliminations	  	 	(86	) 	 	 	(77	) 	 	 	(9	) 	 	(11.7	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated revenues	  	$	3,738	  	 	$	3,471	  	 	$	267	  	 	7.7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Owned and leased hotels expense.     Owned and leased hotels expense increased by $100 million in 2007 compared to 2006, primarily attributable to overall growth in our comparable owned and leased hotels, which had an $84 million increase in expenses. The majority of this expense increase was for compensation and related costs as we added staff at hotels to meet the greater demand for hospitality services. The remaining increase in expenses was primarily driven by noncomparable owned and leased hotels due to acquisitions of hotels.
Depreciation and amortization expense.     Depreciation and amortization expense increased by $19 million in 2007 compared to 2006, primarily driven by depreciation and amortization expense associated with our hotel acquisitions in 2007.
Other direct costs.     Other direct costs, which represent costs associated with our vacation ownership operations, decreased by $4 million in 2007 compared to 2006, primarily due to decreased cost of sales of vacation ownership intervals.
Selling, general and administrative expenses.     Selling, general and administrative expenses increased by $45 million in 2007 compared to 2006, primarily due to $12 million in payroll and other costs related to the growth of our international management and franchising segment, $7 million in higher performance cure expense, $5 million in greater brand launch costs associated with the start-up of our Hyatt Place and Hyatt Summerfield Suites brands, and $14 million of higher corporate expenses due primarily to increased payroll and related benefits.
Net gains and interest income from marketable securities held to fund operating programs.     We recognized a net gain of $5 million in 2007 compared to a net gain of $2 million in 2006 on securities held to fund our Hyatt Gold Passport program and a net gain of $10 million in 2007 and 2006 in securities held to fund our benefit programs funded through rabbi trusts.
Equity earnings from unconsolidated hospitality ventures.     Earnings from unconsolidated hospitality ventures decreased by $2 million in 2007 compared to 2006, primarily due to the difference in impairment and other charges recorded in both years. During 2007, we recorded a charge of $12 million, primarily related to our interest in a hotel property in Waikiki, while in 2006, we recorded an impairment charge of $10 million related to a hotel property in South America.
Interest expense.     Interest expense increased by $7 million in 2007 compared to 2006 and included interest of $10 million in respect of a capital lease obligation we entered into in 2007 for our Hyatt Regency Grand Cypress property, interest of $10 million in respect of debt assumed in connection with 2007 acquisitions and interest of $11 million associated with the 2007 issuance of $600 million in senior subordinated notes. Partially offsetting these increases was a reduction to interest expense of $12 million due to the repayment of debt retired in 2007 and higher capitalized interest in 2007 of $12 million in construction projects.
Gains on sales of real estate.     Gains on sale of real estate of $22 million in 2007 were attributable to the sale of seven AmeriSuites hotels and the Hyatt Regency Woodfield in 2007. In 2006,
 
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gains on sale of real estate of $57 million were attributable to a $18 million gain on the sale of a hotel property and a $39 million gain on the sale of land.
Asset impairments.     We recorded a charge of $61 million in 2007 attributable to a reserve taken in respect of a loan to a hotel developer as a result of the developer’s default. We wrote off the loan in 2008.
Other income, net.     Other income, net increased by $19 million in 2007 compared to 2006. The table below provides a breakdown of other income, net for 2007 and 2006:

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2007	 	 	2006	 	 	Variance	 	
Interest income on interest-bearing cash and cash equivalents	  	$	43	  	 	$	49	  	 	$	(6	) 	 	(12	)% 	
Income from cost method investments(1)	  	 	87	  	 	 	72	  	 	 	15	  	 	21	% 	
Foreign currency gains	  	 	17	  	 	 	11	  	 	 	6	  	 	55	% 	
Other	  	 	(2	) 	 	 	(6	) 	 	 	4	  	 	67	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	$	145	  	 	$	126	  	 	$	19	  	 	15	% 	

(1)	The majority of income from cost method investments in 2007 related to $62 million in distributions from funds that owned the Extended Stay America and the Homestead Studio Suites investments, primarily as a result of the sale of those businesses, $14 million related to distributions from certain non-hospitality real estate partnerships and $6 million related to distributions from indirect investments in certain life science technology companies. The 2006 income from cost method investments primarily related to $40 million in cash distributions from certain non-hospitality real estate partnerships and a $12 million distribution from indirect investments in certain life science technology companies. See note 3 to our audited consolidated financial statements.	
Provision for income taxes.      The provision for income taxes was $208 million for 2007 and $193 million in 2006, based on effective income tax rates of 43.9% in 2007 and 37.0% in 2006.
The effective rate for 2007 of 43.9% differed from the U.S. statutory rate of 35.0% due to an increase in state taxes, net of federal benefits, of $17 million and an increase in unrecognized tax benefits of $30 million and valuation allowances of $17 million, primarily related to foreign operating losses. These impacts were partially offset by foreign tax rate benefits totaling $26 million.
The effective rate for 2006 of 37.0% differed from the U.S. statutory rate of 35.0% due to state and local taxes, net of federal benefits, of $14 million and an increase in valuation allowances of $3 million, primarily related to foreign operating losses. These impacts were partially offset by foreign tax rate benefits of $10 million. 
Net income attributable to noncontrolling interests.     Net income attributable to noncontrolling interests decreased by $13 million in 2007 as compared to 2006. This decrease was attributable to the $39 million gain on sale of land discussed above, of which $13 million was attributable to noncontrolling interests.
Discontinued operations.     During 2007, we sold an AmeriSuites hotel, recognizing a net gain of $2 million and net earnings of $3 million from discontinued operations.
During 2006, we sold eight select service hotels, recognizing a net loss of $2 million and net earnings of $4 million.
 
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Segment Results
Owned and Leased Hotels.     Owned and leased hotel revenues increased by $179 million in 2007 compared to 2006, including $19 million in favorable currency effects. Comparable owned and leased hotel revenues increased by $141 million, driven by strong RevPAR growth of 11.1%. Non-comparable owned and leased hotel revenues increased by $38 million, primarily as a result of acquisitions completed during 2007.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Owned and Leased Hotels)	 	2007	 	2006	 	Variance	 	 	2007	 	 	2006	 	 	Change in
Occ % pts	 	 	2007	 	2006	 	Variance	 	
Full Service	 	$	134	 	$	123	 	9.5	% 	 	70.4	% 	 	69.5	% 	 	 	0.9	% 	 	$	191	 	$	177	 	8.1	% 	
Select Service	 	 	61	 	 	51	 	20.4	% 	 	60.6	% 	 	59.0	% 	 	 	1.6	% 	 	 	101	 	 	87	 	17.1	% 	
Total Owned and Leased Hotels	 	$	115	 	$	103	 	11.1	% 	 	67.8	% 	 	66.7	% 	 	 	1.1	% 	 	$	169	 	$	155	 	9.2	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2007	 	 	2006	 	Variance	 	
Revenues	  	 	$	2,039	  	 	$	1,860	 	$	179	 	9.6	% 	
Adjusted EBITDA	  	 	$	518	  	 	$	421	 	$	97	 	23.0	% 	
Adjusted EBITDA increased by $97 million in 2007 compared to 2006, including $8 million in favorable currency effects. The growth in Adjusted EBITDA was primarily due to improved performance at comparable owned and leased hotels of $52 million, which included the resolution of disputed rent charges that resulted in a gain of $13 million. Our pro rata share of unconsolidated hospitality ventures Adjusted EBITDA increased by $25 million and non-comparable owned and leased hotels contributed $20 million of incremental earnings.
North American management and franchising.     North American management and franchising revenues increased by $64 million in 2007 compared to 2006, of which $61 million was due to an increase in other revenues from managed properties driven by higher costs reimbursed by managed properties incurred to support growth of hotel operations. Included in 2006 were management agreement termination fees of $16 million. Excluding the 2006 termination fees, base and incentive fees in 2007 increased by $17 million, primarily due to a RevPAR increase of 7.7% driven by ADR and occupancy improvement at comparable systemwide North American full service hotels over the same period.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Systemwide Hotels)	 	2007	 	2006	 	Variance	 	 	2007	 	 	2006	 	 	Change in
Occ % pts	 	 	2007	 	2006	 	 	Variance	 	
Systemwide Hotel Results:	 			 			 			 			 			 				 			 				 			
North American Full Service	 	$	129	 	$	120	 	7.7	% 	 	73.3	% 	 	71.7	% 	 	 	1.6	% 	 	$	177	 	$	168	  	 	5.3	% 	
North American Select Service	 	 	62	 	 	57	 	7.9	% 	 	61.6	% 	 	63.6	% 	 	 	(2.0	)% 	 	 	100	 	 	90	  	 	11.5	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2007	 	 	2006	 	Variance	 	
Revenues:	 			 			 			 			 			 				 			 				 			
Management, Franchise and Other Fees	  	 	$	229	  	 	$	226	 	$	3	  	 	1.3	% 	
Other Revenues from Managed Properties	  	 	 	1,211	  	 	 	1,150	 	 	61	  	 	5.3	% 	
	 			 			 			 			 			 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Revenues	  	 	$	1,440	  	 	$	1,376	 	$	64	  	 	4.7	% 	
Adjusted EBITDA	  	 	$	164	  	 	$	171	 	$	(7	) 	 	(4.1	)% 	
 
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Adjusted EBITDA declined $7 million in 2007 compared to 2006. The decline was primarily due to increased expenses for performance cures of $7 million and brand launch costs of $5 million associated with the conversion of the Hyatt Place properties. These increased expenses were partially offset by the 2007 increase in fee revenues.
International management and franchising.     International management and franchising revenues increased by $38 million in 2007 compared to 2006, including $6 million in favorable currency effects. Other revenues from managed properties increased by $12 million in 2007 driven by higher costs reimbursed by managed properties incurred to support growth of hotel operations. Management fees increased $26 million as a result of RevPAR growth of 19.1%, attributable in part to robust demand by business travelers.

 	 	Year Ended December 31,	 	
 	 	RevPAR	 	 	Occupancy	 	 	ADR	 	
(Comparable Systemwide Hotels)	 	2007	 	2006	 	Variance	 	 	2007	 	 	2006	 	 	Change in
Occ % pts	 	 	2007	 	2006	 	Variance	 	
Systemwide Hotel Results:	 			 			 			 			 			 				 			 			 			
International Full Service	 	$	149	 	$	125	 	19.1	% 	 	68.9	% 	 	67.5	% 	 	 	1.4	% 	 	$	216	 	$	185	 	16.7	% 	
							
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year Ended December 31,	 	
(in millions, except percentages)	 	 	 	 	 	 	 	 	 	 	 	2007	 	 	2006	 	Variance	 	
Revenues:	 			 			 			 			 			 				 			 			 			
Management, Franchise and Other Fees	  	 	$	172	  	 	$	146	 	$	26	 	17.8	% 	
Other Revenues from Managed Properties	  	 	 	54	  	 	 	42	 	 	12	 	28.6	% 	
	 			 			 			 			 			 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Revenues	  	 	$	226	  	 	$	188	 	$	38	 	20.2	% 	
Adjusted EBITDA	  	 	$	110	  	 	$	101	 	$	9	 	8.9	% 	
Adjusted EBITDA increased by $9 million in 2007 compared to 2006, including $6 million in net favorable currency effects. The improvement was due primarily to the $26 million increase in management fees, partially offset by higher compensation and defined benefit expenses of $12 million and other expenses of $5 million.
Corporate and other.     Corporate and other included unallocated corporate expenses and the results of our vacation ownership business. Vacation ownership revenues decreased by $5 million.

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2007	 	 	2006	 	 	Variance	 	
Corporate and other Revenues	  	$	119	  	 	$	124	  	 	$	(5	) 	 	(4.0	)% 	
Corporate and other Adjusted EBITDA	  	$	(84	) 	 	$	(65	) 	 	$	(19	) 	 	(29.2	)% 	
Adjusted EBITDA declined by $19 million in 2007 compared to 2006, primarily due to increased corporate expenses of $14 million due to an increase of $8 million in compensation and related costs, $5 million in increased brand development costs and professional fees. The remaining $5 million decline is due to the decrease in vacation ownership sales.
Eliminations. Eliminations increased by $9 million in 2007 compared to 2006, primarily representing fees charged by our management and franchising segments to our owned hotels for handling their operations.
 
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Non-GAAP Measure Reconciliation
The following table sets forth Adjusted EBITDA by segment for 2007 and 2006. For a discussion of our definition of Adjusted EBITDA, how we use it, why we present it and material limitations on its usefulness, see “Prospectus Summary—Summary Consolidated Financial Data” and “—Key Business Metrics Evaluated by Management.”

 	  	Year Ended December 31,	 	
(in millions, except percentages)	  	2007	 	 	2006	 	 	Variance	 	
Owned and Leased Hotels	  	$	518	  	 	$	421	  	 	$	97	  	 	23.0	% 	
North American Management and Franchising	  	 	164	  	 	 	171	  	 	 	(7	) 	 	(4.1	)% 	
International Management and Franchising	  	 	110	  	 	 	101	  	 	 	9	  	 	8.9	% 	
Corporate and Other	  	 	(84	) 	 	 	(65	) 	 	 	(19	) 	 	(29.2	)% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consolidated Adjusted EBITDA	  	$	708	  	 	$	628	  	 	$	80	  	 	12.7	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The table below provides a reconciliation of our consolidated Adjusted EBITDA to EBITDA and a reconciliation of EBITDA to net income attributable to Hyatt Hotels Corporation for 2007 and 2006:

 	  	Year Ended
December 31,	 	
 	  	2007	 	 	2006	 	
(in millions)	  				 				
Adjusted EBITDA	  	$	708	  	 	$	628	  	
Equity earnings from unconsolidated hospitality ventures	  	 	11	  	 	 	13	  	
Gains on sales of real estate	  	 	22	  	 	 	57	  	
Asset impairments	  	 	(61	) 	 	 	—  	  	
Other income, net	  	 	145	  	 	 	126	  	
Discontinued operations and changes in accounting principles, net of tax	  	 	5	  	 	 	(2	) 	
Net income attributable to noncontrolling interests	  	 	(1	) 	 	 	(14	) 	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	  	 	(94	) 	 	 	(69	) 	
	  	 	 	 	 	 	 	 	
EBITDA	  	 	735	  	 	 	739	  	
Depreciation and amortization	  	 	(214	) 	 	 	(195	) 	
Interest expense	  	 	(43	) 	 	 	(36	) 	
Provision for income taxes	  	 	(208	) 	 	 	(193	) 	
	  	 	 	 	 	 	 	 	
Net income attributable to Hyatt Hotels Corporation	  	$	270	  	 	$	315	  	
	  	 	 	 	 	 	 	 	
Inflation
We  do not believe that inflation had a material effect on our business in 2008, 2007 or 2006.
Liquidity and Capital Resources
Overview
We finance our business primarily with existing cash, cash generated from our operations and net proceeds from dispositions. When appropriate, we also borrow cash under our revolving credit facility or from other third party sources, and may also raise funds by issuing debt or equity securities as necessary. We maintain a cash investment policy that emphasizes preservation of capital. Starting in 2008, the global credit and economic crisis had a significant impact on the operations of, and the capital available to, the lodging industry. In response, we implemented the following initiatives:
 
 	Ÿ 	 	we repurchased and cancelled our senior subordinated notes;	
 
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 	Ÿ 	 	we sold shares of common stock to the holders of the senior subordinated notes in settlement of their obligations under an equity subscription agreement;	
 
 	Ÿ 	 	we raised additional equity capital from our existing stockholders;	
 
 	Ÿ 	 	we extended the maturity of our revolving credit facility and increased borrowing capacity to $1.5 billion;	
 
 	Ÿ 	 	we issued $500 million aggregate principal amount of senior notes and repaid $252 million of outstanding secured debt and settled certain related swap agreements; and	
 
 	Ÿ 	 	we implemented a number of cost saving initiatives and reduced our capital expenditure plans for 2009.	
Accordingly, the economic crisis has not had a material impact on the balance of our cash and cash equivalents or our access to liquidity. We believe that our cash position and cash from operations, together with borrowing capacity under our revolving credit facility, will be adequate to meet all of our funding requirements in the foreseeable future.
Recent Transactions Affecting our Liquidity and Capital Resources
In May 2009, we repurchased and cancelled $600 million aggregate principal amount of senior subordinated notes from three third-party investors for an aggregate purchase price of $688 million, consisting of a $600 million repayment of principal and $88 million in make-whole interest and early settlement premiums. We also settled obligations of those third-party investors to subscribe for shares of our common stock and received $11 million for the balance due under the subscription agreement. In the settlement, we sold 21.7 million shares of our common stock to the investors for a purchase price of $600 million. For a detailed description of these transactions, see “Certain Relationships and Related Party Transactions—Agreements Related to August 2007 Financing Transaction, Repurchase of Notes and Early Settlement of Subscription Agreement.”
In May 2009, we issued and sold 58.4 million shares of our common stock for an aggregate purchase price of $759 million to our existing investors (including certain third-party investors) and their affiliates, including affiliates of the holders of our senior subordinated notes referred to above and certain of our non-employee directors.
In July 2009, we amended our revolving credit facility to extend its maturity and to increase borrowing capacity to $1.5 billion. As of June 30, 2009, after giving effect to this amendment and extension, we had undrawn capacity of $1.4 billion under our revolving credit facility, which reflects outstanding letters of credit. Under the terms of the amended facility, the commitments to lend made by those lenders that did not consent to extend the maturity of their commitments (comprising of $370 million of credit availability) will terminate on June 29, 2010, with the remaining commitments to lend (i.e., from those lenders that consented to extend the maturity of their commitments and new lenders) terminating on June 29, 2012. Interest rates on outstanding borrowings are based on either one-, two-, three- or six-month LIBOR or an alternate base rate, at our option, with margins in each case based upon our credit ratings. In addition, if the applicable LIBOR falls below 1.0% in the case of LIBOR-based borrowings (including alternative base rate borrowings based upon one-month LIBOR), we must pay a utilization fee to lenders whose loans mature on June 29, 2012, on applicable loans at a rate equal to the difference between 1.0% and the applicable LIBOR.
Our revolving credit facility is guaranteed by substantially all of our material domestic subsidiaries and requires us to comply with financial covenants, including the maintenance of specific financial ratios. These financial covenants, which were amended in July 2009 in connection with extending the maturity and increasing the borrowing capacity of the revolving credit agreement, as discussed above,
 
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require maintenance of a maximum ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDA (each as defined in the revolving credit facility) not to exceed 4.5x, a minimum ratio of Consolidated EBITDA to Consolidated Interest Expense (as defined in the revolving credit facility) of at least 3.0x and a maximum ratio of Secured Funded Debt to Net Property and Equipment (each as defined in the revolving credit facility) not to exceed 0.3x, in each case measured quarterly. We were in compliance with all applicable covenants as of June 30, 2009. For a detailed discussion of the covenants and restrictions imposed by the documents governing our indebtedness, see “Description of Principal Indebtedness.”
In August 2009, we issued $500 million aggregate principal amount of senior notes. See “Description of Principal Indebtedness.” We used a portion of the net proceeds from the sale of the senior notes to repay $252 million of certain outstanding secured debt and settle certain related swap agreements.
Sources and Uses of Cash
At June 30, 2009, we had cash and cash equivalents of $1.2 billion, after giving effect to the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements. We had cash and cash equivalents of $428 million at December 31, 2008, $409 million at December 31, 2007 and $801 million at December 31, 2006.
																					
 	  	Six Months Ended
June 30,	 	 	Year Ended December 31,	 	
(in millions)	  	2009	 	 	2008	 	 	2008	 	 	2007	 	 	2006	 	
 	  	(Unaudited)	 	 	 	 	 	 	 	 	 	 	
Cash provided by (used in):	  				 				 				 				 				
Operating activities	  	$	61	  	 	$	132	  	 	$	287	  	 	$	362	  	 	$	369	  	
Investing activities	  	 	(214	) 	 	 	(9	) 	 	 	(423	) 	 	 	(396	) 	 	 	(494	) 	
Financing activities	  	 	699	  	 	 	(25	) 	 	 	(20	) 	 	 	(374	) 	 	 	(92	) 	
Cash provided by discontinued operations	  	 	—  	  	 	 	11	  	 	 	143	  	 	 	31	  	 	 	30	  	
Effects of changes in exchange rate on cash and cash equivalents	  	 	(6	) 	 	 	(8	) 	 	 	25	  	 	 	(14	) 	 	 	(4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net changes in cash and cash equivalents	  	$	540	  	 	$	101	  	 	$	12	  	 	$	(391	) 	 	$	(191	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash Flows from Operating Activities
Cash flows provided by operating activities totaled $61 million in the six months ended June 30, 2009, compared to $132 million in the same period last year. The decrease in cash flow generation year-over-year was primarily due to the loss from continuing operations, which included the costs related to the repurchase of senior subordinated notes and early settlement of a subscription agreement described above, of which $77 million was a use of cash. Offsetting these decreases was a significant reduction in cash paid for taxes due to a substantial payment made in the first half of 2008 related to a distribution from indirect investments in certain life science technology companies that was not repeated in 2009, as well as the effect on income tax expense resulting from the shift from a net income position in 2008 to a net loss position in 2009. Additionally, cash used for compensation related expenses reduced significantly in 2009 compared to 2008 primarily due to cost containment measures and a large deferred compensation payment made in the first half of 2008.
In 2008, cash flows provided by operating activities totaled $287 million, compared to $362 million in 2007. The decrease was primarily driven by lower operating results and a 2008 cash payment of $42 million in connection with the termination of our supplemental executive defined benefit plans.
In 2007, cash flows provided by operating activities were relatively flat compared to 2006.
 
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Cash Flows from Investing Activities
Cash flows used in investing activities totaled $214 million in the six months ended June 30, 2009, compared to $9 million in the same period last year. During the first six months of 2009, we invested $109 million, net of cash received, related to the acquisition of our Hyatt Regency Boston property. During the first six months of 2008, we invested $31 million to acquire the remaining interest in our Andaz Liverpool Street property. In the six months ended June 30, 2009, we contributed $39 million of cash to unconsolidated hospitality ventures, compared to $10 million in the same period last year. The large increase was due to the investment in an unconsolidated hospitality venture in Texas that owns a convention hotel. Also, our investing activities included a reduction of $171 million of distributions of capital from unconsolidated entities. The majority of the decrease relates to the fact that 2008 benefited from the distributions from indirect investments in certain life science technology companies of $184 million.
In 2008, cash flows used in investing activities totaled $423 million, compared to $396 million in 2007. The increase was driven by a $278 million senior secured loan that we provided to a hospitality venture that acquired the Hyatt Regency Waikiki and the absence of proceeds from sales of real estate in 2008 compared to $98 million of such proceeds in 2007. The increase was partially offset by a $119 million decrease in capital expenditures in 2008, a $93 million increase in distributions from investments in 2008 and a $212 million decrease in funds used for acquisitions in 2008. The increased distributions from investments in 2008 were primarily attributable to distributions from indirect investments in certain life science technology companies in which we have a 5% residual interest.
In 2007, cash flows used in investing activities totaled $396 million, compared to $494 million in 2006. This reduction was primarily related to a $68 million decrease in funds used for acquisitions in 2007.
Cash Flows from Financing Activities
Cash flows provided by financing activities totaled $699 million in the six months ended June 30, 2009, compared to $25 million of cash used in financing activities during the six months ended June 30, 2008. We repurchased $600 million in outstanding senior subordinated notes from investors and paid down the net balance of $30 million outstanding on our revolving credit facility as well as $19 million in capital lease obligations. In connection with the settlement of a subscription agreement, we sold 21.7 million shares of common stock to existing investors for a purchase price of $600 million. In addition, we issued additional shares of common stock to investors in exchange for cash of $755 million, net of transaction costs of $4 million. These transactions caused our debt to total capital ratio to decrease by 14.7% and 23.5% when calculated on a net debt basis, as set forth in the following table:
 
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The following is a summary of our debt to capital ratios as of June 30, 2009, on an actual basis and on an adjusted basis to give effect to the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements, and as of December 31, 2008:

(in millions, except percentages)	  	June 30,
2009	 	 	December 31,
2008	 	
 	  	Actual	 	 	As Adjusted	 	 			
Consolidated debt	  	$	612	  	 	$	858	  	 	$	1,247	  	
Stockholders’ equity	  	 	4,874	  	 	 	4,876	  	 	 	3,564	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total capital	  	 	5,486	  	 	 	5,734	  	 	 	4,811	  	
				
Total debt to total capital	  	 	11.2	% 	 	 	15.0	% 	 	 	25.9	% 	
				
Consolidated debt	  	 	612	  	 	 	858	  	 	 	1,247	  	
Less: Cash and cash equivalents	  	 	968	  	 	 	1,220	  	 	 	428	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net consolidated debt (cash)	  	 	(356	) 	 	 	(362	) 	 	 	819	  	
Net debt (cash) to total capital	  	 	(6.5	)% 	 	 	(6.3	)% 	 	 	17.0	% 	
In 2008, cash flows used in financing activities totaled $20 million, compared to $374 million in 2007. The decrease was primarily attributable to the net use of cash in 2007 in connection with the retirement of $325 million of debt and the repurchase of 35.8 million shares of our common stock for $1.1 billion, partially offset by the issuance of 100,000 shares of Series A convertible preferred stock for $500 million and the issuance of unsecured senior subordinated notes for $600 million.
In 2007, cash flows used in financing activities totaled $374 million, compared to $92 million in 2006, including $86 million related to payments on debt. The increase in cash used was primarily attributable to the 2007 financing activity described above.
Cash Flows from Discontinued Operations
In 2008, net cash provided by discontinued operations increased $112 million, which was attributable to the sale of US Franchise Systems, Inc., which owned the Microtel and Hawthorne Suites brands, during the third quarter of 2008, resulting in $131 million of gross proceeds.
Capital Expenditures
We routinely make capital expenditures to enhance our business. We divide our capital expenditures into maintenance, enhancements to existing properties and investment in new facilities.
During the six months ended June 30, 2009, we made total capital expenditures of $104 million, which included $31 million related to our Andaz Fifth Avenue property in New York. During the six months ended 2008, our total capital expenditures were $116 million, which included $12 million related to our Andaz Fifth Avenue property. Our total capital expenditures during 2008 were $258 million, which included $28 million related to our Andaz Fifth Avenue property, compared to $377 million during 2007. We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flow from operations.
Revolving Credit Facility and Letters of Credit
At June 30, 2009, we had no borrowings outstanding under our revolving credit facility. At December 31, 2008, we had $30 million of borrowings outstanding under our revolving credit facility. Additionally, we have outstanding undrawn letters of credit that are issued under our revolving credit
 
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facility. During the six months ended June 30, 2009, the average daily borrowings under the revolving credit facility were $82 million. We had no daily borrowings under the revolving credit facility during the six months ended June 30, 2008.
We issue letters of credit either under the revolving credit facility or directly with financial institutions. We had $109 million in letters of credit outstanding at June 30, 2009 and $110 million in letters of credit outstanding at December 31, 2008. We had $88 million in letters of credit issued under the revolving credit facility as of June 30, 2009 and $89 million in letters of credit issued under the revolving credit facility as of December 31, 2008. We had letters of credit issued directly with financial institutions of $21 million at June 30, 2009 and at December 31, 2008.
The average daily borrowings under the revolving credit facility were $20 million during 2008 and $4 million during 2007. At December 31, 2007 we had no outstanding borrowings under the revolving credit facility. We had letters of credit outstanding in the amount of $104 million at December 31, 2007. Letters of credit issued under the revolving credit facility totaled $83 million as of December 31, 2007. The letters of credit issued directly with banks totaled $21 million at December 31, 2007. See “Description of Principal Indebtedness.”
Other Indebtedness and Future Debt Maturities
We entered into a thirty-year capital lease for the Hyatt Regency Grand Cypress in 2007. Under this lease, we are obligated to make at least $30 million in capital improvements to the property within the first five years of the lease. As of June 30, 2009, we had contracted the full amount of capital improvements and $27 million had been spent. The aggregate amount outstanding under this lease was $201 million as of June 30, 2009. The aggregate amount of annual payments under the lease totals $14.2 million, and we have options to buy out the property in the eighth year of the lease for $200 million, in the tenth year of the lease for $220 million and in the fifteenth year of the lease for $255 million.
After giving effect to our use of a portion of the net proceeds from the August 2009 sale of senior notes to repay certain outstanding secured debt and settle certain related swap agreements, and excluding the $201 million lease obligation described above, all other third-party indebtedness as of June 30, 2009 totaled $160 million, consisting primarily of property-specific secured indebtedness on the following three properties:
 
 	Ÿ 	 	Hyatt Regency San Antonio ($59 million), which matures in 2011;	
 
 	Ÿ 	 	Hyatt Regency Princeton ($45 million), which matures in 2011; and	
 
 	Ÿ 	 	Hyatt Regency Aruba ($35 million), which matures in 2011.	
The interest rates on these mortgages are fixed, ranging from 6.00% to 10.07%.
At June 30, 2009, $17 million of our outstanding debt will mature in the following twelve months, and $9 million of additional debt will mature in the second half of 2010. After giving effect to our use of a portion of the net proceeds from the August 2009 sale of senior notes to repay certain outstanding secured debt and settle certain related swap agreements, at June 30, 2009, $11 million of our outstanding debt will mature in the following twelve months, and $5 million of additional debt will mature in the second half of 2010. We believe that we will have adequate liquidity to meet requirements for scheduled maturities. However, we cannot assure you that we will be able to refinance our indebtedness as it becomes due and, if refinanced, whether such refinancing will be available on favorable terms.
 
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Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2008:

 	  	 	  	Payments Due by Period	
(dollars in millions)	  	Total	  	Less Than
1 Year	  	1-3 Years	  	3-5 Years	  	After 5 Years	
Debt(1)(2)(3)	  	$	1,237	  	$	73	  	$	441	  	$	672	  	$	51	
Capital lease obligations(1)	  	 	316	  	 	37	  	 	32	  	 	32	  	 	215	
Operating lease obligations	  	 	417	  	 	30	  	 	55	  	 	49	  	 	283	
Purchase obligations	  	 	117	  	 	98	  	 	19	  	 	—  	  	 	—  	
Other long-term liabilities(4)	  	 	258	  	 	14	  	 	17	  	 	18	  	 	209	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total contractual obligations	  	$	2,345	  	$	252	  	$	564	  	$	771	  	$	758	

 

(1)	Includes principal as well as interest payments.	
(2)	Assumes constant interest rate and foreign exchange rate (as of December 31, 2008) for international debt and floating rate debt.	
(3)	In 2009, we repaid $600 million in senior subordinated notes, issued $500 million aggregate principal amount of senior notes and repaid $252 million of secured debt.	
(4)	Primarily consists of deferred compensation plan liabilities and obligations to fund contract acquisition costs, loans to hotel owners or other investments. Excludes $91 million in long-term tax positions due to the uncertainty related to the timing of the reversal of those positions.	
Off-Balance Sheet Arrangements
Our off-balance sheet arrangements at December 31, 2008 included purchase obligations of $117 million, letters of credit of $89 million and surety bonds of $22 million. These amounts are more fully discussed in “—Sources and Uses of Cash—Revolving Credit Facility and Letters of Credit”, “—Contractual Obligations” and note 14 to our audited consolidated financial statements.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk primarily from changes in interest rates and foreign currency exchange rates. In certain situations, we seek to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into financial arrangements to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged. We enter into derivative financial arrangements to the extent they meet the objectives described above, and we do not use derivatives for trading or speculative purposes. At June 30,  2009, we were a party to hedging transactions including the use of derivative financial instruments, as discussed below.
Foreign Currency Exposures and Exchange Rate Instruments
We maintain non-U.S. dollar denominated debt, which provides a natural hedge of a portion of our international foreign currency earnings exposure but also exposes our reported debt balances to fluctuations in foreign currency exchange rates. During the six months ending June 30, 2009, the effect of changes in foreign currency exchange rates was a net increase of $22 million.
We conduct business in various foreign currencies and use foreign currency forward contracts to offset our exposure associated with the fluctuations of certain foreign currencies. These foreign currency exposures typically arise from intercompany loans and other intercompany transactions. The net U.S. dollar equivalent of the notional amount of the forward contracts as of June 30, 2009 was $199 million, all of which expire in 2009. We intend to offset the gains and losses related to our
 
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intercompany loans and transactions with gains or losses on our foreign currency forward contracts such that there is a negligible effect to net income attributable to Hyatt Hotels Corporation. We expect to continue this practice relating to our intercompany loans and transactions, and may also begin to manage the risks associated with other transactional and translational foreign currency volatility within our business.
Critical Accounting Policies and Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in our consolidated financial statements and accompanying notes.
We believe that of our significant accounting policies, which are described in note 2 to the audited consolidated financial statements included in this prospectus, the following accounting policies are critical due to the fact that they involve a higher degree of judgment and estimates about the effect of matters that are inherently uncertain. As a result, these accounting policies could materially affect our financial position and results of operations. While we have used our best estimates based on the facts and circumstances available to us at the time, different estimates reasonably could have been used in the current period. In addition, changes in the accounting estimates that we use are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions. Management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of the board of directors.
Goodwill
We review the carrying value of all our goodwill in accordance with Financial Accounting Standards Board, (FASB) Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets , by comparing the carrying value of our reporting units to their fair values in a two-step process. We define a reporting unit at the individual property or business level. We are required to perform this comparison at least annually or more frequently if circumstances indicate possible impairment. When determining fair value in step one, we utilize internally developed discounted future cash flow models, third-party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our consolidated capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value. If the carrying value is in excess of the fair value, we must perform step two in order to determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination. We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry. Changes in our allocation approach could result in different measures of implied fair value and impact the final impairment charge, if any.
 
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Changes in economic and operating conditions impacting these assumptions could result in goodwill impairments in future periods. We had $120 million of goodwill as of June 30, 2009, and $120 million as of December 31, 2008. An adverse change to our fair value estimates could result in an impairment charge, which could be material to our earnings. A 10% change in our estimates of projected future operating cash flows, discount rates, or terminal value growth rates used in our calculations of the fair values of the reporting units would have no impact on the reported value of our goodwill.
Goodwill is also reviewed for impairment upon the occurrence of a triggering event. If a triggering event is determined to occur, we then apply the two-step method described above. Determining whether or not a triggering event has occurred requires us to apply judgment. The final determination of the occurrence of a triggering event is based on our knowledge of the hospitality industry, historical experience, location of the property, market conditions and property-specific information available at the time of the assessment. We realize, however, that the results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis.
Long-Lived Assets and Definite-Lived Intangibles
We evaluate the carrying value of our long-lived assets and definite-lived intangibles for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when certain triggering events occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to earnings. When determining fair value, we use internally developed discounted future cash flow models, third-party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs, terminal value growth rate and appropriate discount rates based on the weighted-average cost of capital.
As part of the process detailed above we use judgment to:
 
 	Ÿ 	 	determine whether or not a triggering event has occurred. The final determination of the occurrence of a triggering event is based on our knowledge of the hospitality industry, historical experience, location of the property, market conditions and property-specific information available at the time of the assessment. We realize, however, that the results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis;	
 
 	Ÿ 	 	determine the projected undiscounted future operating cash flows when necessary. The principal factor used in the undiscounted cash flow analysis requiring judgment is our estimates regarding long-term growth and costs which are based on historical data, various internal estimates and a variety of external sources and are developed as part of our routine, long-term planning process; and	
 
 	Ÿ 	 	determine the estimated fair value of the respective long-lived asset when necessary. In determining the fair value of a long lived asset, we typically use internally developed discounted cash flow models. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources and are developed as part of our routine, long-range planning process.	
 
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Changes in economic and operating conditions impacting these judgments could result in impairments to our long-lived assets in future periods, which could be material to our earnings. We had $3.9 billion and $3.8 billion of long-lived assets and definite-lived intangibles as of June 30, 2009 and December 31, 2008, respectively.
Unconsolidated Hospitality Ventures
We record a loss in the value of an unconsolidated hospitality venture that is determined to be an “other than temporary” decline in our consolidated statements of income as an impairment loss. We evaluate the carrying value of our unconsolidated hospitality ventures for impairment by comparing the estimated fair value of the venture to the book value when certain triggering events occur. If the fair value is less than the book value of the unconsolidated hospitality venture, we use our judgment to determine if the decline in value is temporary or other than temporary. The factors we consider when making this determination include, but are not limited to:
 
 	Ÿ 	 	length of time and extent of the decline;	
 
 	Ÿ 	 	loss of value as a percentage of the cost of the unconsolidated hospitality venture;	
 
 	Ÿ 	 	financial condition and near-term financial projections of the unconsolidated hospitality venture;	
 
 	Ÿ 	 	our intent and ability to retain the unconsolidated hospitality venture to allow for the recoverability of the lost value; and	
 
 	Ÿ 	 	current economic conditions.	
When determining fair value, we use internally developed discounted cash flow models, third-party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we use various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital.
As part of the process detailed above we use judgment to determine:
 
 	Ÿ 	 	whether or not a triggering event has occurred. The final determination of the occurrence of a triggering event is based on our knowledge of the hospitality industry, historical experience, location of the underlying venture property, market conditions and venture-specific information available at the time of the assessment. We realize, however, that the results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis;	
 
 	Ÿ 	 	the estimated fair value of the unconsolidated hospitality venture when necessary. In determining the fair value of an unconsolidated hospitality venture we typically utilize internally developed discounted cash flow models. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future cash flows of the venture, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of the unconsolidated hospitality venture’s capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on the unconsolidated hospitality venture’s historical data, various internal estimates and a variety of external sources and are developed as part of our routine, long-range planning process; and	
 
 	Ÿ 	 	whether a decline in value is deemed to be other than temporary. The final determination is based on our review of the consideration factors mentioned above, as well as our knowledge of the hospitality industry, historical experience, location of the underlying venture property, market conditions and venture-specific information available at the time of the assessment. We	
 
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 	realize, however, that the results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis.	
Changes in economic and operating conditions impacting these judgments could result in impairments to our unconsolidated hospitality ventures in future periods. We had investments of $ 213 million of unconsolidated hospitality ventures accounted for under the equity method as of June 30, 2009, and $191 million of unconsolidated hospitality ventures accounted for under the equity method as of December 31, 2008.
Income Taxes
We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes , which establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns. Judgment is required in addressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws or interpretations thereof). In addition, we are subject to examination of our income tax returns by the Internal Revenue Service and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements. See “Risk Factors—Risks Related to Our Business—We may be liable for proposed tax liabilities and the final amount of taxes paid may exceed the amount of applicable reserves, which could reduce our profits.”
We adopted the provisions of FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109 , on January 1, 2007. FIN 48 prescribes a financial statement recognition threshold and measurement attribute for tax positions taken or expected to be taken in a tax return. Specifically, it clarifies that an entity’s tax benefits must be “more likely than not” of being sustained assuming that its tax reporting positions will be examined by taxing authorities with full knowledge of all relevant information prior to recording the related tax benefit in the financial statements. If the position drops below the “more likely than not” standard, the benefit can no longer be recognized. Assumptions, judgment and the use of estimates are required in determining if the “more likely than not” standard has been met when developing the provision for income taxes. A change in the assessment of the “more likely than not” standard could materially impact our consolidated financial statements.
Stock Compensation
Overview
In February 2006, we adopted our LTIP as a means of attracting, retaining and incentivizing qualified executives, key employees and nonemployee directors to increase our value and continue our efforts to build and sustain growth. SFAS No. 123(R), Share-Based Payment, was effective January 1, 2006 and requires compensation expense related to stock-based compensation transactions to be measured and recognized based on fair value. With the adoption of the LTIP in February 2006, we began applying the provisions of SFAS No. 123(R). As of June 30, 2009, we have authorized 13,750,000 shares of common stock to be issued under the LTIP.
We are required to determine the fair value of the underlying common stock in order to determine the fair value of our stock appreciation rights (SARs) and restricted stock units (RSUs) granted under the LTIP. Given the absence of a trading history for our common stock prior to this offering, the LTIP
 
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states that the stock value is to be determined by the compensation committee of our board of directors based on either an independent valuation or using the price paid for a share of common stock between a willing buyer and willing seller, excluding transactions between us and Pritzker family business interests. The compensation committee determined our per share price to be as follows for each of our award grants since January 1, 2008:

Grant Date	  	Common Stock
Fair Value	 	
May 2, 2008	  	$	29.09	(1) 	
September 11, 2008	  	 	29.09	(2) 	
June 9, 2009	  	 	13.00	(3) 	

(1)	In accordance with the LTIP, we determined the fair value of our common stock as of December 31, 2007 based on an independent valuation performed contemporaneously with the grant date. The valuation was reviewed and approved by the compensation committee.	
(2)	In September 2008, approximately four months following the May grant, we made a single grant in connection with the hiring of a new executive. We continued to use the $29.09 per share value for our September 2008 grant of RSUs, as the total shares granted were immaterial and we did not have an updated valuation or an external transaction on which to base an updated share value, as stipulated by our LTIP.	
(3)	In May 2009, we sold additional shares of our common stock to existing stockholders, including third-party stockholders, at $13.00 per share. The price paid per share was between a willing buyer and seller. As a result, and in accordance with the LTIP, the compensation committee used the $13.00 per share value as the basis for our June 9, 2009 grant. The difference between the $13.00 per share value at June 9, 2009 and the $29.09 per share value at September 11, 2008 was caused by a combination of factors, but was primarily driven by the decline in our operating performance resulting from the ongoing economic recession and the other financial and economic disruptions that occurred over the past twelve months, which adversely affected demand and equity valuations in the hospitality industry.	
The following table summarizes by grant date the awards granted since January 1, 2008 under our LTIP, as well as the estimated fair value at the date of grant.

Grant Date	  	Award
Type	  	Number
Granted	  	Fair Value	
May 2, 2008	  	SARs	  	569,275	  	$	13.00	
May 2, 2008	  	RSUs	  	412,015	  	 	29.09	
September 11, 2008	  	RSUs	  	40,670	  	 	29.09	
June 9, 2009	  	SARs	  	984,420	  	 	7.20	
June 9, 2009	  	RSUs	  	553,450	  	 	13.00	
The awards are determined to be classified as equity awards with the fair value being determined on the grant date. We recognize stock-based compensation expense over the requisite service period of the individual grantee, which generally equals the vesting period. We currently have only issued service condition awards, and have therefore elected to use the straight-line method of expense attribution. We recognize, however, that if we begin to issue performance-based awards, the graded vesting method will be required. This will result in an increase to stock-based compensation expense in the earlier years of the requisite service period and a decrease in the later years.
The process of estimating the fair value of stock-based compensation awards and recognizing the associated expense over the requisite service period involves significant management estimates and assumptions.
 
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We use an estimated forfeiture rate of 0% because only a small group of executives has historically received these awards and we have limited historical data on which to base these estimates. We monitor the forfeiture activity to ensure that the current estimate continues to be appropriate. Any changes to this estimate will impact the amount of compensation expense we recognize with respect to any future grants.
We determine the fair value of our stock-settled SARs using the Black-Scholes-Merton (BSM) option-pricing model. Under the BSM option-pricing model, management is required to make certain assumptions, including assumptions relating to the following:
Expected volatility .    Because there is no trading history for our common stock, we do not have sufficient information available on which to base a reasonable and supportable estimate of the expected volatility of our share price. Consequently, the expected price volatility for our common stock is estimated using the average implied volatility of exchange-traded options of our major publicly traded competitors. We evaluate the five-day trailing average implied volatility of exchange-traded options with a minimum term of two years. Using the five-day average, we apply linear interpolation to determine the implied volatility for an option with a strike price equal to the underlying stock’s current trading level. Our peer set was determined based upon companies in our industry with similar business models.
Expected term .    The expected term assumption is estimated using the midpoint between the vesting period and the contractual life of each SAR, in accordance with the SEC’s Staff Accounting Bulletin Topic 14, Share-Based Payment .
Risk-free interest rate .    The risk free interest rate is based on the yields of U.S. Treasury instruments with similar expected lives.
Dividend yield .    We have never declared or paid any cash dividends and do not plan to pay cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero.
Generally, the expected volatility and expected term assumptions are the main drivers of value under the BSM option-pricing model. Consequently, changes in these assumptions can have a significant impact on the resulting fair value. A 10% change in the expected volatility or the expected term assumption would result in an immaterial change to our overall compensation expense.
The fair value of our SARs granted since January 2008 was estimated using the BSM option pricing model with the following assumptions:

 	  	June 9, 2009
Grant	 	 	May 2, 2008
Grant	 	
Expected Volatility	  	56.50	% 	 	40.00	% 	
Expected Life in Years	  	6.196	  	 	6.208	  	
Risk-free Interest Rate	  	2.417	% 	 	3.36	% 	
Annual Dividend Yield	  	0	% 	 	0	% 	
If, in the future, we determine that another method is more reasonable, or, if another method for calculating these input assumptions is prescribed by authoritative guidance, and, therefore, should be used to estimate expected volatility or expected term, the fair value calculated for our stock-based compensation could change significantly. Higher volatility and longer expected term assumptions result in an increase to stock-based compensation expense determined at the date of grant. Stock-based compensation expense affects our selling, general and administrative expense.
We intend to expand the future pool of recipients of stock-based compensation in future periods. Accordingly, we will incur non-cash compensation expense related to the vesting of these future awards.
 
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Our total unearned compensation under our LTIP program was $17.3 million as of December 31, 2008 and $20.3 million as of June 30, 2009 for SARs and $12.6 million as of December 31, 2008 and $16.4 million as of June 30, 2009 for RSUs. We will record these amounts to compensation expense over the next eleven years.
Recent Accounting Pronouncements
In May 2009, the FASB issued SFAS No. 165, Subsequent Events . SFAS No. 165 establishes the accounting for and disclosure requirements of events or transactions that occur after the balance sheet date, but before the financial statements are issued. SFAS No. 165 is effective for interim and annual periods ending after June 15, 2009. We adopted SFAS No. 165 as of June 30, 2009.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) . SFAS No. 167 amends the consolidation rules related to variable interest entities (VIEs) under SFAS No. 46(R). The new rules expand the primary beneficiary analysis to incorporate a qualitative review of which entity controls and directs the activities of the VIE. SFAS No. 167 also modifies the rules regarding the frequency of ongoing reassessments of whether a company is the primary beneficiary. Under SFAS No. 167, companies are required to perform ongoing reassessments as oppose to only when certain triggering events occur, as was previously required. SFAS No. 167 is effective for the first annual reporting period that begins after November 15, 2009 and for interim periods therein. We are currently evaluating the impact, if any, the adoption of SFAS No. 167 will have on our consolidated financial statements.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162. SFAS No. 168 establishes the FASB Accounting Standards Codification as the source of authoritative GAAP for nongovernmental entities. Additionally, SFAS No. 168 modifies the GAAP hierarchy to only include two levels of GAAP, authoritative and nonauthoritative. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. We do not expect the adoption of SFAS No. 168 to have a material impact on our consolidated financial results.
 
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 THE LODGING INDUSTRY
The lodging industry is a global business and a significant part of the overall economy, with over $400 billion in revenues in 2008. The lodging industry is highly segmented with a variety of brands targeting a wide range of consumer needs at various price points. Companies in the lodging industry generally operate under one or more business models, including hotel management, brand franchising and hotel ownership. Hotels are broadly grouped into three categories: full-service, select-service and limited-service. Full-service hotels generally offer a full range of amenities and facilities, including food and beverage (F&B) facilities and meeting facilities. Select-service hotels provide many of the amenities available at full-service hotels but on a smaller scale and tend not to have meeting facilities. Limited-service hotels usually offer only rooms, although some offer modest F&B facilities such as breakfast buffets or small meeting rooms.
Geographically, the global lodging industry can be generally divided into five regions: Europe, Asia Pacific, Central and South America, North America and Middle East and Africa. The global economic downturn has had a significant impact on the overall lodging industry, resulting in significant recent RevPAR declines in all regions. The global lodging industry is also influenced by the cyclical relationship between the supply of and demand for hotel rooms.
YTD June 2009 vs. June 2008 ADR, Occupancy and RevPAR Comparison

Source: Smith Travel Research
Lodging demand growth typically is related to the health of the overall economy in addition to local demand factors that stimulate business and leisure travel to specific locations. In particular, macroeconomic trends relating to GDP growth, corporate profits, capital investments and employment growth are some of the primary drivers of lodging demand. According to the International Monetary Fund, certain major advanced economies, including the U.S. and the United Kingdom, are not projected to experience an increase in GDP growth until 2010; however, key emerging and developing economies, such as China and India are projected to experience significant growth in annual GDP during 2009, 2010 and 2011. Other select economies with exposure to energy and other commodities, such as the United Arab Emirates and Brazil, are expected to begin their recovery in 2010, ahead of more developed economies. Historically, recovery in demand for lodging has generally lagged improvement in the overall economy.
 
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Annual Percent Change in Real GDP Growth for Select Countries

Source: International Monetary Fund
The U.S. lodging market, within the North American region, has a greater share of global lodging revenues than any other single country in the world, with $141 billion in revenues in 2008. As of June 30, 2009, the U.S. lodging market was comprised of approximately 4.8 million hotel rooms, which included approximately 3.3 million rooms in branded hotels and approximately 1.5 million rooms in independent hotels.
From 2002 to 2007, broad growth in the economy led to increases in U.S. lodging demand. During 2008, the overall weakness in the economy, particularly the turmoil in the credit markets, erosion of consumer confidence and increasing unemployment resulted in declines in both consumer and business spending. As a result, lodging demand from both leisure and business travelers decreased significantly during 2008. Decreased demand has resulted in declines in occupancy levels, making it difficult for operators to maintain room rates. It is expected that lodging demand will continue to decline until the macroeconomic trends demonstrate sustained growth.
Lodging supply growth is typically driven by overall lodging demand, as extended periods of strong demand growth tend to encourage new hotel development. However, the rate of supply growth is also influenced by a number of additional factors including availability and cost of capital, construction costs and local market considerations. In particular, because of the lengthy planning and construction process required to complete the development of hotels, supply growth generally lags behind demand growth. As an example, when lodging demand grew from 2002 to 2007, there was an increase in the number of new hotel rooms from cyclical lows; however, the pace of construction remained below long-term averages. From June 2008 through June 2009, the number of new rooms under construction decreased approximately 27%. New hotel room completions in 2009 will likely be lower than the long-term average and, beginning in 2010, supply growth is expected to decrease significantly. The relatively low level of recent supply growth coupled with a declining new construction pipeline is expected to create a favorable RevPAR growth environment once positive demand growth returns in the future.
 
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Number of Hotel Rooms in Construction in the United States

Source: Smith Travel Research
Revenue per available room (RevPAR) is the product of the average daily rate and the average daily occupancy percentage. RevPAR does not include non-room revenue which consists of other revenue generated by a hotel property such as, food and beverage, parking, telephone and other guest service revenues. The chart below sets forth the RevPAR growth for the U.S. lodging industry from 1988 to 2008. RevPAR growth was negative in 2008, which was only the fourth year since 1988 that RevPAR growth in the United States has been negative (1991, 2001, 2002 and 2008) and RevPAR growth is expected to be negative again in 2009. Currently, the lodging market is widely considered to be in the declining stage of the business cycle. Nonetheless, the U.S. lodging market has shown resilience and strong long-term growth since 1988. 
Annual RevPAR Growth

Source: Smith Travel Research
 
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 BUSINESS
Overview
We are a global hospitality company with widely recognized, industry leading brands and a tradition of innovation developed over our more than fifty-year history. Our mission is to provide authentic hospitality by making a difference in the lives of the people we touch every day. We focus on this mission in pursuit of our goal of becoming the most preferred brand in each segment that we serve for our associates, guests and owners. We support our mission and goal by adhering to a set of core values that characterize our culture. We believe that our mission, goal and values, together with the strength of our brands, strong capital and asset base and opportunities for expansion, provide us with a platform for long-term value creation.
We manage, franchise, own and develop Hyatt-branded hotels, resorts and residential and vacation ownership properties around the world. As of June 30, 2009, our worldwide portfolio consisted of 413 Hyatt-branded properties ( 119,509 rooms and units), including:
 
 	Ÿ 	 	158 managed properties (60,934 rooms), all of which we operate under management agreements with third-party property owners;	
 
 	Ÿ 	 	100 franchised properties (15,322 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;	
 
 	Ÿ 	 	96 owned properties (including 4 consolidated hospitality ventures) ( 25,786 rooms) and 6 leased properties (2,851 rooms), all of which we manage;	
 
 	Ÿ 	 	28 managed properties owned or leased by unconsolidated hospitality ventures (12,361 rooms);	
 
 	Ÿ 	 	15 vacation ownership properties (933 units), all of which we manage; and	
 
 	Ÿ 	 	10 residential properties ( 1,322 units), all of which we manage and some of which we own.	
Our full service hotels operate under four world-recognized brands, Park Hyatt, Grand Hyatt, Hyatt Regency and Hyatt. We recently introduced our fifth full service brand, Andaz, where our guests experience a vibrant yet relaxed atmosphere, geared towards today’s individual business and leisure travelers. Our two select service brands are Hyatt Place and Hyatt Summerfield Suites (an extended stay brand), which have been well received in the United States and we believe have significant growth potential both in the United States and internationally. We develop, sell and manage vacation ownership properties in select locations as part of the Hyatt Vacation Club. We also manage Hyatt-branded residential properties that are often adjacent to Hyatt-branded full service hotels. We assist third parties in the design and development of such mixed-use projects based on our expertise as a manager and owner of vacation ownership properties, residential properties and hotels.
Our associates, whom we also refer to as members of the Hyatt family, consist of over 80,000 individuals working at our corporate and regional offices and our managed, franchised and owned properties in 45 countries around the world. Substantially all of our hotel general managers are trained professionals in the hospitality industry with extensive hospitality experience in their local markets and host countries. The general managers of our managed properties are empowered to manage their properties on an independent basis based on their market knowledge, management experience and understanding of our brands. Our divisional management teams located in cities around the world, such as Atlanta, Dubai, Hong Kong, Mexico City, New York, San Francisco and Zurich, support our general managers by providing corporate resources, mentorship, owner interaction and other assistance necessary to help them achieve their goals. Our Franchise and Owner Relations Group provides a single point of contact for our franchisees and offers resources to support franchised properties, including assistance with commercial contracts, distribution matters and brand standards as
 
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well as sales and marketing and reservations support. Our executive management team, headquartered in Chicago, supports our management teams and associates around the world, provides strategic direction and sets overall policies for our company.
We primarily derive our revenues from hotel operations, management and franchise fees, other revenues from managed properties and sales of vacation ownership properties. For the year ended December 31, 2008, revenues totaled $3.8 billion, net income attributable to Hyatt Hotels Corporation totaled $168 million and Adjusted EBITDA totaled $687 million. For the six months ended June 30, 2009, revenues totaled $ 1.6 billion, net loss attributable to Hyatt Hotels Corporation totaled $ 36 million and Adjusted EBITDA totaled $ 210 million. See “Prospectus Summary—Summary Consolidated Financial Data” for our definition of Adjusted EBITDA and why we present it and “Prospectus Summary—Summary Consolidated Financial Data” for a reconciliation of our consolidated Adjusted EBITDA to net income attributable to Hyatt Hotels Corporation for the periods presented. For the year ended December 31, 2008 and the six months ended June 30, 2009, 79.9% and 81.3% of our revenues were derived from operations in the United States, respectively. As of June 30, 2009, 76.9% of our long-lived assets were located in the United States. As of June 30, 2009 and after giving effect to the August 2009 issuance and sale of $500 million aggregate principal amount of senior notes and the use of a portion of the proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements as described under “Prospectus Summary—Recent Developments,” we had total debt of $ 858 million, cash and cash equivalents of $ 1.2 billion. As of June 30, 2009 and after giving effect to the July 2009 amendment and extension of our revolving credit facility, we had undrawn borrowing capacity of $1.4 billion. These sources provide us with significant liquidity and resources for future growth.
Our History
Hyatt was founded by Jay Pritzker in 1957 when he purchased the Hyatt House motel adjacent to the Los Angeles International Airport. Over the following decade, the Pritzker family business interests grew the company into a North American management and hotel ownership company, which became a public company in 1962. In 1968, Hyatt International was formed and subsequently became a separate public company. Hyatt Corporation and Hyatt International Corporation were taken private by the Pritzker family business interests in 1979 and 1982, respectively. On December 31, 2004, substantially all of the hospitality assets owned by Pritzker family business interests, including Hyatt Corporation and Hyatt International Corporation, were consolidated under a single entity, now named Hyatt Hotels Corporation.
Commencing in 2007, third parties, including affiliates of Goldman, Sachs & Co. and Madrone GHC, LLC, made long-term investments in Hyatt. Pritzker family business interests, affiliates of Goldman Sachs and Madrone GHC currently own approximately 85.0%, 7.5% and 6.1%, respectively, of our common stock, and immediately following completion of this offering will own approximately     %,     % and     %, respectively, of our common stock, assuming no exercise of the underwriters’ option to purchase additional shares.
Our Mission, Goal and Values
Our Mission
Our mission is to provide authentic hospitality by making a difference in the lives of the people we touch every day, including our associates, guests and owners.
Our Goal
Our goal is to be the most preferred brand in each customer segment that we serve for our associates, guests and owners.
 
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Our Values
We aim to foster a common purpose and culture within the Hyatt family through shared core values of mutual respect, intellectual honesty and integrity, humility, fun, creativity and innovation.
Our mission, goal and values are interdependent, and we refer to this interdependence as the “Hyatt value chain.” The Hyatt value chain begins with our associates. We believe that our efforts to engage our associates in planning for how we can better serve our fellow associates, guests and owners contributes to their commitment to genuine service, which is the first step to achieving high levels of guest satisfaction. In our view, motivating our associates to become personally involved in serving and demonstrating loyalty to our guests is central to fulfilling our mission. We rely upon the management teams at each of our managed properties to lead by example and we provide them with the appropriate autonomy to make operational decisions in the best interest of the hotel and brand. We believe the managers of our franchised properties are experienced operators with high standards and have demonstrated commitment to our values and our approach to guest service that is designed to enhance guest satisfaction. High levels of guest satisfaction lead to increased guest preference for our brands, which we believe results in a strengthened revenue base over the long term. We also believe that engaged associates will enhance efficient operation of our properties, resulting in improved financial results for our property owners. Sustained adherence to these principles is a basis for our brand reputation and is one of the principal factors behind the decisions by our diverse group of owners and developers to invest in Hyatt-branded properties around the world. We work with existing and prospective owners and developers to increase our presence around the world, which we expect will lead to new channels for professional growth for our associates, guest satisfaction and brand preference thus adding growth to our company and completing the Hyatt value chain.
Our Competitive Strengths
We have significant competitive strengths that support our goal of being the most preferred brand for our associates, guests and owners.
 
 	Ÿ 	 	World Class Brands.     We believe that our widely recognized, industry leading brands provide us with a competitive advantage in attracting and driving preference for associates, guests and owners. We have consistently received top rankings, awards and accolades for service and guest experience from independent publications and surveys, including Condé Nast Traveler, Travel and Leisure, Mobil and AAA. As an example, 54 properties across our Park Hyatt, Grand Hyatt and Hyatt Regency brands received the AAA four diamond lodging award in 2009. Our brand recognition and strength is key to our ability to drive preference for our brands among our associates, guests and owners.	
 
 	Ÿ 	 	Global Platform with Compelling Growth Potential.     Our existing global presence is widely distributed and we operate in 20 of the 25 most populous urban centers around the globe based on demographic research. We believe that our existing hotels around the world provide us with a strong platform from which to selectively pursue new growth opportunities in markets where we are under-represented. We have a long history of executing on growth opportunities. Our dedicated global development executives in offices around the world apply their experience, judgment and knowledge to ensure that new Hyatt branded hotels enhance preference for our brands. An important aspect of our compelling growth potential is our strong brand presence in higher growth markets around the world such as India, China, Russia, the Middle East and Brazil. The combination of our existing presence and brands, experienced development team, established third-party relationships and significant access to capital provides us with a strong foundation for future growth and long-term value creation.	
 
 	Ÿ 	 	Deep Culture and Experienced Management Teams.     Hyatt has a strong culture rooted in values that have supported our past and form the foundation for our future. The members of	
 
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 	the Hyatt family are united by shared values, a common mission and a common goal. The associates at our managed and owned properties are led by an experienced group of hotel general managers with average tenure of more than 21 years. Regional and divisional management teams located around the world support our hotel general managers by providing corporate resources, mentorship and coaching, owner support and other assistance necessary to help them achieve their goals. Senior operating management has an average of 27 years of experience in the industry. Our experienced executive management team sets overall policies for our company, supports our regional and divisional teams and our associates around the world, provides strategic direction and leads our growth worldwide.	
 
 	Ÿ 	 	Strong Capital Base and Disciplined Financial Approach.     Our approach is to maintain appropriate levels of financial leverage and liquidity through industry cycles and economic downturns such as the one we are currently experiencing. As of June 30, 2009, we had cash and cash equivalents of $1.2 billion, after giving effect to the August 2009 issuance and sale of the senior notes and the use of a portion of the net proceeds from the sale of the senior notes to repay certain outstanding secured debt and settle certain related swap agreements, as described under “Prospectus Summary—Recent Developments.” As of such date and after giving effect to the July 2009 amendment and extension of our revolving credit facility, we had undrawn borrowing capacity of $1.4 billion. We have a modest level of debt and no significant debt maturities through 2012. We believe that as a result of our balance sheet strength, we are uniquely positioned to take advantage of strategic opportunities to develop or acquire properties and brands even in economic downturns such as the one we are currently experiencing. We adhere to a formal investment process in evaluating such opportunities with input from various groups within our global organization.	
 
 	Ÿ 	 	Diverse Exposure to Hotel Management, Franchising and Ownership.     We believe that our experience as a multi-brand manager, franchisor and owner of hotels makes us one of the best positioned lodging companies in the world. Our mix of managed, franchised and owned hotels provides a broad and diverse base of revenues, profits and cash flows. Our expertise and experience in each of these areas gives us the flexibility to evaluate growth opportunities across these three lines of business and enables us to achieve the best results for the given situation.	
 
 	Ÿ 	 	High Quality Owned Hotels Located in Desirable Markets.     We own and operate a high quality portfolio of 96 owned properties and 28 managed properties owned or leased by unconsolidated hospitality ventures, consisting of luxury and upper-upscale full service and select service hotels. Our owned full service hotels are located primarily in key markets, including major business centers and leisure destinations, with strong growth potential, such as Chicago, London, New York, Paris, San Francisco, Seoul and Zurich. Our hospitality ventures include 50% ownership interests in properties in Mumbai and São Paulo. A number of these hotels are unique assets with high recognition and a strong position in their local markets. Substantially all of our owned select service hotels were newly renovated in 2006 and 2007 and are typically located near business districts, airports or attractions. As a significant owner of hotel assets, we believe we are well positioned for a recovery of demand as we expect earnings growth from owned properties to outpace growth in revenues due to their high fixed-cost structure. This benefit can be achieved either through increased earnings from our owned assets or through value realized from select asset sales.	
 
 	Ÿ 	 	A Track Record of Innovation.     Successful innovation has been a hallmark of Hyatt since its founding. More than forty years ago, we opened the Hyatt Regency Atlanta, which was the first-ever large-scale atrium lobby hotel. This was both an architectural icon as well as a highly functional hotel property that provided us an entry into the large-scale convention market. We also have a long track record of creative approaches to food and beverage outlets at our hotels throughout the world, which have led to highly profitable venues that create demand for our	
 
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 	hotel properties, particularly in Asian markets. In addition, we successfully introduced new service models to the industry. We launched our Hyatt Place brand in 2006 and our Andaz brand in 2007, each of which features a unique internally developed service model that eliminates a number of de-personalized aspects of the hotel experience. We recently turned our focus to innovation in the area of guest communications. In May 2009, we launched Hyatt Concierge, making us the first hospitality company in the world to deploy a designed concierge site on Twitter, thereby enhancing the quality of hotel guest services. We believe that our commitment to fostering a culture of innovation throughout Hyatt positions us as an industry leader.	
Our Business Strategy
Our goal is to be the most preferred brand in each customer segment that we serve for our associates, guests and owners. In order to achieve this goal, we enhance brand preference by understanding who our customers are and by focusing on what our customers need and want and how we can deliver value to them. This understanding and focus informs our strategy for improving the performance of our existing hotels and expanding the presence of Hyatt brand in markets worldwide.
 
 	Ÿ 	 	Focus on Improvement in the Performance of Existing Hotels	
A key component of our strategy is to maximize revenues and manage costs at existing hotel properties. We strive to enhance revenues by focusing on increasing our share of hotel stays by our existing guests and increasing the number of new guests we serve on a regular basis, with the ultimate goal of establishing and increasing guest loyalty to our brands. We manage costs by setting performance goals for our hotel management teams, basing a portion of hotel management team compensation on whether performance goals are met, and granting our general managers operational autonomy. Managing costs is one way to improve hotel performance, and we believe that providing incentives to general managers to improve hotel performance leads to improved efficiency in ways appropriate for their respective properties. We support these efforts by assisting them with tools and analytics provided by our regional and corporate offices and by compensating our hotel management teams based on property performance.
 
 	Ÿ 	 	Increase Share of Hotel Stays.     We intend to expand Hyatt’s share of hotel stays by continuously striving to provide genuine guest service and delivering value to our guests. Our existing customer base is diverse with different needs and preferences. We aim to provide differentiated service and product offerings targeted at each customer segment within each of our brands, such as meeting planners and convention guests, leisure guests and business travelers, in order to satisfy our customers’ specific needs. Our Hyatt Gold Passport guest loyalty program is designed to attract new guests and to demonstrate our loyalty to our best guests. In 2009, we launched an initiative called “The Big Welcome,” which was targeted at increasing enrollment in our Hyatt Gold Passport program. As part of The Big Welcome, we awarded more than 30,000 room nights to Gold Passport members and 365 free nights at any Hyatt in the world to three individual guests. In the six-month period ended June 30, 2009, new membership enrollment in our Hyatt Gold Passport program has increased by 39% compared to new members enrolled during the same period last year. In addition, Gold Passport members represented 23% of total room nights for the first half of 2009.	
 
 	Ÿ 	 	Emphasize Associate Engagement.     Our brands are defined, in large part, by the authentic hospitality that is delivered to our guests by our associates. We believe that while a great product is necessary for success, a service model that promotes genuine service for our guests and that is focused on our customers’ particular needs is the key to a sustainable long-term advantage. Therefore, we strive to involve our associates in	
 
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 	deciding how we serve our guests and what we can do to improve guest satisfaction. We align our associates’ interests with our goal of becoming the most preferred brand in each segment that we serve. We rely on our hotel general managers to lead by example and foster associate engagement. We believe that associate engagement results in higher levels of customer satisfaction and improves the performance of our properties. To assist in this process, we aim to ensure that talented management teams are in place worldwide and also reward those teams that achieve higher levels of employee engagement, guest satisfaction and hotel financial performance.	
 
 	Ÿ 	 	Enhance Operational Efficiency.     We strive to align our staffing levels and expenses with demand without compromising our commitment to authentic hospitality and high levels of guest satisfaction. We have made significant changes in operations in response to recent declines in demand for hospitality products and services (including staff reductions at many of our hotels, renegotiation of contracts to improve pricing and modification of certain product standards to lower costs without significantly impacting quality). We will continue to incentivize and assist our hotel general managers as they proactively manage both the customer experience and the operating costs at each of their properties.	
 
 	Ÿ 	 	Expanding Our Presence in Attractive Markets	
We intend to drive brand preference by expanding the presence of all of our brands in attractive markets worldwide. We believe that the scale of our presence around the world is small relative to the recognition of our brands and our excellent reputation for service and, therefore, we have a unique opportunity to expand. We believe that our mission, goal and values, together with the strength of our brands, people, strong capital and asset base and opportunities for expansion provide us with a platform for long-term value creation.
 
 	Ÿ 	 	Increase Market Presence.     We will focus our expansion efforts on under-penetrated markets where we already have an established presence and locations where our guests are traveling but where we do not have a presence. These locations include, but are not limited to, the United States, Brazil, Russia, India, China, the countries of the Gulf Cooperation Council and Europe. We will expand our presence by increasing the number of hotels under Hyatt brand affiliation, primarily by entering into new management and franchising agreements. While under the terms of certain of our management agreements we have agreed to limitations on the expansion of one or more of our brands in certain geographic areas related to the location of a specific hotel, in agreeing to such limitations we have considered our development strategy and do not believe that such restrictions will materially impact our ability to pursue and execute on this strategy. We believe our extensive focus on the different customer groups that we serve and our understanding of how we can serve them in new locations will facilitate our growth. In addition, we plan to use our expertise in developing and managing residential and vacation ownership properties to participate in mixed-use developments that typically involve a combination of hotel and residential development in key urban and resort locations.	
 
 	Ÿ 	 	Expand our Select Service Presence .    We intend to establish and expand Hyatt Place and Hyatt Summerfield Suites worldwide, which we believe will support our overall growth and enhance the performance of all of our brands. We intend to grow our select service presence through construction of new franchised properties by third-party developers, conversion and renovation of existing non-Hyatt properties, and, in certain cases participation in the development of properties that would be managed by us. To pursue this strategy, we have a dedicated select service development team. We believe that the opportunity for properties that provide a select offering of services at a lower price point is particularly compelling in certain emerging markets, such as Brazil, Russia, India and	
 
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 	China, where there is a large and growing middle class along with a meaningful number of local business travelers.	
 
 	Ÿ 	 	Increase Focus on Franchising.     We intend to increase our franchised hotel presence, primarily in North America, for our select service brands and our Hyatt Regency brand. By increasing our focus on franchising, we believe that we will gain access to capital from developers and property owners that specifically target franchising business opportunities. To pursue this strategy, we have established an internal team dedicated to supporting our franchise owners and to driving the expansion of our franchised hotel presence. We plan to expand existing relationships and develop new relationships with franchise owners who demonstrate an ability to provide excellent customer service while maintaining our brand standards.	
 
 	Ÿ 	 	Utilize our Capital and Asset Base for Targeted Growth.     The combination of our significant liquidity and strong capital position coupled with our large, high quality asset base provides a unique platform to support our growth strategy. We intend to use our liquidity and strong capital base along with select asset dispositions to redeploy capital to opportunities that will allow us to strengthen our management presence in key markets worldwide. The form of our capital deployment will vary depending on the opportunity. We will assess and balance liquidity, value and strategic importance as we seek to expand our presence through investment. We also will continue to commit capital to fund the renovation of certain assets in our existing owned portfolio. While we may selectively dispose of hotel properties, given our focus and expertise as an owner, we expect to maintain significant ownership of hotel properties over time.	
 
 	Ÿ 	 	Pursue Strategic Acquisitions and Alliances.     We expect to evaluate potential acquisitions of other brands or hospitality management or franchising companies as a part of our efforts to expand our presence. These acquisitions may include hotel real estate. We expect to focus on acquisitions that complement our ability to serve our existing customer base and enhance customer preference by providing a greater selection of locations, properties and services. Furthermore, we may pursue these opportunities in alliance with existing or prospective owners of managed or franchised properties to strengthen our brand presence.	
 
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Description of Our Brands

Brand	 	Segment	 	Customer Base	 	June 30, 2009
% of our
Total
Rooms/Units	 	June 30, 2009
Rooms/Units	 	2008 ADR	 	 	 	 	
	 		 		 		 	North
America	 	Intl	 	North
America	 	Intl	 	Selected
Competitors	 	Key Locations	
	 	Full
Service/
Luxury	 	Individual business and leisure travelers; small meetings	 	4%	 	1,122	 	3,779	 	$320	 	$410	 	Four Seasons,
Ritz-Carlton, Peninsula, St. Regis, Mandarin Oriental	 	Buenos Aires, Paris, Shanghai, Sydney, Washington	
										
	 	Full
Service/
Upper
Upscale	 	Individual business and leisure travelers; small meetings	 	<1%(1)	 	257	 	267	 	N/A	 	$450	 	W, Mondrian, The Standard	 	London,
Los Angeles	
										
	 	Full
Service/
Upper
Upscale	 	Individual business and leisure travelers; large and small meetings, social events	 	17%	 	8,233	 	11,686	 	$230	 	$270	 	Mandarin Oriental, Shangri-La, InterContinental, Fairmont	 	Beijing, Berlin, Dubai, Hong Kong, New York	

 
	 	Full
Service/
Upper
Upscale	 	Conventions, business and leisure travelers; large and small meetings, social events; associations	 	59%	 	52,700	 	17,801	 	$165	 	$180	 	Marriott, Sheraton, Hilton,
Renaissance, Westin	 	Boston, Delhi, London, Los Angeles, San Francisco	
										
	 	Select
Service/
Upscale	 	Individual business and leisure travelers; small meetings	 	15%	 	17,339	 	0	 	$105	 	N/A	 	Courtyard by Marriott, Hilton Garden Inn	 	Atlanta, Dallas, Houston, Miami, Phoenix	
										
	 	Select
Service/
Extended
Stay	 	Extended stay guests; individual business and leisure travelers; small meetings/trainings	 	3%	 	4,070	 	0	 	$125	 	N/A	 	Residence Inn by Marriott, Homewood Suites	 	Austin, Boston, Dallas, Miami, San Francisco,	
										
	 	Vacation
Ownership	 	Owners of vacation units	 	1%	 	933	 	0	 	N/A	 	N/A	 	Hilton Vacation Club, Marriott Vacation Club, Starwood Vacation Ownership	 	Aspen, Beaver Creek, Carmel, Key West, Siesta Key	
										
	 	Residential	 	Repeat Hyatt business and leisure guests	 	1%	 	0	 	1,322	 	N/A	 	N/A	 	Branded and unbranded luxury residential accommodations	 	Dubai, Fukuoka, Mumbai	

(1)	As of June 30, 2009, there were two Andaz properties in operation.	
Park Hyatt
Park Hyatt provides discerning, affluent individual business and leisure guests with elegant and luxurious accommodations. Guests of Park Hyatt receive highly attentive personal service in an intimate environment. Located in many of the world’s premier destinations, each Park Hyatt is custom designed to combine sophistication with distinctive regional character. Park Hyatt features well-appointed guestrooms, meeting and special event spaces for smaller groups, critically acclaimed art programs and signature restaurants featuring award-winning chefs.
 
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Andaz
Andaz is a hotel where our guests experience a vibrant yet relaxed atmosphere geared towards today’s individual business and leisure travelers. Each hotel is designed to reflect the unique cultural scene and spirit of the surrounding neighborhood. The hotels also feature a unique service model that removes a number of de-personalized aspects of a typical hotel experience. For example, each hotel allows guests to check-in to the hotel more efficiently through innovative techniques that include the use by our associates of a hand-held device for check-in. In addition, a laptop is available in the lobby area, known as the Andaz Lounge, upon arrival that allows the guest to check themselves into the hotel. During this check-in process and throughout a guest’s stay, complimentary beverages remain available in the Lounge. We have also simplified pricing for our guests as the room rate includes internet access, local phone calls and non-alcoholic beverages and snacks in the room.
Grand Hyatt
Grand Hyatt features large-scale, distinctive hotels in major gateway cities and resort destinations. With presence around the world and critical mass in Asia, Grand Hyatt hotels provide sophisticated global business and leisure travelers with upscale accommodations. Signature elements of the Grand Hyatt include dramatic architecture, innovative dining options, state of the art technology, spa and fitness centers and comprehensive business and meeting facilities appropriate for corporate meetings and social gatherings of all sizes.
Hyatt Regency
Hyatt Regency offers a full range of services and facilities tailored to serve the needs of conventions, business travelers and resort vacationers. Properties range in size from 200 to over 2,000 rooms and are conveniently located in urban, suburban, airport, convention and resort destinations around the world. Hyatt Regency’s convention hotels feature spacious meeting and conference facilities designed to provide a productive environment. Hyatt Regency hotels in resort locations cater to couples seeking a getaway, families enjoying a vacation together and corporate groups seeking a relaxed atmosphere in which to conduct business and meetings.
Hyatt
Hyatt hotels are smaller-sized properties conveniently located in secondary markets in the United States. With hotels ranging from 150 to 350 rooms, Hyatt hotels offer guests the opportunity to experience our signature service and hospitality even when traveling outside of major gateway markets. Customers include individual business and leisure travelers, and Hyatt hotels can accommodate business meetings and social gatherings.
Hyatt Place
Hyatt Place is designed for the busy lifestyle of today’s multi-tasking business traveler and features a selected range of services aimed at providing casual hospitality in a well-designed, high-tech and contemporary environment. Property sizes range from 125 to 200 rooms and are located in urban, airport and suburban areas. Signature features of Hyatt Place include The Gallery, which offers a coffee and wine bar, a 24 hours a day, seven days a week guest kitchen with freshly prepared snacks and entrees and daily complimentary continental breakfast. Hyatt Place guests are business travelers as well as families. Hyatt Place properties are also well suited to serve small corporate meetings.
 
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Hyatt Summerfield Suites
Hyatt Summerfield Suites is an extended-stay, residential-style hotel that aims to provide individual travelers with the feel of a modern condominium. The 125 to 200 room, all-suite properties offer comforts of home such as fully equipped kitchens, flat panel HDTVs and free high-speed internet access. The public space features facilities such as a pool, a fitness center and a business center. A full breakfast every morning and an evening social on weekday evenings are complimentary to guests. Hyatt Summerfield Suites are located in urban, airport and suburban locations and can accommodate small corporate meetings and corporate clients seeking to place their employees on extended assignment.
Hyatt Vacation Club
Hyatt Vacation Club provides members with vacation ownership opportunities in regionally inspired and designed residential-style properties with the quality of the Hyatt brand. Members prepurchase time at a Hyatt Vacation Club and have the flexibility of usage, exchange and rental. Hyatt Vacation Club members can choose to occupy their vacation home, to exchange time among 15 Hyatt Vacation and Residence Clubs, to trade their time for Gold Passport points or to travel within the Hyatt system. Alternatively, members can exchange their time for time at properties participating within Interval International’s program, a third-party company with over 2,200 resorts in their exchange network worldwide.
Hyatt Resorts
Hyatt Resorts is a collection of vacation destination resorts, including beach, mountain, desert, golf and spa resorts across our Park Hyatt, Grand Hyatt and Hyatt Regency brands. Hyatt Resorts are marketed as a collection to enhance guest loyalty to our resort properties and to our hotel brands. Each Hyatt Resort retains the distinct characteristics, products, amenities and service delivery standards of its sub-brand and each hotel is tailored to provide a relaxed, comfortable vacation environment reflective of the local culture. Hyatt Resort properties are designed to  accommodate individual and family vacations, while also offering a setting intended to enhance the success of corporate meetings.
Hyatt-Branded Residential Properties
Hyatt-branded residential properties consist of serviced apartments in, adjacent to, or near, certain of our Hyatt-branded full service hotels. These apartments are designed consistent with the brand standards of the Hyatt hotel with which they are associated or near which they are operated. Apartments typically feature a kitchenette and sitting area, and residents are provided with or can request various Hyatt hotel services. Hyatt-branded residential properties are marketed to repeat individual business and leisure travelers.
Our Community Commitment
At Hyatt, we are committed to making a positive and lasting impact in every community in which we operate. We do this by demonstrating a strong commitment to preserving our natural environment through Hyatt Earth, by giving back to the local communities in which we operate through Hyatt Community, and with the volunteer services of our associates through Hyatt’s Family of Responsible and Caring Employees (F.O.R.C.E.).
 
 	Ÿ 	 	Hyatt Earth—Our global sustainability program with measurable results that promotes a culture of environmental awareness and rewards initiatives with positive environmental impact.	
 
 	Ÿ 	 	Hyatt Community—a philanthropic program that awards grants to nonprofit groups that support youth development and education or improve the environment in which the Hyatt family lives and works.	
 
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 	Ÿ 	 	F.O.R.C.E. (Family of Responsible and Caring Employees)—This volunteer program allows Hyatt associates worldwide to participate in local community outreach and volunteer efforts on paid company time.	
Management Agreements
Fees
Our management agreements typically provide for a two-tiered fee structure that compensates us both for the volume of business we generate for the property as well as for the profitability of hotel operations. In these two-tier fee structures, our base compensation is a base fee that is usually an agreed upon percentage of gross revenues from hotel operations. In addition, we are incentivized to improve hotel profitability through an incentive fee that is typically calculated as a percentage of a hotel profitability measure, such as gross operating profit, adjusted profit or the amount by which gross operating profit or adjusted profit exceeds a fixed threshold . Outside of the United States our fees are often more dependent on hotel profitability measures either through a single management fee structure where the entire fee is based on a profitability measure, or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee. 
Terms and Renewals
The average remaining term of our management agreements with third party owners and unconsolidated hospitality ventures for full service hotels (other than those in development) is approximately 12 years, assuming no renewal options are exercised by either party. The average remaining term of our management agreements with third-party owners and unconsolidated hospitality ventures for select service hotels (other than those in development) is approximately 21 years, assuming no renewal options are exercised by either party.
Certain of our management agreements allow for extensions of the contract term by mutual agreement, or at the discretion of one of the parties. Including exercise of extension options that are in Hyatt’s sole discretion and assuming in certain cases that specific performance tests have been met, the average remaining term of our management agreements is approximately 20 years for our full service hotels located in the United States, Canada and the Caribbean, approximately 18 years for our full service hotels located throughout the rest of the world and approximately 48 years for our select service hotels. Twenty-two select service hotels are governed under the same management agreement, which has a remaining base term of approximately 21 years. Hyatt may elect to extend the term of this agreement for two additional fifteen-year terms.
Some of our management agreements grant early termination rights to owners of the hotels we manage upon the occurrence of a stated event, such as the sale of the hotel or our failure to meet a specified performance test. Generally, termination rights under performance tests are based upon the property’s individual performance or its performance when compared to a specified set of competitive hotels branded by other hotel operators, or both. These termination rights are usually triggered if we do not meet the performance tests over multiple years. We generally have the option to cure performance failures by paying an amount equal to the short fall but in some cases our cure rights may be limited and the result of our failure to meet a performance test may be the termination of our management agreement.
Many of our management agreements are subordinated to mortgages or other secured indebtedness of the owners. In North America, in the event lenders take possession of the hotel property through foreclosure or similar means, most lenders have agreed to recognize our right to continue to manage the hotels under the terms set forth in the management agreements.
 
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Franchise Agreements
Pursuant to franchise agreements, we grant our franchisees the limited right to use our name, marks and system in the operation of franchised Hyatt, Hyatt Regency, Hyatt Place and Hyatt Summerfield Suites hotels. We do not directly participate in the management of our franchised hotels. However, franchisees are required to operate franchised hotels consistent with our brand standards. We approve the plans for, and the location of, franchised hotels and review the operation of these hotels to ensure that our standards are maintained. We provide support to and advice with respect to certain aspects of hotel operations for the benefit of our franchise owners and operators through our Franchise and Owner Relations Group.
Fees
In general, our franchisees pay us an initial application fee and ongoing royalty fees, the amount of which depends on whether the franchised property is a select or full service hotel. We franchise full service hotels under the Hyatt and Hyatt Regency brands. We franchise select service hotels under our Hyatt Place and Hyatt Summerfield Suites brands. Application fees are typically $60,000 for our Hyatt Place hotels, $50,000 for our Hyatt Summerfield Suites hotels and the greater of $100,000 and $300 per guest room for our full service hotels. Select service franchisees pay continuing royalty fees calculated as a percentage of gross room revenues which typically are 3% in the first year of operations, 4% in the second year and 5% through the remainder of the term. Our full service franchisees typically pay us royalty fees calculated as 6% of gross room revenues and 3% of gross food and beverage revenues, although in some circumstances we have negotiated other fee arrangements.
In addition to our franchise fees, we charge full service franchisees for certain services arranged and provided by us. These activities include centralized reservation functions, certain sales functions, information technology, national advertising, marketing and promotional services, as well as various accounting and insurance procurement services. We also charge select service franchisees for marketing, central reservations and technology services.
Terms and Renewals
The standard term of our franchise agreements is 20 years, with one 10 year renewal option exercisable by the franchisee, assuming the franchisee has complied with franchise agreement requirements and standards. We have the right to terminate franchise agreements upon specified events of default, including non-payment of fees and non-compliance with brand standards. In the event of early termination for any reason, our franchise agreements set forth liquidated damages that our franchisees must pay to us upon termination. The bankruptcy of a franchisee or lender foreclosure could result in the termination of the franchise agreement. The average remaining base term of our franchise agreements for our select service and full service hotels (other than those in development) is approximately 18 years.
Business Segment and Geographical Information
For information regarding our three reportable business segments and geographical information, see note 20 of our consolidated financial statements included elsewhere in this prospectus.
Sales, Marketing and Reservations
Sales
Our global sales organization is focused on growing market share through key accounts, identifying new business opportunities and maximizing our local customer base.
 
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Our worldwide customers consist of: major corporations; national, state and regional associations; specialty market accounts (social, military, educational, religious and fraternal); and travel organizations. Our worldwide sales force targets multiple brands to approximately 1,800 of these customers, which we consider to be key customer accounts. Its goal is to penetrate and expand business share among these key customers, which represent over 40% of our overall room revenue for full service hotels. The remaining portion of our room revenues at our full service hotels are generated from a broad and diverse group of customers. No one customer is material to our business. Our team consists of over 100 associates focused on group business, business and leisure traveler accounts and travel agencies. We also deploy approximately 25 associates to target the acquisition of new business with the goal of establishing new worldwide accounts.
We also have regional sales offices throughout the world, including in New York, Chicago, Los Angeles, Washington D.C., London, Hong Kong, Mainz, Mumbai, Shanghai, Beijing and Tokyo.
Our associates in our worldwide sales force and in our North American full service hotels use Envision, our proprietary sales tool, to manage the group rooms forecast, maintain an inventory of definite and tentative group rooms booked each day, streamline the process of checking guest room availability and rate quotes and determine meeting room availability.
In conjunction with our worldwide sales force, each hotel has an in-house team of sales associates. The in-house sales associates are focused on local and regional business opportunities, as well as securing the business generated from our worldwide accounts.
Hyatt seeks to maximize revenues in each hotel through a team of revenue management professionals. The goal of revenue management is to secure the right customer, on the right date, at the right price. Business opportunities are reviewed and agreed upon by the hotel’s revenue management strategy team.
Marketing
Our marketing strategy is designed to maintain and build brand value and awareness while meeting the specific business needs of hotel operations. Building and differentiating each of our brands is critical to increasing Hyatt’s brand preference. We are focused on targeting the distinct guest segments that each of our brands serves and supporting the needs of the hotels by thorough analysis and application of data and analytics. Hyatt Gold Passport and Hyatt.com are the key components of our marketing strategy. Hyatt Gold Passport is a service and loyalty program with focus on driving guest satisfaction, recognition and differential services for our most loyal guests. Hyatt.com is our primary online distribution channel providing customers with an efficient source of information about our hotels and an effective booking experience.
Reservations
We have a central reservation system that provides a comprehensive view of inventory, while allowing for local management of rates based on demand. Through this system, we are able to allow bookings by hotels directly, via telephone through our call centers, by travel agents and online through Hyatt.com.
We have eight call centers that service our global guest base 24 hours a day, seven days a week and provide reservation services in over 25 languages. While we continue to provide full reservations services via telephone through our call centers, we have also invested significant amounts in internet booking capabilities on Hyatt.com and through online booking partners.
 
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In addition, some of our hotel rooms at hotels and resorts we manage or franchise are booked through internet travel intermediaries and partners and online travel service providers. We also engage third-party intermediaries who collect fees by charging our hotels and resorts a commission on room revenues, including travel agencies and meeting and event management companies.
Hyatt Gold Passport
We operate a guest loyalty program, Hyatt Gold Passport. This program generates substantial repeat guest business by rewarding frequent stays with points toward free hotel nights and other rewards.
Hyatt Gold Passport members earn points based on their spending at our hotels. Hyatt Gold Passport points can be redeemed at all hotels across our brands and can also be converted into airline miles with any of more than 30 participating airlines.
The Hyatt Gold Passport program is funded through a contribution from eligible revenues generated from Hyatt Gold Passport members. These funds are applied to reimburse hotels for room nights where guests redeem Hyatt Gold Passport points and to administrative expenses and marketing initiatives to support the program.
As of June 30, 2009, the Hyatt Gold Passport program had over 9 million members, and during the first half of 2009, Hyatt Gold Passport members represented 23% of total room nights. We expect our Hyatt Gold Passport program to continue to have a positive impact on our brands.
Competition
There is intense competition in all areas of the hospitality industry in which we operate. Competition exists for hotel guests, management agreements and franchise agreements and sales of vacation ownership properties. Our principal competitors are other operators of full service, select service and extended stay properties, including other major hospitality chains with well established and recognized brands. We also compete against small chains and independent and local owners and operators.
We compete for guests based primarily on brand name recognition and reputation, location, customer satisfaction, room rates, quality of service, amenities, quality of accommodations and the ability to earn and redeem loyalty program points.
We compete for management agreements based primarily on the value and quality of our management services, our brand name recognition and reputation, our ability and willingness to invest our capital in third-party owned or hospitality venture projects, the level of our management fees and the economic advantages to the property owner of retaining our management services and using our brand name. We compete for franchise agreements based primarily on brand name recognition and reputation, the room rate that can be realized and total revenues we can deliver to the properties. Other competitive factors for management and franchise agreements include relationships with property owners and investors, including institutional owners of multiple properties, marketing support, reservation and e-commerce system capacity and efficiency and the ability to make investments that may be necessary to obtain management and franchise agreements.
We compete for sales of our vacation ownership properties based principally on location, quality of accommodations, price, financing terms, quality of service, flexibility of usage, opportunity to exchange into other vacation properties and brand name recognition and reputation. In addition to competing with other hotel and resort properties, our vacation ownership properties compete with
 
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national and independent vacation ownership club operators as well as with owners reselling their interests in these properties. Our ability to attract and retain purchasers of our vacation ownership properties depends on our success in distinguishing the quality and value of our vacation ownership products and services from those offered by others.
The universe of branded lodging operators with a global reach and depth of product and offerings similar to us is limited. We believe that our strong customer base, prominent brand recognition, strategic property locations and global development team will enable us to compete effectively. For additional information, see “Risk Factors—Risks Related to Our Business—We operate in a highly competitive industry and our success depends on our ability to compete effectively.”
Seasonality
The hospitality industry is seasonal in nature. The periods during which our lodging properties experience higher revenues vary from property to property, depending principally upon location and the customer base served. Based upon historical results, our North American properties typically generate the highest revenues in the second quarter and our international properties generally experience the highest revenues during the fourth quarter of each year. We generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters.
Cyclicality
The hospitality industry is cyclical and generally follows, on a lagged basis, the general economy. There is a history of increases and decreases in demand for hotel rooms, in occupancy levels and in rates realized by owners of hotels through economic cycles. Variability of results through some of the cycles in the past has been more severe due to changes in the supply of hotel rooms in given markets or in given categories of hotels. The combination of changes in economic conditions and in the supply of hotel rooms can result in significant volatility in results for owners and managers of hotel properties. The costs of running a hotel tend to be more fixed than variable. Because of this, in an environment of declining revenues the rate of decline in earnings will be higher than the rate of decline in revenues. The vacation ownership business is also cyclical. The demand for vacation ownership units is affected by the availability and cost of financing for purchases of vacation ownership units as well as general economic conditions and the relative health of the housing market.
Intellectual Property
In the highly competitive hospitality industry in which we operate, trademarks, service marks, trade names and logos are very important in the sales and marketing of our hotels, residential and vacation ownership properties and services. We have a significant number of trademarks, service marks, trade names, logos and pending registrations, and significant resources are expended each year on surveillance, registration and protection of our trademarks, service marks, trade names and logos, which we believe have become synonymous in the hospitality industry with a reputation for excellence in service and authentic hospitality.
As further described in “Certain Relationships and Related Party Transactions—License Agreements—Agreements Related to Transfer and License Back of “Classic Residence by Hyatt” Trademark and Service Mark,” we have entered into a license agreement with CC-Development Group, Inc. (Classic Residence) whereby we provide Classic Residence with a limited license to permit the Classic Residence companies to use the “Classic Residence by Hyatt” trademark and service mark (subject to maintaining agreed upon standards) and the “classichyatt.com”, “classichyatt.org”, “hyattclassic.com” and “hyattclassic.org” domain names for a transition period ending upon the earlier of December 31, 2010 and the consummation of a change of control of Classic Residence, to the
 
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extent necessary to permit the Classic Residence companies to comply with pre-existing contractual obligations to third parties and as required by applicable laws, regulations and governmental authorities.
Government Regulation
We are subject to numerous federal, foreign, state and local government laws and regulations, including those relating to the preparation and sale of food and beverages, building and zoning requirements, data privacy and general business license and permit requirements, in the various jurisdictions in which we manage, franchise and own hotels. Our ability to develop new hotel properties and to remodel, refurbish or add to existing properties is also dependent on obtaining permits from local authorities. We are also subject to laws governing our relationships with employees, including minimum wage requirements, overtime, working conditions, hiring and firing, non-discrimination for disabilities and other individual characteristics, work permits and benefit offerings. Federal, state and provincial laws and regulations also require certain registration, disclosure statements, compliance with specific standards of conduct and other practices with respect to the franchising of hotels. Additionally, the vacation ownership properties we operate are subject to local, state and federal requirements regarding the licensing of sales agents, compliance of marketing materials and numerous other requirements regarding the sale and management of vacation ownership properties. Compliance with these various laws and regulations can affect the revenues and profits of properties managed, franchised or owned and of our vacation ownership business and could adversely affect our operations. We believe that our businesses are conducted in substantial compliance with applicable laws and regulations.
We manage and own hotels with casino gaming operations as part of or adjacent to the hotels. However, with the exception of the Hyatt Regency Aruba, third parties manage and operate the casinos. We do hold and maintain the casino gaming license and manage the casino located at the Hyatt Regency Aruba. As a result, our business operations at the Hyatt Regency Aruba are subject to the licensing and regulatory control of the Departamento pa Asuntonan di Casino (D.A.C.), a newly formed regulatory agency responsible for gaming licenses and operations in Aruba. The gaming operations at the Hyatt Regency Aruba are also regulated by the Nevada Gaming Commission and the Nevada State Gaming Control Board because a provider of services  at the Hyatt Regency Aruba also operates casinos in Nevada.
Employees
As of June 30, 2009, we had approximately 45,000 employees at our corporate offices, divisional offices, owned and managed hotels and residential and vacation ownership properties. Approximately 25% of those employees were either represented by a labor union or had terms of employment that were determined under a labor agreement. Some of our more than 80,000 associates are employed by certain third-party owners and franchisees of our hotels and are not included in the 45,000 figure above because we do not directly employ them. We believe relations with our employees and associates are good.
Environmental Matters
In connection with our ownership and management of hotels and development of other real properties, we are subject to various foreign, federal, state and local laws, ordinances and regulations relating to environmental protection. Under some of these laws, a current or former owner or operator of real property may be held liable for the costs of investigating or remediating hazardous or toxic substances or wastes on, under or in such real property, as well as third-party sites where the owner or operator sent wastes for disposal. Such laws may impose liability without regard to whether the owner
 
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or operator knew, or was at fault in connection with, the presence or release of such hazardous substances or wastes. Furthermore, a person who arranges for the disposal or treatment of a hazardous or toxic substance at a property owned by another, or who transports such substance to or from such property, may be liable for the costs of removal or remediation of such substance released into the environment at the disposal or treatment facility. Although we are not aware of any current material obligations for investigating or remediating hazardous substances or wastes at our owned properties, the future discovery of substances or wastes at any of our owned properties, or the failure to remediate such contaminated property properly, could adversely affect our ability to develop or sell such real estate, or to borrow using such real estate as collateral. In addition, the costs of investigating or remediating contamination, at our properties or at properties where we sent substances or wastes for disposal, may be substantial.
We are also subject to various requirements, including those contained in environmental permits required for our operations, governing air emissions, effluent discharges, the use, management and disposal of hazardous substances and wastes and health and safety. From time to time, we may be required to manage, abate or remove mold, lead or asbestos-containing materials at our properties. We believe that our properties and operations are in compliance, in all material respects, with all federal, state and local environmental laws and ordinances. However, additional operating costs and capital expenditures could be incurred if additional or more stringent requirements are enacted in the future.
Insurance
We maintain insurance coverage for general liability, property, workers’ compensation and other risks with respect to our business. Our general liability insurance provides coverage for any claim, including terrorism, resulting from our operations, goods and services and automobiles. All owned hotels are covered by Hyatt’s property insurance program. Hotels managed by Hyatt are permitted to participate in Hyatt’s insurance programs by mutual agreement with our hotel owners. If a managed hotel does not participate in our insurance programs, and for franchised locations, which do not currently participate in our insurance programs, our management and franchise agreements require the hotels to be insured at coverage levels generally consistent with the coverage levels under our insurance programs, including liability, property coverage, business interruption coverage and workers’ compensation insurance. We are typically covered under these insurance policies to the extent necessary and reasonable. We believe our insurance policies are adequate for foreseeable losses and on terms and conditions that are reasonable and customary with solvent insurance carriers.
 
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Properties
The following table sets forth a description of each owned or leased Hyatt-branded hotel property:

Property(1)	 	Location	 	Rooms	 	Ownership(2)	 	
Full Service:	 		 		 			
United States, Canada and the Caribbean:	 		 		 			
Park Hyatt Chicago	 	Chicago, IL	 	198	 	100	% 	
Park Hyatt Philadelphia at Bellevue	 	Philadelphia, PA	 	172	 	50	% 	
Park Hyatt Toronto	 	Toronto, Ontario,
Canada	 	346	 	100	% 	
Park Hyatt Washington	 	Washington, DC	 	216	 	100	% 	
Andaz West Hollywood(3)(4)	 	West Hollywood, CA	 	257	 	—	  	
Grand Hyatt New York(5)	 	New York, NY	 	1,311	 	100	% 	
Grand Hyatt San Antonio(5)	 	San Antonio, TX	 	1,003	 	30	% 	
Grand Hyatt San Francisco	 	San Francisco, CA	 	685	 	100	% 	
Grand Hyatt Seattle	 	Seattle, WA	 	425	 	50	% 	
Grand Hyatt Tampa Bay	 	Tampa, FL	 	445	 	100	% 	
Hyatt Regency Aruba Resort & Casino(5)	 	Palm Beach, Aruba,
Dutch Caribbean	 	360	 	100	% 	
Hyatt Regency Atlanta	 	Atlanta, GA	 	1,260	 	100	% 	
Hyatt Regency Baltimore(5)	 	Baltimore, MD	 	488	 	100	% 	
Hyatt Regency Bellevue	 	Bellevue, WA	 	382	 	2	% 	
Hyatt Regency Boston(6)	 	Boston, MA	 	498	 	100	% 	
Hyatt Regency Buffalo	 	Buffalo, NY	 	396	 	14	% 	
Hyatt Regency Cincinnati(5)(7)	 	Cincinnati, OH	 	486	 	20	% 	
Hyatt Regency Cleveland at The Arcade(8)	 	Cleveland, OH	 	293	 	50	% 	
Hyatt Regency Coconut Point Resort & Spa	 	Bonita Springs, FL	 	454	 	100	% 	
Hyatt Regency Columbus(5)	 	Columbus, OH	 	631	 	24	% 	
Hyatt Regency Crown Center(3)	 	Kansas City, MO	 	733	 	—	  	
Hyatt Regency Crystal City at Reagan National Airport	 	Arlington, VA	 	686	 	50	% 	
Hyatt Regency Tech Center	 	Denver, CO	 	451	 	100	% 	
Hyatt Regency DFW (5)	 	DFW Airport, TX	 	811	 	46	% 	
Hyatt Regency Grand Cypress(3)(4)	 	Orlando, FL	 	750	 	—	  	
Hyatt Regency Greenville	 	Greenville, SC	 	328	 	100	% 	
Hyatt Regency Greenwich	 	Old Greenwich, CT	 	373	 	100	% 	
Hyatt Regency Hill Country Resort and Spa	 	San Antonio, TX	 	500	 	16	% 	
Hyatt Regency Huntington Beach Resort & Spa(5)	 	Huntington Beach, CA	 	517	 	40	% 	
Hyatt Regency Indianapolis	 	Indianapolis, IN	 	497	 	100	% 	
Hyatt Regency Jersey City on the Hudson	 	Jersey City, NJ	 	350	 	50	% 	
Hyatt Regency Lake Tahoe Resort, Spa & Casino	 	Incline Village, NV	 	422	 	100	% 	
Hyatt Regency Long Beach(5)	 	Long Beach, CA	 	528	 	100	% 	
Hyatt Regency Lost Pines Resort and Spa	 	Lost Pines, TX	 	491	 	8	% 	
Hyatt Regency Louisville(5)(9)	 	Louisville, KY	 	393	 	50	% 	
Hyatt Regency Miami(5)	 	Miami, FL	 	612	 	100	% 	
Hyatt Regency Minneapolis	 	Minneapolis, MN	 	533	 	100	% 	
Hyatt Regency Monterey Resort & Spa on Del Monte Golf Course(5)	 	Monterey, CA	 	550	 	100	% 	
 
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Property(1)	 	Location	 	Rooms	 	Ownership(2)	 	
Hyatt Regency O’Hare	 	Rosemont, IL	 	1,096	 	100	% 	
Hyatt Regency Princeton(5)	 	Princeton, NJ	 	347	 	88	% 	
Hyatt Regency San Antonio	 	San Antonio, TX	 	632	 	100	% 	
Hyatt Regency San Francisco(3)	 	San Francisco, CA	 	802	 	—	  	
Hyatt Regency Santa Clara(5)	 	Santa Clara, CA	 	501	 	100	% 	
Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch	 	Scottsdale, AZ	 	492	 	100	% 	
Hyatt Regency Vancouver	 	Vancouver, British
Columbia, Canada	 	644	 	100	% 	
Hyatt Regency Waikiki Beach Resort and Spa(5)	 	Honolulu, HI	 	1,229	 	10	% 	
Hyatt on Capitol Square(3)	 	Columbus, OH	 	400	 	—	  	
Hyatt Deerfield	 	Deerfield, IL	 	301	 	100	% 	
Hyatt at Fisherman’s Wharf	 	San Francisco, CA	 	313	 	100	% 	
Hyatt Key West Resort and Spa	 	Key West, FL	 	118	 	100	% 	
Hyatt Lisle	 	Lisle, IL	 	316	 	50	% 	
Hyatt at Olive 8	 	Seattle, WA	 	346	 	50	% 	
Hyatt Rosemont(5)	 	Rosemont, IL	 	206	 	100	% 	
Europe, Africa and the Middle East:	 		 		 			
Park Hyatt Baku	 	Baku, Azerbaijan	 	159	 	100	% 	
Park Hyatt Hamburg(3)(10)	 	Hamburg, Germany	 	252	 	—	  	
Park Hyatt Jeddah(5)	 	Jeddah, Saudi Arabia	 	142	 	8	% 	
Park Hyatt Milan	 	Milan, Italy	 	112	 	30	% 	
Park Hyatt Zurich(5)	 	Zurich, Switzerland	 	142	 	100	% 	
Park Hyatt Paris-Vendôme	 	Paris, France	 	167	 	100	% 	
Andaz Liverpool Street(5)	 	London, England	 	267	 	100	% 	
Grand Hyatt Berlin(3)(11)	 	Berlin, Germany	 	342	 	—	  	
Hyatt Regency Baku	 	Baku, Azerbaijan	 	182	 	100	% 	
Hyatt Regency Bishkek(5)	 	Bishkek, Kyrgyz
Republic	 	178	 	87	% 	
Hyatt Regency Cologne(3)	 	Cologne, Germany	 	306	 	—	  	
Hyatt Regency Mainz(3)	 	Mainz, Germany	 	268	 	—	  	
Asia Pacific:	 		 		 			
Grand Hyatt Bali	 	Bali, Indonesia	 	648	 	10	% 	
Grand Hyatt Mumbai	 	Mumbai, India	 	547	 	50	% 	
Grand Hyatt Seoul	 	Seoul, South Korea	 	601	 	100	% 	
Hyatt Regency Kyoto	 	Kyoto, Japan	 	189	 	20	% 	
Hyatt Regency Osaka(3)(12)	 	Osaka, Japan	 	480	 	—	  	
Bali Hyatt	 	Bali, Indonesia	 	386	 	10	% 	
Latin America:	 		 		 			
Park Hyatt Mendoza, Hotel Casino & Spa	 	Mendoza, Argentina	 	186	 	50	% 	
Grand Hyatt São Paulo	 	São Paulo, Brazil	 	466	 	50	% 	
Select Service:	 		 		 			
United States:	 		 		 			
Hyatt Place Albuquerque Airport	 	Albuquerque, NM	 	127	 	100	% 	
Hyatt Place Atlanta/Alpharetta/Windward Parkway	 	Alpharetta, GA	 	127	 	100	% 	
Hyatt Place Atlanta/Buckhead(3)(4)	 	Atlanta, GA	 	171	 	—	  	
Hyatt Place Atlanta/Norcross/Peachtree	 	Norcross, GA	 	126	 	100	% 	
Hyatt Place Atlanta/Perimeter Center	 	Atlanta, GA	 	150	 	100	% 	
 
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Property(1)	 	Location	 	Rooms	 	Ownership(2)	 	
Hyatt Place Baltimore/Owings Mills	 	Owings Mills, MD	 	123	 	100	% 	
Hyatt Place Birmingham/Inverness	 	Birmingham, AL	 	126	 	100	% 	
Hyatt Place Boise/Towne Square	 	Boise, Idaho	 	127	 	100	% 	
Hyatt Place Charlotte Airport/Tyvola Road	 	Charlotte, NC	 	127	 	100	% 	
Hyatt Place Chicago/Hoffman Estates	 	Hoffman Estates, IL	 	126	 	100	% 	
Hyatt Place Chicago/Itasca	 	Itasca, IL	 	126	 	100	% 	
Hyatt Place Chicago/Lombard/Oak Brook	 	Lombard, IL	 	151	 	100	% 	
Hyatt Place Cincinnati – Northeast	 	Mason, Ohio	 	127	 	100	% 	
Hyatt Place Cincinnati Airport/Florence	 	Florence, KY	 	127	 	100	% 	
Hyatt Place Cleveland/Independence	 	Independence, OH	 	127	 	100	% 	
Hyatt Place Coconut Point	 	Estero, FL	 	108	 	50	% 	
Hyatt Place Columbia/Harbison	 	Irmo, SC	 	127	 	100	% 	
Hyatt Place Dallas/Arlington	 	Arlington, TX	 	127	 	100	% 	
Hyatt Place Dallas/Plano	 	Plano, TX	 	127	 	100	% 	
Hyatt Place Denver – South/Park Meadows	 	Lone Tree, CO	 	127	 	100	% 	
Hyatt Place Denver Airport	 	Aurora, CO	 	126	 	100	% 	
Hyatt Place Denver Tech Center	 	Englewood, CO	 	126	 	100	% 	
Hyatt Place Detroit/Auburn Hills	 	Auburn Hills, MI	 	127	 	100	% 	
Hyatt Place Detroit/Livonia	 	Livonia, MI	 	127	 	100	% 	
Hyatt Place Fair Lawn/Paramus	 	Fair Lawn, NJ	 	143	 	100	% 	
Hyatt Place Fort Worth Cityview	 	Fort Worth, TX	 	127	 	100	% 	
Hyatt Place Fort Worth/Hurst	 	Hurst, TX	 	127	 	100	% 	
Hyatt Place Fremont/Silicon Valley	 	Fremont, CA	 	151	 	100	% 	
Hyatt Place Gilbert	 	Gilbert, AZ	 	127	 	50	% 	
Hyatt Place Greensboro	 	Greensboro, NC	 	124	 	100	% 	
Hyatt Place Lakeland Center(5)	 	Lakeland, FL	 	127	 	100	% 	
Hyatt Place Louisville – East	 	Louisville, KY	 	121	 	100	% 	
Hyatt Place Memphis Primacy Parkway	 	Memphis, TN	 	126	 	100	% 	
Hyatt Place Minneapolis/Eden Prairie	 	Eden Prairie, MN	 	126	 	100	% 	
Hyatt Place Mystic	 	Mystic, CT	 	79	 	100	% 	
Hyatt Place Nashville/Brentwood	 	Brentwood, TN	 	124	 	100	% 	
Hyatt Place Nashville/Opryland	 	Nashville, TN	 	123	 	100	% 	
Hyatt Place Oklahoma City Airport	 	Oklahoma City, OK	 	126	 	100	% 	
Orlando Airport Northeast(13)	 	Orlando, FL	 	128	 	100 	%  	
Hyatt Place Orlando/Convention Center	 	Orlando, FL	 	149	 	100	% 	
Hyatt Place Orlando/Universal	 	Orlando, FL	 	151	 	100	% 	
Hyatt Place Phoenix – North	 	Phoenix, AZ	 	127	 	100	% 	
Hyatt Place Pittsburgh Airport	 	Pittsburgh, PA	 	127	 	100	% 	
Hyatt Place Pittsburgh/Cranberry	 	Cranberry Township, PA	 	127	 	100	% 	
Hyatt Place Princeton	 	Princeton, NJ	 	122	 	100	% 	
Hyatt Place Raleigh – North	 	Raleigh, NC	 	127	 	100	% 	
Hyatt Place Richmond/Arboretum	 	Richmond, VA	 	127	 	100	% 	
Hyatt Place Sacramento/Rancho Cordova	 	Rancho Cordova, CA	 	127	 	100	% 	
Hyatt Place San Antonio – Northwest/Medical Center	 	San Antonio, TX	 	126	 	100	% 	
Hyatt Place Scottsdale/Old Town	 	Scottsdale, AZ	 	127	 	100	% 	
Hyatt Place Secaucus/Meadowlands(5)	 	Secaucus, NJ	 	159	 	100	% 	
Hyatt Place Tampa/Busch Gardens	 	Tampa, FL	 	126	 	100	% 	
Hyatt Summerfield Suites Boston/Waltham	 	Waltham, MA	 	135	 	100	% 	
Hyatt Summerfield Suites Denver Tech Center	 	Englewood, CO	 	135	 	100	% 	
 
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Property(1)	 	Location	 	Rooms	 	Ownership(2)	 	
Hyatt Summerfield Suites Miami Airport	 	Miami, FL	 	156	 	100	% 	
Hyatt Summerfield Suites Parsippany/Whippany	 	Parsippany, NJ	 	135	 	100	% 	
Hyatt Summerfield Suites Morristown	 	Morristown, NJ	 	132	 	100	% 	

(1)	Does not include Hotel Mar Monte, Santa Barbara, CA, as this is not a Hyatt-branded property.	
(2)	Unless otherwise indicated, ownership percentages include both the property and underlying land.	
(3)	Property is accounted for as a capital or an operating lease.	
(4)	Hotel is included in our portfolio of 96 owned hotels.	
(5)	Our ownership interest in the property is subject to a third-party ground lease on the land.	
(6)	We hold a deeded interest in this hotel property that is subject to certain restrictions, which could cause the interest to lapse as early as calendar year 2079.	
(7)	In June 2009, the lender received a successful bid for transfer of title to it (or its designee), pursuant to foreclosure proceedings; a court order confirming the sale and directing the sheriff to issue a deed transferring title to the hotel property to lender or its designee was entered on July 9, 2009. No appeals have been filed and no timely motions for a stay pending appeal have been filed. Issuance of the deed by the sheriff to lender or its designee is pending; however, once the deed is issued to lender or its designee we will no longer hold an equity interest in this hotel property.	
(8)	A foreclosure action was initiated by the mortgage lender on this property in April 2009. The proceedings are pending.	
(9)	We own an approximately 50% interest in a partnership and in July 2009 exercised our option to acquire an additional 43.0% interest in this partnership which will bring our interest to approximately 93%.	
(10)	We own a 50% interest in the entity that is the operating lessee.	
(11)	We own an 82% interest in the entity that is the operating lessee.	
(12)	We own an approximately 11% interest in the entity that is the operating lessee.	
(13)	Hotel is currently branded as an AmeriSuites hotel.	
Corporate Headquarters and Divisional Offices
Our corporate headquarters are located at 71 South Wacker Drive, 12th Floor, Chicago, Illinois. These offices consist of approximately 196,131 square feet (net of subleased space). The lease for this property initially expires on February 29, 2020, with an option to renew and increase the rentable square feet. We also lease 74,067 square feet of office space at 200 West Monroe Street, Chicago, Illinois. The lease for this property initially expires on March 31, 2016 with an option to renew and increase the rentable square feet.
In addition to our corporate headquarters, we lease space for our divisional offices, service centers and sales offices in multiple locations, including Beijing and Hong Kong, People’s Republic of China; Dubai, United Arab Emirates; Gurgaon (NCR) and Mumbai, India; London, United Kingdom; Mainz, Germany; Marion, Illinois; Melbourne, Australia; Mexico City, Mexico; Moore, Oklahoma; Omaha, Nebraska; St. Petersburg, Florida; Tokyo, Japan; and Zurich, Switzerland.
We believe that our existing office properties are in good condition and are sufficient and suitable for the conduct of our business. In the event we need to expand our operations, we believe that suitable space will be available on commercially reasonable terms.
 
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Legal Proceedings
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, workers’ compensation and other employee claims and claims related to our management of certain hotel properties. Most occurrences involving liability, claims of negligence and employees are covered by insurance with solvent insurance carriers. For those matters not covered by insurance, which includes commercial matters, we recognize a liability when we believe the loss is probable and reasonably estimable. We believe we have adequate reserves. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or liquidity.
 
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 MANAGEMENT
Executive Officers and Directors
Our executive officers and directors and their ages and positions as of June 30, 2009 are set forth below:

Name	  	Age	  	Position	
Thomas J. Pritzker	  	59	  	Executive Chairman of the board of directors	
Mark S. Hoplamazian	  	45	  	President, Chief Executive Officer and Director	
Harmit J. Singh	  	46	  	Chief Financial Officer	
Stephen G. Haggerty	  	41	  	Global Head of Real Estate and Development	
Rakesh Sarna	  	52	  	Chief Operating Officer—International	
H. Charles Floyd	  	49	  	Chief Operating Officer—North America	
Robert W. K. Webb	  	53	  	Chief Human Resources Officer	
Susan T. Smith	  	58	  	Senior Vice President, General Counsel, Secretary	
John Wallis	  	56	  	Global Head of Marketing and Brand Strategy	
Bernard W. Aronson	  	63	  	Director	
Richard A. Friedman	  	51	  	Director	
Susan D. Kronick	  	58	  	Director	
Mackey J. McDonald	  	62	  	Director	
John D. Nichols	  	78	  	Director	
Gregory B. Penner	  	39	  	Director	
Penny Pritzker	  	50	  	Director	
Michael A. Rocca	  	64	  	Director	
Byron D. Trott	  	50	  	Director	
Richard C. Tuttle	  	54	  	Director	
Thomas J. Pritzker has been a member of our board of directors since August 2004 and our Executive Chairman since August 2004. Mr. Pritzker served as our Chief Executive Officer from August 2004 to December 2006. Mr. Pritzker was appointed President of Hyatt Corporation in 1980 and served as Chairman and Chief Executive Officer of Hyatt Corporation from 1999 to December 2006. Mr. Pritzker is Chairman and Chief Executive Officer of The Pritzker Organization, LLC, the principal financial and investment advisor to various Pritzker family business interests, including Hyatt. Mr. Pritzker is Chairman of Marmon Holdings, Inc. and also serves as a Director of Royal Caribbean Cruises Ltd. and TransUnion Corp., a credit reporting service company. He is a founding member, Manager and Chairman of the board of managers of Bay City Capital LLC, a life sciences venture capital firm. Mr. Pritzker is a Director and Vice President of The Pritzker Foundation, a charitable foundation; Director and President of the Pritzker Family Philanthropic Fund, a charitable organization; and Chairman and President of The Hyatt Foundation, a charitable foundation which established The Pritzker Architecture Prize. Mr. Pritzker is a first cousin of Ms. Penny Pritzker, who is also a member of our board of directors.
Mark S. Hoplamazian has been a member of our board of directors since November 2006. He has served as our President and Chief Executive Officer since December 2006, as interim President from July 2006 to December 2006 and Vice President from August 2004 to December 2004. Mr. Hoplamazian is a Vice President of The Pritzker Organization, LLC (TPO), the principal financial and investment advisor to various Pritzker family business interests, including Hyatt. From April 2004 to August 2009, Mr. Hoplamazian served as President and Director of TPO and has served in various capacities with TPO and its predecessors since its formation in 1997, including managing its merchant banking and investment activities. Mr. Hoplamazian currently serves on the Board of Trustees of The Latin School of Chicago. He is a member of the Discovery Class of the Henry Crown Fellowship at the Aspen Institute.
 
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Harmit J. Singh has served as our Chief Financial Officer since August 2008. Mr. Singh leads the Company’s finance, accounting, treasury, strategic financial planning and analysis, tax, risk and information technology functions worldwide. Mr. Singh has over 25 years of financial experience in the travel, financial services, restaurant and hospitality industries. He joined Hyatt after spending 14 years at Yum! Brands, Inc., a restaurant company. Mr. Singh most recently served as Senior Vice President and Chief Financial Officer for Yum!, International from December 2005 to July 2008. Prior to this position, Mr. Singh served in several senior financial roles, including Senior Vice President and Chief Financial Officer for Pizza Hut—United States, Vice President Finance—Yum!, International, Chief Financial Officer—India and Chief Financial Officer—Asia. Prior to joining Yum! in 1994, Mr. Singh worked in various financial capacities for American Express India, a worldwide travel, financial and network services company. Mr. Singh serves on the board of directors of Avendra, LLC.
Stephen G. Haggerty has served as our Global Head of Real Estate and Development since August 2007 and our Executive Vice President—Real Estate and Development from June 2007 to August 2007. Mr. Haggerty has responsibility for our global development team, our global feasibility and development finance team, our global asset management team that oversees all of our owned hotel properties and development of hotels and vacation ownership properties in which we have ownership. Prior to joining us, Mr. Haggerty spent 13 years serving in several positions of increasing responsibility with Marriott International, Inc., a lodging company, most recently in London as Senior Vice President, International Project Finance and Asset Management for Europe, Africa and the Middle East from 2005 to 2007. Prior to this position, from 2003 to 2005, Mr. Haggerty served as Marriott’s Senior Vice President of Global Asset Management and Development Finance and previously lived in Asia for nine years holding a variety of roles relating to development at Marriott.
Rakesh Sarna has served as our Chief Operating Officer—International since August 2007. Mr. Sarna has been with us since 1979. Mr. Sarna is responsible for management of our full service hotels and resorts outside of the United States, Canada and the Caribbean. Mr. Sarna is responsible for management of Park Hyatt and Andaz hotels on a global basis. He also oversees the operations of our Divisional offices in Zurich, Switzerland, Hong Kong, Dubai, UAE and Mexico City and oversees various corporate functions in Chicago, IL. Since June 2007, Mr. Sarna has served as the Chief Operating Officer for Hyatt International Corporation. From September 2006 to June 2007, he served as Senior Vice President for Hyatt International Corporation. Prior to that, from April 2001 to September 2006, Mr. Sarna served as our Vice President of Operations for Europe, Africa and the Middle East, and from September 1999 to April 2001 as Director of Operations for Europe, Africa and the Middle East. Prior to that, from January 1997 to September 1999, he served as regional director for South Asia. Mr. Sarna joined Hyatt in 1979 and has held a variety of senior management Food and Beverage positions and served as General Manager for Hyatt Regency Belgrade, Park Hyatt UN Plaza, New York and Hyatt Regency Macau.
H. Charles Floyd has served as our Chief Operating Officer—North America since August 2007. Mr. Floyd has been with us since 1981. Mr. Floyd is responsible for management of our full service hotels and resorts as well as Hyatt Place and Summerfield Suites brands in the United States, Canada and the Caribbean. In addition, he oversees Hyatt Vacation Ownership, Inc. (HVOI) and the Franchise Owner Relations Group, which supports both full service and select service and extended stay franchisees. He also oversees various corporate functions, including sales, human resources, product and design, rooms, food and beverage and engineering. Prior to assuming his current position, Mr. Floyd served in a number of senior positions at Hyatt, including Executive Vice President—North America Operations and Senior Vice President of Sales, as well as various managing director and general manager roles at Hyatt.
Robert W. K. Webb has served as our Chief Human Resources Officer since August 2007. Prior to joining Hyatt, Mr. Webb served as Head of Global Service Delivery for Citi Employee Services at Citigroup Inc., a global financial services company. During his 19-year tenure at Citigroup and two predecessor companies, Mr. Webb served as Chief Administrative Officer for a global business unit,
 
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and held several senior human resources roles in North America and international operations. Mr. Webb serves as a Director of Chicago Children’s Museum and Junior Achievement of Chicago.
Susan T. Smith has served as our Senior Vice President, General Counsel and Secretary since April 2005. She has been a licensed attorney since 1982. Prior to joining Hyatt, Ms. Smith served in a number of roles, including as Vice President, General Counsel and Secretary for First Health Group Corp., a publicly traded company that provided health benefit services to self-funded national employers. First Health was acquired by Coventry Health Care, Inc. in January 2005. Before joining First Health in 1992, she was a shareholder at Pryor, Carney & Johnson, PC, a Denver law firm.
John Wallis has served as our Global Head of Marketing and Brand Strategy since November 2008. Mr. Wallis’ career with Hyatt began in 1981. Prior to his current role, Mr. Wallis served as Senior Vice President, Product and Brand Development since August 2007. From 2004 through 2007, Mr. Wallis served as our Senior Vice President, Global Asset Management, where he was responsible for the management of more than 40 Hyatt-owned properties across North America, Latin America, Europe and Asia. He has also served in a variety of other management positions, including Senior Vice President—Global Asset Management, Senior Vice President—Product and Brand Development, Senior Vice President of Marketing and Sales, and Vice President of Marketing for Hyatt International Corporation, General Manager and Regional Vice President-Gulf States for Hyatt Regency Dubai, Executive Assistant Manager Food and Beverage for Hyatt Regency Kuwait, Hyatt Regency Fiji and Hyatt Kingsgate Sydney and various other food and beverage management positions.
Bernard W. Aronson has been a member of our board of directors since December 2004. Mr. Aronson is the founder and Managing Partner of ACON Investments, LLC, a private equity firm, and has served in this position since 1996. Prior to that, he served as International Advisor to Goldman, Sachs & Co.; he also served as Assistant Secretary of State for Inter-American Affairs. Mr. Aronson serves as a Director of Liz Claiborne, Inc., Royal Caribbean Cruises Ltd. and Mariner Energy Incorporated. Mr. Aronson is also a member of the Council on Foreign Relations.
Richard A. Friedman has been a member of our board of directors since June 2009. Mr. Friedman joined Goldman, Sachs & Co., a full-service global investment banking and securities firm, in 1981, and has been a Partner there since 1990. He has been a Managing Director at Goldman Sachs & Co. since 1996 and is the Head of the Merchant Banking Division of Goldman, Sachs & Co. Mr. Friedman is also the Chairman of the Corporate Investment Committee of the Merchant Banking Division and a Member of the Management Committee of The Goldman Sachs Group, Inc. Mr. Friedman is the Chairman of Yankees Entertainment and Sports Network, LLC (YES).
Susan D. Kronick has been a member of our board of directors since June 2009. Since February 2009, Ms. Kronick has served as the Vice Chair of Macy’s Inc., an operator of department stores; prior thereto she served as Vice Chair, Department Store Divisions of Macy’s Inc. since February 2003. Ms. Kronick served as Group President, Regional Department Stores of Macy’s Inc. from April 2001 to February 2003; and prior thereto she served as Chairman and Chief Executive Officer of Macy’s Florida from June 1997 to February 2003. Ms. Kronick also serves on the board of The Pepsi Bottling Group, Inc.
Mackey J. McDonald has been a member of our board of directors since June 2009. Mr. McDonald is the retired chairman and Chief Executive Officer of VF Corporation, an apparel manufacturer. Mr. McDonald served as Chairman and Chief Executive Officer of VF Corporation from 1998 until his retirement in August 2008. From 1996-2006, he was the President of VF Corporation; and prior thereto he served as VF Group Vice President. Mr. McDonald also serves on the board of Wells Fargo and Company.
 
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John D. Nichols has been a member of our board of directors since December 2006. From 2002 to 2005, Mr. Nichols served as President and Chief Executive Officer of Marmon Holdings, Inc., an international association of more than 125 manufacturing and service businesses. Mr. Nichols also served as the Chief Executive Officer and Chairman of Illinois Tool Works Inc., a worldwide manufacturer of engineered products and equipment. He joined Illinois Tool Works in 1980. Mr. Nichols serves as Vice Chairman of Marmon Holdings, Inc. and is a Director of TransUnion Corp.
Gregory B. Penner has been a member of our board of directors since August 2007. Mr. Penner has been a General Partner at Madrone Capital Partners, LLC, an investment management firm, since 2005. From 2002 to 2005, he was the Senior Vice President and Chief Financial Officer of Wal-Mart Japan, and he continues to serve as a Director of Wal-Mart Stores, Inc., Baidu, Inc. and Cuil Inc. In addition, Mr. Penner serves as a Director of 99Bill Corporation based in Shanghai, China. Prior to joining Wal-Mart, Mr. Penner was a General Partner at Peninsula Capital, an early stage venture capital fund and a financial analyst for Goldman, Sachs & Co.
Penny Pritzker has been a member of our board of directors since August 2004 and served on the board of directors of Hyatt Corporation and Hyatt International Corporation from 1999 to 2004. Ms. Pritzker is the Chairman of CC-Development Group, Inc., which operates Classic Residence by Hyatt, an owner and operator of upscale retirement communities throughout the United States; is Chairman and Chief Executive Officer of Classic Residence Management Limited Partnership, the manager of Classic Residence by Hyatt facilities; serves as President and Chief Executive Officer of Pritzker Realty Group, a real estate investment and advisory firm; is co-founder and Chairman of The Parking Spot, a near-airport parking company; serves as Chairman of TransUnion Corp., a credit reporting service company; is a Director and Vice President of The Pritzker Foundation, a charitable foundation; and served as National Finance Chair of Barack Obama’s presidential campaign. Ms. Pritzker is the first cousin of Mr. Thomas J. Pritzker, who is our executive chairman.
Michael A. Rocca has been a member of our board of directors since March 2008. From 1994 to 2000, Mr. Rocca served as Senior Vice President and Chief Financial Officer of Mallinckrodt Inc., a pharmaceutical and medical device manufacturer. Prior to 1994, Mr. Rocca served in a variety of capacities for Honeywell Inc., a diversified technology and manufacturing company. Mr. Rocca also serves as a Director of St. Jude Medical Inc. and Lawson Software, Inc.
Byron D. Trott has been a member of our board of directors since August 2007. He serves as Managing Partner and Chief Investment Officer of BDT Capital Partners Fund I, L.P. Prior thereto, Mr. Trott had been with Goldman, Sachs & Co. for over 25 years. Mr. Trott was the head of Goldman, Sachs & Co.’s Chicago office and Midwest Region from 1994 to April 2009 and had been Vice Chairman of Investment Banking for Goldman, Sachs & Co. for over 4 years. He was also a member of the Investment Committee of The Goldman, Sachs & Co.’s Principal Investment Area and Investment Banking Division’s Operating Committee. Mr. Trott currently is an Advisory Director of Enterprise Rent-A-Car Company.
Richard C. Tuttle has been a member of our board of directors since December 2004. Mr. Tuttle is a founding Principal at Prospect Partners, LLC, a lower-middle-market private equity firm, and has held this position since 1998. Prior to founding Prospect Partners, he was Executive Vice President of Corporate Development for Health Care & Retirement Corp, now Manor Care, Inc., a healthcare services company. He served as a Director of Manor Care until December 2007 and also served as a Director of Cable Design Technologies, now Belden Inc., for 17 years. Mr. Tuttle is Chairman of the boards of Velvac Holdings, Inc., ESI Lighting, Inc., Office Resources, Inc. and Tender Products Corporation and Polymer Holding Corporation.
Other than the relationships of Mr. Thomas J. Pritzker and Ms. Penny Pritzker as described above, there are no family relationships among any of our directors or executive officers. Each executive officer is elected or appointed by, and serves at the discretion of, our board of directors.
 
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Board of Directors
Our business and affairs are managed under the direction of our board of directors. Our board of directors currently consists of twelve members. Our certificate of incorporation requires that the size of our board of directors be not less than five nor more than 15 members, and that the size of the board be determined from time to time by the board of directors. Upon the completion of this offering, the board of directors will be divided into three classes, with each class serving for a staggered three-year term. The board of directors will initially consist of four class I directors, four class II directors and four class III directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the class I directors, class II directors and class III directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders held during the calendar years 2010, 2011 and 2012, respectively. While voting agreements entered into with or among our major stockholders are in effect, they may provide our board of directors with effective control over the election of directors. See “Risk Factors—Risks Related to Share Ownership and this Offering.” Directors can be removed from our board of directors only for cause. Vacancies on our board of directors, and any newly created director positions created by the expansion of the board of directors, can be filled only by a majority of remaining directors then in office.
Pursuant to a stockholders’ agreement among us and certain of our investors (referred to in this prospectus as the 2007 Stockholders’ Agreement), Madrone GHC and GS Capital Partners VI Parallel, L.P., an affiliate of Goldman, Sachs & Co., each has the right to designate, and our board of directors has appointed, one representative to the board. Mr. Penner has been appointed as Madrone GHC’s designee and Mr. Friedman has been appointed as GS Capital Partners VI Parallel, L.P.’s designee. The right of these investors to designate representatives for appointment to our board of directors terminates, and each designee is required to resign if we so request, immediately prior to the consummation of this offering. Although Mr. Penner and Mr. Friedman will no longer be appointed pursuant to a contractual right, they will continue to serve as directors following this offering.
Pursuant to our employment letter with Mr. Thomas J. Pritzker, we have agreed that so long as he is a member of our board of directors we will use our commercially reasonable efforts to appoint him as our executive chairman as long as he is willing and able to serve in that office. If he is not re-appointed as executive chairman, he will be entitled to terminate his employment with the rights and entitlements available to him under our severance policies as if his employment was terminated by us without cause.
Pursuant to our employment letter with Mr. Mark S. Hoplamazian, we have agreed that so long as he is the president and chief executive officer of Hyatt, we will use our commercially reasonable efforts to nominate him for re-election as a director prior to the end of his term. If he is not re-elected to the board of directors, he will be entitled to terminate his employment with the rights and entitlements available to him under our severance policies as if his employment was terminated by us without cause.
Director Independence
Our board of directors has reviewed the relationships between each director and Hyatt, including the relationships described in “Certain Relationships and Related Party Transactions.” As a result of this review, our board of directors has determined that each of Messrs. Aronson, Friedman, McDonald, Rocca, Trott and Tuttle and Ms. Kronick and Ms. Pritzker is an “independent director” under applicable SEC rules and the listing standards of the New York Stock Exchange.
Committees of the Board of Directors
Upon completion of this offering, our board of directors will have an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will
 
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have the composition and responsibilities described below. Our board of directors may also establish from time to time any other committees that it deems necessary or desirable. The composition of each committee will comply with the listing requirements and other rules of the NYSE.
Audit Committee
Upon completion of this offering, our audit committee will consist of Messrs. Rocca and Tuttle and Ms. Kronick, with Mr. Rocca serving as Chairman. Our board of directors has also determined that each of Messrs. Rocca and Tuttle and Ms. Kronick is independent within the meaning of applicable SEC rules and the listing standards of the NYSE, and has determined that Mr. Rocca is an audit committee financial expert, as such term is defined in the rules and regulations of the SEC. The audit committee has oversight responsibilities regarding:
 
 	Ÿ 	 	the integrity of our financial statements and our financial reporting and disclosure practices;	
 
 	Ÿ 	 	the soundness of our system of internal controls regarding finance and accounting compliance;	
 
 	Ÿ 	 	the annual independent audit of our consolidated financial statements;	
 
 	Ÿ 	 	the independent registered public accounting firm’s qualifications and independence;	
 
 	Ÿ 	 	the engagement of the independent registered public accounting firm;	
 
 	Ÿ 	 	the performance of our internal audit function and independent registered public accounting firm;	
 
 	Ÿ 	 	our compliance with legal and regulatory requirements in connection with the foregoing;	
 
 	Ÿ 	 	compliance with our Code of Business Conduct and Ethics; and	
 
 	Ÿ 	 	addressing requests for waivers of conflict of interest situations and addressing certain concerns related to accounting, internal accounting controls and auditing matters as provided in our Corporate Governance Guidelines.	
The audit committee shall also prepare the report of the committee required by the rules and regulations of the SEC to be included in our annual proxy statement.
Our board of directors has adopted a written charter for our audit committee, which will be available upon completion of this offering on our website at www.hyatt.com .
Compensation Committee
Our compensation committee consists of Messrs. McDonald, Aronson, Friedman and Ms. Pritzker, with Mr. McDonald serving as Chairman. Our board of directors has determined that each of Messrs. McDonald, Aronson and Friedman and Ms. Pritzker is independent within the meaning of the listing standards of the NYSE. The compensation committee is authorized to discharge the board’s responsibilities relating to:
 
 	Ÿ 	 	the establishment, maintenance and administration of compensation and benefit policies designed to attract, motivate and retain personnel with the requisite skills and abilities to enable us to achieve superior operating results;	
 
 	Ÿ 	 	the goals, objectives and compensation of our President and Chief Executive Officer, including evaluating the performance of the President and Chief Executive Officer in light of those goals;	
 
 	Ÿ 	 	the compensation of our other executives and non-management directors;	
 
 	Ÿ 	 	ensuring that succession planning takes place for the Chief Executive Officer and other senior management positions;	
 
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 	Ÿ 	 	our compliance with the compensation rules, regulations and guidelines promulgated by the NYSE, the SEC and other law, as applicable; and	
 
 	Ÿ 	 	the issuance of an annual report on executive compensation for inclusion in our annual proxy statement, once required.	
Our board of directors has adopted a written charter for our compensation committee, which will be available upon completion of this offering on our website at www.hyatt.com .
During 2008 the compensation committee relied upon information provided by Mercer in setting compensation for our named executive officers, as more thoroughly discussed below. Mercer was engaged by us and not by the compensation committee directly. Mercer was asked to provide us information and data regarding appropriate peer groups so that we could assess the competitiveness of our executive compensation package. Mercer was also asked to help us devise our total rewards compensation philosophy and advise management on current incentive compensation and executive benefit practices.
In making decisions about executive compensation, the compensation committee considered input from Mercer, our executive chairman, chief executive officer and chief human resources officer and our global head of total rewards. However, the compensation committee ultimately makes all compensation decisions regarding our executive officers, other than our executive Chairman, whose compensation is approved by the full board of directors.
The compensation committee may delegate its duties to a subcommittee under the terms of its charter. In addition, under the terms of our LTIP the compensation committee may delegate to other board members and to our officers the authority to make awards and to amend LTIP awards, except that it may not delegate the authority to make any awards to officers who are subject to Section 16 of the Exchange Act or to make awards to themselves. To date, the compensation committee has not delegated any of its authority under the LTIP.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Messrs. Aronson, Trott and Tuttle, with Mr. Aronson serving as chairman. Our board of directors has determined that each of Messrs. Aronson, Trott and Tuttle is independent within the meaning of the listing standards of the NYSE. The nominating and corporate governance committee is authorized to:
 
 	Ÿ 	 	assist the board in identifying individuals qualified to become board members consistent with criteria approved by the board and set forth in the corporate governance guidelines and to recommend director nominees to the board;	
 
 	Ÿ 	 	take a leadership role on shaping the corporate governance of the company, including developing and recommending to the board corporate governance guidelines and practices applicable to the company;	
 
 	Ÿ 	 	recommend board committee nominees to the board; and	
 
 	Ÿ 	 	evaluate the board’s and management’s performance.	
After completion of this offering, the committee will assist the board of directors in the selection of nominees for election as directors at each annual meeting of our stockholders. Our board of directors has adopted a written charter for our nominating and corporate governance committee, which will be available upon completion of this offering on our website at www.hyatt.com .
 
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Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and associates. Any waiver of the provisions of the Code of Business Conduct and Ethics for executive officers and directors may be made only by the audit committee and, in the case of a waiver for members of the audit committee, by the board of directors. Any such waivers must be promptly disclosed to our stockholders. A copy of our Code of Business Conduct and Ethics  will be available upon completion of this offering on our website at www.hyatt.com .
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee has at any time been one of our executive officers or employees. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our board of directors or compensation  committee.
Compensation of Directors
We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the board of directors. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties as well as the skill level we require of members of our board of directors.
 
Retainers and Committee Fees
Our directors who are also our employees do not receive any additional compensation for their services as our directors. Accordingly, Mr. Thomas Pritzker and Mr. Nicholas J. Pritzker, a former officer and director, did not receive any compensation for services as directors in 2008. Members of the board of directors who are not our employees are entitled to receive annual cash retainers of $50,000 and stock compensation of $75,000. Directors may elect to receive their annual cash retainer in Class A common stock. For new non-employee directors, their annual stock compensation is pro rated based on the number of whole fiscal quarters served during the fiscal year. The annual cash and stock retainers are paid in arrears after the end of our fiscal year. Committee members and the chairman of each committee receive the following additional cash retainers:

   	  	Committee Member
Retainer	  	Committee Chairman
Retainer	
Audit Committee	  	$	9,000	  	$	25,000	
Compensation Committee	  	 	3,000	  	 	12,000	
Nominating and Corporate Governance Committee	  	 	3,000	  	 	6,000	
Finance Committee	  	 	3,000	  	 	6,000	
The chairman of a committee receives only the chairman retainer and does not also receive the committee member retainer. In addition, each non-employee director receives cash compensation of $1,200 for each committee meeting attended (in person or by telephone). All of our directors are reimbursed for reasonable expenses incurred in connection with attending board of director meetings and committee meetings and for attending corporate functions on our behalf.
Newly Elected Directors
In addition to the annual cash and stock compensation, each non-employee director upon joining the board receives $75,000 of our common stock provided they remain a director on the date that is
 
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thirteen months following their election as a director, either in the form of restricted stock or deferred stock as they may elect. The number of shares of our Class A common stock received is based on the value of the shares on the date the director is first elected to the board.
Directors Deferred Compensation Plan
Each non-employee director may elect to defer all or any portion of his or her annual cash and stock retainers under our Directors Deferred Compensation Plan. Once an election is made to defer a retainer, the decision may be revoked or changed only for subsequent calendar years. Under the Directors Deferred Compensation Plan, a director who elects to defer any of his or her annual cash retainer may elect to have such amount invested in a notional cash account, which is credited with interest quarterly at the prime rate, or in stock units equivalent to our common stock. Deferrals of annual stock retainers are invested in stock units equivalent to our common stock. Any retainers deferred into stock units are entitled to receive additional stock units equal to the amount of any dividends payable on the stock units held by the director. The director may also elect to receive payment for any such deferrals at either the date of the director’s departure from the board or on the last business day of March of the fifth year following the year in which such retainer was earned. Stock units are paid in shares of our Class A common stock from shares reserved for issuance under our LTIP.
The following table provides information related to the compensation of our non-employee directors earned for 2008:

Name	  	Fees Earned
or
Paid in Cash
($)	  	Stock
Awards
($)(1)	  	Non-Equity
Incentive Plan
Compensation
($)	  	All Other
Compensation
($)	  	Total
($)	
Bernard W. Aronson	  	$	71,000	  	$	75,000	  	$	—	  	$	—	  	$	146,000	
Norman R. Bobins(2)(3)	  	 	70,400	  	 	75,000	  	 	—	  	 	—	  	 	145,400	
John D. Nichols(2)	  	 	69,800	  	 	75,000	  	 	—	  	 	—	  	 	144,800	
Gregory B. Penner(2)	  	 	69,800	  	 	150,000	  	 	—	  	 	—	  	 	219,800	
Nicholas J. Pritzker(4)	  	 	182,000	  	 	—	  	 	300,000	  	 	89,655	  	 	571,655	
Penny Pritzker(5)	  	 	66,800	  	 	—	  	 	—	  	 	—	  	 	66,800	
Michael A. Rocca(6)	  	 	73,300	  	 	56,250	  	 	—	  	 	—	  	 	129,550	
Byron D. Trott	  	 	65,600	  	 	150,000	  	 	—	  	 	—	  	 	215,600	
Richard C. Tuttle(2)	  	 	76,400	  	 	75,000	  	 	—	  	 	—	  	 	151,400	

(1)	Amount reflects the total compensation expense for the year ended December 31, 2008, calculated in accordance with SFAS No. 123R for the stock or stock units granted in payment of their annual and initial stock retainer of $75,000 each. As the directors are fully vested in their stock awards when granted, the grant date fair value of the stock and stock units as determined under SFAS No. 123R was the same as the amount noted above. The valuation assumptions used in determining such amounts are described in note 16 to our audited consolidated financial statements included in this prospectus. As described above under “—Directors Deferred Compensation Plan” directors may elect to defer their stock and cash fees into stock units. The following table sets forth the outstanding stock units held by each director as of December 31, 2008:	

Name	  	Stock Units	
Bernard W. Aronson	  	3,677.637816	
John D. Nichols	  	4,537.039672	
Richard C. Tuttle	  	4,537.039672	
 
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(2)	Messrs. Bobins and Penner elected to receive their annual cash retainers of $50,000 in the form of our common stock. Messrs. Nichols and Tuttle deferred their annual cash retainer of $50,000 into restricted stock units under the Directors Deferred Compensation Plan. The number of shares of common stock or stock units received by each of these directors was based on a $13.00 per share valuation, resulting in 3,846 shares of common stock or stock units, as applicable, being issued.	
(3)	Mr. Bobins retired from the board of directors effective June 2, 2009.	
(4)	Mr. Nicholas J. Pritzker retired from the board of directors effective June 2, 2009. During 2008, Mr. Pritzker also served as an employee and, therefore, did not receive any compensation for services as a director. The compensation reflected above represents the amounts he received as an employee in 2008 as salary, non-equity incentive plan compensation and all other compensation. Mr. Pritzker did not receive any equity awards in 2008. The amount set forth under All Other Compensation represents amounts received from a holiday gift, $20,911 of above market interest earned on his non-qualified deferred compensation plans, auto allowance, parking, $12,000 employer contribution to his DCP (described below under “—Narrative to Summary Compensation Table”) (which amount is reimbursed to us by Mr. Pritzker) and a $38,993 contribution to a deferred contribution arrangement pursuant to which we are required to contribute 25% of his base salary each year, less the matching contribution we make to the 401(K) plan on his behalf, and a $6,507 match to the 401(k) plan. In addition, $5,300,532 was transferred to his DCP account upon termination of the SERP. See discussion below under the narrative to Pension Benefits Table, for a description of the SERP termination and calculation of the amount transferred into his DCP account.	
(5)	Ms. Pritzker waived her right to receive the annual stock compensation of $75,000 for 2008.	
(6)	Mr. Rocca was elected to the board of directors in March 2008 and, therefore, he received only three quarters of the annual cash and stock retainers for 2008. He received his initial stock retainer on April 11, 2009, 13 months following election to the board of directors.	
 
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 COMPENSATION DISCUSSION AND ANALYSIS
Our goal is to be the preferred brand for guests and owners and the preferred employer for employees. We believe that this goal is central to and best promotes long-term value creation for our stockholders. Our compensation philosophy is to provide an appropriate base of cash compensation and to align all incentive and long-term components of compensation to long-term value creation for our stockholders. We have focused on defining annual financial and non-financial goals around metrics that we believe support and promote enhancement of long-term brand value. We believe that this is the best way to align our total rewards with creation of long-term stockholder value. To attract, recruit, develop and engage the talent needed to deliver on this ambition, our compensation programs are designed to:
 
 	Ÿ 	 	retain the employee capabilities required to achieve our goal and appropriately motivate employees through the alignment of total rewards with performance goals;	
 
 	Ÿ 	 	address the needs and preferences of employees as individuals and as members of high-performing teams;	
 
 	Ÿ 	 	be innovative and competitive, recognizing the ever changing dynamics of the labor market and acknowledging that, in attracting, retaining and developing talent globally we need to offer compelling employment opportunities; and	
 
 	Ÿ 	 	be cost effective and financially sustainable over time under varying business conditions.	
To accomplish these goals our executive compensation program is based on a total rewards program, which provides:
 
 	Ÿ 	 	compensation, including forms of current cash and incentive compensation, as well as, long-term stock based compensation;	
 
 	Ÿ 	 	benefits, including retirement related, healthcare and other welfare programs;	
 
 	Ÿ 	 	work/lifestyle programs, including paid-time off, vacation, specified number of free hotel stays and other programs that promote well-being; and	
 
 	Ÿ 	 	training and development.	
Our total rewards program is designed to provide rewards for superior individual, team and organizational performance.
The following describes the compensation elements of our total rewards program for our “named executive officers” (NEOs), including our principal executive officer, principal financial officer and our three most highly compensated executive officers. In addition, we have included Mr. Rose who held the position of principal financial officer prior to leaving our employment on May 15, 2008.
Our NEOs for 2008 were:

Name	  	Position	
Thomas J. Pritzker	  	Executive Chairman	
Mark S. Hoplamazian	  	President & Chief Executive Officer	
Harmit J. Singh	  	Chief Financial Officer	
H. Charles Floyd	  	Chief Operating Officer—North America	
Rakesh K. Sarna	  	Chief Operating Officer—International	
Kirk A. Rose	  	Senior Vice President—Finance and Treasurer (Principal Financial Officer) (Former)	
 
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Our compensation committee is responsible for establishing, maintaining and administering our compensation programs for our NEOs and other executives.
Role of the Outside Consultant
We retained Mercer as outside consultant to:
 
 	Ÿ 	 	define a competitive total rewards compensation philosophy;	
 
 	Ÿ 	 	assess the competitiveness of our executive compensation program;	
 
 	Ÿ 	 	advise management on current incentive compensation and executive benefit practices; and	
 
 	Ÿ 	 	assist with the preparation of this Compensation Discussion and Analysis.	
Mercer consultants also work with our human resources personnel on our plan design for retirement, international benefits and manager incentives, as well as the administration of our plans.
Role of Executive Officers
In making decisions about executive compensation, the compensation committee invites our executive chairman, our president and chief executive officer, our chief human resources officer and our global head of total rewards to present at the committee meetings various compensation proposals and to answer any questions the committee may have. With respect to the compensation of our chief executive officer, the compensation committee meets in executive session with the executive chairman and our chief human resources officer present.
Market Data
In 2007, we asked Mercer to assess the market competitiveness of our NEOs’ annual cash and long-term incentives. In doing so, Mercer used several survey sources, and where data for comparable positions was available in the hospitality/restaurant or lodging industry they provided such data. If no such data was available in the hospitality/restaurant or lodging industry, then general industry survey data was used. We included restaurant companies in our market data, along with our competitors in the hospitality and lodging business, as these are companies with which we often compete for management talent. For example, we recruited Mr. Singh, our Chief Financial Officer, from Yum! International, a division of Yum! Brands, Inc. The restaurant companies included in our market data surveys also have a similar business profile to ours, in that they have franchise operations, are in multiple locations and are in a customer oriented service business. Representative companies included in the surveys included the following:

					
Accor North America, Inc.	 	Darden Restaurants Inc	 	Mandalay Resort Group	
Applebee’s International, Inc.	 	Delaware North Companies, Inc	 	Marriott International	
Arby’s Restaurant Group	 	Denny’s Corporation	 	Papa John’s International, Inc.	
Bob Evans Farms, Inc.	 	Domino’s Pizza	 	Royal Caribbean Cruises Ltd	
Boston Market Corporation	 	Dunkin’ Brands, Inc.	 	Starbucks Coffee Company	
Brinker International	 	Friendly Ice Cream Corporation	 	Starwood Hotels & Resorts	
Buffets, Inc.	 	Harrah’s Entertainment, Inc.	 	Starwood Vacation Ownership	
Burger King Corporation	 	Hilton Hotels Corporation	 	Subway Franchisee Advertising Fund Trust	
California Pizza Kitchen	 	Host Marriott Corp	 	Treasure Island Resort & Casino	
Cbrl Group	 	Intercontinental Hotels Group-America	 	Wendy’s International, Inc.	
Choice Hotels International, Inc.	 	International Dairy Queen, Inc.	 	Yum! Brands, Inc.	
Cke Restaurants Inc.	 	Kohler Company—Hospitality & Real Estate Group	 	Wyndham Worldwide Corp	
Compass Group USA	 	Loews Corporation – Loews Hotels	 		
 
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For 2008 we set our base salaries, annual incentive targets and long-term incentives by reference to this review of market competitiveness, although we did not benchmark or target our NEOs’ pay to any particular percentile or level. Rather we used the data obtained from this review merely as one of the reference points for determining how our NEOs’ compensation compared to market levels.
Different Arrangements for Certain NEOs
Mr. Pritzker is subject to a different compensation program than the other NEOs. His compensation program is discussed separately below, under “—Executive Chairman Compensation .” We also agreed to some different compensation arrangements for Mr. Singh in connection with his recruitment and hiring in August 2008. These differences are included in the discussion of the other NEO compensation below and were determined by the compensation committee to be necessary in order to attract Mr. Singh. Finally, because Mr. Rose was employed for only part of the year and received severance upon his termination, his compensation is discussed separately below under “—Kirk  Rose Separation.”
Key Elements of Total Rewards in 2008
Our total rewards programs include fixed and variable compensation as well as other benefits. We provide the following compensation elements to our NEOs:

Compensation Element	  	Purpose	  	Description	
Base Salary	  	Fixed component of pay that fairly compensates the individual based upon level of responsibilities	  	Fixed cash payments	
			
Annual Performance-Based Incentive	  	Align compensation with performance at the enterprise and business segment level	  	Variable annual cash award	
			
Long-Term Incentives	  	Reward for creating long-term stockholder value and provide alignment with stockholders	  	Equity instruments, including stock appreciation rights and restricted stock units	
			
Benefits	  	Retirement, health and other benefits that provide comprehensive long-term financial security to a globally mobile workforce, enable us to maintain a healthy and productive workforce and attract and retain employees	  	401(k) plan, deferred compensation programs with matching and retirement contributions, health, life and disability insurance as well as certain perquisites	
Base Salary
Salaries for our NEOs are reviewed annually. Our NEOs’ salaries for 2008 reflected several factors, including time in the role, market levels and the desire to provide an appropriate base by which their overall total rewards level is set and measured. Mr. Hoplamazian’s base salary was not changed for 2008. Mr. Floyd’s salary was increased by 3.8% and Mr. Sarna’s salary was increased by 5.6% in 2008 based on our assessment of market practices and performance. Mr. Sarna’s increase was also consistent with his position and responsibilities, to which he was promoted in 2007.
 
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Annual Incentive
Our annual incentive plan provides at-risk compensation designed to reward executives for achievement of operating results over a one-year period. Incentives are based on both financial and non-financial metrics that are intended to balance overall focus on corporate financial performance, business unit financial performance and strategic initiatives that will strengthen our competitive position. Our annual incentive plan also includes a discretionary element that provides flexibility in assessing how our executives are meeting the needs of our business.
For 2008 the financial measure focused on attainment of a target level “Performance EBITDA.” Performance EBITDA is similar to the computation of Adjusted EBITDA discussed earlier under “Prospectus Summary—Summary Consolidated Financial Data.” We used Performance EBITDA in 2008 for both our corporate and segment financial goals because we believed it was the measure that most highly correlated with long-term stockholder value at that time. See “—Compensation Going Forward” for refinement of the compensation measures used in 2009. The non-financial metrics are designed to align compensation with achievement in areas that build brand value over time.
Mr. Hoplamazian’s target and maximum incentives were set under the terms of his employment agreement entered into in 2006 upon his hiring as our CEO. See description of such agreement under “— Employment Agreements” below. The target and maximum incentive opportunities for our other NEOs are determined based on references to market data and the individual’s role in the organization. In particular, the compensation committee looked at the total compensation market data for these positions. The compensation committee did not set a pre-determined target weighting for the different forms of compensation or target to a certain percentile. Rather, they focused more on delivering a total compensation package which would attract a high level of talent while weighting more of the NEO’s total compensation potential on variable and long-term incentives, thereby aligning it with the interests of our stockholders. Additionally, since each of the other NEOs have comparable levels of responsibility for our success, the compensation committee determined that their target and maximum incentive levels should be the same. No minimum threshold is established for an incentive. For 2008 performance, the target and maximum annual incentive opportunities as a percentage of base salary for each NEO who participated in our annual incentive plan were as follows:

Position	  	Target	 	 	Maximum	 	
Mark S. Hoplamazian	  	150	% 	 	300	% 	
Harmit J. Singh	  	80	% 	 	120	% 	
Rakesh K. Sarna	  	80	% 	 	120	% 	
H. Charles Floyd	  	80	% 	 	120	% 	
For 2008, Mr. Hoplamazian’s annual incentive was determined based on our corporate Performance EBITDA, and other qualitative goals established by the compensation committee, relating to strategic (long range planning and branding), organizational (staffing), financial (capital usage/planning) and personal developmental goals. His annual incentive was weighted 37.5% on corporate Performance EBITDA, 37.5% on qualitative goals and 25% discretionary. None of the qualitative goals had specific targets, nor did they have a specific weighting. Accordingly, whether or not the qualitative goals were met was determined in the discretion of the compensation committee based on input from our executive chairman. The compensation committee awarded him 29% of the 37.5% on the qualitative goals based on the following achievements:
 
 	Ÿ 	 	Successfully recruiting a new CFO;	
 
 	Ÿ 	 	Building our leadership team;	
 
 	Ÿ 	 	Launching a global engagement survey;	
 
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 	Ÿ 	 	Reinvigorating the guest loyalty program;	
 
 	Ÿ 	 	Enhancing our customer satisfaction tracking process;	
 
 	Ÿ 	 	Brand study completion;	
 
 	Ÿ 	 	Meeting capital deployment goals; and	
 
 	Ÿ 	 	Capital strategy.	
The compensation committee awarded Mr. Hoplamazian a full 25% discretionary bonus for 2008 based on the following factors:
 
 	Ÿ 	 	Expense management initiatives relative to deteriorating global business conditions;	
 
 	Ÿ 	 	Leadership strategies;	
 
 	Ÿ 	 	Strategic framework and focus;	
 
 	Ÿ 	 	Embedding our mission and goals; and	
 
 	Ÿ 	 	Effective internal control procedures.	
The annual incentives of Messrs. Sarna and Floyd were weighted 30% on achievement of the Performance EBITDA goal, 30% based on segment financial goals for their areas of responsibility and 40% based on achievement of non-financial metrics relating to guest satisfaction, employee engagement and strategic initiatives, which are designed to strengthen our competitive position.
Given the emergence of a challenging economic environment, we did not achieve the corporate Performance EBITDA goal of $746,021,000 for 2008. Consequently, our NEOs forfeited this aspect of their incentive compensation.
The segment financial goals for 2008 for Messrs. Sarna and Floyd related to relative market performance, revenues, hotel-level profit and segment Performance EBITDA, with the greatest weighting on segment Performance EBITDA. Mr. Floyd’s financial goals also included fee growth. The targets were set according to our business plans and were intended to be achievable, but not without effort. More specifically, the goals were set with the expectation that the individuals would achieve between 80 to 85% of the goals. Due to the challenging international hotel markets in 2008, Mr. Sarna did not achieve any of his segment’s financial goals and therefore received no payout under the annual incentive plan for that portion. Mr. Floyd met or exceeded certain relative market performance levels, resulting in a 6.67% payout under his segment financial goals of the 30% available.
The non-financial goals for Messrs. Sarna and Floyd were qualitative in nature and did not have measurable targets. Mr. Sarna’s non-financial goals related to staff development and leadership. Mr. Floyd’s non-financial goals related to guest and meeting planner satisfaction, contribution toward sub-branding, owner relations and leadership. The compensation committee, based on input from Mr. Hoplamazian, determined in their discretion whether or not Messrs. Sarna and Floyd met their non-financial goals for 2008. For 2008, Mr. Sarna established key initiatives regarding staffing of our international properties, took a leadership role in organizing our global management meeting and accomplished the transition to his new role without disruption and accordingly, was determined to have met all of his non-financial goals resulting in a full 40% payout under that metric. Mr. Floyd was determined to have met all his goals regarding guest and meeting planner satisfaction and owner relations. With respect to his sub-branding and leadership goals, the compensation committee determined he completed most, but not all of such goals, including his integration of our select service brands into our North American operations. As a result, he was determined to have earned a payout of 38% of the 40% available for his non-financial goals.
 
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Based on their performance for 2008, Messrs. Sarna and Floyd’s annual incentives as determined under the annual incentive plan would have been $185,920 and $209,354 respectively. However, due to Mr. Sarna meeting all of his qualitative goals, and Mr. Floyd meeting all of his segment performance goals, as well as overall performance given the challenging business environment, Mr. Hoplamazian recommended and the compensation committee approved a discretionary bonus for Messrs. Sarna and Floyd of 2.4% and 2.9% of base salary, respectively, which were the amounts that brought their total annual incentives to $200,000 and $226,000, respectively.
The actual annual incentive compensation earned for 2008 performance expressed as a percentage of base salary as in effect at year end for each NEO who participated in the annual incentive plan was as follows:

Name	  	Actual	
Mark S. Hoplamazian	  	81% of salary (54% of target)	
Rakesh. K. Sarna	  	34% of salary (43% of target)	
H. Charles Floyd	  	39% of salary (49% of target)	
Mr. Singh was not part of the annual incentive plan for 2008, as he did not join us until August. In connection with his hiring, Mr. Singh was instead guaranteed a minimum bonus of $200,000 for 2008. In addition, he received a new-hire bonus of $1,080,000 as replacement of short and long-term incentive amounts that he forfeited upon leaving his prior employer.
Long-Term Incentive
In 2008, we used equity in the form of stock appreciation rights (SARs) and restricted stock units (RSUs) granted under our LTIP as the means of providing long-term incentives to our executives. These annual incentives were granted after our share value for the prior fiscal year had been determined and are designed to:
 
 	Ÿ 	 	drive and reward performance over an extended period of time to promote creation of long-term value for our stockholders;	
 
 	Ÿ 	 	create strong alignment with the long-term interests of our stockholders;	
 
 	Ÿ 	 	assist in retaining highly qualified executives; and	
 
 	Ÿ 	 	contribute to competitive total rewards.	
SARs are designed to deliver value to executives only if our share price increases over the share value at the time of grant. Each vested SAR gives the holder the right to receive the excess of the value of one share of our common stock at the exercise date over the value of one share of our common stock at the date of grant. Generally, SARs vest annually over four years (25% per year) and are settled by delivery of our Class A common stock.
RSUs were granted to align the interests of our NEOs with our stockholders, to reward performance and to promote retention of our executives by providing equity compensation regardless of our share price. RSUs were first granted to executives (other than our CEO) in 2008 upon the recommendation of Mercer in light of the fact that the lodging industry is cyclical and, therefore, the volatility of the value of an RSU would be lower than the volatility of the value of a SAR. RSUs, accordingly, were intended to create a sense of ownership and to better align executives’ interests with our stockholders’. Generally, RSUs vest equally over four years (25% per year) and are settled by delivery of shares of our Class A common stock. In addition to regular RSU grants, a special RSU grant was made in 2008 with greater back weighting on vesting at 10% in 2009, 25% in 2010, 25% in 2011 and 40% in 2012. Also, if we terminate an executive, other than for detrimental conduct (as
 
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described under “—Potential Payments on Termination or Change in Control” below), the executive will be treated as being employed through the next vesting date following termination. This special RSU grant was designed to have a higher retention aspect than the regular RSU grant. Shares of our Class A common stock are deliverable in settlement of vested RSUs granted in 2008 on the earlier of (a) May 1, 2012, (b) termination of employment, or (c) a change in control.
In determining the value of long-term incentive grants, we considered the market data, the individual’s potential contribution to our success and the relationship between each NEO’s short-term and long-term compensation. In 2008, the compensation committee determined annual awards to NEOs would consist of one-third RSUs and two-thirds SARs. The target value (as a percent of base salary) for the annual long-term incentive grants for the NEOs other than Mr. Hoplamazian for 2008 was 150% of base salary. The actual number of SARs and RSUs granted was then determined based on applying a Black-Scholes value to the SARs and the value of our common stock for the RSUs (as determined by an independent third party valuation). The allocation of grants between RSUs and SARs, and the target value was established based upon the recommendation of Mercer, as reviewed by the chief human resources officer, and approved by the compensation committee. Such recommendations were based on Mercer’s review of market practices and our first use of RSUs as a long-term incentive component.
Under the terms of his 2006 employment agreement, Mr. Hoplamazian received an initial grant of 210,000 RSUs in 2006 (which were granted outside of our LTIP) and 850,000 SARs under the LTIP in 2007, and as a result he was not considered eligible for additional annual grants during the term of that agreement. However, a portion of Mr. Hoplamazian’s annual incentive award earned for 2007, but payable in 2008, was paid in the form of RSUs, granted under the LTIP.
In connection with his hiring in August 2008, Mr. Singh received a special grant of 25,000 RSUs, which follow the terms of the special RSU grants described above, except his special RSUs settle and become payable upon the earlier of (a) August 31, 2012, (b) termination of employment, or (c) a change in control. Mr. Singh also received an additional 15,670 RSUs which vest 10% each year over ten years and are payable upon the earlier of (a) August 31, 2018, (b) termination of employment, or (c) a change in control. Mr. Singh’s RSU grants were designed to replace value of compensation that he forfeited by leaving his prior employer in order to join us. In connection with his 25,000 RSU grant Mr. Singh also agreed to a two-year post termination non-solicitation of employees and one-year non-competition covenant.
Employee Benefits
Our NEOs are eligible to receive employee benefits similar to all other salaried employees, such as participation in our 401(k) plan, with matching contributions, and health, life and disability plans. In addition, as described in more detail under “—Narrative to Summary Compensation Table,” we provide certain additional retirement and deferred compensation benefits to our NEOs, as well as certain perquisites. These additional employee benefits and perquisites make up the benefits/work/lifestyle portion of our total rewards package and allow us to compete in attracting and retaining executives.
In October of 2008, we merged our non-qualified supplemental defined benefit retirement plans into our non-qualified defined contribution plans. We had two such plans, one for North American executives, the Hyatt Corporation Supplemental Executive Retirement Plan (SERP), and one for international executives, the Hyatt International Hotels Supplemental Retirement Plan (SRP). Both the SERP and the SRP were defined benefit plans providing additional retirement benefits if the officer retired after age 55 and completed 10 years of continuous employment. We accomplished the termination of the SERP and SRP by transferring the present value of the participants’ benefits (based on current compensation levels, years of service and offsets) to our non-qualified defined contribution
 
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retirement plans as described below. The SERP and SRP were merged in order to simplify our employee benefit plan structure by moving towards defined contribution benefits which have more predictable funding requirements and are less expensive to administer than defined benefit arrangements. Messrs. Pritzker and Floyd participated in the SERP and Mr. Sarna participated in the SRP.
We agreed to pay Mr. Singh’s relocation expenses to Chicago. In addition to normal moving and other relocation expenses, we guaranteed the value of the sale of Mr. Singh’s house based on a negotiated value per square foot. Due to market conditions the house did not sell for that negotiated value. Accordingly, we have included in his compensation in the “All Other Compensation” column of the Summary Compensation Table the difference between the negotiated value and the actual sale price received, plus other expenses we incurred in connection with the sale of his house.
Tax Deductibility, Accounting Considerations and Risk Considerations
We consider tax and accounting implications in designing our executive compensation programs and attempt to maximize the tax deductibility to us, while minimizing the tax consequences to our executives. As a private company, we have not been subject to the same limitations on tax-deductible compensation as are applicable to public companies. In addition, our total rewards philosophy is designed to insure levels of risk that correlate directly to our and our stockholders’ long-term financial  interests, without encouraging strategies and risk that threaten the sustainability of the organization.
Executive Chairman Compensation
Mr. Pritzker’s compensation in 2008 was set by our board based on the recommendation of our principal stockholders. Accordingly, his compensation was not subject to the same total rewards programs as our other named executive officers.
Mr. Pritzker’s compensation for 2008 consisted of the following items:
 
 	Ÿ 	 	annual base salary;	
 
 	Ÿ 	 	discretionary annual bonus;	
 
 	Ÿ 	 	benefits and perquisites made available to our other senior executives; however, Mr. Pritzker reimburses us for the contributions we make on his account to our Deferred Compensation Plan;	
 
 	Ÿ 	 	contributions to a non-qualified deferred compensation account for Mr. Pritzker equal to 25% of his base salary, reduced by the amount of our matching contribution to his account under our 401(k) plan, with interest on such account at the short term applicable federal rate set by the IRS (TJP Plan); and	
 
 	Ÿ 	 	personal use of our aircraft for which Mr. Pritzker reimburses us at the Standard Industrial Fare Level (SIFL) rate for the first thirty-three hours of his use each year and for any hours over thirty-three at the lesser of (i) the product of the applicable flight time multiplied by the “Direct Cost Rate” published annually by Conklin & de Decker for operating an equivalent aircraft, or (ii) two times the hourly fuel cost of the flight. In no event does the amount reimbursed by Mr. Pritzker for a flight ever exceed the amount authorized by Federal Aviation Regulation Part 91.501(d)(1)-(10).	
The amount of his discretionary bonus of $1,400,000 for 2008 was recommended by our principal stockholders based on a discretionary assessment of his performance at Hyatt.
Mr. Pritzker has not previously received any equity compensation from us.
 
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Kirk Rose Separation
In connection with his termination of employment in May 2008, we entered into a separation agreement with Mr. Rose. In exchange for a general release of claims, his agreement to cooperate with us with respect to certain matters and six month non-compete and non-solicitation covenants, he received, in addition to accrued and unpaid compensation, the following:
 
 	Ÿ 	 	a pro rated bonus for 2008 in the amount of $107,000, and	
 
 	Ÿ 	 	severance in the amount of $1,400,000.	
Mr. Rose also agreed to terminate all SARs he then held in exchange for a right to payment in 2009 based on the spread between the base price and our share value as of December 31, 2008, for 50% of the SARs granted to him in 2006 (103,125 SARs) and 25% of the SARs granted in 2007 (12,750 SARs). Our share price as of December 31, 2008 was lower than the base price of both Mr. Rose’s 2006 and 2007 SARs and therefore he received no additional payments.
 
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2008 Summary Compensation Table

Name and
Principal Position	 	Fiscal
Year	 	Salary	 	Bonus(1)	 	Stock
Awards(2)	 	Option
Awards(2)	 	Non Equity
Incentive Plan
Compensation	 	Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings(3)	 	All Other
Compensation(4)	 	Total	
Thomas J. Pritzker
Executive Chairman	 	2008	 	$	535,000	 	$	1,400,000	 	$	—	 	$	—	 	$	—	 	$	—	 	$	306,336	 	$	2,241,336	
										
Mark S. Hoplamazian
President and Chief Executive Officer ( Principal Executive Officer)	 	2008	 	 	1,000,000	 	 	810,000	 	 	2,282,175	 	 	2,569,125	 	 	—	 	 	—	 	 	38,960	 	 	6,700,260	
										
Harmit J. Singh
Executive Vice President & Chief Financial Officer ( Principal Financial Officer )	 	2008	 	 	227,404	 	 	1,280,000	 	 	69,934	 	 	—	 	 	—	 	 	—	 	 	407,242	 	 	1,984,580	
										
Rakesh K. Sarna
Executive Vice President & COO International Operations	 	2008	 	 	575,833	 	 	14,080	 	 	545,395	 	 	324,282	 	 	185,920	 	 	—	 	 	169,987	 	 	1,815,497	
										
H. Charles Floyd
Executive Vice President & COO North American Operations	 	2008	 	 	577,500	 	 	16,646	 	 	538,784	 	 	628,089	 	 	209,354	 	 	—	 	 	92,311	 	 	2,062,684	
										
Kirk A. Rose
Former Principal Financial Officer	 	2008	 	 	233,774	 	 	107,000	 	 	—	 	 	481,549	 	 	—	 	 	—	 	 	1,417,192	 	 	2,239,515	

(1)	Except for Messrs. Singh and Rose, the amounts in this column represent the portion of the NEO’s annual incentive which was discretionary or otherwise related to satisfaction of subjective qualitative goals. For Mr. Singh this column reflects his signing bonus of $1,080,000 and his guaranteed bonus of $200,000. For Mr. Rose, this column reflects a pro rata target bonus of $107,000 per his separation agreement.	
(2)	Represents the aggregate expense recognized for the year ending December 31, 2008 for financial statement reporting purposes, disregarding forfeitures related to vesting conditions, in accordance with SFAS No. 123R, Share-Based Payment for RSU and SARs granted in 2008 and prior years for which we continue to recognize expense. The assumptions used in calculating the grant date fair values are set forth in note 16 to our audited consolidated financial statements included in this prospectus.	
(3)	Due to merger of the SERP and SRP in 2008, $6,658,377, $1,960,599 and $1,095,349 of pension value for Messrs. Pritzker, Sarna and Floyd, respectively was transferred to nonqualified defined contribution plans as described in more detail in “—Narrative to Pension Benefits Table” below. Upon such transfer Messrs. Pritzker, Sarna and Floyd no longer had any rights under a defined benefit pension plan.	
(4)	All other compensation includes:	

Name	 	Executive
Dining
Room
Usage	 	Car
Allowance
and
Parking	 	Holiday
Gifts(a)	 	Relocation(b)	 	Personal
Use of
Aircraft(c)	 	Tax
Gross ups(d)	 	401(k)
Match	
Thomas J. Pritzker	 	$	2,493	 	$	11,219	 	$	1,750	 	$	—	 	$	123,511	 	$	—	 	$	9,200	
Mark S. Hoplamazian	 	 	2,493	 	 	25,109	 	 	1,150	 	 	—	 	 	—	 	 	—	 	 	9,200	
Harmit J. Singh	 	 	1,039	 	 	6,375	 	 	—	 	 	330,566	 	 	—	 	 	69,216	 	 	—	
Rakesh K. Sarna	 	 	2,493	 	 	15,300	 	 	1,750	 	 	—	 	 	—	 	 	40,296	 	 	—	
H. Charles Floyd	 	 	2,493	 	 	15,300	 	 	1,750	 	 	—	 	 	—	 	 	22,512	 	 	9,200	
Kirk A. Rose	 	 	1,247	 	 	5,575	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	
 
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Name	 	Contributions
to DCP, Field
Retirement
Plan and TJP
Plan	 	 	Executive
Physical	 	Life
Insurance
Premiums	 	Above Market
Earnings on
Deferred
Compensation	 	Payments in
regard to
Termination of
Employment(f)	 	Total	
Thomas J. Pritzker	 	$	136,550	(e) 	 	$	—	 	$	1,008	 	$	20,605	 	 	$—	 	306,336	
Mark S. Hoplamazian	 	 	—	  	 	 	—	 	 	1,008	 	 	—	 	 	—	 	38,960	
Harmit J. Singh	 	 	—	  	 	 	—	 	 	46	 	 	—	 	 	—	 	407,242	
Rakesh K. Sarna	 	 	104,441	  	 	 	—	 	 	3,480	 	 	2,227	 	 	—	 	169,987	
H. Charles Floyd	 	 	12,000	  	 	 	1,169	 	 	1,008	 	 	26,879	 	 	—	 	92,311	
Kirk A. Rose	 	 	—	  	 	 	—	 	 	248	 	 	10,122	 	 	1,400,000	 	1,417,192	

 	(a)	Holiday gifts were discontinued after 2008.	
 	(b)	Represents moving expenses paid in connection with Mr. Singh’s relocation to Chicago, including the difference between the value guaranteed by us for Mr. Singh’s house and the value received on the sale, and other costs incurred by us in connection with the sale of Mr. Singh’s house.	
 	(c)	Includes landing fees, crew expenses, catering, hangar/parking, fuel (based on the average yearly fuel costs incurred per hour flown) and additional hourly engine maintenance/ insurance policy cost for personal use of our aircraft less the amount Mr. Pritzker reimbursed us for his personal usage under the terms of his employment agreement.	
 	(d)	Gross up for Messrs. Sarna and Floyd was for FICA taxes due under non-qualified retirement plans upon transfer of amounts from SRP and SERP, respectively. Mr. Singh was grossed up for taxes incurred in connection with his relocation to Chicago.	
 	(e)	Represents a contribution to TJP Plan of $124,550, plus Deferred Compensation Plan match equal to $12,000. However, Mr. Pritzker reimburses us for the matching contribution to the Deferred Compensation Plan.	
 	(f)	Mr. Rose’s employment terminated on May 15, 2008 and pursuant to his separation agreement he received $1,400,000 in severance.	
Narrative to Summary Compensation Table
As part of our total rewards program, we offer the following employee benefits plans and perquisites:
Retirement Programs
In addition to our 401(k) plan that is available to employees generally, our NEOs participate in the Deferred Compensation Plan (DCP) or the Hyatt International Hotels Retirement Plan (Field Retirement Plan), which are both non-qualified defined contribution plans. As described under “—Executive Chairman Compensation,” we also contribute 25% of Mr. Pritzker’s base salary, reduced by any matching contribution to his account under our 401(k) plan, to a deferred compensation plan on his behalf.
401(k)
Our 401(k) plan is an on-going, tax-qualified “401(k)” plan that matches 100% on the first 3% an employee contributes and 50% on the next 2% an employee contributes for a total match of 4% of an employee’s compensation up to the IRS limits for tax qualified plans.
Deferred Compensation Plan
The DCP allows executives to defer all or any portion of their base salary and annual incentive. We will match NEOs’ deferrals dollar for dollar up to $12,000 annually. Executives can select among various investment options and are eligible to receive their account balances when they terminate employment.
 
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Field Retirement Plan
Our international executives are eligible for the Field Retirement Plan, pursuant to which we contribute a percentage of their salary each year. The amount of contribution depends upon the employee’s age and years of service or benefit level corresponding with their position. Mr. Sarna is the only NEO who participates in the Field Retirement Plan and he receives contributions equal to 16% of his salary. These contributions vest 25% per year after 2 years, with full vesting after 5 years. Based on his service, Mr. Sarna is fully vested in all contributions. In addition, Mr. Sarna, as part of SRP merger agreed to receive 50% of the normal scale for his contributions beginning in 2009. Executives can also voluntarily contribute to the Field Retirement Plan. Executives voluntary contributions are fully vested. All contributions are held in an account for the participant, which is invested in various investments selected by us.
Perquisites
We offer limited perquisites to our executives which we believe are reasonable and consistent with our total rewards program and our intention to attract and retain key executives. Perquisites that are provided include:
 
 	Ÿ 	 	limited use of Hyatt Hotel properties;	
 
 	Ÿ 	 	personal financial planning;	
 
 	Ÿ 	 	automobile allowance;	
 
 	Ÿ 	 	executive physical;	
 
 	Ÿ 	 	corporate dining room use;	
 
 	Ÿ 	 	parking; and	
 
 	Ÿ 	 	holiday gifts (terminated after 2008).	
Employment Agreements
In 2006, when Mr. Hoplamazian became our President and CEO, we entered into an employment agreement with him, which was applicable in determining his compensation for 2008. We also entered into a letter agreement with Mr. Singh at the time of his hiring in June 2008.
Mr. Hoplamazian’s Employment Agreement
Under the terms of his 2006 employment agreement Mr. Hoplamazian was entitled to the following:
 
 	Ÿ 	 	annual base salary of $1,000,000;	
 
 	Ÿ 	 	annual target bonus equal to 150% of base salary with a maximum equal to 300%;	
 
 	Ÿ 	 	a SAR grant of 850,000 shares of our common stock, which vest 25% annually over four years with the first vest occurring on December 18, 2007;	
 
 	Ÿ 	 	a RSU grant with respect to 210,000 shares, which vests over three years and the shares are delivered on December 21, 2009;	
 
 	Ÿ 	 	participation in our employee benefit programs and perquisites, including lease of an automobile, parking space at our corporate office, corporate dining room privileges, annual comprehensive physical examination and reimbursement for up to $600 in financial planning services every three years; and	
 
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 	Ÿ 	 	severance if his employment were terminated by us without cause or by him for good reason prior to a change in control, or by us for any reason within twelve months following a change in control or in contemplation of a change in control, equal to:	
 
 	Ÿ 	 	one year base salary;	
 
 	Ÿ 	 	target annual incentive for year of termination multiplied by the percentage payout of his annual incentive in the prior year;	
 
 	Ÿ 	 	pro rata annual incentive for year of termination equal to his target for such year multiplied by the percentage payout of his annual incentive for the prior year; and	
 
 	Ÿ 	 	full vesting of his SARs and RSUs granted in 2006.	
Mr. Hoplamazian’s right to such severance was conditioned upon execution of a general release of claims and compliance with two-year non-competition and non-solicitation covenants.
For this purpose “cause” meant Mr. Hoplamazian’s:
 
 	Ÿ 	 	engagement in gross negligence or willful misconduct in the performance of his material duties and responsibilities;	
 
 	Ÿ 	 	material breach of his employment agreement; or	
 
 	Ÿ 	 	admission to the board of directors of his commission of, or a conviction of or plea of guilty or no contest to a felony.	
For this purpose “good reason” meant if we, without Mr. Hoplamazian’s consent:
 
 	Ÿ 	 	changed his title, position or lines of reporting responsibility;	
 
 	Ÿ 	 	made any other material adverse change in the nature or status of his duties, authority or responsibilities;	
 
 	Ÿ 	 	failed to pay him any salary, bonus, SAR, RSU or other compensation, benefits or perquisites specified in his employment agreement; or	
 
 	Ÿ 	 	required his relocation outside of the Chicago metropolitan area.	
Mr. Singh’s Letter Agreement
Under the terms of his letter agreement Mr. Singh is entitled to the following compensation and benefits:
 
 	Ÿ 	 	annual base salary of $550,000 on an annualized basis;	
 
 	Ÿ 	 	annual target bonus of 80% of base salary with $200,000 guaranteed for 2008;	
 
 	Ÿ 	 	25,000 RSU grant (as described under “—Long-Term Incentive”);	
 
 	Ÿ 	 	15,670 RSU grant (as described under “—Long-Term Incentive”);	
 
 	Ÿ 	 	a signing bonus of $1,080,000;	
 
 	Ÿ 	 	participation in our standard benefit plans, the DCP, as well as an $800 monthly automobile allowance, monthly parking and corporate dining room privileges; and	
 
 	Ÿ 	 	severance should his employment be terminated by us without “cause” (as defined below) or by him for “good reason.” Such severance will be in accordance with our severance policy for senior executives. However, if his termination is prior to August 4, 2011 such severance shall not be less than $2,000,000 and if after August 4, 2011, his severance shall not be less than $1,000,000. In all cases he would also receive one year of continued medical benefits and vest in the next tranche of his special grant of 25,000 RSUs.	
 
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For this purpose “cause” shall mean Mr. Singh’s;
 
 	Ÿ 	 	engagement in gross negligence or willful misconduct in the performance of his material duties or responsibilities;	
 
 	Ÿ 	 	failure after written notice to perform his material duties or his material breach of any agreement relating to his employment, if such failure or breach remains uncured for 14 days after notice; or	
 
 	Ÿ 	 	conviction or no contest plea to a felony.	
For this purpose “good reason” means if we, without his consent;
 
 	Ÿ 	 	change his title, position or lines of direct reporting responsibility;	
 
 	Ÿ 	 	materially and adversely change his duties or responsibilities;	
 
 	Ÿ 	 	fail to pay or provide him with any base salary bonus or other compensation or benefits specified in the letter agreement; or	
 
 	Ÿ 	 	relocate his primary office more than 50 miles from our current Chicago headquarters.	
Mr. Singh is also subject to our standard covenant regarding confidential information, intellectual property, non-solicitation and non-disparagement, pursuant to which he has agreed not to disclose our confidential business information, and not to solicit our employees for a period of one year following his termination of employment for any reason.
Grants of Plan-based Awards in Fiscal Year 2008

Name	 	Grant
Date	 	Estimated Future Payouts
Under Non
Equity Incentive Plan Awards	 	All Other
Stock
Awards:
Number
of
shares of
stock or
Units(#)(1)	 	All other
Option
Awards:
Number of
Securities
Underlying
Options(#)	 	Exercise
or Base
Price of
Option
Awards
($)(1)	 	Grant
Date Fair
Value of
Stock
and
Options
Awards
($)(2)	
 	 	 	 	Threshold($)	 	 	Target($)	 	Maximum($)	 	 	 	 	 	 	 	 	
Mark S. Hoplamazian	 		 			 			 			 		 		 			 			
	 		 			 	$	1,500,000	 	$	3,000,000	 		 		 			 			
Special Restricted Stock Units	 	5/2/2008	 			 			 			 	17,000	 		 			 	$	494,530	
									
Harmit J. Singh	 		 			 			 			 		 		 			 			
	 		 	200,000	(3) 	 	 	440,000	 	 	660,000	 		 		 			 			
Restricted Stock Units	 	9/10/2008	 			 			 			 	15,670	 		 			 	 	455,840	
Special Restricted Stock Units	 	9/10/2008	 			 			 			 	25,000	 		 			 	 	727,250	
									
Rakesh K. Sarna	 		 			 			 			 		 		 			 			
	 		 			 	 	464,800	 	 	697,200	 		 		 			 			
Stock Appreciation Rights	 	5/2/2008	 			 			 			 		 	49,850	 	$	29.09	 	 	648,050	
Restricted Stock Units	 	5/2/2008	 			 			 			 	9,500	 		 			 	 	276,355	
Special Restricted Stock Units	 	5/2/2008	 			 			 			 	100,000	 		 			 	 	2,909,000	
									
H. Charles Floyd	 		 			 			 			 		 		 			 			
	 		 			 	 	464,800	 	 	697,200	 		 		 			 			
Stock Appreciation Rights	 	5/2/2008	 			 			 			 		 	43,350	 	$	29.09	 	 	563,550	
Restricted Stock Units	 	5/2/2008	 			 			 			 	8,250	 		 			 	 	239,993	
Special Restricted Stock Units	 	5/2/2008	 			 			 			 	100,000	 		 			 	 	2,909,000	

(1)	Equals the fair market value of our shares on the grant date as determined by the compensation committee under the LTIP.	
(2)	Represents the SFAS No. 123R grant date fair value based on the assumptions described in note 16 to our audited consolidated financial statements included in this prospectus.	
(3)	Mr. Singh was guaranteed a bonus in connection with his offer of employment.	
 
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Outstanding Equity at 2008 Fiscal Year End

Name	 	Grant Date	 	Number of
Securities
Underlying
Unexercised
(#) SAR
Exercisable	 	Number of
Securities
Underlying
Unexercised
(#) SAR
Unexercisable(1)	 	SAR
Exercise
Price ($)	 	SAR
Expiration
Date	 	Number
of RSUs
Not
Vested
(2)(#)	 	Market
Value of
RSUs that
have not
Vested
($)(3)	
Mark S. Hoplamazian	 	5/2/2008	 		 		 			 		 	17,000	 	$	494,530	
	 	7/1/2007	 	425,000	 	425,000	 	$	31.40	 	7/1/2017	 		 			
	 	12/18/2006	 		 		 			 		 	70,000	 	 	2,036,300	
								
Harmit J. Singh	 	9/10/2008	 		 		 			 		 	40,670	 	 	1,183,090	
								
Rakesh K. Sarna	 	5/2/2008	 		 		 			 		 	109,500	 	 	3,185,355	
	 	5/2/2008	 		 	49,850	 	 	29.09	 	5/2/2018	 		 			
	 	7/1/2007	 	15,557	 	46,671	 	 	31.40	 	7/1/2017	 		 			
								
H. Charles Floyd	 	5/2/2008	 		 		 			 		 	108,250	 	 	3,148,993	
	 	5/2/2008	 		 	43,350	 	 	29.09	 	5/2/2018	 		 			
	 	7/1/2007	 	15,000	 	45,000	 	 	31.40	 	7/1/2017	 		 			
	 	10/6/2006	 	68,750	 	68,750	 	 	24.95	 	10/6/2016	 		 			

(1)	SARs vest as follows:	

 	  	Grant
Date	  	Vesting	
Mark S. Hoplamazian	  	7/1/2007	  	25% per year commencing on December 18, 2007 and each anniversary of December 18 thereafter.	
Rakesh K. Sarna	  	7/1/2007	  	25% per year commencing on March 31, 2008 and each anniversary of March 31 thereafter.	
	  	5/2/2008	  	25% per year commencing on April 1, 2009 and each anniversary of April 1 thereafter.	
H. Charles Floyd	  	10/6/2006	  	25% per year commencing on October 6, 2007 and each anniversary of October 6 thereafter.	
	  	7/1/2007	  	25% per year commencing on March 31, 2008 and each anniversary of March 31 thereafter.	
	  	5/2/2008	  	25% per year commencing on April 1, 2009 and each anniversary of April 1 thereafter.	
 
(2)	RSUs vest as follows	

 	  	RSUs	  	Vesting	
Mark S. Hoplamazian	  	70,000	  	100% on December 18, 2009 but the shares underlying the RSUs will not be issued until December 21, 2009.	
	  	17,000	  	10/25/25/40% on each anniversary of April 1, commencing April 1, 2009.	
Harmit J. Singh	  	25,000	  	10/25/25/40% on each anniversary of July 31, commencing July 31, 2009.	
	  	15,670	  	10% per year commencing on July 31, 2009.	
Rakesh K. Sarna	  	9,500	  	25% per year on each April 1, commencing April 1, 2009.	
	  	100,000	  	10/25/25/40% on each April 1, commencing April 1, 2009.	
H. Charles Floyd	  	8,250	  	25% per year on each April 1, commencing April 1, 2009.	
	  	100,000	  	10/25/25/40% on each April 1, commencing April 1, 2009.	
 
(3)	Based on a share value of $29.09, which was the fair market value of our shares determined by the compensation committee as of December 31, 2007, which we continued to use as of December 31, 2008 as we did not have an updated valuation or an external transaction on which to base an updated share value, as stipulated under the LTIP.	
 
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2008 Option Exercises and Stock Vesting

Name	  	Number of RSUs
Acquired on
Vesting (#)	  	RSU Value Realized on
Vesting ($) (1)	
Mark S. Hoplamazian	  	70,000	  	$	2,036,300	

(1)	Based on a share value of $29.09. No shares were delivered to Mr. Hoplamazian on vesting of the RSUs. His vested RSUs are deliverable on December 21, 2009, which are also reflected in  “—2008 Non-qualified Deferred Compensation” below.	
Pension Benefits

Name	  	Plan
Name	  	Number of
Years Credited
Service	  	Payments during last
fiscal year (1)	
Thomas J. Pritzker	  	SERP	  	20	  	$	6,658,377	
Rakesh K. Sarna	  	SRP	  	20	  	$	1,960,599	
H. Charles Floyd	  	SERP	  	13	  	$	1,095,349	

(1)	Transferred to DCP and Field Retirement Plan.	
Narrative to Pension Benefits Table
In 2008, we merged our two supplemental executive retirement plans, the SERP and the SRP, which had previously provided defined benefits to our executives into our defined contribution plans, the DCP and Field Retirement Plan.
The SERP provided a benefit payable monthly equal to one-twelfth of:
 
 	Ÿ 	 	2.5% of the participant’s base salary and bonus for the three highest years out of the last ten prior to retirement multiplied by his years of service (not to exceed twenty); less	
 
 	Ÿ 	 	the sum of his estimated Social Security Primary Insurance benefit, his account balance under the 401(k) plan attributable to employer contributions (expressed as a life annuity).	
Upon termination of the SERP we converted the participants’ accrued benefit to the present value of an actuarial lump sum equivalent using the following assumptions:
 
 	Ÿ 	 	highest three consecutive salaries out of the last ten years;	
 
 	Ÿ 	 	estimated Social Security Primary payable at Social Security Normal Retirement Age;	
 
 	Ÿ 	 	the participant’s account balance under the 401(k) plan attributable to employer contributions and earnings thereon as of October 31, 2008, increased 6% annually through age 60 and converted to an annual life annuity using an interest rate of 4.52% and the 1983 Group Annuity Mortality table (blended 50% male, 50% female);	
 
 	Ÿ 	 	that the SERP benefit was payable as a life annuity payable monthly beginning at age 60; and	
 
 	Ÿ 	 	discount rate of 6.6% and the 1994 Group Annuity Mortality table (blended 50% male, 50% female) for purposes of determining present values.	
These amounts were then transferred to the DCP accounts for Mr. Pritzker and Mr. Floyd.
Under the SRP Mr. Sarna was eligible for an annual pension payable at age 60 equal to:
 
 	Ÿ 	 	2.5% of his base salary and bonus for the three highest years out of the last ten prior to retirement (benefit compensation) multiplied by his years and months of service; less	
 
 	Ÿ 	 	the sum of his estimated Social Security Primary Insurance benefit, his account balance under the Field Retirement Plan attributable to employer contributions and employer contributions to any other old age pension, but not in excess of 50% of his benefit compensation.	
 
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Upon termination of the SRP we converted Mr. Sarna’s benefit to the present value of an actuarial lump sum equivalent using the following assumptions:
 
 	Ÿ 	 	highest three consecutive benefit compensation years out of the last ten years;	
 
 	Ÿ 	 	estimated Social Security Primary payable at Social Security Normal Retirement Age;	
 
 	Ÿ 	 	his account balances under the Field Retirement Plan attributable to employer contributions and earnings thereon as of October 31, 2008;	
 
 	Ÿ 	 	offsets for contributions to Swiss retirement plan; and	
 
 	Ÿ 	 	converting the SRP benefit to a lump sum amount using a discount rate of 7% and the PA 92 Short Cohort Calendar Year 2028 mortality table.	
This amount was then transferred to the Field Retirement Plan.
2008 Non-qualified Deferred Compensation
The table below sets forth certain information as of December 31, 2008 with respect to the non-qualified deferred compensation plans in which our NEOs participate.

Name	 	Plan Name	 	Executive
Contributions
in Last Fiscal
Year(1)	 	Registrant
Contributions
in Last Fiscal
Year	 	Aggregate
Earnings in Last
Fiscal Year(1)	 	 	Aggregate
Withdrawals/
Distributions	 	Aggregate
Balance at
Last Fiscal
Year End	
Thomas J. Pritzker	 	DCP	 	$	1,640,919	 	$6,739,485(2)	 	$	498,869	  	 	$	—	 	$	11,861,753	
	 	TJP Plan	 	 	—	 	124,550	 	 	15,169	  	 	 	—	 	 	822,564	
	 	RDICP	 	 	—	 	—	 	 	74,173	  	 	 	—	 	 	1,329,224	
	 	Frozen Acct	 	 	—	 	—	 	 	3,244	  	 	 	69,108	 	 	—	
Mark S. Hoplamazian	 	RSUs	 	 	—	 	2,036,300(3)	 	 	—	  	 	 	—	 	 	4,072,600(4)	
Harmit J. Singh	 		 	 	—	 	—	 	 	—	  	 	 	—	 	 	—	
Rakesh K. Sarna	 	Field Retirement	 	 	—	 	2,065,040(2)	 	 	(167,704	) 	 	 	—	 	 	2,627,812	
	 	RDICP—Int’l	 	 	—	 	—	 	 	(48,591	) 	 	 	—	 	 	134,701	
	 	RDICP II—Int’l	 	 	—	 	—	 	 	3,409	  	 	 	—	 	 	61,089	
	 	GHDIP	 	 	—	 	—	 	 	5,206	  	 	 	—	 	 	93,298	
H. Charles Floyd	 	DCP	 	 	17,325	 	1,107,349(2)	 	 	84,930	  	 	 	—	 	 	1,638,705	
	 	RDICP	 	 	—	 	—	 	 	87,367	  	 	 	—	 	 	1,565,667	
	 	RDICP II	 	 	—	 	—	 	 	13,890	  	 	 	—	 	 	248,921	
Kirk A. Rose	 	DCP	 	 	7,013	 	—	 	 	(184,596	) 	 	 	673,758	 	 	—	
	 	RDICP	 	 	—	 	—	 	 	38,050	  	 	 	—	 	 	681,882	

(1)	Includes contributions and above-market earnings included in the NEOs 2008 fiscal year end compensation in the Summary Compensation Table above. See note 4 to the Summary Compensation Table for amount of contributions and above-market earnings so included.	
(2)	Includes amounts transferred from the SERP for Messrs. Pritzker and Floyd and from the SRP for Mr. Sarna in the amount of $6,658,377, $1,095,349 and $1,960,599, respectively, $69,108 transferred from Mr. Pritzker’s frozen account to the DCP as described in the narrative to this table below. Also includes $12,000 matching contributions to the DCP for each of Messrs. Pritzker and Floyd (Mr. Pritzker reimbursed us for his $12,000 contribution), and $104,441 contribution to the Field Retirement Plan for Mr. Sarna.	
(3)	Represents the value of the share underlying RSUs, which vested in December 2008 but are not deliverable until December 21, 2009, based on a per share value of $29.09.	
(4)	Represents the value of 140,000 shares underlying vested RSUs held at December 31, 2008 but which are not deliverable until December 21, 2009 based on a per share value of $29.09.	
Narrative to Non-qualified Deferred Compensation Table
See description of calculation of amounts transferred from the SERP and SRP under “—Narrative to Pension Benefits Table” above. In addition, see description of the DCP and Field Retirement Plan under the “—Narrative to Summary Compensation Table” above and the description of the TJP Plan under “—Executive Chairman Compensation.” Messrs. Pritzker, Singh, Floyd and Rose participated in the DCP in 2008. Mr. Sarna participated in the Field Retirement Plan in 2008.
 
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In addition to the DCP and Field Retirement Plan, Messrs. Pritzker, Sarna, Floyd and Rose also have existing account balances under non-qualified deferred plans to which we no longer contribute for the NEOs, but on which they continue to accrue earnings. These additional plans are as follows:
RDICP —The RDICP is a non-qualified deferred compensation plan we established for selected individuals to which we no longer contribute. Contributions to the RDICP were allocated from a contribution pool calculated based on a percentage of income from our operations. Contributions to this plan ceased following the 2005 plan year, when in 2006 the GHDIP, as described below, was created. Participants vest in their contributions based on years of service but forfeit their accounts if terminated for cause. Participants become entitled to payment of their accounts upon the later of termination of employment or age 55 or on account of death or disability and are paid in a lump sum or in up to 15 annual installments as elected by the participant. Participants’ accounts are credited with interest annually at a rate equal to the average annual rate for 20 year Treasury securities, constant maturity as published in the Federal Reserve Statistical Release H15 for the calendar year prior to the year in which interest credit is made, plus 100 basis points (20 + 100 Rate). Messrs. Pritzker, Floyd and Rose had account balances under the RDICP during 2008 and were fully vested in their accounts.
RDICP II —The RDICP II was established as an additional plan to the RDICP for a select number of senior executives. Contributions to the RDICP II were discretionary and became vested based on a participant’s age at retirement and years of participation in the RDICP II, with 50% of a participant’s account vesting at age 55, and 10% vesting for each additional year of age at retirement, with 100% vesting at age 60 or older. Once vested, a participant becomes entitled to payment of his account upon the earlier of termination, death or disability. Accounts are paid in a lump sum or installments of up to 15 years as elected by the participant. Participants are credited with interest on their RDICP II accounts at the 20 + 100 Rate, similar to the RDICP. Contributions to this plan ceased following the 2005 plan year, when the GHDIP was created in 2006. Mr. Floyd is the only NEO currently with an account balance under the RDICP II.
RDICP-Int’l —The RDICP-Int’l is substantially similar to the RDICP, but was initially established by Hyatt International, when it was a separate company from us, for its employees. Contributions to the RDICP-Int’l were allocated from a contribution pool calculated based on a percentage of income from the operations of Hyatt International. Contributions to this plan also ceased in 2006 when the GHDIP was created. Participants vest in their contributions based on years of service with Hyatt International and its affiliated entities, including with us, but forfeit their accounts if terminated for cause. Participants become entitled to payment of their accounts upon the later of termination of employment or age 55 or on account of death or disability. Accounts are payable as elected by the participant in a lump sum, life annuity, joint and survivor annuity or such other annuity form as the participant may request. However, unlike the RDICP, participants’ accounts are invested in various investments selected by us. Mr. Sarna is the only NEO who has an account under in the RDICP-Int’l and he is fully vested in his account.
RDICP II-Int’l —The features of the RDICP II-Int’l are substantially similar to the RDICP II and it was established by Hyatt International for its employees when Hyatt International was a separate company from us. Participants’ accounts under the RDICP II-Int’l are payable once vested at termination, death or disability in a lump sum. However, prior to December 31, 2005 a participant could elect payment in installments; provided that all installments were paid by the time the participant attained age 60. Contributions to this plan also ceased in 2006 when the GHDIP was created. Mr. Sarna is the only NEO who has an account under the RDICP II-Int’l.
GHDIP —The GHDIP was established as a replacement plan for all of the foregoing RDICP plans. Contributions to the GHDIP are allocated from a pool calculated based on a percentage of net income attributable to Hyatt Hotels Corporation. Participants vest in their contributions based on years of service but forfeit their accounts if terminated for cause. Participants’ vested accounts are paid upon
 
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the earlier of termination of employment, death or disability in a lump sum. Participants’ accounts are credited with interest annually at the 20 + 100 Rate. Our NEOs no longer receive contributions to the GHDIP, as they are eligible for LTIP grants. Mr. Sarna is the only NEO with an account under the GHDIP and he is fully vested in his account.
Frozen Account —Mr. Pritzker had a frozen deferred compensation account which consisted of the cash value of a whole life insurance policy that was terminated in 1989, plus interest on such amount credited annually at the 20 + 100 Rate. Mr. Pritzker’s frozen deferred compensation account was merged into the DCP on October 31, 2008 and is included in the aggregate balance at year end for his DCP account.
Potential Payments on Termination or Change in Control
Severance
In 2008, the only NEOs entitled to guaranteed severance in the event of a termination of employment were Messrs. Hoplamazian and Singh. See the description of such severance under “—Narrative to Summary Compensation Table—Employment Agreements” above. We did not have a severance policy applicable to senior officers in 2008, and no other NEOs were guaranteed severance. Under the terms of his employment agreement Mr. Pritzker was not eligible for any severance.
Equity Awards
Outstanding awards under our LTIP will fully vest if a participant’s employment is terminated within 12 months following a change in control; provided such awards are assumed by a successor in the change in control. If awards are not assumed by a successor then the compensation committee may in its discretion fully vest the awards.
Outstanding SAR and RSU awards will fully vest if a participant’s employment is terminated by reason of death or disability. In addition, participants will be treated as having an additional year of vesting if their employment is terminated by us for reasons other than “detrimental conduct.” Detrimental conduct includes engaging in conduct constituting:
 
 	Ÿ 	 	a felony;	
 
 	Ÿ 	 	gross negligence or willful misconduct in the performance of the participant’s duties and responsibilities;	
 
 	Ÿ 	 	willful violation of a material policy, including, without limitation, any policy relating to confidentiality, honesty, integrity and/or workplace behavior, which violation has resulted or may reasonably be expected to result in harm to us, our stockholders, directors, officers, employees or customers;	
 
 	Ÿ 	 	improper internal or external disclosure or use of confidential information or material concerning us or any of our stockholders, directors, officers, or employees which use or disclosure has resulted or may reasonably be expected to result in harm to us;	
 
 	Ÿ 	 	public disparagement of us or any of our stockholders, directors, officers or employees; and/or	
 
 	Ÿ 	 	willful violation of any stockholders’ agreement or other material agreements entered into by the participant with us in connection with or pursuant to the LTIP.	
The following table provides the amount of severance and the value of vesting on their SAR and RSU awards which our NEOs would receive following a termination of employment (i) without cause
 
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following a change in control in which all SAR and RSU awards vest and (ii) without regard to a change in control and assuming the following:
 
 	Ÿ 	 	their employment was terminated without cause as of December 31, 2008;	
 
 	Ÿ 	 	a share value of $29.09; and	
 
 	Ÿ 	 	that such amounts do not include payments under our tax qualified and non-qualified retirement and deferred compensation plans.	

Name	  	Not in connection with
Change in Control($)	  	Change in Control($)	
Mark S. Hoplamazian	  	$	10,608,900	  	$	11,103,430	
Harmit J. Singh	  	 	2,000,000	  	 	3,183,090	
Rakesh K. Sarna	  	 	290,900	  	 	3,185,355	
H. Charles Floyd	  	 	290,900	  	 	3,433,618	
Mr. Rose was terminated May 15, 2008 and received a total of $1,507,000 in severance related payments. See “—Kirk Rose Separation” above for a description of Mr. Rose’s severance payments.
Compensation Going Forward
Although our general compensation philosophy will not change, in the future, we anticipate implementing the following to further align our executive officers’ interests with those of our stockholders:
 
 	Ÿ 	 	share ownership guidelines, which will require each executive officer to hold SARs, RSUs or stock with a value equal to a multiple of base salary, depending upon the role each individual plays;	
 
 	Ÿ 	 	a compensation recovery policy, which would require selected executives to repay, forfeit or return any bonus, equity compensation or profits received on equity compensation upon certain events, including fraud; and	
 
 	Ÿ 	 	general severance and change in control policies.	
Additionally, for 2009 and going forward, we intend to use Adjusted EBITDA on both a corporate and segment basis rather than Performance EBITDA as a financial target for our annual incentive plan. During 2008, we reassessed the components of the metrics used to measure our performance and adopted Adjusted EBITDA, which includes a component of our unconsolidated hospitality ventures Adjusted EBITDA performance. In 2009, we also reviewed the competitiveness of our compensation against the following peer group which was selected based on several factors, including business mix and model, revenues, global presence and the strength of their brands:

Ÿ  Carnival Corporation	  	Ÿ  Las Vegas Sands Corporation	
		
Ÿ  Marriott International Inc.	  	Ÿ  Wyndham Worldwide Corporation	
		
Ÿ  Starwood Hotels and Resorts Worldwide, Inc.	  	Ÿ  Brinker International, Inc.
Ÿ  Wynn Resorts	
		
Ÿ  Boyd Gaming Corporation	  	Ÿ  Burger King Holdings, Inc.	
		
Ÿ  Starbucks Corporation	  	Ÿ  Wendy’s/Arby’s Group, Inc.	
		
Ÿ  MGM Mirage	  	Ÿ  Host Hotels & Resorts, Inc.	
		
Ÿ  Darden Restaurants, Inc.	  	Ÿ  Yum! Brands, Inc.	
		
Ÿ  Royal Caribbean Cruises, Ltd.	  		
 
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While we do not expect to establish a standard relative to a specific percentile, we expect to use the data obtained from this peer group as a reference point for determining market levels of compensation in the future.
New Employment Agreements
Mr. Pritzker’s Letter Agreement
Mr. Pritzker entered into a letter agreement in July 2009, with an effective date of August 1, 2009. This agreement superseded any previous employment terms with Mr. Pritzker. Under the terms of his letter agreement, which expires on December 31, 2012, Mr. Pritzker will continue to serve as our executive chairman and will be entitled to the following compensation and benefits:
 
 	Ÿ 	 	annual base salary of $475,000;	
 
 	Ÿ 	 	following the consummation of this offering, eligibility for annual grants under the LTIP similar to other senior executives with a targeted grant date fair value (as determined under FAS 123R) equal to 500% of base salary;	
 
 	Ÿ 	 	all future grants under the LTIP will continue to vest following his termination for any reason other than cause, provided he executes a general release of claims and he does not compete with Hyatt;	
 
 	Ÿ 	 	benefits and perquisites generally available to our senior executive officers from time to time including medical and dental insurance, life insurance, 401(k) plan, disability coverage, vacation benefits, automobile lease in accordance with our policies for officers, monthly parking in Hyatt Center, executive dining room privileges, DCP and executive medical plan; and	
 
 	Ÿ 	 	severance in accordance with our general policies.	
Mr. Hoplamazian’s Letter Agreement
Mr. Hoplamazian entered into a letter agreement in July 2009, with an effective date of August 1, 2009. This agreement supersedes his previous agreement. Under the terms of his letter agreement, which expires on December 31, 2012, Mr. Hoplamazian is entitled to the following compensation and benefits:
 
 	Ÿ 	 	annual base salary of $950,000;	
 
 	Ÿ 	 	target annual incentive equal to 150% of base salary with a maximum incentive of 300% of base salary;	
 
 	Ÿ 	 	eligibility for annual grants under the LTIP similar to other senior executives with a targeted grant date fair value (as determined under FAS 123R) equal to 350% of base salary;	
 
 	Ÿ 	 	an additional equity grant on August 1, 2009 split equally between SARs and RSUs with a grant date fair value (as determined under FAS 123R) of $1,662,500, which will vest annually 25% on the first, second, third and fourth anniversaries of the grant date;	
 
 	Ÿ 	 	all future grants under the LTIP whether regular annual or the additional equity grant will continue to vest following his termination for any reason other than cause, provided he executes a general release of claims and he does not compete with us;	
 
 	Ÿ 	 	benefits and perquisites generally available to our senior executive officers from time to time, including medical and dental insurance, life insurance, 401(k) plan, disability coverage, vacation benefits, automobile lease in accordance with our policies for officers, monthly parking in the Hyatt Center, executive dining room privileges, DCP and executive medical plan; and	
 
 	Ÿ 	 	severance in accordance with our general policies.	
 
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Amended and Restated Hyatt Hotels Corporation Long-Term Incentive Plan
We provide equity compensation to our employees, directors and consultants under the LTIP.
The LTIP provides for equity-based compensation in the form of stock options, stock appreciation rights, restricted shares, restricted share units, dividend equivalents, deferred stock, stock payments (collectively, awards), for the purpose of assisting us in attracting and retaining qualified directors, officers, employees and consultants and to promote our success by providing them with a shared interest in increasing our value and sustaining our growth.
Eligibility.     Persons eligible to participate in the LTIP include all non-employee members of the board of directors, our employees and consultants, as determined by the Administrator (collectively, participants).
Administration.     The LTIP is administered by our compensation committee which may delegate to a committee of one or more members of the board or one or more of our officers the authority to grant or amend awards to participants, other than senior executive officers who are subject to Section 16 of the Exchange Act or the officers or directors to whom such authority has been delegated (collectively; the Administrator). Unless otherwise determined by the board, the compensation committee shall consist solely of two or more non-employee directors appointed by and holding office at the pleasure of the board, each of whom is a non-employee director, and an “independent director” under the rules of the NYSE (or other principal securities market on which our shares of common stock are traded) and, once we are subject to Code Section 162(m), they will also be an “outside director” within the meaning of Section 162(m) of the Code.
The Administrator has the authority to administer the LTIP, including the power to determine eligibility, the types and sizes of awards, the price and timing of awards and the acceleration or waiver of any vesting restriction, as well as the authority to delegate such administrative responsibilities.
Limitation on Awards and Shares Available.     A total of 18,750,000 shares of our Class A common stock are authorized for grant pursuant to the LTIP. The shares of our common stock covered by the LTIP may be treasury shares, or authorized but unissued shares. Only shares of Class A common stock may be issued pursuant to the LTIP.
If any shares subject to an award under the LTIP are forfeited or expire or an award under the LTIP is settled for cash, then any shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the LTIP, including any shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any award.
Awards granted under the LTIP upon the assumption of, or in substitution for, outstanding awards previously granted by an entity, in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, will not reduce the shares authorized for grant under the LTIP. The payment of dividend equivalents in cash will also not count against the number of shares subject to the LTIP.
Award Types.     The LTIP provides for the grant of incentive stock options (ISOs), nonqualified stock options (NSOs, collectively with ISOs, options), restricted stock, restricted stock units (RSUs), stock appreciation rights (SARs), dividend equivalents, stock payments, cash and deferred stock. No determination has been made as to the types or amounts of awards that will be granted to specific individuals pursuant to the LTIP in the future. See the Outstanding Equity Awards Table for information on awards granted under LTIP to our NEOs.
 
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Options.     Both ISOs, as defined under Section 422 of the Code, and NSOs may be granted pursuant to the LTIP. The option exercise price of all options granted pursuant to the LTIP will not be less than 100% of the fair market value of our common stock on the date of grant. Options may be exercised as determined by the Administrator, but in no event may an option have a term extending beyond the tenth anniversary of the date of grant. ISOs granted to any person who owns, as of the date of grant, stock possessing more than 10% of the total combined voting power of all classes of our stock, however, shall have an exercise price that is not less than 110% of the fair market value of our common stock on the date of grant and may not have a term extending beyond the fifth anniversary of the date of grant. The aggregate fair market value of the shares with respect to which options intended to be ISOs are exercisable for the first time by an employee in any calendar year may not exceed $100,000, or such other amount as the Code provides.
Restricted Stock .    A restricted stock award is the grant of shares of our common stock at a price (if any) determined by the Administrator, that is nontransferable and may be subject to substantial risk of forfeiture until specific conditions are met. Conditions may be based on continuing service or achieving performance goals. During the period of restriction, all shares of restricted stock will be subject to restrictions and vesting requirements, as provided by the Administrator. The restrictions will lapse in accordance with a schedule or other conditions determined by the Administrator. Restricted stock may not be sold or encumbered until all restrictions are terminated or expire.
Performance Awards.     Performance awards may be granted in the form of awards that are paid in cash, shares or a combination of both, based on attainment of performance criteria selected by the Administrator, over such period as determined by the Administrator.
Dividend Equivalents.     A dividend equivalent is the right to receive the equivalent value of dividends paid on shares. Dividend equivalents that are granted by the Administrator are credited as of dividend payments dates during the period between the date an award is granted and the date such award vests, is exercised, or is distributed or expires, as determined by the Administrator. Such dividend equivalents will be converted to cash or additional shares of our common stock by such formula, at such time and subject to such limitations as may be determined by the Administrator.
Stock Payment.     A stock payment is a payment in the form of shares of our common stock or an option or other right to purchase shares, as part of a bonus, deferred compensation or other arrangement. The number or value of shares of any stock payment will be determined by the Administrator. Except as otherwise determined by the Administrator, shares underlying a stock payment which is subject to a vesting schedule or other conditions set by the Administrator will not be issued until those conditions have been satisfied. Stock payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards.
Deferred Stock.     Deferred stock is a right to receive shares of our common stock at a later date. The number of shares of deferred stock will be determined by the Administrator. Except as otherwise determined by the Administrator, shares underlying a deferred stock award which is subject to a vesting schedule or other conditions set by the Administrator will not be issued until those conditions have been satisfied.
Restricted Stock Units.     A RSU is similar to deferred stock in that it provides for the issuance of our common stock at a future date upon the satisfaction of specific conditions set forth in the applicable award agreement. The Administrator will specify the dates on which the RSUs will become fully vested and nonforfeitable and may specify such conditions to vesting as it deems appropriate, including conditions based on achieving performance goals or other specific criteria, including service to us or any of our subsidiaries or affiliates. The Administrator will specify, or permit the RSU holder to elect,
 
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the conditions and dates upon which the shares underlying the restricted stock units will be issued, which dates may not be earlier than the date as of which the restricted stock units vest and which conditions and dates will be subject to compliance with Section 409A of the Code. RSUs may be paid in cash, shares, or both, as determined by the Administrator. On the distribution dates, we will transfer to the participant one unrestricted, fully transferable share of our common stock (or the fair market value of one such share in cash) for each RSU scheduled to be paid out on such date and not previously forfeited. The Administrator will specify the purchase price, if any, to be paid by the participant for such shares.
Stock Appreciation Rights or SARs .    A SAR entitles its holder, upon exercise to receive from us the difference between the fair market value of our common stock on the date of exercise and the exercise price per share subject to the SAR, subject to any limitations imposed by the Administrator. The exercise price per share subject to a SAR will be set by the Administrator, but may not be less than 100% of the fair market value on the date the SAR is granted. The Administrator determines the period during which the right to exercise the SAR vests in the holder. No portion of a SAR which is unexercisable at the time the holder’s employment with us ends will thereafter become exercisable, except as may be otherwise provided by the Administrator. SARs may be exercised as determined by the Administrator, but in no event may a SAR have a term extending beyond the tenth anniversary of the date of grant. Payment of the SAR right may be in cash, shares, or a combination of both, as determined by the Administrator.
Payment Methods .    The Administrator will determine the methods by which payments by any participant with respect to any awards granted under the LTIP may be paid, the form of payment, including, without limitation: (1) cash or check; (2) shares of our common stock issuable pursuant to the award or held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences and having a fair market value on the date of delivery equal to the aggregate payments required; (3) other property acceptable to the Administrator (including through the delivery of a notice that the award holder has placed a market sell order with a broker with respect to shares of our common stock then issuable upon exercise or vesting of an award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to us in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to us upon settlement of such sale); or (4) other form of legal consideration acceptable to the Administrator. However, no participant who is a member of our board of directors or one of our “executive officers” within the meaning of Section 13(k) of the Exchange Act will be permitted to make payment with respect to any awards granted under the LTIP, or continue any extension of credit with respect to such payment in any method which would violate the prohibitions on loans made or arranged by us as set forth in Section 13(k) of the Exchange Act.
Vesting and Exercise of an Award .    The applicable award agreement governing an award will contain the period during which the right to exercise the award in whole or in part vests, including the events or conditions upon which the vesting of an award will occur or may accelerate. No portion of an award which is not vested at the holder’s termination of service with us will subsequently become vested, except as may be otherwise provided by the Administrator in the agreement relating to the award or by action following the grant of the award.
Additionally, the Administrator has the right to provide in the award agreements, or may require a participant to agree that any proceeds, gain or other economic benefit actually or constructively received by the participant upon receipt or exercise of an award, or upon the receipt or resale of any shares subject to an award, must be repaid to us, or the award shall terminate if the participant terminates employment prior to a specified date, or engages in any activity in competition with us, or which is inimical, contrary or harmful to our interests, or is terminated for cause, as defined in the discretion of the Administrator.
 
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Generally, an option or SAR may only be exercised while such participant remains an employee, consultant or non-employee director of us or one of our subsidiaries or affiliates or for a specified period of time (up to the remainder of the award term) following the holder’s termination of service with us or one of our subsidiaries or affiliates. An award may be exercised for any vested portion of the shares subject to such award until the award expires. Upon the grant of an award or following the grant of an award, the Administrator may provide that the period during which the award will vest or become exercisable will accelerate, in whole or in part, upon the occurrence of one or more specified events, including, a change in control or a holder’s termination of employment with us or otherwise.
Transferability .    No award under the LTIP may be transferred other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a domestic relations order, unless and until such award has been exercised or the shares underlying such award have been issued and all restrictions applicable to such shares have lapsed. No award shall be liable for the debts or contracts of the holder or his successors in interest or shall be subject to disposition by any legal or equitable proceedings. During the lifetime of the holder of an award granted under the LTIP, only such holder may exercise such award unless it is subject to a domestic relations order. After the holder’s death, any exercisable portion of an award may be exercised by his or her personal representative or any other person empowered to do so under such holder’s will or the applicable laws of descent and distribution, until such portion becomes unexercisable under the LTIP or the applicable award agreement. Notwithstanding the foregoing, the Administrator may permit an award holder to transfer an award, other than an ISO to any “family member” of the holder, as defined under the instructions to the Form S-8 Registration Statement under the Securities Act, subject to certain terms and conditions. Further, an award holder may, in a manner determined by the Administrator, designate a beneficiary to exercise the holder’s right and to receive any distribution with respect to any award upon the holder’s death, subject to certain terms and conditions.
Fair Market Value .    For all purposes of the LTIP, including exercise prices of options and SARs, as well as withholding of shares, the fair market value of our common stock will be the closing price for our shares on the principal stock exchange on which such shares are traded on the date that fair market value is determined. However, if our stock is not traded on the date fair market value is to be determined, then the fair market value will be the closing price on the date immediately preceding such date on which our common stock was traded. Prior to our shares becoming publicly traded, the fair market value of our shares was determined by the compensation committee, in its discretion, based on a third-party appraisal, or the price paid between a willing buyer and seller, other than those involving Pritzker family business interests.
Adjustment Provisions.     Certain transactions with our stockholders not involving our receipt of consideration, such as a stock split, spin-off, stock dividend or certain recapitalizations may affect the share price of our common stock (which transactions are referred to collectively as equity restructurings). In the event that an equity restructuring occurs, the compensation committee is required to equitably adjust the class of shares issuable and the maximum number and kind of shares of common stock subject to the LTIP, and any outstanding awards as to the class, number of shares and price per share of our common stock. Other types of transactions may also affect our common stock, such as a dividend or other distribution, reorganization, merger, or other changes in corporate structure. In the event that there is such a transaction, which is not an equity restructuring, and the compensation committee determines that an adjustment to the LTIP and any outstanding awards would be appropriate to prevent any dilution or enlargement of benefits under the LTIP, the compensation committee is required to equitably adjust the LTIP as to the class of shares issuable and the maximum number of shares of our common stock subject to the LTIP, as well as the maximum number of shares that may be issued to an employee during any calendar year, and will adjust any outstanding awards as to the class, number of shares and price per share in such manner as it may deem equitable. 
 
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Change in Control .    In the event of a change in control, each outstanding award may be assumed or an equivalent award substituted therefore by a successor, or a parent or subsidiary of the successor. If an award is assumed or an equivalent award substituted therefore, and the participant’s service is terminated within 12 months following the change in control, then the award will fully vest. If a successor refuses to assume or substitute equivalent awards, then the Administrator may cause the outstanding awards to become fully exercisable and vested, and the Administrator shall notify the participants of the ability to exercise the award for a period of fifteen day, and if not exercised such award will expire. A change in control occurs under the LTIP if any person or group acting in concert acquires, directly or indirectly, beneficial ownership of 50% or more of the combined voting power of our stock, other than acquisitions by (i) Pritzker family business interests, or (ii) Pritzker family business interests acting as a group with any stockholder which owns more than 5% of the combined voting power of our stock on June 30, 2009 (Non-Pritzker Existing Shareholder) but only so long as Pritzker family business interests continue to own more voting stock than such Non-Pritzker Existing Shareholder.
Amendment and Termination .    The compensation committee may terminate, amend, or modify the LTIP at any time; however, except to the extent permitted by the LTIP in connection with certain changes in capital structure, stockholder approval will be obtained for any amendment to (i) increase the number of shares available under the LTIP, or (ii) reduce the per share exercise price of the shares subject to any option or SAR.
In no event may an award be granted pursuant to the LTIP on or after the tenth anniversary of the date the stockholders approve the LTIP.
Executive Incentive Plan
We have adopted an Executive Incentive Plan (EIP) pursuant to which we will award incentive compensation to our senior executives, including our NEOs.
Incentives paid under the EIP will be exempt from the limitations of Section 162(m) under a transition rule applicable to plans in place at the time of completion of this offering for a transition period ending on the earliest of: (i) the expiration of the EIP; (ii) the material modification of the EIP ( i.e. , an amendment that increases the compensation payable under the EIP); or (iii) the first shareholders meeting at which directors are elected that occurs three years after completion of this offering. At the end of this transition period, no bonuses will be paid under the EIP until our stockholders approve the EIP and the Performance Criteria (discussed below) as required by Section 162(m) of the Code.
Eligibility. 
Eligibility to participate in the EIP is limited to our senior executives, as may be selected by the compensation committee for each performance period under the EIP.
Bonuses are paid only to participants who are on the payroll on the last day of the performance period (other than by reason of an authorized leave of absence, disability or retirement). If the executive retires, dies or becomes disabled prior to payment, at the discretion of the compensation committee, a pro rata bonus may be paid based on the number of months of active employment during the year.
 
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Performance Criteria.
Bonuses are determined and paid based upon objectively determinable performance goals established by the compensation committee and relating to one or more of the following performance criteria:

Ÿ  earnings (either before or after one or more of the following: interest, taxes, depreciation and amortization);
Ÿ  sales or revenue;
Ÿ  net income (either before or after taxes);
Ÿ  economic value-added (as determined by the compensation committee);
Ÿ  cash flow (including, but not limited to, operating cash flow and free cash flow);
Ÿ  return on capital;
Ÿ  return on invested capital;
Ÿ  return on stockholders’ equity;
Ÿ  return on assets;
Ÿ  stockholder return;
Ÿ  return on sales;
Ÿ  gross or net profit;
Ÿ  productivity;
Ÿ  expenses;
 	 	Ÿ  operating margin;
Ÿ  operating efficiency;
Ÿ  customer satisfaction;
Ÿ  working capital;
Ÿ  earnings per share;
Ÿ  price per share of common stock;
Ÿ  market share;
Ÿ  costs;
Ÿ  chain results;
Ÿ  gross operating profit;
Ÿ  capital deployment;
Ÿ  implementation or completion of critical projects;
Ÿ  funds from operations;
Ÿ  branding;
Ÿ  organizational or succession planning; or
Ÿ  management or licensing fee growth;	
each as determined in accordance with generally accepted accounting principles or subject to such adjustments as may be specified by the committee. The performance goals set may be expressed in terms of overall corporate performance or the performance of an individual, division, region or business unit or segment. The achievement of a performance goal should be determined in accordance with applicable accounting standards, where relevant.
The compensation committee may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the performance goals set. Such adjustments may include one or more of the following items relating to:

Ÿ  a change in accounting principle;
Ÿ  financing activities;
Ÿ  expenses for restructuring or productivity initiatives;
Ÿ  other non-operating items;
Ÿ  acquisitions or dispositions;
Ÿ  the business operations of an entity acquired by us during the performance period;
Ÿ  discontinued operations;	 	Ÿ  stock dividend, split, combination or exchange of stock;
Ÿ  unusual or extraordinary events, transactions or developments;
Ÿ  amortization of intangible assets, other significant income or expense outside our core on-going business activities;
Ÿ  other nonrecurring items; or
Ÿ  changes in applicable law.	
Performance Periods .
Bonus formulas may be set for performance periods of one, two or three fiscal years.
Award Determination .
The compensation committee may, in its discretion, reduce the amount of bonus otherwise payable to a Participant under the bonus formula. However, the compensation committee has no discretion to increase the amount of a Participant’s bonus above the formula amount.
 
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Bonuses may be paid in cash or the equivalent value of our Class A common stock at the time the bonus is awarded. If paid in our Class A common stock, the compensation committee may impose additional vesting or other similar restrictions on such stock. Awards paid in Class A common stock shall be paid under the LTIP or any successor equity incentive plan thereto.
Amendment and Termination of the EIP .
Our compensation committee may amend or discontinue the EIP at any time, however any changes shall not apply retroactively. Except in the event of a change in control, if the compensation committee terminates the EIP during a performance period, then pro rata bonuses will be paid based on the period of time elapsed during the performance period and a determination of whether pro rata performance goals have been met.
 
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 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Current Relationships and Related Party Transactions
Agreements Relating to the Hyatt Center
Hyatt Center Office Lease
In June 2004, we entered into an office lease with FrankMon LLC, a wholly-owned subsidiary of H Group Holding, Inc. (H Group), for our principal executive offices located at 71 South Wacker Drive, Chicago, Illinois (commonly known as the Hyatt Center), consisting of approximately 317,826 square feet of office space. H Group is owned by Pritzker family business interests. Mr. Nicholas J. Pritzker, our former director, is the president and a director of H Group. Under the terms of the office lease, the annual net rent per square foot of rentable area ranges from $24.00 to $42.22 during the initial term and is payable in monthly installments. The lease initially expires on February 29, 2020 with options to renew and increase the rentable square feet. In 2008, 2007 and 2006, we paid FrankMon approximately $10,599,062, $10,507,896 and $8,886,249, respectively, under the lease, which amounts included net rent, taxes and our share of operating expenses and shared facilities costs.
Sublease Agreements
Following our entering into the office lease with FrankMon, we entered into sublease agreements with each of CC-Development Group, Inc. (Classic Residence), H Group, Pritzker Realty Group, L.P. (PRG) and The Pritzker Organization, LLC (TPO), among others, under which we sublease a portion of our rentable space at the Hyatt Center. Classic Residence, H Group and PRG are owned by Pritzker family business interests. Ms. Penny Pritzker, one of our directors, is the chairman of Classic Residence and the president and chief executive officer of PRG. Mr. Nicholas J. Pritzker, our former director, is a director of Classic Residence and the president and a director of H Group. TPO is owned by a trust for the benefit of Mr. Thomas J. Pritzker, our executive chairman. Mr. Pritzker is also the chairman and chief executive officer of TPO. The square footage of the subleased premises, the commencement date and the termination date of the sublease term, and the annual net rent per square foot during the initial sublease term, payable in monthly installments, under our sublease agreements, as amended, with Classic Residence, H Group, PRG and TPO are as follows:

   	  	Square
Footage	  	Commencement
Date	  	Initial
Termination Date	  	Annual Net Rent
Per Square Foot	
Classic Residence	  	54,242	  	February 1, 2005	  	February 29, 2020	  	$25.85 – $34.11	
H Group	  	5,760	  	February 1, 2005	  	February 29, 2020	  	$25.85 – $35.94	
PRG	  	21,390	  	July 1, 2005	  	December 16, 2011	  	$27.24 – $36.04	
TPO	  	16,557	  	July 1, 2005	  	December 16, 2011	  	$27.24 – $30.68	
Each subtenant is also obligated to pay as additional rent their respective share of taxes, operating expenses and shared facilities costs related to the subleased premises. All rent payments under the sublease agreements are paid by the respective subtenants directly to FrankMon.
In 2008 and 2006, we made payments to PRG of $24,500 and $122,646, respectively, for our share of the build out costs for shared facilities space.
With respect to each sublease agreement, FrankMon, as landlord under the office lease, executed a master landlord recognition agreement whereby it acknowledged the applicable sublease agreement and agreed to recognize the subtenant on a direct lease basis in the event the office lease with us is terminated or if the subtenant elects to extend the term of the sublease beyond the initial term. We are not released from any liability or obligations under the office lease as a result of our sublease arrangements.
Mr. Thomas J. Pritzker and one of our former executive officers maintain business offices in the Hyatt Center leased by TPO from us. We have agreed to pay a portion of the occupancy and operation
 
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costs related to this office space. Effective December 31, 2008, we no longer pay a portion of the occupancy and operation costs for the office space maintained by our former executive officer. In 2008 and 2007, we made aggregate payments of $453,464 and $1,085,356, respectively, to TPO for our share of these office costs.
Omnibus Office Services Agreement
We are party to an Omnibus Office Services Agreement with Classic Residence, H Group, TPO, Pritzker Family Office, L.L.C. and PRG, among others, relating to the Hyatt Center. Pritzker Family Office L.L.C. is owned by trusts for the benefit of Mr. Thomas J. Pritzker, Ms. Penny Pritzker and Ms. Gigi Pritzker Pucker. Certain tenants party to the agreement, including us, have entered into various service contracts with vendors for services such as copy, messenger, newspaper and telecommunications services. Multiple tenants and subtenants of the Hyatt Center utilize various services under the service agreements and this agreement establishes a system for the administration of the service contracts, including the methodology by which the fees with respect to each service contract are allocated among the applicable service users (such as by headcount or square footage leased). PRG acts as an administrator under the agreement and has responsibility for the administration and management of certain of the service contracts. Under the agreement, PRG also provides office management services relating to the premises and facilities of the Hyatt Center shared by subtenants who are party to the agreement. Each party pays PRG an administrative fee determined by PRG based on budgets prepared of the projected costs for the administrative services and office management services for the following calendar year. The term of the agreement continues indefinitely unless terminated earlier by prior written notice. We made the following payments to PRG and TPO in 2008, 2007 and 2006, which payments represented our allocation of costs for services provided to us under service contracts:

 	  	2008	  	2007	  	2006	
PRG	  	$	1,729	  	 	—	  	$	257,131	
TPO	  	 	10,327	  	$	22,759	  	 	5,361	
We also contract for various services related to telecommunications and facilities maintenance, which are used by PRG, Classic Residence, H Group and TPO. In addition, we operate an executive dining room and shared computer room used by PRG, Classic Residence, H Group, TPO and HGMI Gaming, Inc., a wholly-owned subsidiary of H Group (HGMI), the operating costs for which are allocated to each organization based on eligible headcount or square footage. In 2008, 2007 and 2006, PRG, Classic Residence, H Group, TPO and HGMI made the following payments to us, which payments represented their allocation of costs for the executive dining room and services used by them:

 	  	2008	  	2007	  	2006	
PRG	  	$	168,101	  	$	9,164	  	$	90,536	
Classic Residence	  	 	298,896	  	 	72,195	  	 	57,939	
H Group	  	 	—	  	 	—	  	 	6,188	
TPO	  	 	1,540	  	 	—	  	 	9,119	
HGMI	  	 	23,051	  	 	551,417	  	 	64,626	
Agreements Related to Hotel Mar Monte
HDG Associates is the owner of Hotel Mar Monte located in Santa Barbara, California. Hyatt Corporation indirectly owns approximately 91.14% of HDG Associates, which is consolidated. In addition, Hyatt Executives Partnership No. 1, L.P., which is owned, in part, indirectly by certain of our current and former executive officers and directors, owns approximately 0.53% of HDG Associates. The remaining 8.33% is owned by third parties. In July 2000, HDG Associates entered into a Management Agreement with PRG, under which PRG manages and operates the Hotel Mar Monte. In addition to being reimbursed for their out-of-pocket costs and expenses, HDG Associates pays PRG a
 
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management fee equal to 4% of the annual gross receipts for each fiscal year. The agreement expires on December 31, 2010, with automatic yearly renewals until terminated by prior written notice by either party. In 2008, 2007 and 2006, HDG Associates made payments of $434,407, $446,729 and $427,143, respectively, to PRG under this agreement.
PRG also provides certain administrative services to HT-Santa Barbara Motel, Inc., one of our wholly-owned subsidiaries, such as cash management, tax, financial, information technology, human resources, legal and payroll services, for which we have paid PRG fees of less than $120,000 in each of the last three fiscal years. Additionally, PRG acts as investment manager of HT-Santa Barbara Motel’s financial interests. In exchange for these services, PRG is paid (i) an annual investment fee equal to 50 basis points per year of the maximum equity invested, (ii) a per transaction acquisition/disposition fee equal to 50 basis points of the gross proceeds of the transaction and (iii) a per transaction financing fee equal to 25 basis points of the gross financing proceeds. PRG is also entitled to be reimbursed for all reasonable direct out-of-pocket costs and expenses incurred in connection with the services provided. In 2008, 2007 and 2006, HT-Santa Barbara Motel made payments of $45,188, $120,501 and $45,188, respectively, to PRG for such investment management services.
Agreements with HGMI Gaming, Inc. and Related Entities
We have entered into certain contractual relationships with HGMI with respect to certain of HGMI’s gaming facilities and the related hotels located at, or adjacent to, such gaming facilities.
Hyatt Regency Lake Tahoe Resort, Spa and Casino Gaming Space Lease Agreement
In February 1997, HCC Corporation, a wholly-owned subsidiary of HGMI, entered into a Gaming Space Lease Agreement with Hyatt Equities, L.L.C., our wholly-owned subsidiary and, which prior to the June 2004 Transaction (as defined in “Prospectus Summary—Corporate Information”), was majority owned by H Group. Under the agreement, HCC leases approximately 20,990 square feet of space at the Hyatt Regency Lake Tahoe Resort, Spa and Casino, where it operates a casino. Rent is $186,688 per month for 2009. In addition to the payment of base rent, HCC is also obligated to pay its portion of expenses associated with the operation of the casino. The initial term of the lease expired on December 31, 2008; however, the parties mutually agreed to extend the terms of the lease and an amended lease is currently under negotiation. In 2008, 2007 and 2006, HCC made payments to us of $4,350,000, $4,223,399 and $4,100,004, respectively, under the lease.
Hyatt Regency Lake Tahoe Resort, Spa and Casino Facilities Agreement
In connection with the Gaming Space Lease Agreement, in June 2004, HCC Corporation entered into a Casino Facilities Agreement with Hyatt Corporation, under which we have agreed to provide HCC with certain non-gaming services related to the management and operation of the casino and related facilities at the Hyatt Regency Lake Tahoe Resort, Spa and Casino. In exchange for such services, HCC pays us fees based on the type of service being provided and for complimentary rooms provided to its patrons. The term of this agreement was set to terminate at the expiration of the original lease. The parties have mutually agreed to update the agreement and the agreement is currently under negotiation. In 2008, 2007 and 2006, HCC made payments to us of $3,306,279, $4,267,961 and $3,982,496, respectively, under this agreement.
Niagara Fallsview Casino Resort/Casino Niagara Master (Permanent) Non-Gaming Services Agreement
In July 2002, Hyatt Corporation entered into a Master (Permanent) Non-Gaming Services Agreement with Falls Management Company (Falls Management), which agreement was subsequently contributed to Falls Management Group, L.P., the operator of Niagara Fallsview Casino Resort and the
 
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Casino Niagara. A subsidiary of HGMI is the general partner of a limited partnership that indirectly owns approximately 28.3% of Falls Management Group. The limited partnership is substantially owned by Pritzker family business interests. We provide certain non-gaming consulting under this agreement to Falls Management related to Casino Niagara, including with respect to labor policies and wage rates, development and training programs, recruiting, purchasing of support services necessary for the operation of the casinos, charges for commercial space, entertainment and amusement, food and beverages, information services and advertising. In exchange for these services, Falls Management pays us a fee equal to 0.3% per year of the casino’s adjusted gross receipts up to CAD 300 million ($260 million as of June 30, 2009 foreign exchange rates). In addition to these services related to the casinos, we also provide support services to Falls Management related to their policies, procedures, systems and guidelines. Falls Management pays us a fee equal to our cost of rendering these ancillary support services, which fee is not to exceed a total of CAD 200 ($173 as of June 30, 2009 foreign exchange rates) per hour, per Hyatt employee providing such services. In 2008, 2007 and 2006, Falls Management Company made payments of $846,210, $729,761 and $840,511, respectively, to us for services provided under the agreement.
Palm Beach, Aruba Casino Consulting Agreement
Hyatt Aruba N.V., our wholly-owned subsidiary, manages the gaming casino located at the Hyatt Regency Aruba in Palm Beach, Aruba. In connection with the management of the casino, in September 1997, Hyatt Aruba entered into a Consulting Agreement with HGMI. Under the agreement, HGMI provides development, marketing, compliance, management consulting services and gaming compliance services to Hyatt Aruba related to this property. In exchange for these services, we pay HGMI a fee of $200,000 per year and reimburse HGMI for its out-of-pocket expenses. The agreement has a one year term and automatically renews on a yearly basis for an additional one year period unless either party gives written notice of termination on or before the preceding January 1. In 2008, 2007 and 2006, Hyatt Aruba made payments of $373,110, $328,712 and $191,542, respectively, to HGMI under the agreement.
License Agreement with CC-Development Group, Inc.
In December 2008, Hyatt Corporation entered into a License Agreement with Classic Residence under which we provide Classic Residence with a limited license to permit the Classic Residence companies to continue use of the “Classic Residence by Hyatt” trademark and service mark (subject to maintaining agreed standards) (i) for a transition period ending upon the earlier of December 31, 2010 and the consummation of a change of control of Classic Residence, (ii) to the extent necessary to permit the Classic Residence companies to comply with pre-existing contractual obligations to third parties and (iii) as required by applicable laws, regulations and governmental authorities. The agreement also provides for a limited license to use the “classichyatt.com,” “classichyatt.org,” “hyattclassic.com” and “hyattclassic.org” domain names for a transition period ending upon the earlier of December 31, 2010 and the consummation of a change of control of Classic Residence.
Hyatt Vacation Club Resort in Puerto Rico Indemnification and Reimbursement Agreement
In 1997, Cerromar Development Partners, L.P., S.E. (Cerromar) began developing a Hyatt Vacation Club Resort in Puerto Rico. In 1997, Cerromar was owned by CDP Investors, L.P. as the sole limited partner and Cerromar Development Partners GP, Inc. as the general partner, which were both owned, directly or indirectly, by Pritzker family business interests. Due to the tax incentives in place in Puerto Rico, the partners of Cerromar were entitled to and received an investment tax credit equal to $5,253,750. In order to be eligible to receive the benefits of the tax credit, the Cerromar partners were required to post as collateral a letter of credit in favor of the Puerto Rico Treasury Department in the event that the final development cost associated with the Hyatt Vacation Club Resort was less than the amount necessary to generate the tax credit received. Diversified Capital,
 
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L.L.C. (Diversified Capital) posted this letter of credit on behalf of the partners of Cerromar. Pritzker family business interests own 100% of the outstanding membership interests in Diversified Capital. One percent of the outstanding membership interests in Diversified Capital is owned by T Corporation, which is 100% owned by our executive chairman, Mr. Thomas J. Pritzker. Mr. Pritzker also serves as President of Diversified Capital. Following the June 2004 Transaction, Cerromar became our wholly-owned subsidiary; however, the Cerromar letter of credit with the Puerto Rico Treasury Department remained and continues to be outstanding. We have entered into an indemnification and reimbursement agreement with both of the partners of Cerromar to cover any costs which may be owed to the Puerto Rico Treasury Department for the tax credit. In order to maintain the letter of credit, we pay Diversified Capital a quarterly letter of credit fee. In 2008, 2007 and 2006 Cerromar paid $157,821, $157,713 and $157,713 respectively, to Diversified Capital in letter of credit fees.
Agreements Relating to Aircraft
Falcon 900EX Aircraft—Rosemont Project Management, LLC
In October 2006, Rosemont Project Management Group, LLC, our wholly-owned subsidiary, entered into a time sharing agreement with respect to our Falcon 900EX aircraft with a number of companies owned all or in part by Pritzker family business interests, including Marmon Holdings, Inc. (Marmon), PRG, TransUnion Corp., Classic Residence, H Group, and Mr. Karl J. Breyer, Mr. Marshall E. Eisenberg and Mr. Thomas J. Pritzker, not individually, but each solely in their capacity as co-trustees of U.S. situs Pritzker family business interests, as well as TPO. At the time the agreement was entered into, Marmon was 99.6% owned by Pritzker family business interests. In 2008, the Pritzker family business interests sold an aggregate of approximately 64% of their interests in Marmon to a third party and committed to sell to such third party their remaining interests over a five to six year period. Mr. Thomas J. Pritzker, our executive chairman, is the chairman and director of Marmon and Mr. John D. Nichols, one of our directors, is the vice chairman of Marmon. Ms. Penny Pritzker, one of our directors, and Mr. Nicholas J. Pritzker, one of our former directors, also served as directors of Marmon until March 2008.
Under the time sharing agreement, each party may lease the aircraft and flight services crew on a time sharing basis for a fee equal to the “Direct Cost Rate” published annually by Conklin & de Decker for operating a Falcon 900EX aircraft for the applicable flight time. In no event does the amount reimbursed for a flight ever exceed the amount authorized by Federal Aviation Regulation Part 91.501(d)(1)-(10). Marmon, TPO, U.S. situs Pritzker family business interests, Classic Residence, PRG and H Group have made the following payments to us for use of the aircraft under the time sharing agreement:

 	  	2008	  	2007	
Marmon	  	$	123,778	  	$	10,464	
TPO	  	 	145,172	  	 	48,755	
U.S. situs Pritzker family business interests	  	 	177,171	  	 	83,953	
Classic Residence	  	 	26,962	  	 	—	
PRG	  	 	8,906	  	 	—	
H Group	  	 	72,235	  	 	—	
On March 18, 2008, the time sharing agreement was terminated with respect to Marmon.
In October 2006, Rosemont Project Management entered into an aircraft administrative and flight services agreement with Marmon Group, Inc. (Marmon Group), a subsidiary of Marmon, for the aircraft. Under the agreement, Marmon Group provides aircraft management services, maintenance and other aviation support services for the aircraft. In exchange for such services, Rosemont Project Management is obligated to pay Marmon Group a service fee of $60,000 per month for up to a maximum of 70 flight hours per month. For all flight hours over 70 per month, Rosemont Project Management and Marmon Group have agreed to negotiate, in good faith, a reasonable hourly rate. In
 
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addition to the service fee, Rosemont Project Management is also obligated to reimburse Marmon Group for specified direct costs and expenses incurred with respect to any flight. Under the agreement, Marmon Group also historically obtained and maintained on Rosemont Project Management’s behalf, and at Rosemont Project Management’s expense, customary casualty and liability insurance covering the aircraft and operation of the aircraft. This insurance is now obtained from a third party. The agreement terminated on March 18, 2008. Following the termination of the prior agreement, in March 2008, Rosemont Project Management entered into a new aircraft administrative and flight services agreement with Marmon Group for the aircraft on similar terms. This new aircraft administrative and flight services agreement terminates on March 18, 2010, unless terminated earlier. In 2008 and 2007, Rosemont Project Management made aggregate payments of $2,711,862 and $4,334,630, respectively, to Marmon Group under these agreements.
Interchange Agreement
In August 2008, Rosemont Project Management and Marmon Group entered into an interchange agreement with respect to the aircrafts owned by them. Subject to the terms and conditions of the agreement, each party has agreed to provide the use of its aircraft and operate interchange flights for the convenience of the other party. The parties intend to lease their aircraft to one another on an equal time basis. Use of Rosemont Project Management’s aircraft by Marmon Group requires our executive chairman’s approval, and use of Marmon Group’s aircraft by Rosemont Project Management requires the approval of Marmon Group’s chief executive officer. No charge, assessment or fee is to be made by either party for use of its aircraft under the agreement. The agreement has a one year term, unless earlier terminated by written notice. Additionally, the agreement may be extended for up to 180 days past the initial term by the party which has used fewer hours of the other party’s aircraft to enable such party to use the other party’s aircraft to equalize the number of flight hours used.
Gulfstream 200 Aircraft—Navigator Investments, LLC
In January 2006, we and certain other parties entered into a time sharing agreement with Navigator Investments, LLC, a wholly-owned subsidiary of Classic Residence, under which Navigator Investments agreed to lease to us and such other parties on a time sharing basis their Gulfstream 200 and flight crew for a flight fee equal to the “Direct Cost Rate” published annually by Conklin & de Decker for operating a Gulfstream 200 aircraft for the applicable flight time. In no event does the amount reimbursed for a flight ever exceed the amount authorized by Federal Aviation Regulation Part 91.501(d)(1)-(10). In July 2009 this agreement was terminated. Following this termination, in July 2009, we entered into a new time sharing agreement with Navigator Investments on similar terms. The time sharing agreement terminates on December 31, 2012. In 2008, 2007 and 2006, we made aggregate payments of $360,873, $228,653 and $178,418, respectively, to Navigator Investments for use of the aircraft.
2007 Stockholders’ Agreement
In connection with the issuance and sale of 100,000 shares of our Series A Convertible Preferred Stock to GS Sunray Holdings, L.L.C. (GSSH) and GS Sunray Holdings Parallel, L.L.C. (GSSHP and collectively, the Goldman Sachs Funds), affiliates of Goldman Sachs & Co., and the execution of the Subscription Agreement, we entered into the 2007 Stockholders’ Agreement with Madrone, the Goldman Sachs Funds and an additional investor that provides for certain rights and obligations of these stockholders, including the following:
Transfer Restrictions
Other than with respect to the 12,236,551 shares of common stock received by such stockholders in the May 2009 private placement transaction, these stockholders are restricted from transferring any shares of our common stock held by them, except to us, their affiliates (with the prior
 
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written consent of our board of directors), in limited amounts over specified time periods as described below and as otherwise permitted pursuant to the terms of the agreement. Subject to the rights of first refusal and “drag along” rights described below and provided that such transfers are accomplished by way of a broad distribution sale, following the consummation of this offering, each stockholder party to the 2007 Stockholders’ Agreement may transfer up to one-third of its common stock acquired under the Subscription Agreement or upon conversion of Series A Convertible Preferred Stock to unaffiliated third parties during each 365-day period beginning on the three and one-half, four and one-half and five and one-half year anniversaries of the consummation of this offering. In addition, following the consummation of this offering, subject to the rights of first refusal and “drag along” rights described below, each of such stockholders may transfer up to one-third of its common stock acquired under the Subscription Agreement or upon conversion of Series A Convertible Preferred Stock to unaffiliated third parties (1) at any time following the end of the first calendar year during which the “existing stockholders” (as described below) owned less than 25% of our common stock at any time during such year or (2) at any time following both (a) the second anniversary of the issuance of common stock to the relevant stockholders under the Subscription Agreement or the issuance of common stock upon conversion of the Series A Convertible Preferred Stock and (b) the first date on which the applicable market value exceeds 165% of the gross price per share at which the common stock was first traded in connection with this offering; provided that such transfers are accomplished by way of an underwritten public offering or in an otherwise broad distribution sale. The term “existing stockholders” is defined in the agreement to mean (i) members of the Pritzker family who are lineal descendants of Nicholas J. Pritzker, deceased, and their spouses, (ii) trusts for the benefit of such persons and/or (iii) affiliates of any such persons listed in clauses (i) and (ii). Subject to the rights of first refusal and “drag along” rights described below, the transfer restrictions set forth in the 2007 Stockholders’ Agreement expire at 11:59 p.m. (Central time) on the day after the date that is five and one-half years following the consummation of this offering.
Notwithstanding the foregoing, and subject to the rights of first refusal and “drag along” rights described below, following the consummation of this offering, in the event that any “initial holder” (as described below) transfers all or any portion of the shares of common stock held by such initial holder as of August 28, 2007 (other than pursuant to certain permitted transfers), each stockholder party to the 2007 Stockholders’ Agreement may transfer up to a pro rata portion of such stockholder’s common stock; provided, however, that in any 365-day period or calendar year in which such stockholder is permitted to transfer shares of common stock pursuant to the terms described in the preceding paragraph, such stockholder’s right to transfer a pro rata portion of its common stock shall apply only to the extent that the aggregate number of shares of common stock held by initial holders as of August 28, 2007 held at the commencement of such 365-day period or calendar year by initial holders and transferred by initial holders in such 365-day period or calendar year, as a percentage of the aggregate number of shares of common stock held by the initial holders as of August 28, 2007 at the commencement of such 365-day period or calendar year, exceeds the maximum percentage of such stockholder’s shares of common stock that such stockholder is permitted to sell in such 365-day period or calendar year (as described in the preceding paragraph), with the result that only such excess number of shares of common stock held by the initial holders as of August 28, 2007 and transferred by the initial holders will be taken into account in determining such stockholder’s pro rata portion eligible for transfer. The rights described in this paragraph expire at 11:59 p.m. (Central time) on the day after the date that is five and one-half years following the consummation of this offering. The term “initial holder” is defined in the agreement to mean (i) any of Mr. Thomas J. Pritzker, Ms. Penny Pritzker and/or Ms. Gigi Pritzker Pucker or (ii) trusts for the benefit of these individuals and/or for the benefit of their respective spouses and/or lineal descendants.
In addition, no stockholder party to the 2007 Stockholders’ Agreement may transfer (1) the legal or beneficial ownership of any common stock held by such stockholder unless such acquiring person’s ownership of common stock is not reasonably likely to jeopardize any licensing from a governmental
 
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authority, as determined by our board of directors in its reasonable discretion, (2) any common stock to an aggregator (meaning a person who is required to file a Schedule 13D under the Exchange Act disclosing an interest other than for investment), (3) any common stock to a competitor of ours engaged in one or more of the hospitality, lodging and/or gaming industries or (4) any common stock that would cause a stockholder to violate any provision of the agreement. Such restrictions are qualified by the “actual knowledge” of the transferring stockholder in the case of transfers pursuant to an underwritten public offering or a broad distribution sale.
Right of First Refusal
Following the consummation of this offering, in the event that the number of shares of common stock proposed to be transferred by a stockholder party to the 2007 Stockholders’ Agreement and its affiliates together with any shares of common stock then proposed to be transferred by the other stockholders party to the 2007 Stockholders’ Agreement and their affiliates exceeds 2% of the then outstanding shares of common stock, then prior to consummating the sale of common stock to a third-party purchaser, such stockholder or stockholders shall offer to transfer the common stock to us at the applicable market value (as defined in the 2007 Stockholders’ Agreement). If we do not accept the offer within a specified period of time, such stockholder or stockholders may transfer the shares of common stock to the third-party purchaser as long as such transfer occurs within the time periods specified in the 2007 Stockholders’ Agreement and on terms and conditions no more favorable in the aggregate than offered to us.
“Drag-Along” Right
In connection with a “change of control” (as defined in the 2007 Stockholders’ Agreement) transaction, we have the right to require each stockholder party to the 2007 Stockholders’ Agreement to participate in such change of control transaction on the same terms, conditions and price per share of common stock as those applicable to the other holders of our common stock. In addition, upon our request, the stockholders party to the 2007 Stockholders’ Agreement have agreed to vote in favor of such change of control transaction or similar transaction, and we have the right to require each stockholder party to the 2007 Stockholders’ Agreement to vote for, consent to and raise no objection to any such transaction.
“Tag-Along” Right
Subject to the fiduciary duties of our board of directors, we have agreed that we will not agree to consummate a change of control transaction with respect to which the stockholders party to the 2007 Stockholders’ Agreement are not given the right to participate on the same terms, conditions and price per share of common stock as those applicable to the other holders of our common stock.
Preemptive Rights
Each stockholder party to the 2007 Stockholders’ Agreement has the right to purchase such stockholder’s pro rata share of any new shares of common stock, or any other equity securities, that we may propose to sell and issue on comparable terms by making an election within the time periods specified in the 2007 Stockholders’ Agreement, subject to certain excluded securities issuances described in the 2007 Stockholders’ Agreement, including shares issued pursuant to equity compensation plans adopted by our board of directors and the issuance of shares of our common stock in a public offering. If not all stockholders elect to purchase their full preemptive allocation of new securities, then we will notify the fully-participating stockholder of such and offer them the right to purchase the unsubscribed new securities.
 
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Voting Agreement
Until the later of (1) December 31, 2013 and (2) the date that Mr. Thomas J. Pritzker is no longer our chairman, each stockholder party to the 2007 Stockholders’ Agreement has agreed to vote all of their shares of common stock consistent with the recommendations of a majority of our board of directors with respect to all matters. Prior to the consummation of this offering, the stockholders party to the 2007 Stockholders’ Agreement own in the aggregate 50,224,176 shares, or approximately 14.9%, of our outstanding common stock. Following the consummation of this offering, such stockholders will own in the aggregate              shares of Class B common stock, or approximately             % of the outstanding shares of our common stock and approximately             % of the total voting power of our outstanding common stock.
Designation of Directors to the Board
Under the 2007 Stockholders’ Agreement, each of Madrone GHC and the Goldman Sachs Funds has the right to designate, and the board will appoint, one representative to the board. Mr. Penner is Madrone GHC’s designee and Mr. Friedman is the Goldman Sachs Fund’s designee. These rights to designate representatives for appointment to the board terminate immediately prior to the consummation of this offering, however, Mr. Penner and Mr. Friedman will continue to serve as directors until their successors are duly elected by the holders of our common stock.
Access to Information
For so long as GS Sunray Holdings Parallel, L.L.C. owns any shares of common stock, we have agreed that GS Capital Partners VI Parallel, L.P. or its representatives may examine our books and records and visit and inspect our facilities and may reasonably request information at reasonable time and intervals concerning the general status of our financial condition and operations. Additionally, on reasonable prior notice, GS Capital Partners VI Parallel, L.P. or its representatives may discuss our business operations, properties and financial and other conditions with our management, independent accountants and investment bankers. In no event shall we be required to provide access to any information that we reasonably believe would constitute attorney/client privileged communications or would violate any securities laws.
Standstill
Under the 2007 Stockholders’ Agreement, each stockholder party to the 2007 Stockholders’ Agreement agreed that, subject to certain limited exceptions, so long as such stockholder owns shares of common stock, neither such stockholder nor any of its related persons will in any manner, directly or indirectly:
 
 	Ÿ 	 	effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate or encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (a) any acquisition of any of our or our subsidiaries’ securities (or beneficial ownership thereof) (except through the proper exercise of preemptive rights granted under the 2007 Stockholders’ Agreement), or rights or options to acquire any of our or our subsidiaries’ securities (or beneficial ownership thereof), or any of our or our subsidiaries’ or affiliates’ assets, indebtedness or businesses, (b) any tender or exchange offer, merger or other business combination involving us or any of our subsidiaries or affiliates or any assets constituting a significant portion of our consolidated assets, (c) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to us or any of our subsidiaries or affiliates, or (d) any “solicitation” of “proxies” (as such terms are used in the proxy rules under the Exchange Act) or written consents with respect to any of our or our affiliates’ voting securities. For this purpose, the term “affiliates” means our affiliates primarily engaged in the hospitality, lodging and/or gaming industries;	
 
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 	Ÿ 	 	form, join or in any way participate in a “group” (within the meaning of Section 13(d) of the Exchange Act) with respect to us where such group seeks to acquire any of our equity securities;	
 
 	Ÿ 	 	otherwise act, alone or in concert with others, to seek representation on or to control or influence our or our subsidiaries’ management, board of directors or policies;	
 
 	Ÿ 	 	take any action which would or would reasonably be expected to force us to make a public announcement regarding any of the types of matters set forth in the first bullet point above;	
 
 	Ÿ 	 	own more than 12% of the issued and outstanding common stock, unless such ownership arises as a result of any action not taken by or on behalf of such stockholder or a related person of such stockholder; or	
 
 	Ÿ 	 	request that we or any of our representatives, directly or indirectly, amend or waive any of the foregoing provisions.	
Each stockholder party to the 2007 Stockholders’ Agreement has also agreed that, if at any time during the period such stockholder is subject to the foregoing provisions, such stockholder is approached by any third party concerning its participation in any transaction or proposed transaction involving the acquisition of all or any portion of the assets, indebtedness or securities of, or any business of, ours or any of our subsidiaries, such stockholder will promptly inform us of the nature of such transaction and the parties involved.
Termination
The 2007 Stockholders’ Agreement terminates (1) with respect to any individual stockholder, on the first date when such stockholder no longer holds any shares of common stock and (2) in its entirety, upon the first to occur of all of our equity securities being owned by a single person or the agreement in writing by us and each stockholder party to the 2007 Stockholders’ Agreement.
Other Transactions with Goldman, Sachs & Co. and its Affiliates
We paid Goldman, Sachs & Co. $1,543,898 in 2008 and $19,254,065 in 2007 for investment banking and advisory services provided to us. Mr. Richard A. Friedman, one of our directors, is a partner and managing director of Goldman, Sachs & Co.
In September 2008, Goldman, Sachs & Co. assigned to us their interests and obligations under a United Center Suite License Agreement related to a private suite box at the United Center in Chicago, Illinois. The use of the suite box and costs under the license agreement are shared equally with a third party. In 2008, we paid a license fee of $90,849 and a security box deposit of $87,500. The license fee periodically adjusts to reflect increases in the Consumer Price Index. The license term expires on August 31, 2012.
Hyatt Corporation, our wholly-owned subsidiary, has partnered with W2007 Finance Sub, LLC and Whitehall Parallel Global Real Estate Limited Partnership 2007 (the Whitehall entities), to form W2007 Waikiki Holdings, LLC (the Waikiki joint venture) for the purpose of acquiring, owning and operating the Hyatt Regency Waikiki Beach Resort & Spa. The Whitehall entities are both affiliates of The Goldman Sachs Group, Inc., the parent of Goldman, Sachs & Co. Mr. Richard A. Friedman, one of our directors, is the head of the Merchant Banking Division of Goldman, Sachs & Co. and the chairman of the Corporate Investment Committee of the Merchant Banking Division. The Whitehall entities are the managing members of the Waikiki joint venture, collectively owning 90.01% of its ownership interests. Hyatt Corporation owns the remaining 9.99% of the ownership interests in the Waikiki joint venture. In June 2007, Hyatt Corporation acquired 500 shares of non-voting, redeemable preferred stock of the predecessor to W2007 WKH Hotel TRS, Inc., a subsidiary of the Waikiki joint venture. The 
 
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redeemable preferred shares accrue dividends at a rate per annum equal to 6% of $500,000. Such dividends will continue to accrue until W2007 WKH Owner, LLC redeems the shares of preferred stock in exchange for an aggregate payment to Hyatt Corporation of $500,000. In July 2008, W2007 WKH Owner, LLC acquired ownership of the Hyatt Regency Waikiki Beach Resort & Spa and neighboring Kings Village retail center. In connection with the acquisition, in July 2008, SDI, Inc., our wholly-owned subsidiary, provided a loan in the amount of $277,500,000 to W2007 WKH Senior Borrower, LLC, a subsidiary of the Waikiki joint venture. Interest accrues on the loan at a rate per annum equal to the 30-day LIBOR plus 3.75%. The loan is first priority and is secured by real property interests held in the hotel and retail center by W2007 WKH Owner, LLC and other subsidiaries of the Waikiki joint venture. The loan has a stated maturity date of July 2010 with three, one-year options to extend through 2013. In July 2008, Hyatt Corporation entered into a management agreement with W2007 WKH Hotel TRS, Inc., pursuant to which we manage the hotel. In exchange for the management services provided, W2007 WKH Hotel TRS, Inc. pays us a base fee and an incentive fee. The base fee is calculated as a percentage of gross revenues, and the incentive fee is calculated as a percentage of adjusted gross operating profit exceeding certain amounts. The agreement expires in 2047. In 2008 we received interest payments of $7,051,998 in connection with this financing. In 2008, W2007 WKH Hotel TRS, Inc. made payments of $3,252,279 to us pursuant to the management agreement .
Prior to October 2006, our wholly-owned subsidiary, AmeriSuites Franchising, Inc. franchised 18 AmeriSuites hotels that were owned and operated by Equity Inns TRS Holdings, Inc. or certain of its subsidiaries (collectively referred to as ENN). In October 2006, our wholly-owned subsidiaries, Select Hotels Group, L.L.C., Hyatt Place Franchising, L.L.C. and AmeriSuites Franchising, Inc. entered into a master agreement with Equity Inns pursuant to which the parties agreed to convert the hotels to Hyatt Place hotels. On October 25, 2007, Equity Inns was acquired by affiliates of Whitehall Street Global Real Estate Limited Partnership 2007, and ownership of the hotels was transferred to W2007 Equity Inns Realty, LLC, also an affiliate of Whitehall, which expressly assumed Equity Inns’ obligations under the master agreement. As a result of the change of control in the ownership structure for these hotels, in 2007, Equity Inns paid us $135,000 in transfer fees in relation to the existing AmeriSuites franchise agreements and W2007 Equity Inns Realty, LLC paid us $670,800 in new application fees pursuant to the new Hyatt Place franchise agreements. Fifteen of the hotels completed conversion to Hyatt Place and executed new Hyatt Place franchise and management agreements in late 2007 and early 2008. The hotels paid us franchise and management fees as well as reimbursement of payroll costs, fees for shared services and the national advertising fund under existing AmeriSuites franchise and management agreements until their respective conversions. Following their respective conversion dates and until January 30, 2009, these hotels paid us franchise and management fees pursuant to Hyatt Place franchise and management agreements. On January 30, 2009, the parties terminated the management agreements, and since then Archon Group, L.P., an affiliate of Whitehall, has managed these properties. We continue to receive franchise fees pursuant to the Hyatt Place franchise agreements. We paid Equity Inns a total of $3,451,280 representing performance payments, net of amounts received and cost reimbursements due to us, under these agreements for the period between October 25, 2007 and December 31, 2007. In 2008, Equity Inns paid us a total of $14,957,618 under these agreements.
On January 11, 2008, W2007 MVP St. Louis, LLC, an affiliate of Whitehall, entered into an agreement with Hyatt Corporation to manage the Hyatt Regency St. Louis Riverfront hotel. In 2008, W2007 MVP St. Louis, LLC made payments of $1,584,850 to us pursuant to the management agreement.
Tax Separation Agreement
Prior to the June 2004 Transaction, H Group, Hyatt Corporation, Classic Residence and their respective subsidiaries were members of a consolidated group and were included in the consolidated
 
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federal income tax return as well as various consolidated or combined state, local and foreign tax returns filed by H Group. As a result of the June 2004 Transaction, Hyatt Corporation and Classic Residence ceased to be members of the H Group consolidated group and following the contribution of stock of Hyatt Corporation to us, Hyatt Corporation became a member of our consolidated group and became included in the consolidated federal and certain other consolidated or combined state, local and foreign income tax returns filed by us.
In connection with the June 2004 Transaction, on June 30, 2004, H Group, Hyatt Corporation, Classic Residence and their respective direct and indirect subsidiaries entered into a tax separation agreement. In general, H Group agreed to indemnify Hyatt Corporation, Classic Residence and their subsidiaries against: (i) taxes of the members of H Group’s group prior to the June 2004 Transaction; (ii) taxes attributable to the June 2004 Transaction and related transactions; and (iii) liabilities of certain members of H Group’s group prior to the June 2004 Transaction under the consolidated return rules or similar rules.
In general, Hyatt Corporation agreed to indemnify H Group, Classic Residence and their respective subsidiaries following the June 2004 Transaction against: (i) Hyatt Corporation group’s share of H Group’s taxes for the year of the June 2004 Transaction, calculated as if the Hyatt Corporation group was a separate group for that year; (ii) Hyatt Corporation’s post-June 2004 Transaction taxes; (iii) final audit adjustments in periods prior to the June 2004 Transaction attributable to Hyatt Corporation’s group members; and (iv) certain specific pre-June 2004 Transaction tax matters.
In general, Classic Residence agreed to indemnify H Group, Hyatt Corporation and their respective subsidiaries following the June 2004 Transaction against: (i) Classic Residence group’s share of H Group’s taxes for the year of the June 2004 Transaction, calculated as if the Classic Residence group was a separate group for that year; (ii) Classic Residence’s post-June 2004 Transaction taxes; and (iii) final audit adjustments in periods prior to the June 2004 Transaction attributable to Classic Residence’s group members.
The tax separation agreement also addresses other tax related matters, including the preparation and filing of returns, tax contests and refunds.
H Group agreed to prepare and file all income tax returns for periods prior to the June 2004 Transaction and periods that include the June 2004 Transaction. Hyatt Corporation and Classic Residence each agreed to prepare and file their own income tax returns for periods beginning after the June 2004 Transaction.
The parties agreed that Hyatt Corporation will control and represent the parties’ interests in any tax audit or similar proceeding related to tax periods ending on or before or including the June 2004 Transaction and do so in consultation with H Group or Classic Residence with respect to issues that impact them. Hyatt Corporation’s settlement of such issues requires H Group’s or Classic Residence’s reasonable consent.
H Group is entitled to refunds and other tax benefits from periods prior to the June 2004 Transaction, provided H Group reimburses Hyatt Corporation and Classic Residence for any refunds or tax benefits attributable to the Hyatt Corporation or Classic Residence group members, as applicable, resulting from settlements of audits for periods prior to the June 2004 Transaction. Refunds for tax periods that include the June 2004 Transaction will be allocated in a way that is consistent with how taxes for such periods are allocated. If H Group realizes a tax benefit with respect to deductions associated with payment obligations assumed from Hyatt Corporation in connection with the June 2004 Transaction, then H Group will pay the amount of such tax benefit to Hyatt Corporation.
 
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Pursuant to the tax separation agreement, Hyatt Corporation advanced H Group $32 million in July 2005. H Group repaid Hyatt Corporation $3.2 million in 2005, $2.9 million in 2006 and $15.7 million in 2007. The remaining $10.2 million was treated as a distribution made by Hyatt Corporation to H Group immediately prior to the June 2004 Transaction. Hyatt Corporation paid H Group $16.3 million in 2007 for separate amounts owed under the tax separation agreement, and in August 2009, Hyatt Corporation paid $5.4 million under the tax separation agreement for amounts effectively settled with taxing authorities.
In connection with the June 2004 Transaction, H Group assumed liability for future payment of $101.7 million that Hyatt Corporation owed to a third party. In accordance with U.S. federal income tax laws, while H Group makes the payments related to these liabilities, we retain the tax benefits, and in each of 2008, 2007 and 2006 recorded tax deductions of $7.8 million for payments made by H Group.
In connection with the June 2004 Transaction, H Group also assumed Hyatt Corporation’s benefit liabilities of $27.7 million under certain deferred compensation and executive retirement plans with respect to certain former and retired employees of Hyatt Corporation. While H Group retains the liability for such payments, we retain the tax benefits. In 2008, 2007 and 2006, we recorded tax deductions of $4.0 million, $4.1 million and $3.9 million, respectively.
HGMI Gaming, Inc. Transition Services Agreement
In connection with the June 2004 Transaction, on June 30, 2004, Hyatt Corporation entered into a transition services agreement with HGMI pursuant to which Hyatt Corporation agreed to provide certain transition services, including human resources, payroll, employee benefits, accounting, financial, legal, tax, software and technology, call center and reservation, purchasing, travel, insurance and treasury banking services, to allow HGMI to develop the internal resources and capabilities to arrange for third-party providers for such services. This transition services agreement was extended on February 12, 2008 by a letter agreement, pursuant to which we agreed to continue to provide certain employee benefit services to HGMI for an annual fee of $36,000, which fee will be increased by 4% each year. In addition, HGMI agrees to reimburse us for all fees and other out-of-pocket expenses incurred. The HGMI agreement continues until terminated by advance written notice by either party. In 2008, 2007 and 2006, HGMI made payments to us of $47,024, $93,328 and $32,660, respectively, under the transition services agreement.
Employee Benefits Agreement
In connection with the June 2004 Transaction, on July 1, 2004, Hyatt Corporation entered into an employee benefits and other employment matters allocation and separation agreement with HGMI, H Group, HCC and Grand Victoria Casino & Resort, L.P., a company principally owned by Pritzker family business interests, pursuant to which we continue to provide administrative services to the parties. The services include, coordinating third-party administration for retirement plans, coordinating third-party administration for health and dental plans, providing claims administration for unemployment insurance claims, and for a short period of time, payroll services. The parties agree to reimburse each other for any costs or expenses incurred in connection with any of the plans which are the responsibility of the other party. In 2008 and 2006, H Group made payments of $6,310,055 and $10,549, respectively, to us under the agreement.
Transactions Related to the Nassau Veterans Memorial Coliseum
Facility Management of New York, Inc., formerly known as Hyatt Management Corporation of New York, Inc., entered into an indenture agreement with the County of Nassau to lease and operate the Nassau Veterans Memorial Coliseum. As part of the lease agreement, the County of Nassau
 
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assigned to Facility Management of New York, Inc. an agreement with Nassau Sports, the sole owner of the New York Islanders, a National Hockey League team, for the lease of certain spaces within the Nassau Veterans Memorial Coliseum. At the time of the agreement, Facility Management of New York, Inc. was entirely owned by us. Pursuant to this agreement, we agreed to guarantee the obligations of Facility Management of New York, Inc. to the County of Nassau for up to $1,000,000. The lease was assigned to SMG, formerly known as Spectacor Management Group, which at the time was a wholly-owned subsidiary of H Group. Our obligation to indemnify the County of Nassau continued despite the assignment. In 2007, SMG was acquired by a third-party acquirer. As a condition to the acquisition, SMG agreed to indemnify us for any losses up to $750,000 arising out of or in connection with our obligations under the lease agreement. This indemnification is supported by a $750,000 letter of credit. A third-party, 50% partner in SMG, in order to facilitate the acquisition of SMG by the third-party acquirer, also agreed to indemnify us for 50% of any losses suffered under the lease obligation. The lease expires on July 31, 2015 and may be extended. However, SMG has agreed not to extend or renew the lease agreement unless we would have no obligations whatsoever under the guaranty in the lease agreement.
Registration Rights
After this offering, GS Sunray Holdings Subco I, L.L.C., GS Sunray Holdings Subco II, L.L.C., GS Sunray Holdings Parallel Subco, L.L.C., Madrone GHC, LLC, Lake GHC, LLC and Shimoda GHC, LLC and their respective transferees will be entitled to certain “long-form” (Form S-1) demand, “short-form” (Form S-3) demand and “piggyback” registration rights, subject to lock-up arrangements. For additional information, see “Description of Capital Stock—Registration Rights.”
Other Agreements, Transactions and Arrangements
A partner of Latham & Watkins LLP, Michael A. Pucker, is the brother-in-law of Mr. Thomas J. Pritzker. In 2008, 2007 and 2006, we made aggregate payments of $5,762,334, $4,534,125, $1,672,984, respectively, to Latham & Watkins LLP for legal services.
In 2008, 2007 and 2006, Northridge Industries, Inc., our wholly-owned subsidiary made payments of $25,830, $11,095 and $5,001, respectively, to PRG for administrative and investment management services.
In 1998, one of our subsidiaries and Canadian Torvan Realty, L.P., an entity owned by certain Pritzker family business interests, transferred depreciable property and a leasehold interest in land and buildings, which constitute the Hyatt Regency Hotel in Vancouver, B.C., to our subsidiary, Hyatt Equities, L.L.C. In connection with this transfer, the Canadian Revenue and Customs Agency allowed the transferors to defer the tax on the income that would have otherwise been realized until any one of a number of events, as set forth in the agreement, causes the liability to become payable. This tax deferral, however, was subject to, among other things, the guarantee by Hyatt Equities of the tax liabilities to the extent they become payable under the agreement. The potential future tax liability of the other Pritzker family business interests is CAD 6.8 million ($5.9 million based on June 30, 2009 foreign exchange rates).
Through a wholly-owned subsidiary, we own 5% interests in two limited liability companies that, in turn, each own a majority of the limited partnership interests in limited partnerships that invest in life science technology companies. Other Pritzker family business interests own the remaining interests in such limited liability companies. In addition, these limited liability companies, trusts for the benefit of Mr. Thomas J. Pritzker’s immediate family members and an entity owned by Pritzker family business interests own non-controlling interests in two separate limited liability companies each of which acts as the sole general partner of each of the limited partnerships. An entity substantially owned by trusts for
 
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the benefit of certain members of the Pritzker family, including Mr. Thomas J. Pritzker and Ms. Penny Pritzker, and their immediate family members, acts as the advisor to and is the manager of the general partner of each of the limited partnerships. Mr. Thomas J. Pritzker serves as a manager on the board of managers of this entity. A majority vote of the board of managers and any committee thereof requires the affirmative vote of Mr. Pritzker. Through a wholly-owned subsidiary, we also own a 5% interest in a limited liability company that also invested in a pharmaceutical company. The remaining interests in this limited liability company are owned by Pritzker family business interests and trusts for the benefit of certain members of the Pritzker family, including immediate family members of Mr. Thomas J. Pritzker and Ms. Penny Pritzker. As described in note 18 to our consolidated financial statements, in 2008, 2007 and 2006 we received distributions from these investments.
Through two wholly-owned subsidiaries, we own a 4.7% limited partnership interest and a 5% limited partnership interest in two limited partnerships that invest in real estate. These limited partnerships are managed by PRG. As described in note 18 to our consolidated financial statements, in 2008, 2007 and  2006 we received distributions from these investments.
Related Party Transactions No Longer In Effect
Repurchases of Common Stock
On August 22, 2007, our wholly-owned subsidiary, AIC, borrowed $730 million from Diversified Capital pursuant to the terms of a promissory note. The outstanding indebtedness under the promissory note accrued interest at a rate per annum equal to 5.5% compounded annually. On August 22, 2007, AIC used the proceeds from the loan plus cash on hand to purchase approximately 24,271,808 shares of our common stock owned by three wholly-owned subsidiaries of Marmon for an aggregate purchase price of $745,387,230. On September 25, 2007, AIC repaid Diversified Capital the full $730 million in outstanding indebtedness as well as $3,740,000 in accrued and unpaid interest on the loan. On October 22, 2007, we purchased the 24,271,808 shares of our common stock from AIC for a purchase price of $745,387,230.
On August 31, 2007, we offered to purchase, on a pro rata basis, up to 8,290,875 shares of our common stock from all common stockholders of record on August 27, 2007 at a price per share of $30.71. On September 14, 2007, we purchased a total of 8,290,875 shares of our common stock for an aggregate purchase price of $254,612,770 from certain Pritzker family business interests.
On October 2, 2007, we offered to purchase, on a pro rata basis, up to 3,256,269 shares of our common stock from all common stockholders of record on October 2, 2007 at a price per share of $30.71. On October 17, 2007, we purchased a total of 3,256,268 shares of our common stock for an aggregate purchase price of $100,000,000 from Pritzker family business interests.
Loan Guarantee
In connection with the sale by Pritzker family business interests of their interests in Timber Products Co. Limited Partnership (14.2% of which was indirectly owned by AIC) to a third party on August 31, 2004, AIC, severally but not jointly, guaranteed the payment when due of a loan in the principal amount of $29.8 million made by Diversified Capital to such third party in connection with such third party’s purchase of Timber Products. AIC’s share of the guarantee was based on 16.2% of the obligations. On September 30, 2008, Diversified Capital sold a 16.2% interest in the note evidencing the loan to AIC for an aggregate purchase price of $2,774,076. Subsequently, on September 30, 2008, AIC sold its 16.2% interest in the note plus accrued interest to TP-AIC, L.L.C. for an aggregate purchase price of $2,774,076. Pritzker family business interests own all of the outstanding membership interests in TP-AIC, L.L.C. On September 30, 2008, following such sale, Diversified Capital released AIC from all of its obligations under the guarantee. No claims were made against AIC under the guarantee.
 
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Agreements Relating to the Hyatt Center
In connection with the construction of the Hyatt Center, we provided construction management services to PRG for which they paid us $300,000 in 2006. PRG managed the overall build-out of the space we lease.
Mr. Nicholas J. Pritzker, a former director, from time to time provides services to H Group and TPO, and previously maintained a business office in the Hyatt Center leased by us. As a result, H Group and TPO paid a portion of the occupancy and operation costs related to this office space. In 2008, H Group and TPO paid us $545,190 and $164,212, respectively, for their share of these office costs from 2005 through 2007. This agreement was terminated in April 2009.
License Agreements
Agreements Related to Transfer and License Back of “Classic Residence by Hyatt” Trademark and Service Mark
On June 30, 2004, Hyatt Corporation and Classic Residence Management Limited Partnership (CRM) entered into an Agreement and Consent Regarding Use of Trademark to, among other things, confirm the status of the “Classic Residence by Hyatt” trademark and service mark, and in particular, that they were owned by CRM in the United States. Under a License Agreement, dated as of June 30, 2004, between Hyatt Corporation and Classic Residence (the 2004 License Agreement), we licensed to Classic Residence the right to use the name “Classic Residence by Hyatt” in connection with the business of Classic Residence and its subsidiaries outside of the United States and the word “Hyatt” and variations thereof, and all trademarks, logos, trade names, service marks or copyrights owned by Hyatt Corporation. In 2008, 2007 and 2006 Classic Residence made payments to us of $5,000, $10,000 and $5,000, respectively, under the 2004 License Agreement.
On December 31, 2008, the 2004 License Agreement and the Agreement and Consent Regarding Use of Trademark were terminated. Also on December 31, 2008, CRM sold its right, title and interest in the trademark and service mark “Classic Residence by Hyatt” to H Mark, L.L.C. and IHE, INC. At the time of the purchase, the members of H Mark were U.S. situs Pritzker family business interests. IHE is controlled by certain non-U.S. situs Pritzker family business interests. Immediately following such purchase, the members of H Mark contributed and assigned their membership interests in H Mark, and IHE contributed and assigned its undivided interest in the “Classic Residence by Hyatt” trademark and service mark and in the December 31, 2008 purchase agreement with CRM to us, in each case as a capital contribution and for no additional consideration. Following such capital contribution, we contributed and assigned (1) the membership interests in H Mark and (2) the former IHE interest in the “Classic Residence by Hyatt” trademark and service mark and the December 31, 2008 purchase agreement to our subsidiary, Hyatt Corporation. Subsequently, on December 31, 2008, H Mark merged into Hyatt Corporation. Following the merger, Hyatt Corporation entered into a License Agreement with Classic Residence as described in “—Current Relationships and Related Party Transactions—License Agreement with CC-Development Group, Inc.” above.
License Agreement with HGMI Gaming, Inc.
In June 2004, HGMI entered into a License Agreement with Hyatt Corporation, under which we granted HGMI a limited, non-exclusive right to use Hyatt trademarks, logos, trade names, service marks and copyrights, including the name “Hyatt.” In exchange for this right, HGMI paid us a license fee of $10,000 per calendar quarter. In 2008, 2007 and 2006, HGMI made payments of $50,000, $30,000 and $40,000, respectively, to us under this agreement. This agreement was terminated in March 2009.
 
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Agreements with HGMI Gaming, Inc. and Related Entities
Grand Victoria Casino & Resort (Rising Sun, Indiana) Master Subcontract Agreement
HGMI manages the Grand Victoria Casino & Resort complex in Rising Sun, Indiana, which is owned by Grand Victoria Casino and Resort L.P. (GVCR). A subsidiary of HGMI is the general partner and Pritzker family business interests own the majority of the limited partnership interests in the limited partnership that is the general partner and 80% owner of GVCR. In January 1996, Hyatt Corporation entered into a Management Subcontract with HGMI, under which we provided “chain services,” such as food and beverage, personnel and other operational departmental supervision and control services, centralized reservations services and advertising, publicity and public relations services, and certain Hyatt system centrally provided services, such as marketing, employee benefits and computer services, for this property. HGMI was obligated to reimburse us for the hotel’s pro rata share of allocable chain expense and Hyatt systems costs. GVCR made payments of $257,477 and $241,832 in 2008 and 2007, respectively, and HGMI made payments of $321,021 in 2006 to us for services provided under this agreement. This agreement was terminated on December 31, 2008.
Mendoza, Argentina Casino
Nuevo Plaza Hotel Mendoza Limited, S.A., our indirect 50% owned subsidiary, developed and owned a casino located at the Park Hyatt Mendoza Hotel in Mendoza, Argentina. In February 2000, Nuevo Plaza Hotel Mendoza Limited entered into a Casino Management Agreement with Regency Casinos (Mendoza) Limited, which at the time the agreement was entered into, was an indirect subsidiary of HGMI. Under the agreement, Regency Casinos (Mendoza) Limited managed and operated the casino. In exchange for these services, Nuevo Plaza Hotel Mendoza Limited pays Regency Casinos (Mendoza) Limited a fee equal to a percentage of the gross operating profits of the casino. The agreement expires at the earlier of the expiration of the gaming license (following any renewals) or midnight on December 31, 2020. In 2007, HGMI sold Regency Casinos (Mendoza) Limited to a third party. In 2007 and 2006, Nuevo Plaza Hotel Mendoza Limited, S.A made payments of $1,299,099 and $1,171,055, respectively, to Regency Casinos (Mendoza) Limited under this agreement.
Dorado Beach Hotel and Resort and Hyatt Regency Cerromar Hotel Management Agreement and Conversion Costs
In January 1985, our wholly-owned subsidiary, Hyatt Hotels of Puerto Rico, Inc., entered into a management agreement with Dorado Beach Hotel Corporation (Dorado Beach), an entity 100% indirectly owned by Pritzker family business interests, pursuant to which we managed and operated two Dorado Beach hotel properties, the Dorado Beach Hotel and Resort and the Hyatt Regency Cerromar Hotel. In exchange for these services, Dorado Beach paid us a management fee equal to 2% of the annual gross receipts for each fiscal year. In 2006, Dorado Beach made payments to us of $510,634 pursuant to the terms of the management agreement. The Hyatt Regency Cerromar Hotel closed in 2003 and the Dorado Beach Hotel and Resort closed in 2006. From 2003 through 2006, we incurred various costs related to determining the feasibility of converting the Hyatt Regency Cerromar Hotel to be part of our existing Hyatt Vacation Club property located in Puerto Rico. In 2007, Dorado Beach made payments to us of $1,574,562 and Cerromar Beach Resort, LLC made payments to us of $14,077 to reimburse us for these costs. Cerromar Beach Resort, LLC is 100% indirectly owned by Pritzker family business interests. The project was ultimately not pursued and the Hyatt Regency Cerromar Hotel and the Dorado Beach Hotel and Resort were sold to a third party on December  7, 2007.
 
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Agreements Related to August 2007 Financing Transaction, Repurchase of Notes and Early Settlement of Subscription Agreement
Series A Convertible Preferred Stock
In August 2007, we sold an aggregate of 100,000 shares of Series A convertible preferred stock, par value $0.01 per share, to the Goldman Sachs Funds, for $500,000,000. On May 13, 2009, the 100,000 shares of Series A convertible preferred stock were converted into approximately 16,281,342 shares of common stock. Richard A. Friedman, one of our directors, is a partner and managing director of Goldman, Sachs & Co.
5.84% Senior Subordinated Notes due 2013
In August 2007, we sold $500,000,000 aggregate principal amount of 5.84% Senior Subordinated Notes due September 1, 2013 (2013 Notes) to Madrone Capital, LLC (Madrone). Gregory B. Penner, one of our directors, was manager of Madrone and is the brother-in-law of an executive vice president of TPO. In December 2007, the Goldman Sachs Funds acquired $75,000,000 aggregate principal amount of Madrone’s 2013 Notes and an equivalent amount of Madrone’s obligations under the Subscription Agreement described below. In 2007, 2008 and 2009, we made aggregate interest payments to Madrone under the 2013 Notes of $7,543,333, $24,820,000 and $11,169,000, respectively. In 2008 and 2009, we made aggregate interests payments to the Goldman Sachs Funds under the 2013 Notes of $4,380,000 and $1,971,000, respectively.
On May 13, 2009, we repurchased from Madrone $425,000,000 aggregate principal amount of 2013 Notes for an aggregate purchase price of $479,700,199, consisting of a $425,000,000 payment of principal and $54,700,199 in make-whole interest payments and early settlement premiums. We also repurchased from the Goldman Sachs Funds an aggregate of $75,000,000 principal amount of 2013 Notes for an aggregate purchase price of $84,652,976, consisting of a $75,000,000 payment of principal and $9,652,975 in make-whole interest payments and early repurchase settlement premiums.
Subscription Agreement
In August 2007, we entered into a Subscription Agreement with Madrone, under which Madrone agreed to purchase in September 2011, or earlier upon the occurrence of a change of control or an initial public offering, a variable number of shares of our common stock for $500,000,000. In connection with the sale of $75,000,000 aggregate principal amount of 2013 Notes to the Goldman Sachs Funds in December 2007, the Goldman Sachs Funds also assumed $75,000,000 of Madrone’s obligations under the Subscription Agreement. Each of Madrone and the Goldman Sachs Funds pledged 2013 Notes as collateral for its obligations under the Subscription Agreement.
Under the terms of the Subscription Agreement, Madrone and the Goldman Sachs Funds were obligated to make subscription payments to us at a rate of 0.84% per year on the purchase price to be paid on the Subscription Agreement settlement date. In 2008, we received subscription payments of $3,786,712 from Madrone and $463,151 in the aggregate from the Goldman Sachs Funds. In 2009, we received subscription payments of $2,481,068 from Madrone and $437,836 in the aggregate from the Goldman Sachs Funds.
Settlement of Madrone’s and the Goldman Sachs Funds’ obligations under the Subscription Agreement occurred on May 13, 2009, at our request. In the settlement, Madrone purchased 15,375,284 shares of common stock for a purchase price of $425,000,000 and the Goldman Sachs Funds purchased an aggregate of 2,713,285 shares of common stock for an aggregate purchase price of $75,000,000.
 
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Issuance of Common Stock
In May 2009, we issued and sold an aggregate of 58,390,397 shares of our common stock to certain of our existing investors and their affiliates, including to Pritzker family business interests, entities affiliated with Madrone and the Goldman Sachs Funds and certain of our non-employee directors or their permitted assigns, at a price of $13.00 per share. The following table presents the number of shares of common stock purchased by each related party that purchased in excess of $120,000 of stock:

Name of Purchaser:	  	Number of Shares of
Common Stock	  	Purchase Price	
U.S. situs Pritzker family business interests	  	38,466,651	  	$	500,066,463	
IHE, INC. and Subsidiaries	  	7,673,767	  	$	99,758,971	
GS Sunray Holdings Subco I, L.L.C.	  	2,751,540	  	$	35,770,020	
GS Sunray Holdings Subco II, L.L.C.	  	2,751,540	  	$	35,770,020	
GS Sunray Holdings Parallel Subco, L.L.C.	  	810,394	  	$	10,535,122	
Madrone GHC, LLC	  	2,647,000	  	$	34,411,000	
Lake GHC, LLC	  	1,882,500	  	$	24,472,500	
Shimoda GHC, LLC	  	470,500	  	$	6,116,500	
Transition Services Agreements
In connection with the June 2004 Transaction, on June 30, 2004, Hyatt Corporation entered into transition services agreements with each of H Group and Classic Residence pursuant to which Hyatt Corporation agreed to provide certain transition services, including human resources, payroll, employee benefits, accounting, financial, legal, tax, software and technology, call center and reservation, purchasing, travel, insurance, and treasury and banking services, to allow such companies to develop the internal resources and capacities, or to arrange for third-party providers, for such services. Each of H Group and Classic Residence agreed to reimburse Hyatt Corporation for all fees and other out-of-pocket expenses incurred by Hyatt Corporation (or any parent of Hyatt Corporation) in connection with the provision of such services (at cost). In addition, each of H Group and Classic Residence agreed to pay Hyatt Corporation a reimbursement fee equal to the “allocable employee cost” for each hour of time spent by any Hyatt employee in connection with the provision of transition services. In 2008 and 2006 H Group made payments to us of $46,973 and $13,884, respectively, under the transition services agreement. The H Group and Classic Residence transition services agreements terminated on June 30, 2007.
Agreements Relating to Aircraft
Falcon 900EX Aircraft—The Marmon Group, Inc.
In January 2006, we and certain other parties entered into a time sharing agreement with Marmon Group, under which Marmon Group agreed to lease to us and such other parties on a time sharing basis their Falcon 900EX aircraft and flight crew for a flight fee equal to the “Direct Cost Rate” published annually by Conklin & de Decker for operating a Falcon 900EX aircraft for the applicable flight time. In no event did the amount reimbursed for a flight ever exceed the amount authorized by Federal Aviation Regulation Part 91.501(d)(1)-(10). This agreement was amended and as of June 2009 has been terminated with respect to all parties. In 2006 and 2007, we made aggregate payments of $120,851 and $436,294, respectively, to Marmon Group for use of this aircraft under this agreement.
On September 13, 2006, Marmon Group entered into an aircraft exchange agreement with an aircraft broker pursuant to which Marmon Group agreed to exchange their aircraft for another Falcon 900EX aircraft. Contemporaneously on such date Rosemont Project Management, L.L.C., entered into
 
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an aircraft purchase agreement with the aircraft broker to purchase the original Falcon 900EX aircraft exchanged by Marmon Group for an aggregate purchase price of $32,140,000. We loaned the aircraft broker $500,000 to pay the deposit to acquire Marmon Group’s new Falcon 900EX aircraft and also guaranteed the performance of the aircraft broker’s obligations to purchase the aircraft from the seller. On October 2, 2006, we acquired from the aircraft broker Marmon Group’s original Falcon 900EX aircraft for $31,640,000 in cash and cancelled the $500,000 promissory note.
Falcon 900EX Aircraft—Marmon Group
Following the exchange of Marmon Group’s original Falcon 900EX aircraft for the new Falcon 900EX aircraft, the time sharing agreement originally entered into with respect to the original Falcon 900EX aircraft was amended in October 2006 to apply on the same terms to the new Falcon 900EX aircraft. On March 18, 2008, the time sharing agreement was terminated with respect to all parties other than Marmon and us. In 2008 and 2007, we made aggregate payments of $196,381 and $62,311, respectively, to Marmon Group for use of the aircraft under this agreement. In June 2009, the time sharing agreement was terminated for all remaining parties.
Falcon 50 Aircraft—Marmon Group, Inc.
In January 2006, we and certain other parties entered into a time sharing agreement with Marmon Group, under which Marmon Group agreed to lease to us and such other parties on a time sharing basis its Falcon 50 aircraft and flight crew for a flight fee equal to the “Direct Cost Rate” published annually by Conklin & de Decker for operating a Falcon 50 aircraft for the applicable flight time. In no event did the amount reimbursed for a flight ever exceed the amount authorized by Federal Aviation Regulation Part 91.501(d)(1)-(10). In 2008 and 2007, we made aggregate payments of $37,302 and $29,362, respectively, to Marmon Group for use of the aircraft. The time sharing agreement was terminated in March 2007.
Other Agreements, Transactions and Arrangements
On April 1, 2004, H Group loaned Steven R. Goldman, our former Executive Vice President, Development and Acquisitions, $1,000,000 pursuant to the terms of a promissory note to purchase Series D preferred stock in Reliant Pharmaceuticals, Inc. In connection with Mr. Goldman’s separation from us, on March 16, 2007, we agreed to purchase the loan from H Group for an aggregate amount of $1,147,808, which amount represented the outstanding principal and accrued interest under the loan. On such date, Mr. Goldman tendered 50,000 shares of Series D preferred stock of Reliant Pharmaceuticals, Inc. to us in full satisfaction of his obligations under the loan.
In 2007, we paid TPO $530,492 for advisory services provided by Mark S. Hoplamazian while he acted as our interim chief executive officer and expenses related thereto.
In 2006, we paid TPO $572,651 for consulting services and expenses related to corporate structuring activities.
In 2008 and 2007, we reimbursed TPO $13,272 and $285,492, respectively, for strategic services provided by a third-party provider to certain of our executive officers and paid by TPO.
In 2007, we made payments of $163,750 to Pritzker & Pritzker for our portion of occupation and operation costs related to office space used for Mr. Thomas J. Pritzker and Mr. Nicholas J. Pritzker, a former officer and director, and certain other former officers leased in 2005 from Pritzker & Pritzker at our former headquarters. In 2008, Pritzker & Pritzker made payments to us of $1,701 related to refunds on real estate taxes paid by us. Pritzker & Pritzker was owned by Mr. Thomas J. Pritzker and one of his immediate family members, Mr. Nicholas J. Pritzker and Ms. Penny Pritzker, and was dissolved on December 31, 2008.
 
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In 2006, IHE, INC. received $11,655,334 from THD Limited Partnership. The payment represented funds that had been held in escrow from the sale of a hotel business in 2005 to an unrelated third party. Upon receipt of the funds, IHE, INC. immediately transferred the entire amount of the proceeds it received to us in exchange for approximately 466,074 shares of our common stock.
In 2000, our now wholly-owned subsidiaries, Hyatt International Corporation and Hyatt International Technical Services, Inc. entered into a management services agreement and a technical services agreement, respectively, with Panama Investment Company, an entity indirectly owned 50% by Pritzker family business interests and 50% by a third party. In December 2005, Rainforest Funding Corporation, an entity also owned indirectly 50% by Pritzker family business interests and 50% by a third party, assumed the obligations of Panama Investment Company under the management and technical services agreements. In January 2007, Rainforest Funding Corporation terminated these agreements. As part of the terminations, Hyatt International Corporation and Hyatt International Technical Services, Inc. released Rainforest Funding Corporation from paying $279,000 in technical services fees and $29,230 of reimbursable expenses incurred under the management and technical services agreements.
In 2008, we reimbursed H Group $2,027,080 for a fee paid by H Group to one of its employees (who was a former employee of ours) in connection with the sale of property owned by us in Boston, Massachusetts.
Related Party Transaction Policy and Procedures
We have adopted a written policy regarding the review, approval and ratification of related party transactions. For purposes of our policy, a “related party transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we are, or will be, a participant, the amount exceeds $120,000, and in which the related person had, has or will have a direct or indirect interest. A related person is any executive officer, director or a beneficial owner of more than 5% of our common stock, including any of their immediate family members and any entity owned or controlled by such persons. The principal elements of this policy are as follows:
 
 	Ÿ 	 	For each related party transaction (other than pre-approved transactions as discussed below), the audit committee reviews the relevant facts and circumstances, such as the extent and materiality of the related party’s interest in the transaction, takes into account the conflicts of interest and corporate opportunity provisions of our Code of Business Conduct and Ethics and either approves or disapproves the related party transaction.	
 
 	Ÿ 	 	Any related party transaction shall be consummated and shall continue only if the audit committee has approved or ratified such transaction in accordance with the policy.	
 
 	Ÿ 	 	If advance audit committee approval of a related party transaction requiring the audit committee’s approval is not practicable, then the transaction may be preliminarily entered into by management upon prior approval of the transaction by the Chair of the audit committee, or if prior approval of the transaction by the Chair of the audit committee is not practicable, then the transaction may be preliminarily entered into by management, subject in each case to ratification of the transaction by the audit committee at the audit committee’s next regularly scheduled meeting; provided that if ratification shall not be forthcoming, management shall make all reasonable efforts to cancel or annul such transaction.	
 
 	Ÿ 	 	The Chief Financial Officer, or his designee, shall present to the audit committee each proposed related party transaction requiring the audit committee’s approval, including all relevant facts and circumstances relating thereto, shall update the audit committee as to any material changes to any approved or ratified related party transaction and shall provide a status report at least annually at a regularly scheduled meeting of the audit committee of all then active related party transactions.	
 
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 	Ÿ 	 	No director may participate in approval of a related party transaction for which he or she is a related party.	
Certain types of transactions have been designated pre-approved transactions under the policy, and as such are deemed to be approved or ratified, as applicable, by the audit committee. Such pre-approved transactions include: (1) executive and director compensation; (2) certain ordinary course of business transactions; (3) lodging transactions involving less than $250,000 provided the terms of which are no less favorable to us than those of similar transactions with unrelated third parties occurring during the same fiscal quarter and/or where the transaction is a result of an open auction process involving unrelated third-party bidders; (4) ordinary course sales of timeshare, fractional or similar ownership interests at prices that are no lower than those available under our company-wide employee discount programs; (5) charitable contributions in amounts that would not require disclosure in our annual proxy statement or annual report under the NYSE corporate governance listing standards; (6) transactions involving the rendering of legal services to us by the law firm of Latham & Watkins LLP to the extent such firm is associated with one or more related parties; and (7) transactions where the rates or charges involved are determined by competitive bids. All of the transactions described above were entered into prior to the adoption of this policy or were adopted in accordance with this policy.
 
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 STOCKHOLDER AGREEMENTS
Global Hyatt Agreement
Mr. Thomas J. Pritzker, Mr. Marshall E. Eisenberg and Mr. Karl J. Breyer, solely in their capacity as co-trustees of U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, that own, directly or indirectly, shares of our common stock, and the adult beneficiaries of such trusts, including Mr. Thomas J. Pritzker, our executive chairman, and Ms. Penny Pritzker, one of our directors, have entered into the Global Hyatt Agreement pursuant to which they have agreed to, among other things, certain voting agreements and limitations on the sale of shares of our common stock. Pritzker Family U.S. Situs Trusts and Entities own, directly or indirectly, 238,256,469 shares, or 70.9%, of our common stock (and will own                  shares, or         %, of our Class B common stock and will control approximately         % of our total voting power immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares ). Specifically, such parties have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of the voting securities of Hyatt is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of Pritzker family members and spouses), all Pritzkers (and their successors in interest, if applicable), but not the transferees by sale (other than Pritzkers who purchase directly from other Pritzkers), will vote all of their voting securities consistent with the recommendations of our board of directors with respect to all matters (assuming agreement as to any such matter by a majority of a minimum of three independent directors or, in the case of transactions involving us and an affiliate, assuming agreement of all of such minimum of three independent directors).
In addition, such parties have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of the voting securities of Hyatt is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses), all Pritzker family members and spouses (including U.S. and non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses or affiliates of any thereof) in a “beneficiary group” (including trusts only to the extent of the then current benefit of members of such beneficiary group) may sell up to 20% of their aggregate holdings of our common stock in each 12-month period (without carry-overs), other than knowingly to any aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors, such 20% limitation may, on an annual basis, be increased to a higher percentage or waived entirely. All shares of our common stock owned by each beneficiary group (including trusts only to the extent of the then current benefit of members of such beneficiary group) are freely pledgeable to an institutional lender and such institutional lender will not be subject to the sale restrictions described above upon default and foreclosure.
The Global Hyatt Agreement may be amended, modified, supplemented or restated by the written agreement of the co-trustees of the Pritzker Family U.S. Situs Trusts, 75% of the adult beneficiaries named below and a majority of the other adult beneficiaries party to the agreement. Each of Thomas J. Pritzker, Nicholas J. Pritzker, James N. Pritzker, John A. Pritzker, Linda Pritzker, Karen L. Pritzker, Penny Pritzker, Daniel F. Pritzker, Anthony N. Pritzker, Gigi Pritzker Pucker and Jay Robert Pritzker, and their respective lineal descendants and current spouse, if relevant, make up a “beneficiary group.” Disputes that relate to the subject matter of the Global Hyatt Agreement are subject to arbitration.
Foreign Global Hyatt Agreement
The adult beneficiaries of the non-U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, including Mr. Thomas J. Pritzker and Ms. Penny Pritzker, have entered
 
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into the Foreign Global Hyatt Agreement pursuant to which they have agreed to, among other things, certain voting agreements and limitations on the sale of shares of our common stock. The adult beneficiaries have informed CIBC Trust Company (Bahamas) Limited, in its capacity as trustee of such non-U.S. situs trusts, and the directors of IHE, INC. and its subsidiaries, of their agreement and expressed their desire that the trustee and the directors of IHE, INC. and its subsidiaries act in accordance with the provisions of the Foreign Global Hyatt Agreement. IHE, INC. and its Subsidiaries beneficially own 47,530,288 shares, or 14.1%, of our common stock (and will own                  shares, or         %, of our Class B common stock and will control approximately         % of our total voting power immediately following completion of this offering). Specifically, such parties have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of our voting securities is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses), all Pritzkers (and their successors in interest, if applicable), but not the transferees by sale (other than Pritzkers who purchase directly from other Pritzkers), will vote (or cause to be voted) all of the voting securities held directly or indirectly by them consistent with the recommendations of our board of directors with respect to all matters (assuming agreement as to any such matter by a majority of a minimum of three independent directors or, in the case of transactions involving us and an affiliate, assuming agreement of all of such minimum of three independent directors).
In addition, such parties have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of the voting securities of Hyatt is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses), all Pritzker family members and spouses (including U.S. and non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses and/or affiliates of any thereof) in a “beneficiary group” (including trusts only to the extent of the then current benefit of members of such beneficiary group) may sell up to 20% of their aggregate direct or indirect holdings of our common stock in each 12-month period (without carry-overs), other than knowingly to any aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors, such 20% limitation may, on an annual basis, be increased to a higher percentage or waived entirely. All shares of our common stock owned directly or indirectly by each beneficiary group (including trusts only to the extent of the then current benefit of members of such beneficiary group) are freely pledgeable to an institutional lender and such institutional lender will not be subject to the sale restrictions described above upon default and foreclosure.
The Foreign Global Hyatt Agreement may be amended, modified, supplemented or restated by the written agreement of 75% of the adult beneficiaries named below and a majority of the other adult beneficiaries party to the agreement. Each of Thomas J. Pritzker, Nicholas J. Pritzker, James N. Pritzker, John A. Pritzker, Linda Pritzker, Karen L. Pritzker, Penny Pritzker, Daniel F. Pritzker, Anthony N. Pritzker, Gigi Pritzker Pucker and Jay Robert Pritzker, and their respective lineal descendants and current spouse, if relevant, make up a “beneficiary group.” Disputes that relate to the subject matter of the Foreign Global Hyatt Agreement are subject to arbitration.
Amended and Restated Agreement Relating to Stock
In addition to the Global Hyatt Agreement, Mr. Thomas J. Pritzker, Mr. Marshall E. Eisenberg and Mr. Karl J. Breyer, solely in their capacity as co-trustees of U.S. situs trusts for the benefit of Mr. Thomas J. Pritzker, Ms. Penny Pritzker and Ms. Gigi Pritzker Pucker and their lineal descendants, that own, directly or indirectly, shares of our common stock and Mr. Thomas J. Pritzker, Ms. Penny Pritzker and Ms. Gigi Pritzker Pucker and their respective adult lineal descendants have entered into an
 
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Amended and Restated Agreement Relating to Stock whereby they have agreed to further restrict their ability to transfer shares of our common stock. Pritzker family business interests for the benefit of the parties to this agreement own, directly or indirectly,                  shares, or         %, of our common stock (and will own                  shares, or         %, of our Class B common stock immediately following completion of this offering assuming no exercise of the underwriters’ option to purchase additional shares ). Subject to limited permitted transfers described in the agreement, and subject to the terms of the Global Hyatt Agreement and Foreign Global Hyatt Agreement described above, the parties have agreed that each stockholder party to the Amended and Restated Agreement Relating to Stock may transfer up to one-third of its common stock held as of August 28, 2007 (or deemed to be held as of such date) to unaffiliated third parties during each 365-day period beginning on the dates that are three and one-half, four and one-half and five and one-half years following the consummation of this offering; provided that such transfers are accomplished by way of a broad distribution sale. In addition, following the consummation of this offering, each of such stockholders may transfer up to one-third of its common stock held as of August 28, 2007 (or deemed to be held as of such date) to unaffiliated third parties (1) at any time following the end of the first calendar year during which the “existing stockholders” (as described below) owned less than 25% of our common stock at any time during such year or (2) at any time following both (a) August 28, 2007 and (b) the first date on which the applicable market value of our Class A common stock exceeds 165% of the gross price per share at which the Class A common stock was first traded in connection with this offering; provided that such transfers are accomplished by way of an underwritten public offering or in an otherwise broad distribution sale. The term “existing stockholders” is defined in the agreement to mean (i) members of the Pritzker family who are lineal descendants of Nicholas J. Pritzker, deceased, and their spouses, (ii) trusts for the benefit of such persons, or (iii) affiliates of any such persons listed in clauses (i) and (ii). In addition, no stockholder party to the Amended and Restated Agreement Relating to Stock may transfer (1) the legal or beneficial ownership of any common stock held by such stockholder unless such acquiring person’s ownership of common stock is not reasonably likely to jeopardize any licensing from a governmental authority, (2) any common stock to a competitor of ours engaged in one or more of the hospitality, lodging or gaming industries, (3) any common stock to an aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) or (4) any common stock that would cause a stockholder to violate any provision of the Amended and Restated Agreement Relating to Stock. Such restrictions are qualified by the “actual knowledge” of the transferring stockholder in the case of transfers pursuant to an underwritten public offering or a broad distribution sale.
The transfer restrictions set forth in the Amended and Restated Agreement Relating to Stock expire at 11:59 p.m. (Central time) on the earlier of the day after the date that is five and one-half years following the consummation of this offering or the date on which the stockholders party to the 2007 Stockholders’ Agreement are released from the transfer restrictions set forth therein. The Amended and Restated Agreement Relating to Stock may be amended by the holders of a majority of the restricted stock held by the stockholders party to the agreement and each of Thomas J. Pritzker, Penny Pritzker and Gigi Pritzker Pucker, and may be terminated by the written agreement of each of the parties thereto. Disputes that relate to the subject matter of the Agreement Relating to Stock are subject to arbitration.
2007 Stockholders’ Agreement
Holders of approximately 50,224,176 shares, or 14.9%, of our common stock (and              shares, or         %, of our Class B common stock and approximately         % of our total voting power immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares ), have entered into the 2007 Stockholders’ Agreement that provides for certain rights and obligations of these stockholders, including, among other things, a voting agreement, limitations on the sale of shares of our common stock and standstill provisions. See “Certain Relationships and Related Party Transactions—2007 Stockholders’ Agreement.”
 
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 PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth as of September 1, 2009 information regarding the beneficial ownership of shares of our common stock for:
 
 	Ÿ 	 	each person known to us to be the beneficial owner of more than 5% of our outstanding shares of common stock;	
 
 	Ÿ 	 	each of our named executive officers;	
 
 	Ÿ 	 	each of our directors;	
 
 	Ÿ 	 	all of our directors and executive officers as a group; and	
 
 	Ÿ 	 	each selling stockholder.	
The information shown in the table with respect to the percentage of shares of common stock beneficially owned before the offering is based on 336,063,783 shares of common stock outstanding as of September 1, 2009. Upon the filing of our amended and restated certificate of incorporation, which will occur prior to the consummation of this offering, 52,067 outstanding shares of our common stock will be reclassified into 52,067 shares of Class A common stock and 336,011,716 outstanding shares of our common stock will be reclassified into 336,011,716 shares of Class B common stock, of which              shares of Class B common stock will convert into              shares of Class A common stock at the time they are sold by the selling stockholders in this offering. Each share of Class B common stock is convertible at any time into one share of Class A common stock. See “Description of Capital Stock.” The information shown in the table with respect to the percentage of shares of Class A common stock and Class B common stock beneficially owned after the offering and the percentage of total voting power after the offering is based on              shares of common stock outstanding, consisting of              shares of common stock outstanding as of September 1, 2009 and              shares of Class A common stock offered by us. The percentage ownership information assumes no exercise of the underwriters’ option to purchase additional shares.
Information with respect to beneficial ownership has been furnished by each director, executive officer or beneficial owner of more than 5% of our common stock. Beneficial ownership has been determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and investment power with respect to those securities. Unless otherwise indicated by footnote, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
For information with respect to the selling stockholders and their relationships with us, see “Certain Relationships and Related Party Transactions.”
Unless otherwise provided, the address of each individual listed below is c/o Hyatt Hotels Corporation, 71 S. Wacker Drive, 12 th Floor, Chicago, Illinois 60606.
 
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 	 	Shares
Beneficially Owned
Before Offering	 	 	Class A Shares
to be Sold
in the Offering	 	Shares
Beneficially Owned After
Offering	 	 	 	 	%
of Total
Voting Power
After Offering	 	
 	 			 		 	Class A
Common
Stock	 	 	Class B
Common
Stock	 	 			
Name of Beneficial Owner	 	Common
Stock	 	%	 	 		 	Shares	 	%	 	 	Shares	 	%	 	 			
5% or greater stockholders:	 		 			 		 		 			 		 			 			
Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, in their capacity as co-trustees(1)	 	238,256,469	 	70.9	% 	 		 	—  	 	—  	  	 		 	  	% 	 	  	% 	
IHE, INC. and Subsidiaries(2)	 	47,530,288	 	14.1	% 	 	—  	 	—  	 	—  	  	 	47,530,288	 	  	% 	 	  	% 	
Investment funds affiliated with The Goldman Sachs Group, Inc.(3)	 	25,318,428	 	7.5	% 	 	—  	 	10,328	 	  	% 	 	25,308,100	 	  	% 	 	  	% 	
Madrone GHC, LLC and Affiliates(4)	 	20,375,284	 	6.1	% 	 	—  	 	—  	 	—  	  	 	20,375,284	 	  	% 	 	  	% 	
									
Named Executive Officers and Directors:	 		 			 		 		 			 		 			 			
Thomas J. Pritzker(5)	 	238,257,253	 	70.9	% 	 		 	—  	 	—  	  	 		 	  	% 	 	  	% 	
Mark S. Hoplamazian	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Harmit J. Singh	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Rakesh Sarna	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
H. Charles Floyd	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Kirk A. Rose(6)	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Bernard W. Aronson(7)	 	1,570	 	*	  	 	—  	 	1,570	 	*	  	 	—  	 	—  	  	 	*	  	
Richard A. Friedman(8)	 	25,318,428	 	7.5	% 	 	—  	 	10,328	 	  	% 	 	25,308,100	 	  	% 	 	  	% 	
Susan D. Kronick	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Mackey J. McDonald	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
John D. Nichols(9)	 	2,352	 	*	  	 	—  	 	2,352	 	*	  	 	—  	 	—  	  	 	*	  	
Gregory B. Penner(10)	 	20,390,597	 	6.1	% 	 	—  	 	—  	 	—  	  	 	20,390,597	 	  	% 	 	  	% 	
Penny Pritzker(11)	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Michael A. Rocca	 	1,148	 	*	  	 	—  	 	1,148	 	*	  	 	—  	 	—  	  	 	*	  	
Byron D. Trott	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Richard C. Tuttle	 	2,352	 	*	  	 	—  	 	2,352	 	*	  	 	—  	 	—  	  	 	*	  	
All directors and current executive officers as a group (19 persons)	 	283,973,700	 	84.5	% 	 	—  	 	17,750	 	  	% 	 		 	  	% 	 	  	% 	

*	Less than 1%.	
 
(1)	Represents shares of Class B common stock held of record by U.S. situs trusts and various entities owned, directly or indirectly, by U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, including Mr. Thomas J. Pritzker, our executive chairman, and Ms. Penny Pritzker, one of our directors, and their immediate family members. Mr. Thomas J. Pritzker, Mr. Marshall E. Eisenberg and Mr. Karl J. Breyer are co-trustees of all such U.S. situs trusts and have shared voting and investment power over the shares listed in the table. Pursuant to the Global Hyatt Agreement, the co-trustees and the adult beneficiaries of all of these U.S. situs trusts have agreed to certain voting agreements and to certain limitations with respect to the sale of shares of our common stock. See “Stockholder Agreements” and “Shares Eligible For Future Sale—Lock-Up Agreements” for additional information. The address of Messrs. Pritzker, Eisenberg and Breyer, in their capacity as co-trustees, is 71 S. Wacker Drive, 46th Floor, Chicago, IL 60606.	
(2)	Represents (i) 11,764,941 shares of Class B common stock held of record by IHE, INC., (ii) 11,921,782 shares of Class B common stock held of record by WW HOTELS, INC., (iii) 11,921,782 shares of Class B common stock held of record by Luxury Lodging, Inc. and (iv) 11,921,783 shares of Class B common stock held of record by Hospitality Hotels, Inc. Each of WW HOTELS, INC., Luxury Lodging, Inc. and Hospitality	
 
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 	Hotels, Inc. is a wholly-owned subsidiary of IHE, INC. IHE, INC. has voting and investment power with respect to the shares of Class B common stock owned by IHE, INC. and its subsidiaries. Non-U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, including Mr. Thomas J. Pritzker and Ms. Penny Pritzker, and their immediate family members, directly and indirectly own substantially all of the outstanding stock of IHE, INC. CIBC is the sole trustee of such trusts. Pursuant to the Foreign Global Hyatt Agreement, the adult beneficiaries of these non-U.S. situs trusts have agreed to certain voting agreements and limitations with respect to the sale of shares of our common stock. The adult beneficiaries have informed CIBC, in its capacity as trustee of such trusts, and the directors of IHE, INC. and its subsidiaries of their agreement and expressed their desire that CIBC and the directors of IHE, INC. and its subsidiaries act in accordance with this agreement. See “Stockholder Agreements” and “Shares Eligible For Future Sale—Lock-Up Agreements” for additional information. The address of CIBC is Goodman’s Bay Corporate Centre, West Bay Street, P.O. N-3933, Nassau, Bahamas.	
(3)	Represents (i) 3,248,544 shares of Class B common stock owned by GS Sunray Holdings Parallel Subco, L.L.C., (ii) 11,029,778 shares of Class B common stock owned by GS Sunray Holdings Subco I, L.L.C., (iii) 11,029,778 shares of Class B common stock owned by GS Sunray Holdings Subco II, L.L.C. (collectively, the Goldman Sachs Sunray Entities) and (iv) 10,328 shares of Class A common stock held of record by The Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc. and certain affiliates, including Goldman, Sachs & Co., may be deemed to directly or indirectly own the 25,308,100 shares of Class B common stock which are collectively owned by the Goldman Sachs Sunray Entities, which are owned directly or indirectly by investment partnerships, of which affiliates of The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. are the general partner, managing limited partner or the managing partner. Goldman, Sachs & Co. is the investment manager for certain of the investment partnerships which own directly or indirectly the Goldman Sachs Sunray Entities. Goldman, Sachs & Co. is a direct and indirect wholly-owned subsidiary of The Goldman Sachs Group, Inc. The Goldman Sachs Group, Inc., Goldman, Sachs & Co. and the Goldman Sachs Sunray Entities share voting power and investment power with certain of their respective affiliates. Each of The Goldman Sachs Group, Inc., Goldman, Sachs & Co. and the Goldman Sachs Sunray Entities disclaims beneficial ownership of the Class B common shares owned directly or indirectly by the Goldman Sachs Sunray Entities, except to the extent of their pecuniary interest therein, if any. Pursuant to the 2007 Stockholders’ Agreement, until the later of (i) December 31, 2013 and (ii) the date that Mr. Thomas J. Pritzker is no longer the chairman of our board of directors, the Goldman Sachs Sunray Entities have agreed to vote all 25,308,100 shares of their Class B common stock consistent with the recommendations of a majority of the board of directors with respect to all matters. With respect to 18,994,627 shares of Class B common stock, the Goldman Sachs Sunray Entities have also agreed to certain limitations with respect to the sale of such shares of common stock. See “Shares Eligible For Future Sale—Lock-Up Agreements” for additional information. The address of the Goldman Sachs Sunray Entities, The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. 85 Broad Street, 10 th Floor, New York, NY 10004.	
(4)	Represents (i) 10,786,675 shares of Class B common stock held of record by Madrone GHC, LLC (Madrone GHC), (ii) 7,671,295 shares of Class B common stock held of record by Lake GHC, LLC (Lake GHC) and (iii) 1,917,314 shares of Class B common stock held of record by Shimoda GHC, LLC (Shimoda GHC). Mr. Penner is a manager of Madrone GHC, Lake GHC and Shimoda GHC and has shared voting and investment power with respect to the shares of Class B common stock owned by such entities. Mr. Penner disclaims beneficial ownership of the shares held by Madrone GHC, Lake GHC and Shimoda GHC, except to the extent of his proportionate pecuniary interest in such shares. Pursuant to the 2007 Stockholders’ Agreement, until the later of (i) December 31, 2013 and (ii) the date that Mr. Thomas J. Pritzker is no longer the chairman of our board of directors, Madrone GHC, Lake GHC and Shimoda GHC have agreed to vote all of their common stock consistent with the recommendations of a majority of	
 
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 	the board of directors with respect to all matters. With respect to 15,375,284 shares of Class B common stock, Madrone GHC, Lake GHC and Shimoda GHC have also agreed to certain limitations with respect to the sale of such shares of common stock. See “Shares Eligible For Future Sale—Lock-Up Agreements” for additional information. The address of Madrone GHC, Lake GHC and Shimoda GHC is 3000 Sand Hill Road, Building 1, Suite 155, Menlo Park, CA 94027.	
(5)	Represents (i) 238,256,469 shares of Class B common stock beneficially owned by Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, in their capacity as co-trustees as described in footnote (1) and (ii) 784 shares of Class B common stock owned of record by LaSalle Trust No. 35. Mr. Pritzker serves as co-trustee along with Mr. Marshall E. Eisenberg of LaSalle Trust No. 35 and they have shared voting and investment power over such shares. Mr. Pritzker and his immediate family members are beneficiaries of certain of the U.S. situs trusts referenced in footnote (1) and certain of the non-U.S. situs trusts referenced in footnote (2).	
(6)	Mr. Rose resigned as our Senior Vice President—Finance effective May 15, 2008 and is no longer one of our executive officers. See “Compensation Discussion and Analysis—Kirk Rose Separation” for additional information. The address of Mr. Rose is 13 E. First Street, Suite H, Hinsdale, IL 60521.	
(7)	Represents 1,570 shares of Class A common stock held of record by National Financial Services, LLC FBO: Bernard W. Aronson. Mr. Aronson has sole voting and investment power with respect to the shares of common stock held in such individual retirement account.	
(8)	Represents (i) 25,308,100 shares of Class B common stock held of record collectively by the Goldman Sachs Sunray Entities and (ii) 10,328 shares of Class A common stock held of record by The Goldman Sachs Group, Inc. Mr. Friedman is a Partner and a Managing Director of Goldman, Sachs & Co. and the head of Goldman, Sachs & Co’s Merchant Banking Division. Mr. Friedman is also Chairman of the Corporate Investment Committee of the Merchant Banking Division and member of the Management Committee of The Goldman Sachs Group, Inc. Mr. Friedman disclaims beneficial ownership of the shares of common stock held by The Goldman Sachs Group, Inc., Goldman, Sachs & Co., the Goldman Sachs Sunray Entities or their affiliates, except to the extent of his pecuniary interest therein, if any. As compensation for his service as a director of Hyatt, Mr. Friedman is eligible to receive shares of restricted stock or restricted stock units pursuant to the LTIP. Mr. Friedman has an understanding with The Goldman Sachs Group, Inc. pursuant to which any shares of common stock he receives in his capacity as a director of Hyatt will be held for the benefit of The Goldman Sachs Group, Inc. See footnote 3 above for information regarding The Goldman Sachs Group, Inc. and the Goldman Sachs Sunray Entities. The address of Mr. Friedman is 85 Broad Street, New York, NY 10004.	
(9)	Represents 2,352 shares of Class A common stock held of record by the Nichols Family Limited Partnership. John D. Nichols has shared voting and investment power with respect to the shares of common stock held by the Nichols Family Limited Partnership. Mr. Nichols disclaims beneficial ownership of the shares held by the Nichols Family Limited Partnership, except to the extent of his proportionate pecuniary interest in such shares.	
(10)	Represents (i) 13,131 shares of Class A common stock received by Mr. Penner as compensation for his services as a director under the LTIP, (ii) 10,786,675 shares of Class B common stock owned of record by Madrone GHC, (iii) 7,671,295 shares of Class B common stock held of record by Lake GHC, (iv) 1,917,314 shares of Class B common stock held of record by Shimoda GHC and (v) 2,182 shares of Class A common stock held of record by Shimoda Holdings, LLC. Mr. Penner is a manager of Madrone GHC, Lake GHC, Shimoda GHC and Shimoda Holdings, LLC and has voting and investment power with respect to the shares of common stock owned by such entities. Mr. Penner disclaims beneficial ownership of the shares held by Madrone GHC, Lake GHC, Shimoda GHC and Shimoda Holdings, LLC, except to the extent of his proportionate pecuniary interest in such shares.	
 
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(11)	Ms. Penny Pritzker and her immediate family members are beneficiaries of certain of the U.S. situs trusts referenced in footnote (1) and certain of the non-U.S. situs trusts referenced in footnote (2). Neither Ms. Pritzker nor any of her immediate family members has voting or investment power over the shares held by such trusts.	
 
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 DESCRIPTION OF PRINCIPAL INDEBTEDNESS
Revolving Credit Facility
In June 2005, we entered into a five-year $1.0 billion unsecured revolving credit facility with Wachovia Bank, National Association, as administrative agent and a lender, and various other lenders. The revolving credit facility was amended in July 2009. Under the terms of the amended facility, $370 million of credit availability matures on June 29, 2010, with the remaining availability maturing on June 29, 2012. The amendment also increased our borrowing capacity under the revolving credit facility to $1.5 billion for all lenders. The revolving credit facility is intended to provide financing for working capital and general corporate purposes, including commercial paper back-up and permitted investments and acquisitions. The overall availability will decrease by $370 million on June 29, 2010 with the maturity of the non-extending lenders. At that time, we have the option to increase our facility by an aggregate amount not to exceed $370 million, subject to certain conditions, including, without limitation, our ability to secure commitments from one or more new lenders to provide such increase. The revolving credit facility also contains (1) a $50 million sublimit for swingline loans, (2) a $300 million sublimit for letters of credit and (3) a $250 million sublimit for multi-currency loans that allows us to borrow (in addition to U.S. dollars) in Euros, JPY and GBP.
As of June 30, 2009, we had no outstanding borrowings under our revolving credit facility and $88.4 million of outstanding letters of credit which reduce the remaining undrawn portion of the facility that is available for future borrowings.
Interest Rate, Facility Fee and Other Fees
Borrowings under our revolving credit facility that mature on June 29, 2010 bear interest, at our option, at either one-, two-, three- or six-month LIBOR plus a margin ranging from 0.27% to 0.80% per annum or an alternative base rate (defined as the greatest of (a) the federal funds rate plus 0.5%, (b) the prime rate and (c) one-month LIBOR plus 1.0%) plus a margin ranging from 0.00% to 0.25% per annum, in each case depending on our credit rating by Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. (S&P), and Moody’s Investors Service, Inc. (Moody’s). Borrowings under our revolving credit facility that mature on June 29, 2012 bear interest, at our option, at either one-, two-, three- or six-month LIBOR plus a margin ranging from 1.70% to 3.50% per annum or the alternative base rate referenced above plus a margin ranging from 0.70% to 2.50% per annum, in each case depending on our credit rating by S&P and Moody’s. Borrowings under our swingline subfacility will bear interest at a rate equal to the alternative base rate referenced above plus the applicable margin for alternative base rate loans. We are also required to pay letter of credit fees with respect to each letter of credit equal to the applicable margin for LIBOR on the face amount of each letter of credit. In addition, we must pay a fronting fee to the issuer of the letter of credit of 0.10% per annum on the face amount of the letter of credit.
The revolving credit facility also provides for a facility fee ranging from 0.08% to 0.20% of total availability (depending on our credit rating by S&P and Moody’s) for revolving loans maturing on June 29, 2010 and 0.30% to 1.00% of total availability (depending on our credit rating by S&P and Moody’s) for revolving loans maturing on June 29, 2012. The facility fee is charged regardless of the level of borrowings. In addition, if the calculation of LIBOR falls below 1.00% in the case of LIBOR-based borrowings (including alternative base rate borrowings based on the one-month LIBOR), we must pay a utilization fee to lenders whose loans mature on June 29, 2012 on applicable loans at a rate equal to 1.0% minus LIBOR in the case of LIBOR-based borrowings and 1.0% minus one-month LIBOR in the case of alternative base rate borrowings (where the alternative base rate is based on the one-month LIBOR).
 
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In the event we no longer have a credit rating from either S&P or Moody’s or our rating falls below BBB-/Baa3, (i) with respect to borrowings under our revolving credit facility that mature on June 29, 2010, (a) such borrowings will bear interest at either LIBOR plus 0.80% per annum or the alternative base rate referenced above plus 0.25% per annum and (b) the related facility fee will be 0.20% and (ii) with respect to borrowings under our revolving credit facility that mature on June 29, 2012, (a) such borrowings will bear interest at either LIBOR plus 3.50% per annum or the alternative base rate referenced above plus 2.50% per annum and (b) the related facility fee will be 1.00%.
As of June 30, 2009, the applicable rate for a one month LIBOR borrowing would have been one month LIBOR plus 0.50%, or 0.82% inclusive of the facility fee.
Maturity
Certain of the revolving loans will mature on June 29, 2010, with the remaining revolving loans maturing on June 29, 2012. We are permitted to repay the loans or terminate the revolving credit facility at any time without penalty or premium, subject to reimbursement of lenders’ breakage and redeployment costs with respect to repayment of LIBOR loans.
Guarantees
All of our borrowings under our revolving credit facility are guaranteed by substantially all of our material domestic subsidiaries, as defined in the revolving credit facility. All guarantees are guarantees of payment and performance and not of collection.
Covenants
Our revolving credit facility contains a number of affirmative and restrictive covenants including limitations on the ability to place liens on our or our direct or indirect subsidiaries’ assets; to merge, consolidate and dissolve; to sell assets; to engage in transactions with affiliates; to change our or our direct or indirect subsidiaries’ fiscal year or organizational documents; and to make restricted payments.
Our revolving credit facility also requires us to meet the following financial covenants, each measured quarterly:
 
 	Ÿ 	 	a maximum leverage ratio based upon the ratio of (1) Consolidated Adjusted Funded Debt (as defined in the revolving credit facility) to (2) Consolidated EBITDA (as defined in the revolving credit facility) not to exceed 4.5 to 1.0;	
 
 	Ÿ 	 	an interest coverage ratio based upon the ratio of (1) consolidated EBITDA (as defined in the revolving credit facility) to (2) Consolidated Interest Expense (as defined in the revolving credit facility) of at least 3.0 to 1.0; and	
 
 	Ÿ 	 	a secured funded debt ratio based upon the ratio of (1) the aggregate principal amount of any funded debt secured by a lien that is owed by us or our subsidiaries, excluding certain debt assumed in connection with an acquisition (a) not to exceed $250,000,000 and (b) to the extent in excess of $250,000,000, for a period of one year following such acquisition, to (2) the book value of all of our and our subsidiaries’ property and equipment (net of depreciation and amortization) of less than or equal to 0.3 to 1.0.	
Events of Default
Our revolving credit facility contains events of default that are usual and customary in credit facilities of this type, including:
 
 	Ÿ 	 	non-payment of principal, interest, fees or other amounts (with cure periods applicable to non-payment of interest, fees or other amounts);	
 
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 	Ÿ 	 	violation of covenants (with cure periods as applicable);	
 
 	Ÿ 	 	material inaccuracy of representations and warranties;	
 
 	Ÿ 	 	cross default to other indebtedness in an outstanding aggregate principal amount of at least $100.0 million;	
 
 	Ÿ 	 	bankruptcy and other insolvency events;	
 
 	Ÿ 	 	judgments involving an aggregate liability of at least $50.0 million that have not been paid, satisfied, vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof;	
 
 	Ÿ 	 	certain ERISA matters;	
 
 	Ÿ 	 	failure of any loan documentation (including any guarantee) to be in full force and effect; and	
 
 	Ÿ 	 	a change of control.	
Senior Notes
On August 14, 2009, we issued $500 million aggregate principal amount of senior notes. The table below sets forth the principal, maturity and interest rate of the senior notes. Interest on the senior notes is payable semi-annually.

Description	  	Principal
Amount	
5.750% Senior Notes due 2015	  	$	250,000,000	
6.875% Senior Notes due 2019	  	$	250,000,000	
In the indenture that governs the senior notes, we agreed not to:
 
 	Ÿ 	 	create any liens on our principal properties, or on the capital stock or debt of our subsidiaries that own or lease principal properties, to secure debt without also effectively providing that the senior notes are secured equally and ratably with such debt for so long as such debt is so secured; or	
 
 	Ÿ 	 	enter into any sale and leaseback transactions with respect to our principal properties.	
These limitations are subject to significant exceptions.
The indenture also limits our ability to enter into mergers or consolidations or transfer all or substantially all of our assets unless certain conditions are satisfied.
If a change of control triggering event occurs, as defined in the indenture, we will be required to offer to purchase the senior notes at a price equal to 101% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase. We may also redeem some or all of the senior notes at any time prior to their maturity at a redemption price equal to 100% of the principal amount of the senior notes redeemed together with accrued and unpaid interest, plus a make-whole amount, if any.
Other Indebtedness and Future Debt Maturities
We entered into a 30 year capital lease for the Hyatt Regency Grand Cypress in 2007. As part of this lease we are obligated to spend at least $30 million in capital improvements to the hotel within the first five years of the lease. As of June 30, 2009, the full amount had been contracted with work completed and $27 million had actually been paid. The aggregate amount outstanding under this lease
 
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was $201 million as of June 30, 2009. Our lease payments aggregate to $14.2 million annually and we have options to buy out the hotel in 8, 10 or 15 years from the date we entered into the lease for $200 million, $220 million or $255 million, respectively.
After giving effect to our use of a portion of the net proceeds from the August 2009 sale of senior notes to repay certain outstanding secured debt and settle certain related swap agreements, and excluding the $201 million lease obligation described above, all other third-party indebtedness as of June 30, 2009 totaled $160 million, consisting primarily of property-specific secured indebtedness on the following three properties: Hyatt Regency San Antonio ($59 million); Hyatt Regency Princeton ($45 million) and Hyatt Regency Aruba ($35 million) all maturing in 2011. The interest rates for these mortgages are fixed, ranging from 6.00% - 10.07%.
 
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 DESCRIPTION OF CAPITAL STOCK
General
The following is a summary of the material rights of our capital stock and related provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as they will be in effect upon the completion of this offering. The following description of our capital stock does not purport to be complete and is subject to, and qualified in its entirety by, our amended and restated certificate of incorporation, amended and restated bylaws and registration rights agreements, which we have included as exhibits to the registration statement of which this prospectus is a part.
Our amended and restated certificate of incorporation provides that, upon the closing of the offering, we will have two classes of common stock: Class A common stock, which will have one vote per share, and Class B common stock, which will have ten votes per share. Any holder of Class B common stock may convert his or her shares at any time into shares of Class A common stock on a share-for-share basis and, under certain circumstances, the shares of Class B common stock will be automatically converted into shares of Class A common stock on a share-for-share basis. Otherwise the rights of the two classes of our common stock will be identical. The rights of these classes of our common stock are discussed in greater detail below.
After completion of this offering, our authorized capital stock will consist of 1,510,000,000 shares, each with a par value of $0.01 per share, of which:
 
 	Ÿ 	 	1,000,000,000 shares will be designated as Class A common stock;	
 
 	Ÿ 	 	500,000,000 shares will be designated as Class B common stock; and	
 
 	Ÿ 	 	10,000,000 shares will be designated as preferred stock.	
As of June 30, 2009, we had issued and outstanding 336,063,783 shares of common stock held by 205 stockholders of record. There will be              shares of Class A common stock and              shares of Class B common stock outstanding after giving effect to the sale of the              shares of our Class A common stock in this offering. These amounts assume the reclassification of 52,067 shares of our outstanding common stock into 52,067 shares of Class A common stock and the reclassification of 336,011,716 shares of our outstanding common stock into 336,011,716 shares of Class B common stock prior to completion of the offering, of which              shares will convert into shares of Class A common stock at the time that they are sold by the selling stockholders in this offering. This number excludes 18,921,361 shares of common stock reserved for issuance under our LTIP and a restricted stock unit agreement.
Common Stock
Voting Rights
The holders of our Class A common stock are entitled to one vote per share and the holders of our Class B common stock are entitled to ten votes per share on any matter to be voted upon by stockholders. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law.
The holders of common stock are not entitled to cumulative voting rights with respect to the election of directors, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election.
 
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Dividends
The holders of our Class A common stock and Class B common stock are entitled to share equally in any dividends that our board of directors may declare from time to time from legally available funds, subject to limitations under Delaware law and the preferential rights of holders of any outstanding shares of preferred stock. In addition, we must be in compliance with the covenants in our revolving credit facility in order to pay dividends. If a dividend is paid in the form of shares of common stock or rights to acquire shares of common stock, the holders of Class A common stock are entitled to receive Class A common stock, or rights to acquire Class A common stock, as the case may be, and the holders of Class B common stock are entitled to receive Class B common stock, or rights to acquire Class B common stock, as the case may be.
Liquidation
Upon any voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of our corporation, the holders of our Class A common stock and Class B common stock are entitled to share equally, on a per share basis, in all our assets available for distribution, after payment to creditors and subject to any prior distribution rights granted to holders of any outstanding shares of preferred stock.
Conversion
Our Class A common stock is not convertible into any other shares of our capital stock.
Each share of Class B common stock is convertible at any time, at the option of the holder, into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain permitted transfers described in our amended and restated certificate of incorporation, including the following:
 
 	Ÿ 	 	transfers to any “permitted transferee” as defined in our amended and restated certificate of incorporation, which includes, among others, transfers:	
 
 	Ÿ 	 	between Pritzker family business interests or to the Pritzker Foundation and related Pritzker charitable foundations;	
 
 	Ÿ 	 	to lineal descendants of the transferor who are Pritzker family business interests, which we refer to as “related persons;”	
 
 	Ÿ 	 	to trusts for the current benefit of the transferor and related persons;	
 
 	Ÿ 	 	to corporations, partnerships, limited liability companies or other entities that are owned and controlled by the transferor and related persons;	
 
 	Ÿ 	 	to guardians of stockholders who are adjudged to be unable to manage their own affairs, and executors of estates of deceased stockholders;	
 
 	Ÿ 	 	for trusts, corporations, partnerships, limited liability companies or other entities, to their current beneficiaries, shareholders, partners, members or other equity holders who are Pritzker family business interests;	
 
 	Ÿ 	 	transfers to other holders of shares of Class B common stock and their permitted transferees;	
 
 	Ÿ 	 	granting a revocable proxy to any officer or director at the request of our board of directors;	
 
 	Ÿ 	 	pledging shares of Class B common stock pursuant to a bona fide loan or indebtedness transaction as to which the holder of Class B common stock continues to exercise voting	
 
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 	control, provided that the foreclosure on those shares by the lender does not qualify as a permitted transfer and, unless the lender otherwise qualifies as a permitted transferee, will result in the automatic conversion of those shares into shares of Class A common stock;	
 
 	Ÿ 	 	transfers by parties to the 2007 Stockholders’ Agreement to their respective affiliates, subject to, and in accordance with, the 2007 Stockholders’ Agreement; and	
 
 	Ÿ 	 	transfers approved in advance by our board of directors or a majority of the independent directors on our board of directors after making a determination that the transfer is consistent with the purposes of the other types of transfers that are permitted.	
Any transfer by a holder that is a party to, by a holder controlled by a person that is party to, or by a holder controlled by trusts whose beneficiaries are party to the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Amended and Restated Agreement Relating to Stock will not qualify as a “permitted transfer” unless the transferee executes a joinder to those agreements.
Each share of Class B common stock will also convert automatically into one share of Class A common stock if the holder is party to, the holder is controlled by a person party to or the holder is controlled by trusts whose beneficiaries are party to, and the party breaches its obligations under, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Amended and Restated Agreement Relating to Stock or if the successor trustee or trustees for a holder of shares of Class B common stock that is a trust do not execute a joinder to those agreements.
All shares of Class B common stock will convert automatically into shares of Class A common stock if, on any record date for determining the stockholders entitled to vote at an annual or special meeting of stockholders, the aggregate number of shares of our Class A common stock and Class B common stock owned, directly or indirectly, by the holders of our Class B common stock is less than 15% of the aggregate number of shares of our Class A common stock and Class B common stock then outstanding.
Once converted into Class A common stock, the Class B common stock cannot be reissued. No class of common stock may be subdivided or combined unless the other class of common stock concurrently is subdivided or combined in the same proportion and in the same manner.
Other than in connection with dividends and distributions, subdivisions or combinations, or mergers, consolidations, reorganizations or other business combinations involving stock consideration as provided for in our amended and restated certificate of incorporation, we are not authorized to issue additional shares of Class B common stock.
Mergers or Business Combinations
In any merger, consolidation, reorganization or other business combination, our amended and restated certificate of incorporation requires that the consideration to be received per share by the holders of our Class A common stock and the holders of our Class B common stock will be identical. If the consideration paid in the merger, consolidation, reorganization or other business combination is paid in the form of shares or other equity interests of us or another person, then the rights of the shares or other equity interests may differ to the extent that the rights of Class A common stock and the Class B common stock differ. These differences could include, for example, the voting rights and conversion features of the Class A common stock and the Class B common stock.
Preemptive or Similar Rights
Pursuant to the 2007 Stockholders’ Agreement, if we propose to sell any new shares of common stock, or any other equity securities (subject to certain excluded securities issuances described in the agreement, including shares issued pursuant to equity compensation plans adopted by the board of
 
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directors and the issuance of shares of our common stock in a public offering), then each stockholder party to the agreement is entitled to receive notice of the terms of the proposed sale and may elect to purchase up to such stockholder’s pro rata share in the proposed sale on comparable terms. If not all stockholders party to the 2007 Stockholders’ Agreement elect to purchase their full preemptive allocation of new securities, then we will notify the fully-participating stockholders of such and offer them the right to purchase the unsubscribed new securities. Other than as described above, our common stock is not entitled to preemptive rights, conversion or other rights to subscribe for additional securities and there are no redemption or sinking fund provisions applicable to our common stock.
Fully Paid and Non-assessable
All of the outstanding shares of our Class A common stock and Class B common stock are, and the shares of Class A common stock offered by us in this offering will be, fully paid and non-assessable.
Preferred Stock
Following this offering, our board of directors will be authorized, without any further action by our stockholders, but subject to the limitations imposed by Delaware law, to issue up to 10,000,000 shares of preferred stock in one or more series. Our board of directors may fix the designations, powers, preferences and rights of the preferred stock, along with any qualifications, limitations or restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock. The preferred stock could have voting or conversion rights that could adversely affect the voting power or other rights of holders of our common stock. The issuance of preferred stock, or rights to acquire preferred stock, could also have the effect, under certain circumstances, of delaying, deferring or preventing a change of control of our company.
Registration Rights
We have granted the registration rights described below to holders of 50,224,176 shares of our common stock pursuant to the terms of a Registration Rights Agreement, dated as of August 28, 2007, as amended, among us and stockholders party to the 2007 Stockholders’ Agreement (2007 Registration Rights Agreement). The following description of the terms of the registration rights agreement is intended as a summary only and is qualified in its entirety by reference to the 2007 Registration Rights Agreement filed as an exhibit to the registration statement of which this prospectus is a part.
Demand Registration Rights
Following this offering, the holders of approximately 50,224,176 shares of our common stock will be entitled to certain demand registration rights.
At any time at least 180 days following the consummation of this offering, each stockholder party to the 2007 Registration Rights Agreement may, on not more than two occasions, request that we register all or a portion of such stockholder’s shares of common stock under the Securities Act if the anticipated aggregate offering price of such shares of common stock exceeds $750,000,000 and the stockholder making the request is (or will be at the anticipated time of effectiveness of the applicable registration statement) permitted to sell shares of its common stock under the lock-up provisions contained in the 2007 Stockholders’ Agreement. See “Shares Eligible For Future Sale—Lock-Up Agreements—2007 Stockholders’ Agreement—Transfer Restrictions” for additional information with respect to these lock-up provisions.
 
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Form S-3 Registration Rights
Following this offering, the holders of approximately 50,224,176 shares of our common stock will be entitled to certain Form S-3 demand registration rights.
Commencing on the date that we become eligible to register securities issued by us on Form S-3, each stockholder party to the 2007 Registration Rights Agreement may, on not more than two occasions during each calendar year, request registration of their shares of common stock if the anticipated aggregate offering amount of such shares of common stock exceeds $100,000,000 and the stockholder making the request is (or will be at the anticipated time of effectiveness of the applicable registration statement) permitted to sell shares of its common stock under the lock-up provisions contained in the 2007 Stockholders’ Agreement.
Under the 2007 Registration Rights Agreement, we will not be required to effect a demand registration or a Form S-3 demand registration within 180 days after the effective date of a registration statement related to a previous demand or Form S-3 demand registration. In addition, once every twelve months, we may postpone for up to 120 days the filing or the effectiveness of a registration statement for a demand or a Form S-3 demand registration, if our board of directors determines in good faith that such a filing (1) would be materially detrimental to us, (2) would require a disclosure of a material fact that might reasonably be expected to have a material adverse effect on us or any plan or proposal by us to engage in any acquisition or disposition of assets or equity securities or any merger, consolidation, tender offer, material financing or other significant transactions, or (3) is inadvisable because we are planning to prepare and file a registration statement for a primary offering of our securities.
Piggyback Registration Rights
Following this offering, the holders of approximately 50,224,176 shares of our common stock will be entitled to certain “piggyback” registration rights.
At any time at least 180 days following the consummation of this offering, in the event that we propose to register shares of our common stock under the Securities Act, either for our own account or for the account of other security holders, we will notify each stockholder party to the 2007 Registration Rights Agreement that is, or will be at the anticipated time of effectiveness of the applicable registration statement, permitted to sell shares of its common stock under the applicable lock-up provisions contained in the 2007 Stockholders’ Agreement of our intention to effect such a registration and will use our reasonable best efforts to include in such registration all shares requested to be included in the registration by each such stockholder, subject to certain marketing and other limitations.
Expenses of Registration, Restrictions and Indemnification
We will pay all registration expenses, including the legal fees of one counsel for all holders under the 2007 Registration Rights Agreement, other than underwriting discounts, commissions and transfer taxes, in connection with registering any shares of common stock pursuant to any demand, Form S-3 demand or piggyback registration described above. Under the 2007 Registration Rights Agreement, if a request for a demand or Form S-3 demand registration is withdrawn at the request of the majority of the holders of registrable securities requested to be registered, the holders of registrable securities who have withdrawn such request shall forfeit such demand or Form S-3 demand registration unless those holders pay or reimburse us for all of the related registration expenses.
The demand, Form S-3 demand and piggyback registration rights are subject to customary restrictions such as blackout periods and any limitations on the number of shares to be included in the underwritten offering imposed by the managing underwriter. The 2007 Registration Rights Agreement also contains customary indemnification and contribution provisions.
 
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Board Rights
Pursuant to our employment letter with Mr. Thomas J. Pritzker, we have agreed that so long as he is a member of our board of directors, we will use our commercially reasonable efforts to appoint him as our executive chairman as long as he is willing and able to serve in that office. If he is not re-appointed as executive chairman, he will be entitled to terminate his employment with the rights and entitlements available to him under our severance policies as if his employment was terminated by us without cause.
Pursuant to our employment letter with Mr. Mark S. Hoplamazian, we have agreed that so long as he is the president and chief executive officer of Hyatt, we will use our commercially reasonable efforts to nominate him for re-election as a director prior to the end of his term. If he is not re-elected to the board of directors, he will be entitled to terminate his employment with the rights and entitlements available to him under our severance policies as if his employment was terminated by us without cause.
Anti-Takeover Effects of Delaware Law and Provisions of Our Certificate of Incorporation and Bylaws
Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon completion of this offering could have the effect of delaying, deferring or discouraging another party from acquiring control of us. In particular, our dual class common stock structure will concentrate ownership of our voting stock in the hands of the Pritzker family business interests. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and inadequate takeover bids. These provisions are also designed in part to allow management to continue making decisions for the long-term best interest of Hyatt and all of our stockholders and encourage anyone seeking to acquire control of us to first negotiate with our board of directors. We believe that the advantages gained by protecting our ability to negotiate with any unsolicited and potentially unfriendly acquirer outweigh the disadvantages of discouraging such proposals, including those priced above the then-current market value of our common stock, because, among other reasons, the negotiation of such proposals could improve their terms.
Dual Class Structure
As discussed above, our Class B Common Stock is entitled to ten votes per share, while our Class A common stock is entitled to one vote per share. Our Class A common stock is the class of stock we are proposing to sell in our initial public offering and will be the only class of stock which is publicly traded. Following this offering, Pritzker family business interests will beneficially own, in the aggregate, approximately     % of our Class B common stock, representing approximately     % of the outstanding shares of our common stock and approximately     % of the total voting power of our outstanding common stock. As a result, Pritzker family business interests will be able to exert a significant degree of influence or actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets and any other significant transaction. Because of our dual class ownership structure, Pritzker family business interests will continue to exert a significant degree of influence or actual control over matters requiring stockholder approval, even if they own less than 50% of the outstanding shares of our common stock. This concentrated control will limit your ability to influence corporate matters, and the interests of Pritzker family business interests may not always coincide with our interests or your interests. As a result, we may take actions that you do not believe to be in our interests or your interests that could depress our stock price.
 
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Certificate of Incorporation and Bylaws
Our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective upon completion of this offering, include the following provisions, among others:
 
 	Ÿ 	 	our amended and restated certificate of incorporation provides for a dual class ownership structure, in which our Class B common stock is entitled to ten votes per share and our Class A common stock is entitled to one vote per share;	
 
 	Ÿ 	 	our board of directors is divided into three classes, with each class serving for a staggered three-year term;	
 
 	Ÿ 	 	our directors may be removed only for cause;	
 
 	Ÿ 	 	holders of our Class A common stock vote together with the holders of our Class B common stock on all matters, including the election of directors, and our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors;	
 
 	Ÿ 	 	vacancies on our board of directors, and any newly created director positions created by the expansion of the board of directors, may be filled only by a majority of remaining directors then in office;	
 
 	Ÿ 	 	actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent;	
 
 	Ÿ 	 	special meetings of our stockholders can be called only by the chairman of the board or by our corporate secretary at the direction of our board of directors;	
 
 	Ÿ 	 	our bylaws establish an advance notice procedure for stockholders to submit proposed nominations of persons for election to our board of directors and other proposals for business to be brought before an annual meeting of our stockholders;	
 
 	Ÿ 	 	our board of directors may issue up to 10,000,000 shares of preferred stock, with designations, rights and preferences as may be determined from time to time by our board of directors; and	
 
 	Ÿ 	 	an affirmative vote of the holders of at least 80% of the voting power of our outstanding capital stock entitled to vote is required to amend all provisions of our amended and restated certificate of incorporation and bylaws.	
Delaware Anti-Takeover Statute
We have elected not to be governed by Section 203 of the Delaware general corporation law, which otherwise would prohibit a Delaware corporation, subject to certain exceptions, from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder.
Lock-Up Agreements
Holders of              shares, or       % of our Class A common stock and       % of our total voting power immediately following completion of this offering, and              shares or       % of our Class B common stock and       % of our total voting power immediately following completion of this offering (in each case assuming no exercise of the underwriters’ option to purchase additional shares), have agreed to certain lock-up restrictions with respect to all or a portion of their common stock, in addition to the 180-day lock-up period agreed to with the underwriters. Such lock-up provisions may delay, defer or prevent a merger or other takeover or a change of control of our Company. For additional information, see “Shares Eligible For Future Sale—Lock-Up Agreements.”
Certain stockholders and beneficiaries of Pritzker family business interests have entered into additional agreements, including the Global Hyatt Agreement, the Foreign Global Hyatt Agreement, the Amended and Restated Agreement Relating to Stock and the 2007 Stockholders’ Agreement, which
 
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further restrict their ability to transfer such shares of common stock such that they may not transfer any shares of common stock to any known aggregators. For additional information, see “Stockholder Agreements” and “Shares Eligible For Future Sale—Lock-Up Agreements.”
Voting Agreements
Voting agreements entered into with and among our major stockholders, including Pritzker family business interests, Madrone GHC and the Goldman Sachs Funds, will result in a substantial number of our shares being voted consistent with the recommendations of our board of directors, which may limit your ability to influence the election of directors and other matters submitted to stockholders for approval. For additional information, see “Certain Relationships and Related Party Transactions—2007 Stockholders’ Agreement—Voting Agreement,” “Stockholder Agreements” and “Principal and Selling Stockholders.”
Standstill Agreements
Each stockholder party to the 2007 Stockholders’ Agreement has agreed, subject to certain limited exceptions, not to participate in any acquisition of any of our or our subsidiaries’ securities, any tender or exchange offer, merger or other business combination involving us or any of our subsidiaries, any recapitalization, restructuring, liquidation, dissolution or any other extraordinary transaction with respect to us or any of our subsidiaries or affiliates, or any “solicitation” of “proxies.” These standstill provisions may prevent a merger or other takeover or a change of control of us. For additional information, see “Certain Relationships and Related Party Transactions—2007 Stockholders’ Agreement—Standstill.”
Listing
We have applied to have our Class A common stock approved for listing on the New York Stock Exchange under the symbol “H.”
Transfer Agent and Registrar
The transfer agent and registrar for our Class A common stock and Class B common stock is Wells Fargo Shareowner Services. The transfer agent’s address is 161 N. Concord Exchange Street, South St. Paul, MN 55075, and its telephone number is (800) 468-9716.
 
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 SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock. We cannot predict the effect, if any, that market sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the market price of our Class A common stock prevailing from time to time after this offering. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, future sales of our Class A common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market price of our Class A common stock and could impair our ability to raise capital through the sale of our equity or equity-related securities in the future.
Upon the completion of this offering, we will have              shares of Class A common stock outstanding, assuming no exercise of the underwriters’ option to purchase additional shares, and              shares of Class B common stock outstanding.
The number of shares of our Class A common stock and Class B common stock to be outstanding after this offering is based on 336,063,783 shares of common stock outstanding immediately prior to this offering. This number excludes 18,921,361 shares of common stock reserved for issuance under our LTIP and a restricted stock unit agreement.
Of the outstanding shares, all              shares of Class A common stock sold in this offering and any shares sold upon exercise of the underwriters’ option to purchase additional shares will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are held by any of our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The remaining              outstanding shares of Class A common stock and Class B common stock will be deemed “restricted securities,” as that term is defined in Rule 144 under the Securities Act. Substantially all of these restricted securities will be subject to the 180-day lock-up period, which may be extended in specified circumstances. Restricted securities may be sold in the public market only if they are registered under the Securities Act or they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which rules are summarized below.
Substantially all of these restricted securities are subject to further contractual lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock and the 2007 Stockholders’ Agreement in addition to the 180-day lock-up period as described below. These additional restrictions may be amended, waived or terminated by the parties to those lock-up agreements in accordance with the terms of those agreements or, with respect to the Global Hyatt Agreement and the Foreign Global Hyatt Agreement, the 20% limitations on sales of our common stock may, on an annual basis, be increased to a higher percentage or waived entirely by the unanimous affirmative vote of our independent directors, without the consent of the underwriters or us and without notice. As a result, following the expiration of the 180-day lock-up period agreed to with the underwriters, all shares of Class A common stock, including shares of Class A common stock that may be acquired upon conversion of shares of Class B common stock, will be eligible for resale in compliance with Rule 144 or Rule 701 to the extent the lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock or 2007 Stockholders’ Agreement, as applicable, are waived or terminated with respect to such shares. See “Stockholder Agreements.”
Assuming the lock-up restrictions contained in the Global Hyatt Agreement, Foreign Global Hyatt Agreement, Amended and Restated Agreement Relating to Stock and the 2007 Stockholders’ Agreement are not amended, waived or terminated and assuming the parties to these agreements sell
 
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the maximum amount permitted to be sold during the first time period that such shares are eligible to be sold, following the expiration of the 180-day lock-up period, and subject to the provisions of Rules 144 and 701 under the Securities Act described below, these restricted securities will be available for sale in the public market as follows:

Number of Shares	  	Time Period	
		
	  	After 180 days and up to 12 months from the date of this prospectus.	
		
	  	After 12 months and up to 24 months from the date of this prospectus.	
		
	  	After 24 months and up to 36 months from the date of this prospectus.	
		
	  	After 36 months and up to 42 months (3  1 / 2 years) from the date of this prospectus.	
		
	  	After 42 months (3  1 / 2 years) and up to 48 months from the date of this prospectus.	
		
	  	After 48 months and up to 54 months (4  1 / 2 years) from the date of this prospectus.	
		
	  	After 54 months (4  1 / 2 years) and up to 60 months from the date of this prospectus.	
		
	  	After 60 months and up to 66 months (5  1 / 2 years) from the date of this prospectus.	
		
	  	After 66 months (5  1 / 2 years) and up to 72 months from the date of this prospectus.	
		
	  	At various times after 72 months from the date of this prospectus.	
If shares are not sold during the first time period that they become eligible for sale as set forth above, the number of shares eligible for sale during future periods will increase.
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with the manner of sale, volume limitations or notice provisions of Rule 144.
In general, under Rule 144 as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up agreements described below, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:
 
 	Ÿ 	 	1% of the number of shares of Class A common stock then outstanding, which will equal approximately              shares immediately after this offering; and	
 
 	Ÿ 	 	the average weekly trading volume of the Class A common stock on the New York Stock Exchange during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.	
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
 
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Rule 701
In general, under Rule 701 as currently in effect, any of our employees, directors, consultants or advisors who purchase shares from us in connection with a compensatory stock or option plan or other written agreement in a transaction before the effective date of this offering that was completed in reliance on, and complied with the requirements of, Rule 701 will, subject to the lock-up restriction described below, be eligible to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with certain restrictions, including the holding period, contained in Rule 144.
Lock-Up Agreements
Lock-Up Agreement with Underwriters
We and all of our directors, executive officers and holders of substantially all of our common stock outstanding immediately prior to this offering, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co.
The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the date of release of earnings results or the announcement of the material news or material event, as applicable, unless Goldman, Sachs & Co. waives, in writing, such extension.
Pritzker Family Lock-Up Agreements
Global Hyatt Agreement
Under the Global Hyatt Agreement, Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, solely in their capacity as co-trustees of U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, that own, directly or indirectly, 238,256,469 shares, or 70.9%, of our common stock (and will own              shares, or     %, of our Class B common stock immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares), and the adult beneficiaries of such trusts have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of the voting securities of Hyatt is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses), all Pritzker family members and spouses (including U.S. and non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses or affiliates of any thereof) in a “beneficiary group” (including trusts only to the extent of the then current benefit of members of such beneficiary group) may sell up to 20% of their aggregate holdings of our common stock in each 12-month period (without carry-overs), other than knowingly to any aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors, such 20% limitation may, on an annual basis, be increased to a higher percentage or waived entirely. The Global Hyatt Agreement may be amended, modified, supplemented or restated by the written agreement of the co-trustees of the Pritzker Family U.S. Situs Trusts, 75% of
 
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the adult beneficiaries named below and a majority of the other adult beneficiaries party to the agreement. Each of Thomas J. Pritzker, Nicholas J. Pritzker, James N. Pritzker, John A. Pritzker, Linda Pritzker, Karen L. Pritzker, Penny Pritzker, Daniel F. Pritzker, Anthony N. Pritzker, Gigi Pritzker Pucker and Jay Robert Pritzker, and their respective lineal descendants and current spouse, if relevant, make up a “beneficiary group.”
Foreign Global Hyatt Agreement
Under the Foreign Global Hyatt Agreement, each of the adult beneficiaries of the non-U.S. situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, which indirectly own, 44,674,314 shares, or 13.3%, of our common stock (and will own              shares, or     %, of our Class B common stock immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares) have agreed that until the later to occur of (i) January 1, 2015 and (ii) the date upon which more than 75% of the voting power of the voting securities of Hyatt is owned by persons other than Pritzker family members and spouses (including any U.S. or non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses), all Pritzker family members and spouses (including U.S. and non-U.S. situs trusts for the current or future, direct or indirect, vested or contingent, benefit of any Pritzker family members and spouses and/or affiliates of any thereof) in a “beneficiary group” (including trusts only to the extent of the then current benefit of members of such beneficiary group) may sell up to 20% of their aggregate direct or indirect holdings of our common stock in each 12-month period (without carry-overs), other than knowingly to any aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors, such 20% limitation may, on an annual basis, be increased to a higher percentage or waived entirely. The Foreign Global Hyatt Agreement may be amended, modified, supplemented or restated by the written agreement of 75% of the adult beneficiaries named below and a majority of the other adult beneficiaries party to the agreement. Each of Thomas J. Pritzker, Nicholas J. Pritzker, James N. Pritzker, John A. Pritzker, Linda Pritzker, Karen L. Pritzker, Penny Pritzker, Daniel F. Pritzker, Anthony N. Pritzker, Gigi Pritzker Pucker and Jay Robert Pritzker, and their respective lineal descendants and current spouse, if relevant, make up a “beneficiary group.” The adult beneficiaries have informed CIBC, in its capacity as trustee of the non-U.S. situs trusts and the directors of IHE, INC. and its subsidiaries of their agreement and expressed their desire that CIBC and the directors of IHE, INC. and its subsidiaries act in accordance with the foregoing provisions.
Amended and Restated Agreement Relating to Stock
In addition to the lock-up agreements described above, Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, solely in their capacity as co-trustees of U.S. situs trusts for the benefit of Mr. Thomas J. Pritzker, Ms. Penny Pritzker and Ms. Gigi Pritzker Pucker and their lineal descendants, and Thomas J. Pritzker, Penny Pritzker and Gigi Pritzker Pucker and their respective adult lineal descendants have entered into an Amended and Restated Agreement Relating to Stock, whereby the holders of              shares, or     %, of our common stock (who will own              shares, or     %, of our Class B common stock immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares) have agreed to further restrict their ability to transfer such shares of common stock. Subject to limited permitted transfers described in the agreement, and subject to the terms of the Global Hyatt Agreement and Foreign Global Hyatt Agreement described above, each stockholder party to the agreement may transfer up to one-third of its common stock held as of August 28, 2007 (or deemed to be held as of such date) to unaffiliated third parties during each 365-day period beginning on the dates that are three and one-half, four and one-half and five and one-half years following the consummation of this offering; provided that such transfers are accomplished by way of a broad distribution sale. In addition, following the consummation
 
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of this offering, each of such stockholders may transfer up to one-third of its common stock held as of August 28, 2007 (or deemed to be held as of such date) to unaffiliated third parties (1) at any time following the end of the first calendar year during which the “existing stockholders” (as described below) owned less than 25% of our common stock at any time during such year or (2) at any time following both (a) August 28, 2007 and (b) the first date on which the applicable market value of our Class A common stock exceeds 165% of the gross price per share at which the Class A common stock was first traded in connection with this offering; provided that such transfers are accomplished by way of an underwritten public offering or in an otherwise broad distribution sale. The term “existing stockholders” is defined in the agreement to mean (i) members of the Pritzker family who are lineal descendants of Nicholas J. Pritzker, deceased, and their spouses, (ii) trusts for the benefit of such persons, or (iii) affiliates of any such persons listed in clauses (i) and (ii). In addition, no stockholder party to the Amended and Restated Agreement Relating to Stock may transfer (1) the legal or beneficial ownership of any common stock held by such stockholder unless such acquiring person’s ownership of common stock is not reasonably likely to jeopardize any licensing from a governmental authority, (2) any common stock to a competitor of ours engaged in one or more of the hospitality, lodging or gaming industries, (3) any common stock to an aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment) or (4) any common stock that would cause a stockholder to violate any provision of the Amended and Restated Agreement Relating to Stock. Such restrictions are qualified by the “actual knowledge” of the transferring stockholder in the case of transfers pursuant to an underwritten public offering or a broad distribution sale. The transfer restrictions set forth in the Amended and Restated Agreement Relating to Stock expire at 11:59 p.m. (Central time) on the earlier of the day after the date that is five and one-half years following the consummation of this offering or the date on which the stockholders party to the 2007 Stockholders’ Agreement are released from the transfer restrictions set forth therein. The Amended and Restated Agreement Relating to Stock may be amended by the holders of a majority of the restricted stock held by the stockholders party to the agreement and each of Thomas J. Pritzker, Penny Pritzker and Gigi Pritzker Pucker, and may be terminated by the written agreement of each of the parties thereto.
2007 Stockholders’ Agreement—Transfer Restrictions
With respect to an aggregate of 37,987,625 shares, or 11.3%, of our common stock (and 37,987,625 shares, or     % of our Class B common stock immediately following completion of this offering, assuming no exercise of the underwriters’ option to purchase additional shares) of common stock held by stockholders party to the 2007 Stockholders’ Agreement, such stockholders are restricted from transferring these shares of common stock held by them, except to us, their affiliates (with the prior written consent of our board of directors), in limited amounts over specified time periods as described below and as otherwise permitted pursuant to the terms of the agreement. Subject to rights of first refusal and “drag along” rights and provided that such transfers are accomplished by way of a broad distribution sale, following the consummation of this offering, each stockholder party to the 2007 Stockholders’ Agreement may transfer up to one-third of its common stock acquired under the Subscription Agreement or upon conversion of Series A convertible preferred stock to unaffiliated third parties during each 365-day period beginning on the dates that are three and one-half, four and one-half and five and one-half years following the consummation of this offering. In addition, following the consummation of this offering, subject to the rights of first refusal and “drag along” rights, such stockholder may transfer up to one-third of its common stock acquired under the Subscription Agreement or upon conversion of Series A convertible preferred stock to unaffiliated third parties (1) at any time following the end of the first calendar year during which the “existing stockholders” (as described below) owned less than 25% of our common stock at any time during such year or (2) at any time following both (a) the second anniversary of the issuance of common stock to the relevant stockholder under the Subscription Agreement or the issuance of common stock upon conversion of the Series A convertible preferred stock and (b) the first date on which the applicable market value
 
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of our Class A common stock exceeds 165% of the gross price per share at which the Class A common stock was first traded in connection with this offering; provided that such transfers are accomplished by way of an underwritten public offering or in an otherwise broad distribution sale. The term “existing stockholders” is defined in the agreement to mean (i) members of the Pritzker family who are lineal descendants of Nicholas J. Pritzker, deceased, and their spouses, (ii) trusts for the benefit of such persons and/or (iii) affiliates of any such persons listed in clauses (i) and (ii). Subject to the rights of first refusal and “drag along” rights, the transfer restrictions set forth in the 2007 Stockholders’ Agreement expire at 11:59 p.m. (Central time) on the day after the date that is five and one-half years following the consummation of this offering. The transfer restrictions described above other than the right of first refusal and “drag along” rights do not apply with respect to an aggregate of 12,236,551 shares of common stock owned by stockholders party to the 2007 Stockholders’ Agreement.
Notwithstanding the foregoing, and subject to rights of first refusal and “drag along” rights, following the consummation of this offering, in the event that any “initial holder” (as described below) transfers all or any portion of the shares of common stock held by such initial holder as of August 28, 2007 (other than pursuant to certain permitted transfers), each stockholder party to the 2007 Stockholders’ Agreement may transfer up to a pro rata portion of such stockholder’s common stock; provided, however, that in any 365-day period or calendar year in which such stockholder is permitted to transfer shares of common stock pursuant to the terms described in the preceding paragraph, such stockholder’s right to transfer a pro rata portion of its common stock shall apply only to the extent that the aggregate number of shares of common stock held by the initial holders at the commencement of such 365-day period or calendar year by initial holders and transferred by initial holders in such 365-day period or calendar year, as a percentage of the aggregate number of shares of common stock held by the initial holders as of August 28, 2007, at the commencement of such 365-day period or calendar year, exceeds the maximum percentage of such stockholder’s shares of common stock that such stockholder is permitted to sell in such 365-day period or calendar year (as described in the preceding paragraph), with the result that only such excess number of shares of common stock held by the initial holders as of August 28, 2007, and transferred by the initial holders will be taken into account in determining such stockholder’s pro rata portion eligible for transfer. The rights described in this paragraph expire at 11:59 p.m. (Central time) on the day after the date that is five and one-half years following the consummation of this offering. The term “initial holder” is defined in the agreement to mean (i) any of Mr. Thomas J. Pritzker, Ms. Penny Pritzker or Ms. Gigi Pritzker Pucker or (ii) trusts for the benefit of these individuals or for the benefit of their respective spouses or lineal descendants.
In addition, no stockholder party to the 2007 Stockholders’ Agreement may transfer (1) the legal or beneficial ownership of any common stock held by such stockholder unless such acquiring person’s ownership of common stock is not reasonably likely to jeopardize any licensing from a governmental authority, as determined by our board of directors in its reasonable discretion, (2) any common stock to a competitor of ours engaged in one or more the hospitality, lodging and/or gaming industries, (3) any common stock to an aggregator (i.e., a person who is required to file a Schedule 13D (or successor form) under the Exchange Act, disclosing an intent other than for investment), or (4) any common stock that would cause a stockholder to violate any provision of the agreement. Such restrictions are qualified by the “actual knowledge” of the transferring stockholder in the case of transfers pursuant to an underwritten public offering or a broad distribution sale. The 2007 Stockholders’ Agreement may be amended, waived or terminated by written consent of the Company and each of the stockholders party to the Agreement. See also “Certain Relationships and Related Party Transactions—2007 Stockholders’ Agreement.”
Registration Rights
Beginning 180 days following the consummation of this offering, and subject to the lock-up restrictions described above, the holders of 50,224,176 shares of common stock or their transferees will be entitled to various rights with respect to the registration of their shares under the Securities Act.
 
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Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of registration, except for shares purchased by affiliates. See “Description of Capital Stock—Registration Rights.”
Registration Statements
We intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock issued or reserved for issuance under our LTIP. Such registration statement will become effective immediately upon filing, and shares covered by such registration statement will be eligible for sale in the public market immediately after the effective date, upon the expiration or release from the terms of the lock-up agreements, and subject to vesting of such shares and to Rule 144 volume limitations applicable to affiliates.
 
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 MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK
The following discussion describes the material U.S. federal income tax consequences to non-U.S. holders (as defined below) of the acquisition, ownership and disposition of our Class A common stock issued pursuant to this offering. This discussion is not a complete analysis of all the potential U.S. federal income tax consequences relating thereto, nor does it address any tax consequences arising under any state, local or foreign tax laws, the federal estate tax or gift tax rules, or any other U.S. federal tax laws. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the IRS) all as in effect as of the date of this offering. These authorities may change, possibly retroactively, resulting in U.S. federal income tax consequences different from those discussed below. No ruling has been or will be sought from the IRS with respect to the matters discussed below, and there can be no assurance that the IRS will not take a contrary position regarding the tax consequences of the acquisition, ownership or disposition of our Class A common stock, or that any such contrary position would not be sustained by a court.
This discussion is limited to non-U.S. holders who purchase our Class A common stock in this offering and who hold our Class A common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax considerations that may be relevant to a particular holder in light of that holder’s particular circumstances. This discussion also does not consider any specific facts or circumstances that may be relevant to holders subject to special rules under the U.S. federal income tax laws, including, without limitation, U.S. expatriates and former long-term permanent residents of the United States, an integral part or controlled entity of a foreign sovereign, partnerships and other pass-through entities, real estate investment trusts, regulated investment companies, “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid U.S. federal income tax, banks, financial institutions, insurance companies, brokers, dealers or traders in securities, commodities or currencies, tax-exempt organizations, tax-qualified retirement plans, persons subject to the alternative minimum tax, persons holding our Class A common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment, persons who hold or receive our Class A common stock pursuant to the exercise of any employee stock option or otherwise as compensation, or persons deemed to sell the Class A common stock under the constructive sale provisions of the Code.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS, THE FEDERAL ESTATE OR GIFT TAX RULES, AND ANY OTHER U.S. FEDERAL TAX LAWS.
Definition of Non-U.S. Holder
For purposes of this discussion, a non-U.S. holder is any beneficial owner of our Class A common stock that is not a “U.S. person” or a partnership for U.S. federal income tax purposes. A U.S. person is any of the following:
 
 	Ÿ 	 	an individual citizen or resident of the United States;	
 
 	Ÿ 	 	a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;	
 
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 	Ÿ 	 	an estate the income of which is subject to U.S. federal income tax regardless of its source; or	
 
 	Ÿ 	 	a trust (1) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) that has validly elected to be treated as a U.S. person for U.S. federal income tax purposes.	
If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our Class A common stock, the tax treatment of a partner in the partnership generally will depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships that hold our Class A common stock and partners in such partnerships are urged to consult their tax advisors regarding the specific U.S. federal income tax consequences to them of acquiring, owning or disposing of our Class A common stock.
Distributions on our Class A Common Stock
Payments on our Class A common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted tax basis in the Class A common stock, but not below zero. Any remaining excess will be treated as capital gain.
Dividends paid to a non-U.S. holder of our Class A common stock that are not effectively connected with a U.S. trade or business conducted by such holder generally will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends, or such lower rate specified by an applicable tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder must furnish to us or our paying agent a valid IRS Form W-8BEN (or applicable successor form) certifying such holder’s qualification for the reduced rate. This certification must be provided to us or our paying agent prior to the payment of dividends and must be updated periodically. Non-U.S. holders that do not timely provide us or our paying agent with the required certification, but which qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.
If a non-U.S. holder holds our Class A common stock in connection with the conduct of a trade or business in the United States, and dividends paid on the Class A common stock are effectively connected with such holder’s U.S. trade or business, the non-U.S. holder will be exempt from U.S. federal withholding tax. To claim the exemption, the non-U.S. holder must furnish to us or our paying agent a properly executed IRS Form W-8ECI (or applicable successor form) prior to the payment of such dividends.
Any dividends paid on our Class A common stock that are effectively connected with a non-U.S. holder’s U.S. trade or business (or if required by an applicable tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the United States) generally will be subject to U.S. federal income tax on a net income basis in the same manner as if such holder were a resident of the United States, unless an applicable tax treaty provides otherwise and such holder is entitled to treaty benefits. A non-U.S. holder that is a foreign corporation also may be subject to a branch profits tax equal to 30% (or such lower rate specified by an applicable tax treaty) of a portion of its effectively connected earnings and profits for the taxable year. Non-U.S. holders are urged to consult any applicable tax treaties that may provide for different rules.
 
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Gain on Disposition of our Class A Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our Class A common stock unless:
 
 	Ÿ 	 	the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, or if required by an applicable tax treaty, attributable to a permanent establishment maintained by the non-U.S. holder in the United States;	
 
 	Ÿ 	 	the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or	
 
 	Ÿ 	 	our Class A common stock constitutes a U.S. real property interest by reason of our status as a USRPHC during the relevant statutory period.	
Unless an applicable tax treaty provides otherwise, gain described in the first bullet point above will be subject to U.S. federal income tax on a net income basis in the same manner as if such holder were a resident of the United States. Non-U.S. holders that are foreign corporations also may be subject to a branch profits tax equal to 30% (or such lower rate specified by an applicable tax treaty) of a portion of its effectively connected earnings and profits for the taxable year. Non-U.S. holders are urged to consult any applicable tax treaties that may provide for different rules.
Gain described in the second bullet point above will be subject to U.S. federal income tax at a flat 30% rate (or such a lower rate specified by an applicable income tax treaty), but may be offset by U.S. source capital losses (even though the individual is not considered a resident of the United States) provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
With respect to the third bullet point above, if we are or become a USRPHC, so long as our Class A common stock is regularly traded on an established securities market (within the meaning of applicable Treasury Regulations), shares of our Class A common stock will be treated as U.S. real property interests only with respect to a non-U.S. holder that owned (actually or constructively) more than 5% of our Class A common stock at any time during the shorter of the five-year period ending on the date of disposition of such stock or the non-U.S. holder’s holding period in such stock. In general, a corporation is a USRPHC if the fair market value of its “United States real property interests” (as defined in the Code and applicable Treasury Regulations) equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. Because we have significant U.S. real estate holdings, we may be a USRPHC, but we have made no determination to that effect. As a result, there can be no assurance that we do not currently constitute or will not become a USRPHC. Non-U.S. holders owning (actually or constructively) more than 5% of our Class A common stock should consult their own tax advisors regarding the U.S. federal income tax consequences of the sale or disposition of our Class A common stock.
Information Reporting and Backup Withholding
We must report annually to the IRS and to each non-U.S. holder the amount of dividends on our Class A common stock paid to such holder and the amount of any tax withheld with respect to those dividends. These information reporting requirements apply even if no withholding was required because the dividends were effectively connected with the holder’s conduct of a U.S. trade or business, or withholding was reduced or eliminated by an applicable tax treaty. This information also may be made available under a specific treaty or agreement with the tax authorities in the country in which the non-U.S. holder resides or is established.
 
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This information reporting regime is reinforced by “backup withholding” rules, which generally require payors to withhold tax from payments subject to information reporting if the recipient fails to provide its correct taxpayer identification number or repeatedly fails to report interest or dividends on its returns.
Backup withholding, currently at a rate of 28%, however, generally will not apply to payments of dividends to a non-U.S. holder of our Class A common stock provided the non-U.S. holder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN or W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge or reason to know that the holder is a U.S. person that is not an exempt recipient.
Payments of the proceeds from a disposition by a non-U.S. holder of our Class A common stock made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) will apply to those payments if the broker does not have documentary evidence that the beneficial owner is a non-U.S. holder, an exemption is not otherwise established, and the broker is:
 
 	Ÿ 	 	a U.S. person or a foreign branch or office of a U.S. person;	
 
 	Ÿ 	 	a controlled foreign corporation for U.S. federal income tax purposes;	
 
 	Ÿ 	 	a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period; or	
 
 	Ÿ 	 	a foreign partnership if at any time during its tax year (1) one or more of its partners are U.S. persons who hold in the aggregate more than 50% of the income or capital interest in such partnership or (2) it is engaged in the conduct of a U.S. trade or business.	
Payment of the proceeds from a non-U.S. holder’s disposition of our Class A common stock made by or through the U.S. office of a broker generally will be subject to information reporting and backup withholding unless the non-U.S. holder certifies as to its non-U.S. holder status under penalties of perjury, such as by providing a valid IRS Form W-8BEN or W-8ECI, or otherwise establishes an exemption from information reporting and backup withholding, provided the broker does not have actual knowledge or reason to know that the holder is a U.S. person that is not an exempt recipient.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF ACQUIRING, OWNING AND DISPOSING OF OUR CLASS A COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN TAX LAWS, THE FEDERAL ESTATE OR GIFT TAX RULES, AND ANY OTHER U.S. FEDERAL TAX LAWS.
 
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 UNDERWRITING
We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the representatives of the underwriters.

Underwriters	  	Number of Shares	
Goldman, Sachs & Co.	  		
Deutsche Bank Securities Inc.	  		
J.P. Morgan Securities Inc.	  		
	  	 	
Total	  		
	  	 	
The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.
If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional              shares from certain of our existing stockholders. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase              additional shares.
Paid by the Company

 	  	No Exercise	  	Full Exercise	
Per Share	  	$	            	  	$	            	
Total	  	$	 	  	$	 	
Paid by the Selling Stockholders

 	  	No Exercise	  	Full Exercise	
Per Share	  	$	            	  	$	            	
Total	  	$	 	  	$	 	
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $             per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
We and our directors, executive officers and holders of substantially all of our common stock, including the selling stockholders, have agreed with the underwriters, subject to certain exceptions, not to dispose of or hedge any of our or their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the
 
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date that is 180 days after the date of this prospectus, except with the prior written consent of Goldman, Sachs & Co. See “Shares Eligible for Future Sale” for a discussion of certain other transfer restrictions.
The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.
In addition to being subject to the restrictions described above, pursuant to Rule 5110(g) of the Financial Industry Regulatory Authority, all 25,318,428 shares of our common stock held by the Goldman Sachs Sunray Entities and The Goldman Sachs Group, Inc. may not be sold during this offering or, subject to certain exceptions, disposed of or hedged for a period of 180 days immediately following the date of this prospectus. 18,944,627 shares of the 25,318,428 shares are subject to additional sale restrictions under the 2007 Stockholders’ Agreement. See “Certain Relationships and Related Party Transactions – 2007 Stockholders’ Agreement.”
Prior to this offering, there has been no public market for the shares. The initial public offering price will be negotiated among us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.
An application has been made to list the common stock on the New York Stock Exchange under the symbol “H.” In order to meet one of the requirements for listing the common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 400 beneficial holders at a minimum price of at least $4.00 at the time of listing and thereby establish at least 1,100,000 shares in the public float having a minimum aggregate market value of $40 million.
In connection with this offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from us in this offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
 
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Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than € 43,000,000 and (3) an annual net turnover of more than € 50,000,000, as shown in its last annual or consolidated accounts;
(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the representatives for any such offer; or
(d) in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Each underwriter has represented and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other
 
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circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
We and the selling stockholders estimate that our share of the total expenses of this offering in aggregate, excluding the underwriting discount, will be approximately $            .
We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In particular, the affiliates of each of Goldman, Sachs & Co., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are lenders under our revolving credit facility and have received and will receive fees from us.
 
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 LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us by Latham & Watkins LLP, Chicago, Illinois. The underwriters have been  represented by Cravath, Swaine & Moore LLP, New York, New York.
 EXPERTS
The financial statements of Hyatt Hotels Corporation as of December 31, 2008 and 2007 and for each of the three years in the period ended December 31, 2008 and the related financial statement schedule included in this prospectus, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein, which report expresses an unqualified opinion on the financial statements and financial statement schedule and includes an explanatory paragraph relating to the adoption of new accounting standards. Such financial statements and financial statement schedule have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
 WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC under the Securities Act a registration statement on Form S-1 relating to the shares of Class A common stock we and the selling stockholders are offering by this prospectus. This prospectus, which constitutes part of the registration statement filed with the SEC, does not contain all the information included in the registration statement and the exhibits and schedules thereto. For further information with respect to us and our common stock, you should refer to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract, agreement or other document are not necessarily complete, and, where the contract, agreement or other document is an exhibit to the registration statement, any statement with respect to such contract, agreement or document is qualified by the provisions of such exhibit. You may examine and copy the registration statement, including the exhibits, at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can obtain a copy of all or a portion of the registration statement by mail from the Public Reference Section of the SEC at the same address, upon payment of prescribed fees. You may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains periodic reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is http:/ /www.sec.gov .
As a result of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC.
 
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Table of Contents
 H  YATT HOTELS CORPORATION*
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:	  		
Report of Independent Registered Public Accounting Firm	  	F-2	
Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006	  	F-3	
Consolidated Balance Sheets as of December 31, 2008 and 2007	  	F-4	
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	  	F-5	
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2008, 2007 and 2006	  	F-7	
Notes to Consolidated Financial Statements	  	F-8	
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS	  	F-50	
		
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS:	  		
Consolidated Statements of Income for the Six Months ended June 30, 2009 and 2008 (Unaudited)	  	F-51	
Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008 (Unaudited)	  	F-52	
Consolidated Statements of Cash Flows for the Six Months ended June 30, 2009 and 2008 (Unaudited)	  	F-53	
Consolidated Statements of Changes in Stockholders’ Equity for the Six Months ended June 30, 2009 and 2008 (Unaudited)	  	F-55	
Notes to Unaudited Consolidated Interim Financial Statements	  	F-56	

*	Formerly known as Global Hyatt Corporation.	
 
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Table of Contents
 Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Hyatt Hotels Corporation:
We have audited the accompanying consolidated balance sheets of Hyatt Hotels Corporation and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index at page F-1. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, on January 1, 2009, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 . Additionally, as discussed in Notes 2, 11 and 12 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 , on January 1, 2007, changed its method of accounting for real estate time-sharing transactions in connection with the adoption of Statement of Position 04-2, Accounting for Real Estate Time-Sharing Transactions , on January 1, 2006, and changed its method of accounting for defined benefit pension and other postretirement plans in connection with the adoption of FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R) , on December 31, 2006.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 27, 2009
(August 5, 2009 as to the effects of the retrospective adoption of SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 , as disclosed in Note 2, for the inclusion of Earnings Per Share information on the consolidated statements of income and Note 22, and for the inclusion of the financial statement schedule listed in the Index at page F-1.)
 
F-2

Table of Contents
 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2008, 2007, and 2006
(In millions of dollars)

   	  	2008	 	 	2007	 	 	2006	 	
REVENUES:	  				 				 				
Owned and leased hotels	  	$	2,139	  	 	$	2,039	  	 	$	1,860	  	
Management and franchise fees	  	 	290	  	 	 	315	  	 	 	294	  	
Other revenues	  	 	83	  	 	 	103	  	 	 	110	  	
Other revenues from managed properties	  	 	1,325	  	 	 	1,281	  	 	 	1,207	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total revenues	  	 	3,837	  	 	 	3,738	  	 	 	3,471	  	
				
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:	  				 				 				
Owned and leased hotels	  	 	1,583	  	 	 	1,524	  	 	 	1,424	  	
Depreciation and amortization	  	 	249	  	 	 	214	  	 	 	195	  	
Other direct costs	  	 	26	  	 	 	42	  	 	 	46	  	
Selling, general, and administrative	  	 	290	  	 	 	292	  	 	 	247	  	
Other costs from managed properties	  	 	1,325	  	 	 	1,281	  	 	 	1,207	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Direct and selling, general, and administrative expenses	  	 	3,473	  	 	 	3,353	  	 	 	3,119	  	
Net (losses) gains and interest income from marketable securities held to fund operating programs	  	 	(36	) 	 	 	15	  	 	 	12	  	
Equity earnings from unconsolidated hospitality ventures	  	 	14	  	 	 	11	  	 	 	13	  	
Interest expense	  	 	(75	) 	 	 	(43	) 	 	 	(36	) 	
Gains on sales of real estate	  	 	—  	  	 	 	22	  	 	 	57	  	
Asset impairments	  	 	(86	) 	 	 	(61	) 	 	 	—  	  	
Other income, net	  	 	23	  	 	 	145	  	 	 	126	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
INCOME BEFORE INCOME TAXES	  	 	204	  	 	 	474	  	 	 	524	  	
PROVISION FOR INCOME TAXES	  	 	(90	) 	 	 	(208	) 	 	 	(193	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
INCOME FROM CONTINUING OPERATIONS	  	 	114	  	 	 	266	  	 	 	331	  	
DISCONTINUED OPERATIONS:	  				 				 				
Income from discontinued operations, net of income tax expense (benefit) of $0, $2, and $(7) in 2008, 2007, and 2006, respectively	  	 	1	  	 	 	3	  	 	 	4	  	
Gain (loss) on sale of discontinued operations, net of income tax expense (benefit) of $28, $1, and $(1) in 2008, 2007, and 2006, respectively	  	 	55	  	 	 	2	  	 	 	(2	) 	
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE	  	 	—  	  	 	 	—  	  	 	 	(4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
NET INCOME	  	 	170	  	 	 	271	  	 	 	329	  	
NET (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	  	 	(2	) 	 	 	(1	) 	 	 	(14	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION	  	$	168	  	 	$	270	  	 	$	315	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
EARNINGS PER SHARE – Basic	  				 				 				
Income from continuing operations	  	$	0.45	  	 	$	0.98	  	 	$	1.20	  	
Net income attributable to Hyatt Hotels Corporation	  	$	0.66	  	 	$	1.00	  	 	$	1.15	  	
EARNINGS PER SHARE – Diluted	  				 				 				
Income from continuing operations	  	$	0.45	  	 	$	0.98	  	 	$	1.20	  	
Net income attributable to Hyatt Hotels Corporation	  	$	0.66	  	 	$	1.00	  	 	$	1.15	  	
See accompanying notes to consolidated financial statements.
 
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Table of Contents
 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2008 and 2007
(In millions, except share and per share amounts)

   	  	2008	 	 	2007	 	
ASSETS	  				 				
CURRENT ASSETS:	  				 				
Cash and cash equivalents	  	$	428	  	 	$	409	  	
Restricted cash	  	 	37	  	 	 	20	  	
Receivables, net of allowances of $24 and $21 at December 31, 2008 and 2007, respectively	  	 	281	  	 	 	318	  	
Inventories	  	 	170	  	 	 	150	  	
Prepaids and other assets	  	 	72	  	 	 	73	  	
Prepaid income taxes	  	 	18	  	 	 	3	  	
Deferred tax assets	  	 	51	  	 	 	25	  	
Assets of discontinued operations	  	 	—  	  	 	 	67	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,057	  	 	 	1,065	  	
Investments	  	 	204	  	 	 	324	  	
Property and equipment, net	  	 	3,495	  	 	 	3,518	  	
Notes receivable, net of allowances	  	 	410	  	 	 	160	  	
Goodwill	  	 	120	  	 	 	203	  	
Intangibles, net	  	 	256	  	 	 	359	  	
Deferred tax assets	  	 	126	  	 	 	151	  	
Other assets	  	 	451	  	 	 	468	  	
	  	 	 	 	 	 	 	 	
TOTAL ASSETS	  	$	6,119	  	 	$	6,248	  	

LIABILITIES AND STOCKHOLDERS’ EQUITY	  				 				
CURRENT LIABILITIES:	  				 				
Current maturities of long-term debt	  	$	38	  	 	$	26	  	
Accounts payable	  	 	318	  	 	 	303	  	
Accrued expenses	  	 	177	  	 	 	174	  	
Accrued income taxes	  	 	23	  	 	 	54	  	
Accrued compensation and benefits	  	 	97	  	 	 	132	  	
Liabilities of discontinued operations	  	 	—  	  	 	 	8	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	653	  	 	 	697	  	
Long-term debt	  	 	1,209	  	 	 	1,288	  	
Other long-term liabilities	  	 	665	  	 	 	794	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,527	  	 	 	2,779	  	
Commitments and contingencies (see Note 14)	  				 				
			
STOCKHOLDERS’ EQUITY:	  				 				
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, 100,000 issued and outstanding as of December 31, 2008 and 2007, respectively	  	 	—  	  	 	 	—  	  	
Common stock, $0.01 par value per share, 400,000,000 shares authorized, 239,660,762 issued and outstanding at December 31, 2008, and 275,466,074 issued and 239,647,122 outstanding at December 31, 2007	  	 	2	  	 	 	3	  	
Additional paid-in capital	  	 	2,241	  	 	 	3,323	  	
Retained earnings	  	 	1,381	  	 	 	1,213	  	
Treasury stock (35,818,952 shares at December 31, 2007), at cost	  	 	—  	  	 	 	(1,101	) 	
Accumulated other comprehensive loss	  	 	(60	) 	 	 	(4	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	3,564	  	 	 	3,434	  	
	  	 	 	 	 	 	 	 	
Noncontrolling interests in consolidated subsidiaries	  	 	28	  	 	 	35	  	
	  	 	 	 	 	 	 	 	
Total equity	  	 	3,592	  	 	 	3,469	  	
	  	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	  	$	6,119	  	 	$	6,248	  	
	  	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
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Table of Contents
 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007, and 2006
(In millions of dollars)

 	  	2008	 	 	2007	 	 	2006	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	  				 				 			
Net income	  	$	170	  	 	$	271	  	 	329	  	
(Gain) loss on sale of discontinued operations	  	 	(55	) 	 	 	(2	) 	 	2	  	
Income from discontinued operations	  	 	(1	) 	 	 	(3	) 	 	(4	) 	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	4	  	
	  	 	 	 	 	 	 	 	 	 	 	
Income from continuing operations	  	 	114	  	 	 	266	  	 	331	  	
	  	 	 	 	 	 	 	 	 	 	 	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				 			
Depreciation and amortization	  	 	249	  	 	 	214	  	 	195	  	
Deferred income taxes	  	 	5	  	 	 	(100	) 	 	(18	) 	
Asset impairments	  	 	86	  	 	 	61	  	 	—  	  	
Equity earnings from unconsolidated hospitality ventures, less dividends received	  	 	(5	) 	 	 	1	  	 	17	  	
Gain on sales of real estate	  	 	—  	  	 	 	(22	) 	 	(57	) 	
Foreign currency exchange losses (gains)	  	 	24	  	 	 	(17	) 	 	(11	) 	
Net realized losses from marketable securities	  	 	14	  	 	 	—  	  	 	—  	  	
Net unrealized losses (gains) from marketable securities	  	 	23	  	 	 	(12	) 	 	(10	) 	
Other	  	 	(44	) 	 	 	(76	) 	 	(63	) 	
Increase (decrease) in cash attributable to changes in assets and liabilities:	  				 				 			
Receivables, net	  	 	4	  	 	 	(19	) 	 	(45	) 	
Inventories	  	 	(21	) 	 	 	14	  	 	9	  	
Accounts payable	  	 	(10	) 	 	 	(19	) 	 	43	  	
Accrued compensation and benefits	  	 	(31	) 	 	 	5	  	 	25	  	
Accrued expenses and other current liabilities	  	 	(95	) 	 	 	89	  	 	(19	) 	
Other, net	  	 	(26	) 	 	 	(23	) 	 	(28	) 	
	  	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities of continuing operations	  	 	287	  	 	 	362	  	 	369	  	
	  	 	 	 	 	 	 	 	 	 	 	
(Continued)
 
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Table of Contents
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2008, 2007, and 2006
(In millions of dollars)

   	  	2008	 	 	2007	 	 	2006	 	
CASH FLOWS FROM INVESTING ACTIVITIES:	  				 				 				
Contributions to investments and purchases of marketable securities	  	 	(87	) 	 	 	(32	) 	 	 	(64	) 	
Distributions from investments	  	 	209	  	 	 	116	  	 	 	109	  	
Proceeds from sale of investments and marketable securities	  	 	8	  	 	 	—  	  	 	 	50	  	
Proceeds from notes receivable	  	 	19	  	 	 	19	  	 	 	22	  	
Issuance of notes receivable	  	 	(281	) 	 	 	(23	) 	 	 	(38	) 	
Acquisitions, net of cash acquired	  	 	(28	) 	 	 	(240	) 	 	 	(308	) 	
Purchase of property and equipment	  	 	(258	) 	 	 	(377	) 	 	 	(326	) 	
Contract acquisition costs	  	 	(8	) 	 	 	(5	) 	 	 	(14	) 	
Proceeds from sales of real estate	  	 	—  	  	 	 	98	  	 	 	93	  	
Decrease (increase) in restricted cash - investing	  	 	3	  	 	 	48	  	 	 	(18	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used in investing activities of continuing operations	  	 	(423	) 	 	 	(396	) 	 	 	(494	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	  				 				 				
Proceeds from issuance of debt	  	 	175	  	 	 	1,386	  	 	 	1	  	
Payments on debt	  	 	(169	) 	 	 	(1,135	) 	 	 	(86	) 	
Increase in restricted cash - financing	  	 	(17	) 	 	 	—  	  	 	 	—  	  	
Distributions to noncontrolling interests	  	 	(2	) 	 	 	(1	) 	 	 	(16	) 	
Purchase of noncontrolling interests	  	 	(7	) 	 	 	—  	  	 	 	(3	) 	
Costs related to issuance of debt and stock	  	 	—  	  	 	 	(23	) 	 	 	—  	  	
Issuance of convertible preferred stock	  	 	—  	  	 	 	500	  	 	 	—  	  	
Capital contribution	  	 	—  	  	 	 	—  	  	 	 	12	  	
Purchase of treasury stock	  	 	—  	  	 	 	(1,101	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities of continuing operations	  	 	(20	) 	 	 	(374	) 	 	 	(92	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS:	  				 				 				
Net cash provided by (used in) operating activities of discontinued operations	  	 	4	  	 	 	24	  	 	 	(11	) 	
Net cash provided by investing activities of discontinued operations	  	 	139	  	 	 	7	  	 	 	41	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by discontinued operations	  	 	143	  	 	 	31	  	 	 	30	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH	  	 	25	  	 	 	(14	) 	 	 	(4	) 	
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	  	 	12	  	 	 	(391	) 	 	 	(191	) 	
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	  	 	416	  	 	 	807	  	 	 	998	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS - END OF PERIOD	  	$	428	  	 	$	416	  	 	$	807	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
LESS CASH AND CASH EQUIVALENTS DISCONTINUED OPERATIONS	  	 	—  	  	 	 	7	  	 	 	6	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS CONTINUING OPERATIONS - END OF PERIOD	  	$	428	  	 	$	409	  	 	$	801	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	  				 				 				
Cash paid during the year for interest	  	$	62	  	 	$	48	  	 	$	38	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash paid during the year for income taxes	  	$	198	  	 	$	224	  	 	$	232	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Non-cash investing and financing activities are as follows:	  				 				 				
Capital lease	  	$	1	  	 	$	248	  	 	$	—  	  	
Stock subscription receivable	  	$	—  	  	 	$	18	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
(Concluded)
See accompanying notes to consolidated financial statements.
 
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Table of Contents
 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006
(In millions of dollars, except share amounts)

   	 	Total	 	 	Common
Stock
Amount	 	 	Additional
Paid-in
Capital	 	 	Retained
Earnings	 	 	Treasury
Stock
Amount	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Noncontrolling
Interests in
Consolidated
Subsidiaries	 	
BALANCE—JANUARY 1, 2006	 	$	3,463	  	 	$	3	  	 	$	2,786	  	 	$	647	  	 	$	—  	  	 	$	(6	) 	 	$	33	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	329	  	 	 	—  	  	 	 	—  	  	 	 	315	  	 	 	—  	  	 	 	—  	  	 	 	14	  	
Foreign currency translation adjustments, net of income tax of $7	 	 	2	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2	  	 	 	—  	  	
Minimum pension liability adjustment, net of income tax of $8	 	 	(14	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(14	) 	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive Income	 	 	317	  	 	 	—  	  	 	 	—  	  	 	 	315	  	 	 	—  	  	 	 	(12	) 	 	 	14	  	
Capital contribution (see Note 18)	 	 	12	  	 	 	—  	  	 	 	12	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Distribution (see Note 12)	 	 	(10	) 	 	 	—  	  	 	 	—  	  	 	 	(10	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Distributions to noncontrolling interests	 	 	(16	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(16	) 	
Purchase of subsidiary shares from non-controlling interest	 	 	(3	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(3	) 	
Attribution of share based payments	 	 	1	  	 	 	—  	  	 	 	1	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Adjustment to initially apply FAS 158, net of income tax of $2	 	 	(4	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(4	) 	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—DECEMBER 31, 2006	 	 	3,760	  	 	 	3	  	 	 	2,799	  	 	 	952	  	 	 	—  	  	 	 	(22	) 	 	 	28	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	271	  	 	 	—  	  	 	 	—  	  	 	 	270	  	 	 	—  	  	 	 	—  	  	 	 	1	  	
Foreign currency translation adjustments, net of income tax of $(0)	 	 	16	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	16	  	 	 	—  	  	
Unrecognized pension cost, net of income tax of $2	 	 	2	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive Income	 	 	289	  	 	 	—  	  	 	 	—  	  	 	 	270	  	 	 	—  	  	 	 	18	  	 	 	1	  	
Adjustment to initially apply FIN 48	 	 	(9	) 	 	 	—  	  	 	 	—  	  	 	 	(9	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Issuance of convertible preferred stock	 	 	497	  	 	 	—  	  	 	 	497	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Purchase of treasury stock	 	 	(1,101	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1,101	) 	 	 	—  	  	 	 	—  	  	
Stock subscription receivable	 	 	18	  	 	 	—  	  	 	 	18	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Noncontrolling interest in acquired hotel property	 	 	7	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	7	  	
Distributions to noncontrolling interests	 	 	(1	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(1	) 	
Attribution of share based payments	 	 	9	  	 	 	—  	  	 	 	9	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—DECEMBER 31, 2007	 	 	3,469	  	 	 	3	  	 	 	3,323	  	 	 	1,213	  	 	 	(1,101	) 	 	 	(4	) 	 	 	35	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	170	  	 	 	—  	  	 	 	—  	  	 	 	168	  	 	 	—  	  	 	 	—  	  	 	 	2	  	
Foreign currency translations adjustments, net of income tax of $(13)	 	 	(68	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(68	) 	 	 	—  	  	
Unrecognized pension cost, net of income tax of $8	 	 	14	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	14	  	 	 	—  	  	
Unrealized loss on hedge activity, net of income tax of $(1)	 	 	(2	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2	) 	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive Income	 	 	114	  	 	 	—  	  	 				 	 	168	  	 	 	—  	  	 	 	(56	) 	 	 	2	  	
Capital Contribution (see Note 18)	 	 	5	  	 	 	—  	  	 	 	5	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Retirement of treasury stock	 	 	—  	  	 	 	(1	) 	 	 	(1,100	) 	 	 	—  	  	 	 	1,101	  	 	 	—  	  	 	 	—  	  	
Distributions to noncontrolling interests	 	 	(2	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2	) 	
Purchase of subsidiary shares from non-controlling interest	 	 	(7	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7	) 	
Attribution of share based payments	 	 	13	  	 	 	—  	  	 	 	13	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—DECEMBER 31, 2008	 	$	3,592	  	 	$	2	  	 	$	2,241	  	 	$	1,381	  	 	$	—  	  	 	$	(60	) 	 	$	28	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
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 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions, unless otherwise indicated)
 
1.	ORGANIZATION	
Hyatt Hotels Corporation, a Delaware corporation, and subsidiaries (“Hyatt Hotels Corporation”), which, collectively, may be referred to as “we,” “us,” “our,” “HHC,” or the “Company,” is principally owned directly and indirectly by trusts for the benefit of various members of the Pritzker family (the “Family”).
The Company provides hospitality services on a worldwide basis through the management, franchising and ownership of hospitality related businesses. Our operations consist of the following:
We operate or franchise 218 full-service, Hyatt-branded hotels, consisting of 95,756 rooms, in 45 countries throughout the world. We hold ownership interests in certain of these hotels. We operate or franchise 159 select-service, Hyatt-branded hotels with 20,078 rooms in the United States and Canada. We hold ownership interests in certain of these hotels. We develop and/or operate Hyatt-branded timeshare, fractional and other forms of residential or vacation properties.
Our North American management and hotel ownership company, Hyatt Corporation, was founded in 1957. Our international management and hotel ownership company, Hyatt International Corporation, was founded in 1968. On August 4, 2004, our predecessor, Global Hyatt, Inc., was incorporated in Delaware as a holding company to combine our North American and international hospitality operations and increase the scale and scope of our company. Effective October 13, 2004, the name Global Hyatt, Inc. was changed to Global Hyatt Corporation. On December 31, 2004, the stock of Hyatt Corporation and AIC, which owned Hyatt International Corporation, and the other hospitality-related assets of the Pritzker family business interests were contributed to Global Hyatt Corporation in exchange for shares of Global Hyatt Corporation common stock. The contribution was accounted for as a transaction between entities under common control in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141 Business Combinations. As such, the contribution was recorded on the Company’s books at the same historical cost as that carried on the books for the transferors. Effective June 30, 2009, Global Hyatt Corporation changed its name to Hyatt Hotels Corporation.
 
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	
Principles of Consolidation —The consolidated financial statements present the results of operations, financial position, and cash flows of Hyatt Hotels Corporation and its majority owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Investments in joint ventures are accounted for using the guidance of the revised Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities (revised December 2003) — an interpretation of ARB No. 51 (“FIN 46R”), for all ventures deemed to be variable interest entities.
Use of Estimates —We are required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ materially from such estimated amounts.
Revenue Recognition —Our revenues are primarily derived from the following sources and are generally recognized when services have been rendered:
 
 	Ÿ 	 	Owned and leased hotel revenues are derived from room rentals and services provided at our owned, leased, and consolidated hospitality venture properties and are recorded when rooms are occupied and services have been rendered. Sales and occupancy taxes are recorded on a net basis in the consolidated statements of income.	
 
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 	Ÿ 	 	Management and franchise fees earned from hotels managed and franchised worldwide:	
 
 	–	 	Management fees primarily consist of a base fee, which is generally computed as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Base fee revenues are recognized when earned in accordance with the terms of the contract. We recognize incentive fees that would be due as if the contract were to terminate at that date, exclusive of any termination fees payable or receivable by us.	
 
 	–	 	We account for the sale of real estate assets in accordance with FASB Statement No. 66. Realized gains from the sale of hotel real estate assets where we maintain continuing involvement in the form of a long-term management contract are deferred and recognized as management fee revenues over the term of the underlying management contract.	
 
 	–	 	Franchise fees are generally based on a percentage of hotel rooms’ revenues and are recognized in accordance with FASB Statement No. 45, Accounting for Franchise Fee Revenue , as the fees are earned and become due from the franchisee when all material services or conditions relating to the sale have been substantially performed or satisfied by the franchisor.	
 
 	Ÿ 	 	Other revenues	
 
 	–	 	Other revenues primarily include revenues from our timeshare business. Consistent with the guidance in FASB Statement No. 152, Accounting for Real Estate Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67 , we recognize timeshare revenues when a minimum of 10% of the purchase price for the interval has been received, the period of cancellation with refund has expired, and receivables are deemed collectible. For sales that do not qualify for full revenue recognition as the project has progressed beyond the preliminary stages but has not yet reached completion, all revenues and associated direct expenses are initially deferred and recognized in earnings through the percentage-of-completion method.	
 
 	Ÿ 	 	Other revenues from managed properties represent the reimbursement of costs incurred on behalf of the owners of hotel properties we manage. These costs relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our net income.	
Cash Equivalents —We consider all investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash —We have restricted cash of $36.7 million and $20.0 million at December 31, 2008 and 2007, respectively. Of these amounts: (i) $17.0 million and $0 at December 31, 2008 and 2007, respectively, are funds deposited in an interest bearing account for security of a long-term loan and satisfying debt covenant requirements; (ii) $4.5 million and $3.4 million at December 31, 2008 and 2007, respectively, are escrow deposits on purchases of our timeshare intervals; (iii) $6.4 million and $1.2 million at December 31, 2008 and 2007, respectively, are advance payments of certain taxes and fees related to timeshare units that are required to be held in escrow under statutory law; (iv) $0 and $6 million relate to earnest money for a potential hotel acquisition; and (v) $0 and $2.6 million relate to funds held in an interest bearing escrow account to settle any final purchase price adjustments for the purchase of the remaining 50% interest in the Great Eastern Hotel Holding Company (see Note 17). The remaining $8.8 million and $6.8 million in 2008 and 2007, respectively, secure certain long-term letters of credit related to hotel equity investments, real estate taxes, property insurance, security deposits, property and equipment reserves, and long-term loans. These amounts are invested in interest-bearing accounts. The fair value of the restricted cash approximates its carrying value.
 
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Investments —We consolidate entities under our control. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, are accounted for by the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.
Marketable Securities —Our portfolio of marketable securities is accounted for as trading securities and consists of various types of common stock, fixed income securities, and mutual funds. Marketable securities are principally included within other noncurrent assets in the consolidated balance sheets (see Note 8). Fair value is based on listed market prices where available. Marketable securities are recorded at fair value with unrealized gains and losses reflected in the consolidated statements of income.
Other Income, Net —Other income, net includes interest income on interest-bearing cash and cash equivalents, gains (losses) on other marketable securities (see Note 8), income from cost method investments (see Note 3) and foreign currency gains (losses) including gains (losses) on foreign currency exchange rate instruments (see Note 19). The table below provides a reconciliation of the components in other income, net for the years ended December 31, 2008, 2007, and 2006 respectively:

(In millions of dollars)	  	For the years ended
December 31,	 	
	  	2008	 	 	2007	 	 	2006	 	
Interest income on interest-bearing cash and cash equivalents	  	$	23.1	  	 	$	42.9	  	 	$	49.2	  	
Gains (losses) on other marketable securities	  	 	(37.2	) 	 	 	—  	  	 	 	—  	  	
Income from cost method investments	  	 	64.1	  	 	 	86.8	  	 	 	72.0	  	
Foreign currency gains (losses)	  	 	(23.5	) 	 	 	16.7	  	 	 	10.7	  	
Other	  	 	(4.0	) 	 	 	(1.6	) 	 	 	(5.5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	  	$	22.5	  	 	$	144.8	  	 	$	126.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Foreign Currency —The functional currency of our consolidated and nonconsolidated entities located outside the United States of America is generally the local currency. The assets and liabilities of these entities are translated into U.S. dollars at year-end exchange rates, and the related gains and losses, net of applicable deferred income taxes, are reflected in stockholders’ equity. Gains and losses from foreign currency transactions are included in earnings. Income and expense accounts are translated at the average exchange rate for the period. Gains and losses from foreign exchange rate changes related to intercompany receivables and payables of a long-term nature are generally included in other comprehensive income. Gains and losses from foreign exchange rate movement related to intercompany receivables and payables that are not of a long-term nature are reported currently in income.
Notes Receivable —These receivables reflect the amounts due from our financing of timeshare interval sales, as well as receivables from certain franchisees and other hotel owners or developers. We carry mortgages receivable at amortized cost in current receivables and noncurrent receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. The adequacy of the allowance is determined by management through the analysis of several factors, such as economic conditions and industry trends, defaults, past-due aging, and historical write-offs of mortgages and contracts receivable. The allowance is maintained at a level believed adequate by management based on a periodic analysis of the portfolio of receivables.
 
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Inventories —Inventories are comprised principally of unsold timeshare intervals of $153.8 million and $137.1 million at December 31, 2008 and 2007, respectively, and food and beverage inventories at our owned and leased hotels. Timeshare inventory is carried at the lower of cost or market, based on relative sales value or net realizable value. Food and beverage inventories are generally valued at the lower of cost (first-in, first-out) or market. Timeshare interval products inventory, which has an operating cycle that exceeds 12 months, is classified as a current asset consistent with recognized industry practice.
Property and Equipment —Property and equipment are stated at cost, including interest incurred during development and construction periods. Depreciation and amortization are provided over the estimated useful lives of the assets, primarily on the straight-line method. All repair and maintenance costs are expensed as incurred.
Useful lives assigned to property and equipment are as follows:

Buildings and improvements	  	15–50 years	
Leasehold improvements	  	The shorter of the lease term or useful life of asset	
Furniture and equipment	  	2–21 years	
Computers	  	3–6 years	
Long-Lived Assets and Definite-Lived Intangibles —We evaluate the carrying value of our long-lived assets and definite-lived intangibles for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when certain trigger events occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the carrying value of our long-lived assets and definite-lived intangibles based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition. Changes to our plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.
Goodwill —We evaluate goodwill for impairment on an annual basis during the fourth quarter of each year using balances as of the end of September and at an interim date if a triggering event occurs. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount with an impairment being recognized only where the fair value is less than carrying value. See Note 7 for additional information about goodwill.
Income Taxes —We account for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes . The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is not more likely than not to be substantiated on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. For additional information about income taxes, see Note 12.
Fair Value —In accordance with FASB Statement No. 107, Disclosures about Fair Values of Financial Instruments , the Company discloses the fair value of its financial assets and liabilities as determined under the guidance of FASB Statement No. 157, Fair Value Measurements , and based on
 
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observable market information, where available, or on market participant assumptions. These assumptions are subjective in nature, involve matters of judgment, and therefore, fair values cannot always be determined with precision.
The carrying values of cash and cash equivalents, accounts receivable, notes receivable – current, accounts payable, and current portion of debt approximate fair value due to the short-term nature of these items and their close proximity to maturity.
The fair value of marketable securities is discussed in Note 8; the fair value of notes receivable is discussed in Note 6; and the fair value of long-term debt is discussed in Note 9.
Hyatt Gold Passport Fund —The Hyatt Gold Passport Program (the “Program”) is our loyalty program. We operate the Program for the benefit of Hyatt branded properties, whether owned, operated, managed, or franchised by the Company. The Program is operated through the Hyatt Gold Passport Fund, which is an entity that is owned collectively by the owners of Hyatt branded properties, whether owned, operated, managed or franchised by the Company. The Hyatt Gold Passport Fund (the “Fund”) has been established to provide for the payment of operating expenses and redemptions of member awards associated with the Program. The Fund is maintained and managed by us on behalf of and for the benefit of Hyatt branded properties. In accordance with FIN 46R, we have evaluated our investment in the Fund and have determined that the Fund qualifies as a variable interest entity and, as a result of the Company being the primary beneficiary, we have consolidated the Fund.
The Program allows members to earn points based on their spending at Hyatt branded properties. Points earned by members can be redeemed for goods and services at Hyatt branded properties, and to a lesser degree, through other redemption opportunities with third parties, such as the conversion to airline miles. Points cannot be redeemed for cash. We charge the cost of operating the Program, including the estimated cost of award redemption, to the hotel properties based on members’ qualified expenditures. Due to the requirements under the Program that the hotel properties reimburse us for their operating costs as incurred, we recognize these revenues from properties at the time such costs are incurred and expensed. We defer revenues received from the hotel properties equal to the fair value of our future redemption obligation. Upon the redemption of points, we recognize as revenue the amounts previously deferred and recognize the corresponding expense relating to the costs of the awards redeemed. Revenue is recognized by the hotel properties when the points are redeemed, and expenses are recognized when the points are earned by the members.
The Company actuarially determines the expected fair value of the future redemption obligation based on statistical formulas that project the timing of future point redemption based on historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the points that will eventually be redeemed. Actual expenditures for the Program may differ from the actuarially determined liability.
The Fund is financed by payments from the properties and returns on marketable securities. The Fund invests amounts received from the properties in marketable securities (see note 8). As of December 31, 2008 and 2007, total assets of the Fund were $296.5 million and $278.2 million, respectively, including $46.6 million and $38.1 million of current assets, respectively. Marketable securities held by the Fund and included in other noncurrent assets were $249.9 million and $240.1 million, respectively (see Note 8). As of December 31, 2008 and 2007 total liabilities of the Fund were $296.5 million and $278.2 million, respectively, including $46.6 million and $38.1 million of current liabilities, respectively. The non-current liabilities of the Fund are included in other long-term liabilities (see Note 10).
 
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Recently Issued Accounting Pronouncements
Adopted Accounting Standards
In December 2004, the FASB issued FASB Statement No. 152, Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67 . FASB Statement No. 152 amends FASB Statement No. 66 and FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, in association with the issuance of American Institute of Certified Public Accountants Statement of Position (“SOP”) No. 04-2. Among other things, the standard addresses the treatment of sales incentives provided by a seller to a buyer to consummate a transaction, the calculation of accounting for uncollectible notes receivable, the recognition of changes in inventory cost estimates, recovery or repossession of sold vacation ownership interests, selling and marketing costs, associations, and upgrade and reload transactions. The standard also requires a change in the classification of the provision for loan losses for notes receivable from sold vacation ownership interests as a reduction in revenues as opposed to previously being recorded as an expense.
In accordance with FASB Statement No. 66, as amended by FASB Statement No. 152, the Company recognizes sales when the period of cancellation with refund has expired, receivables are deemed collectible, and the buyer has demonstrated a sufficient level of initial and continuing involvement. For sales that do not qualify for full revenue recognition as the project has progressed beyond the preliminary stages but has not yet reached completion, all revenues and associated direct expenses are initially deferred and recognized in earnings through the percentage-of-completion method.
The Company adopted SOP No. 04-2 on January 1, 2006, and recorded as a cumulative effect of change in accounting principle a charge of $3.8 million, net of $2.4 million of tax benefit, in its 2006 consolidated statement of income. The charge taken consisted of deferring revenues of $12.5 million and expenses of $6.4 million related to sales of vacation ownership interests that were not qualified to be recognized as sales, as of January 1, 2006, under the provisions of SOP No. 04-2. During 2006, the sales that were deferred on January 1, 2006, did reach the recognition criteria of SOP No. 04-2, and were, therefore, recorded as part of consolidated revenues and expenses.
FASB Statement No. 157, Fair Value Measurements , issued by the FASB in September 2006, provides enhanced guidance for using fair value to measure assets and liabilities. FASB Statement No. 157 establishes a common definition of fair value, provides a framework for measuring fair value under accounting principles generally accepted in the United States of America (“GAAP”), and expands disclosure requirements about fair value measurements. This statement was originally effective for fiscal years beginning after November 15, 2007. On January 1, 2008, the Company adopted FASB Statement No. 157. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 (“FSP No. FAS 157-2”) which defers the adoption of FASB Statement No. 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. Consistent with the deferral provisions of FSP No. FAS 157-2, the Company has not applied the provisions of FASB Statement No. 157 to nonfinancial assets and nonfinancial liabilities recognized in the financial statements on a nonrecurring basis. Additionally, the Company does not expect the adoption of FASB Statement No. 157 for nonfinancial assets and nonfinancial liabilities to materially impact the consolidated financial results of the Company. FASB Statement No. 157 was adopted on January 1, 2008 for financial assets and liabilities and did not impact the financial results of the Company for the year ended December 31, 2008. Please see Note 4 for disclosures regarding the adoption of FASB Statement No. 157.
In October 2008, the FASB issued FASB Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (“FSP FAS 157-3” or “the FSP”). The FSP provides clarification on how an entity should apply the principles of FASB Statement
 
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No. 157 in a market that is not active. FSP FAS 157-3 was effective upon issuance. The Company applied the guidance in the FSP on an as needed basis to measure the fair value of financial assets and liabilities.
In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 , which provides entities the option to elect to carry most financial assets and liabilities at fair value with changes in fair value recorded in earnings. FASB Statement No. 159 was effective as of the beginning of the entity’s first fiscal year that begins after November 15, 2007. On January 1, 2008, the Company adopted FASB Statement No. 159 and determined that it will not elect the fair value option for any of its financial assets and liabilities that existed as of the date of adoption.
In September 2008, the FASB issued FASB Staff Position No. FAS 133-1 and FIN 45-4 (“FSP FAS 133-1 and FIN 45-4”), Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161 . While FSP FAS 133-1 is not applicable for the Company, FSP FIN 45-4 does apply. FSP FIN 45-4 requires the Company to disclose the current status of its performance risk under guarantees that are within the scope of FASB Interpretation No. 45. FSP FIN 45-4 was effective for annual and interim reporting periods ending after November 15, 2008. The Company adopted the FSP FIN 45-4 as of December 31, 2008. See Note 14 for a discussion of the Company’s guarantees.
In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8, Disclosure by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“the FSP”). The FSP requires a company to disclose information regarding its involvement with variable interest entities. The FSP was effective for the first reporting period ending after December 15, 2008. The Company adopted the FSP as of December 31, 2008 and has included the additional disclosures in the Hyatt Gold Passport Fund description above.
In November 2006, the Emerging Issues Task Force (“EITF”) of FASB reached a consensus on EITF Issue No. 06-8, Applicability of the Assessment of a Buyer’s Continuing Investment under FASB Statement No. 66 for Sales of Condominiums (“EITF 06-8”). EITF 06-8 will require condominium sales to meet the continuing investment criterion in FASB Statement No. 66 in order to recognize profit under the percentage-of-completion method. EITF 06-8 is effective for annual reporting periods beginning after March 15, 2007. The Company adopted EITF 06-8 on January 1, 2008 with no impact on its consolidated financial statements.
In December 2007, the FASB ratified EITF Abstract Issue No. 07-06, Accounting for the Sale of Real Estate Subject to the Requirements of FASB Statement No. 66 When the Agreement Includes a Buy-Sell Clause . EITF 07-06 addresses whether a buy-sell clause represents a form of continuing involvement that precludes profit recognition under FASB Statement No. 66. EITF 07-06 is effective for agreements entered into during fiscal years beginning after December 15, 2007. The Company adopted EITF 07-06 on January 1, 2008 with no impact on its consolidated financial results.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements . FASB Statement No. 160 amends the accounting and reporting requirements for minority interests in Accounting Research Bulletin No. 51, Consolidated Financial Statements. FASB Statement No. 160 requires that minority interests be labeled non-controlling interests and recorded as a component of equity. We have adopted FASB Statement No. 160, which defines a noncontrolling interest in a subsidiary as “the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent” and requires noncontrolling interests to be presented as a separate component of equity in the consolidated balance sheet. FAS 160 also modifies the
 
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presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and noncontrolling interests. As a result of the adoption of this standard, the following retroactive adjustments were made: the December 31, 2008 and 2007 noncontrolling interest balance of $28 million and $35 million, respectively, previously presented as $28 million and $35 million of minority interest, has been presented as part of equity. Additionally, noncontrolling interest has been presented in the consolidated statements of income as an adjustment to net income to arrive at net income attributable to Hyatt Hotel Corporation.
Future Adoption of Accounting Standards
In December 2007, the FASB issued FASB Statement No. 141R (revised 2007), Business Combinations , which revises how entities will account for acquisitions. The more significant changes are the (1) expanded definitions of a business and business combination, (2) increased use of fair value, (3) expensing of acquisition costs, and (4) expanded financial statement disclosures. FASB Statement No. 141R is to be applied prospectively to business combinations with acquisition dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will adopt FASB Statement No. 141R effective January 1, 2009 and apply the provisions of the standard to all subsequent business combinations.
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133 (“FASB Statement No. 161”). FASB Statement No. 161 requires companies to enhance the transparency of their disclosures by addressing (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133 and related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FASB Statement No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of FASB Statement No. 161 on January 1, 2009 is not expected to have a material impact on the consolidated financial statements of the Company.
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that the Company should consider when developing renewal or extension assumptions used in the determination of useful lives of intangible assets recognized under FASB Statement No. 142. These assumptions should be consistent with the expected cash flow method used to measure the fair value of the intangible asset. FSP FAS 142-3 is applicable prospectively to intangible assets acquired after January 1, 2009. The Company does not expect the adoption of FSP FAS 142-3 to have a material impact on its consolidated financial results.
In May 2008, the FASB issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles (“FASB Statement No. 162”). The new standard provides a framework for selecting the appropriate accounting literature used in preparing nongovernmental financial statements in accordance with GAAP. The Company does not expect the adoption of FASB Statement No. 162 to have a material impact on its consolidated financial statements.
In November 2008, the FASB ratified EITF Issue No. 08-6, Equity Method Investment Accounting Considerations (“EITF 08-6”). EITF 08-6 addresses how certain guidance in FASB Statement No. 141R and FASB Statement No. 160 might impact the accounting for equity method investments. EITF 08-6 is effective prospectively for new investments acquired in fiscal years beginning on or after December 15, 2008. The Company does not expect the adoption of EITF 08-6 to have a material impact on its consolidated financial results.
 
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3.	INVESTMENTS	
We have investments that are recorded under both the equity and cost methods. Those investments categorized as hospitality ventures are recorded under the equity method. These investments are considered to be an integral part of our business and are strategically and operationally important to our overall results. Our equity and cost method investment balances recorded at December 31, 2008 and 2007 are as follows:

 	  	2008	  	2007	
Equity method investments	  	$	191.2	  	$	185.4	
Cost method investments	  	 	12.4	  	 	138.7	
	  	 	 	  	 	 	
Total investments	  	$	203.6	  	$	324.1	
	  	 	 	  	 	 	
Income from equity method investments included in our consolidated statements of income for the years ended December 31, 2008, 2007, and 2006, were $13.7 million, $11.1 million, and $12.6 million, respectively. Income from cost method investments included in our consolidated statements of income for the years ended December 31, 2008, 2007, and 2006, were $64.1 million, $86.8 million, and $72.0 million, respectively, and are included in other income, net.
The carrying value and ownership percentages of our unconsolidated investments in certain hotel and timeshare properties accounted for under the equity method as of December 31 are as follows:

 	  	 	 	 	As of December 31,
2008 and 2007	
 	  	Ownership
Interests	 	 	Our
Investment	  	Our
Investment	
Juniper Hotels Private Ltd	  	50.0	% 	 	$	37.0	  	$	36.4	
Hedreen Hotel Two, LLC	  	50.0	% 	 	 	21.4	  	 	20.6	
Nuevo Plaza Hotel Mendoza Limited	  	50.0	% 	 	 	17.7	  	 	16.2	
Hedreen Hotel, LLC	  	50.0	% 	 	 	17.1	  	 	16.9	
Sao Paulo Investment Co.	  	50.0	% 	 	 	11.5	  	 	11.8	
Pelican Landing Golf Resort Ventures, LP	  	49.0	% 	 	 	10.6	  	 	10.8	
Bear Creek DFW Associates, LTD	  	50.0	% 	 	 	9.4	  	 	11.3	
East West Resort Development XII, LP, LLLP	  	41.4	% 	 	 	8.9	  	 	13.1	
Grand Aspen Holdings, LLC & Top of Mill Investors, LLC	  	25.8	% 	 	 	8.5	  	 	12.1	
Cal Harbor South Pier Urban Renewal Associates, LP	  	50.0	% 	 	 	8.2	  	 	11.6	
Other	  			 	 	40.9	  	 	24.6	
	  			 	 	 	  	 	 	
Total	  			 	$	191.2	  	$	185.4	
	  			 	 	 	  	 	 	
In 2007, the Company entered into contract negotiations for the purchase of an equity interest in a hospitality venture, which would ultimately acquire a hotel property in Waikiki, Hawaii. The Company placed a nonrefundable deposit of $8.9 million to secure the purchase of the property. In addition, the Company incurred $2.6 million of transaction costs. Due to uncertainty surrounding the transaction, the Company reserved the full amount of the deposit and expensed the transaction costs. The charges related to this equity method investment were included in equity earnings from unconsolidated hospitality ventures during the year ended December 31, 2007. In July 2008, the Company executed a restructuring transaction and purchased a 9.99% equity interest in the hospitality venture for $7.4 million. At that time, the hospitality venture acquired the hotel property in Hawaii. The hotel acquisition was financed from the equity interests in the hospitality venture, as well as a loan from the Company for $277.5 million, which has been recorded as a note receivable (see Note 6) on our consolidated balance sheets. The note matures July 2010 and earns interest at a 30-day London InterBank Offered Rate (“LIBOR”) plus 3.75%. As a result of the transactions in July 2008, the Company reversed the previously recorded reserve on the deposit and received reimbursement of the aforementioned transaction costs.
 
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In December 2008, we reviewed our timeshare projects held through equity method investments for potential impairment. This review was prompted by the current economic downturn, the related tightening of mortgage financing availability, and the resulting decrease in the pace of sales contracts written for our timeshare projects. We estimated the current fair value of these investments based on discounted future cash flow projections, which reflected decreases in annual sales pace and/or price. Based on the resulting fair value estimates, we recorded impairment charges for three equity method investments of $19.1 million in 2008. These impairment charges are included in equity earnings from unconsolidated hospitality ventures.
In 2006, we recorded an impairment charge of $10.0 million related to our equity method investment in a hospitality venture in connection with a hotel property in South America. This impairment charge was the result of operating cash flows that were anticipated to be insufficient to service debt and the impairment charge is included in equity earnings from unconsolidated hospitality ventures.
During 2008, 2007, and 2006, we recorded $61.8 million, $5.5 million and $12.3 million, respectively, of preferred returns, which are included in other income, net in our consolidated statements of income, related to distributions from three privately held investment entities, which invest in life science technology companies and are managed by an affiliate. On January 24, 2008, the Company received distributions of $183.8 million from these investments, representing all of the preferred returns and return of capital of $122.0 million. At December 31, 2008 and 2007, we had an interest in unpaid preferred returns of $0 and $52.6 million, respectively, related to these cost method investments.
In 2008, 2007, and 2006, the Company recognized as income total distributions of $1.6 million, $62.4 million, and $0.7 million, respectively, from its investment in funds that owned Extended Stay America and the Homestead Studio Suites, primarily as a result of the sale of those businesses. Our investment was accounted for under the cost method, and these distributions are included in other income, net in our consolidated statements of income.
We have interests in certain real estate partnership investments from which we received distributions of $0.2 million, $13.6 million and $40.0 million during 2008, 2007 and 2006, respectively, which are included in other income, net.
 
4.	FAIR VALUE MEASUREMENT	
As discussed in Note 2, we adopted FASB Statement No. 157, as amended by FSP 157-2, on January 1, 2008. Consistent with the deferral in FSP 157-2, the Company has not applied FASB Statement No. 157 to nonfinancial assets and liabilities that are recorded on a nonrecurring basis. Such assets and liabilities include those measured at fair value in goodwill impairment testing, asset retirement obligations initially measured at fair value, and nonfinancial long-lived asset impairment assessments as well as those initially measured at fair value in a business combination.
When determining fair value, FASB Statement No. 157 requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. FASB Statement No. 157 establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. The three levels of the hierarchy are as follows:
Level One—Values based on unadjusted quoted prices in active markets for identical assets and liabilities.
Level Two—Values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability.
 
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Level Three—Values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques. The Company does not currently have any instruments with fair value determined using level three inputs.
We have various financial instruments that must be measured under the new fair value standard including certain marketable securities and derivatives instruments. We currently do not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis.
We utilize the market approach for valuing our financial instruments. According to FASB Statement No. 157, the market approach “utilizes prices and information generated by market transactions involving identical or similar assets and liabilities.” In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy. Our financial assets and liabilities are measured using inputs from level one and two of the fair value hierarchy.
As of December 31, 2008, the Company had the following financial assets and liabilities measured at fair value on a recurring basis:

 	  	2008	 	 	Quoted Prices in
Active Markets
for Identical
Assets (Level 1)	  	Significant
Other
Observable
Inputs (Level 2)	 	
Marketable securities included in other current and long-term assets	  	$	443.9	  	 	$	178.1	  	$	265.8	  	
Interest bearing money market funds recorded in cash and cash equivalents	  	 	156.8	  	 	 	156.8	  	 	—  	  	
Derivative instruments	  	 	(19.5	) 	 	 	—  	  	 	(19.5	) 	
Our portfolio of marketable securities consists of various types of U.S. Treasury securities, mutual funds, common stock, preferred stock, and fixed income securities, including government and corporate bonds. The fair value of our mutual funds were classified as level one as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The remaining securities were classified as level two due to the use and weighting of multiple market inputs being considered in the final price of the security. Market inputs include quoted market prices from active markets for identical securities, quoted market prices for identical securities in inactive markets, and quoted market prices in active and inactive markets for similar securities. See Note 8 for further details on our marketable securities.
We invest a portion of our cash balance into short-term interest bearing money market funds that have a maturity of less than ninety days. Consequently, the balances are recorded in cash and cash equivalents. The funds are held with open-ended registered investment companies and the fair value of the funds are classified as level one as we are able to obtain market available pricing information on an ongoing basis.
Our derivative instruments are foreign currency exchange rate instruments and interest rate swaps. The instruments are valued using factors such as interest rates and yield curves, which represent market observable inputs and are generally classified as level two. See Note 19 for further details on our derivative instruments.
 
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5.	PROPERTY AND EQUIPMENT	
Property and equipment at cost as of December 31, 2008 and 2007, consist of the following:

 	  	2008	  	2007	
Land	  	$	559.5	  	$	561.6	
Buildings	  	 	3,158.1	  	 	3,111.3	
Leasehold improvements	  	 	234.4	  	 	246.4	
Furniture, equipment and computers	  	 	1,057.1	  	 	1,083.7	
Construction in progress	  	 	201.8	  	 	136.7	
	  	 	 	  	 	 	
	  	 	5,210.9	  	 	5,139.7	
Less accumulated depreciation	  	 	1,715.6	  	 	1,621.6	
	  	 	 	  	 	 	
Total	  	$	3,495.3	  	$	3,518.1	
	  	 	 	  	 	 	
Depreciation expense from continuing operations was $233.2 million, $201.3 million, and $181.8 million, for the years ended December 31, 2008, 2007, and 2006, respectively. Interest capitalized as a cost of property and equipment totaled $16.0, $15.0 and $4.7 for the years ended December 31, 2008, 2007, and 2006, respectively, and is recorded net in interest expense. The net book value of capital leased assets at December 31, 2008 and 2007, is $242.2 million and $255.3 million, respectively, which is net of accumulated depreciation of $17.0 million and $7.6 million, respectively.
 
6.	NOTES RECEIVABLE	
Notes receivable at December 31, 2008 and 2007, is as follows:

 	  	2008	  	2007	
Senior loan receivable to provide acquisition financing to a hospitality venture investment in Hawaii, interest set at 30-day LIBOR + 3.75% due monthly, principal matures July 2010 (see below)	  	$	277.5	  	$	—  	
Mortgages receivable from individuals participating in timeshare investment activities at various interest rates with varying payments through 2018 (see below)	  	 	82.8	  	 	82.7	
Mortgage receivables from franchisees, interest rates between 6.9% and 8.0%, due 2011 and 2012 (see below)	  	 	46.4	  	 	44.3	
Note receivable to fund construction of a hotel property in Las Vegas, 10% interest, principal and interest payable as per agreement; amounts fully reserved in 2007 and written off in 2008 (see below)	  	 	—  	  	 	60.5	
Loan receivable from affiliated hotel company in Maryland, 9% interest due monthly based on available net revenues, matures November 2029	  	 	5.1	  	 	7.7	
Note receivable from a third-party guarantor related to the operations of an Australian hotel, 6.52% interest, principal and interest payable as per agreement; amount fully reserved	  	 	12.5	  	 	16.4	
Note receivable from third-party owned hotel in Poland, 6.82% effective interest, due quarterly, matures 2018; amounts fully reserved	  	 	10.0	  	 	8.5	
Loan receivable from a hotel in Buenos Aires, 6% interest due annually, matures October 2016	  	 	5.4	  	 	6.3	
Subscription receivable due annually through settlement in September 2011 (see Note 13)	  	 	14.2	  	 	18.5	
Other	  	 	25.0	  	 	41.0	
	  	 	 	  	 	 	
	  	 	478.9	  	 	285.9	
Less allowance for losses	  	 	53.9	  	 	109.1	
Less current portion included in receivables	  	 	15.0	  	 	16.7	
	  	 	 	  	 	 	
Total	  	$	410.0	  	$	160.1	

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Senior Loan Receivable —On July 16, 2008, the Company provided financing to a subsidiary of W2007 Waikiki Holdings, LLC (W2007). W2007 is an unconsolidated hospitality venture, which is accounted for under the equity method (see Note 3), and was formed to acquire ownership of a hotel property in Hawaii. The loan is collateralized by the hotel property and there is a recorded mortgage consent by the ground lessors. The loan has a stated maturity date of 2010 with three, one-year options to extend through 2013.
Timeshare Mortgages Receivable —These receivables reflect the amounts due from our financing of timeshare interval sales. We carry mortgages receivable at amortized cost in current and long-term receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. As of December 31, 2008 and 2007, the allowance for such timeshare mortgages was $15.5 million and $10.8 million, respectively. As of December 31, 2008, the weighted-average interest rate on timeshare mortgages receivable was 14.21%. The adequacy of the allowance is determined by management through the analysis of several factors, such as current economic conditions and industry trends, defaults, past due aging, and historical write-offs of mortgages and contracts receivable. The allowance is maintained at a level believed adequate by management based on a periodic analysis of the mortgage portfolio.
Mortgages receivable held by the Company as of December 31, 2008, are scheduled to mature as follows:

Years Ending December 31	  	Amount	
2009	  	$	8.7	
2010	  	 	9.2	
2011	  	 	8.3	
2012	  	 	9.0	
2013	  	 	9.8	
Thereafter	  	 	37.8	
	  	 	 	
Total mortgages receivable	  	 	82.8	
Less allowance	  	 	15.5	
	  	 	 	
Net mortgages receivable	  	$	67.3	
	  	 	 	
Mortgages Receivable from Franchisees —These receivables reflect financing provided to certain franchisees for the renovations and conversion of certain franchised hotels. As of December 31, 2008, five mortgages have been provided to franchisees with a total loan commitment of $47.3 million, of which $46.4 million has been funded. These mortgage receivables are collateralized by the underlying properties and all loans accrue interest at fixed rates ranging between 6.9% to 8.0%.
Mortgages receivable held by the Company as of December 31, 2008, are scheduled to mature as follows:

Years Ending December 31	  	Amount	
2009	  	$	0.5	
2010	  	 	1.3	
2011	  	 	28.4	
2012	  	 	16.2	
2013	  	 	—  	
Thereafter	  	 	—  	
	  	 	 	
Total mortgages receivable	  	 	46.4	
Less allowance	  	 	—  	
	  	 	 	
Net mortgages receivable	  	$	46.4	

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Development Loan for Las Vegas Hotel Property —On December 30, 2005, the Company provided a $50.0 million mezzanine loan (“Mezzanine Loan”) to Cosmo Mezz Borrower One LLC (“Cosmo”) in connection with the development of a hotel in Las Vegas. During December 2007, the entity that owned the hotel property defaulted on bank loans, which triggered a default on the Mezzanine Loan. Based on our assessment of the potential outcome, the Company recorded an allowance for the principal and interest receivable of $60.5 million, which was recorded in asset impairments in the consolidated statements of income for the year ended December 31, 2007. In the fourth quarter of 2008, the loan was fully written off.
Fair Value —In accordance with FASB Statement No. 107, the Company estimated the fair value of notes receivable using the measurement guidance in FASB Statement No. 157. The fair value of notes receivable approximated $413.0 million and $286.0 million as of December 31, 2008 and 2007, respectively. We estimated the fair value of notes receivables using discounted cash flow analysis based on current market inputs for similar types of arrangements. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
 
7.	GOODWILL AND INTANGIBLE ASSETS	
We review the carrying value of all our goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible Assets , by comparing the carrying value of our reporting units to their fair values in the two-step process. We define a reporting unit at the individual property or business level. We are required to perform this comparison at least annually or more frequently if circumstances indicate possible impairment. When determining fair value in step one, we utilize internally developed discounted future cash flow models, third-party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our consolidated capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value. If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination. We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.
During the fourth quarter of 2008, the Company performed its annual impairment review of goodwill. This review resulted in an impairment charge of $86.0 million related to the owned and leased hotel segment and is included in asset impairments in our consolidated statements of income. This impairment charge was related to management’s review of the Great Eastern Hotel Holding Company’s British Pounds 52.8 million ($78.5 million) of goodwill and one other hotel, which determined that the forecasted future earnings and cash flows of these hotels no longer supported the carrying value of goodwill because of forecasted deterioration in revenues from these hotels.
 
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The following is a summary of changes in the carrying amount of goodwill for the year ended December 31, 2008:

 	 	Balance at
January 1,
2007	 	Goodwill
acquired
during 2007	 	Foreign
Exchange
and Other
(*)	 	 	Balance at
December 31,
2007	 	Goodwill
impaired
during 2008	 	 	Foreign
Exchange
and Other
(*)	 	Balance at
December 31,
2008	
Owned and Leased Hotels	 	$	90.0	 	$	78.7	 	$	(2.9	) 	 	$	165.8	 	$	(86.0	) 	 	$	2.7	 	$	82.5	
Management and Franchising
– North American	 	 	33.1	 	 	—  	 	 	—  	  	 	 	33.1	 	 	—  	  	 	 	—  	 	 	33.1	
Management and Franchising – International	 	 	—  	 	 	—  	 	 	—  	  	 	 	—  	 	 	—  	  	 	 	—  	 	 	—  	
Other	 	 	4.0	 	 	—  	 	 	—  	  	 	 	4.0	 	 	—  	  	 	 	—  	 	 	4.0	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	127.1	 	$	78.7	 	$	(2.9	) 	 	$	202.9	 	$	(86.0	) 	 	$	2.7	 	$	119.6	

(*)	Relates to foreign exchange translation adjustments of ($24.7) million and ($2.9) million in 2008 and 2007, respectively, and purchase price allocation adjustments of $27.4 million in 2008 related to the prior year acquisition of Great Eastern Hotel Holding Company.	
Definite lived intangible assets primarily include acquired management and franchise contracts, contract acquisition costs, and acquired lease rights. Franchise contracts are amortized on a straight-line basis over their contract terms, which are typically 20 years. Contract acquisition costs are generally amortized on a straight-line basis over the life of the management contracts, which range from approximately 10 to 40 years. Acquired lease rights are amortized on a straight-line basis over the lease term. Definite lived intangibles are tested for impairment whenever indicators of impairment arise. During the years ended December 31, 2008, 2007 and 2006, no impairments were identified with respect to intangible assets with definite lives.
The following is a summary of intangible assets at December 31, 2008 and 2007:

 	  	2008	 	 	Weighted
Average
Useful Lives	  	2007	 	
Contract acquisition costs	  	$	123.7	  	 	20	  	$	116.3	  	
Acquired lease rights	  	 	122.1	  	 	114	  	 	219.1	  	
Franchise intangibles	  	 	56.1	  	 	22	  	 	56.1	  	
Brand intangibles	  	 	11.0	  	 	7	  	 	11.0	  	
Other	  	 	3.0	  	 	7	  	 	1.9	  	
	  	 	 	 	 		  	 	 	 	
	  	 	315.9	  	 		  	 	404.4	  	
Accumulated amortization	  	 	(60.3	) 	 		  	 	(45.2	) 	
	  	 	 	 	 		  	 	 	 	
Intangibles, net	  	$	255.6	  	 		  	$	359.2	  	
	  	 	 	 	 		  	 	 	 	
Amortization expense relating to intangible assets for the years ended December 31, 2008, 2007, and 2006, was $15.3 million, $12.1 million, and $12.6 million, respectively.
We estimate amortization expense for the definite lived intangibles for the years 2009 through 2013 to be:

Years Ending December 31	
2009	  	$	12.5	
2010	  	 	12.7	
2011	  	 	12.7	
2012	  	 	10.7	
2013	  	 	10.6	
 
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8.	OTHER ASSETS	
Other assets primarily consist of marketable securities and deferred financing charges. Marketable securities are primarily held for the Gold Passport Fund (see Note 2) and to fund certain deferred compensation plans (see Note 10).
Marketable Securities —At December 31, 2008 and 2007, total marketable securities carried at fair value and included in the consolidated balance sheets were as follows:

 	  	2008	 	 	2007	 	
Marketable securities held by the Gold Passport Fund	  	$	265.8	  	 	$	256.4	  	
Marketable securities held to fund deferred compensation plans	  	 	163.3	  	 	 	184.6	  	
Other marketable securities	  	 	14.8	  	 	 	3.4	  	
	  	 	 	 	 	 	 	 	
Total marketable securities	  	 	443.9	  	 	 	444.4	  	
Less current portion of marketable securities included in Prepaids and other assets	  	 	(28.3	) 	 	 	(16.3	) 	
	  	 	 	 	 	 	 	 	
Marketable securities included in Other assets	  	$	415.6	  	 	$	428.1	  	
	  	 	 	 	 	 	 	 	
Included in net (losses) gains and interest income from marketable securities held to fund operating programs in the consolidated statements of income are $2.4 million, $4.8 million and $2.3 million of realized and unrealized (losses) gains and interest income related to marketable securities held by the Gold Passport Fund for the years ended December 31, 2008, 2007 and 2006, respectively. Also included in net (losses) gains and interest income from marketable securities held to fund operating programs in the consolidated statements of income are $(38.2) million, $10.1 million, and $10.1 million of realized and unrealized (losses) gains related to marketable securities held to fund deferred compensation plans for the years ended December 31, 2008, 2007, and 2006, respectively. Gains (losses) on other marketable securities of $(37.2) million, $0, and $0 for the years ended December 31, 2008, 2007 and 2006, respectively, are included in other income, net (see Note 2).
 
9.	DEBT	
Debt as of December 31, 2008 and 2007, consists of the following:

 	  	2008	  	2007	
Senior subordinated notes—5.84%, maturing 2013	  	$	600.0	  	$	600.0	
9.26% twenty-five year mortgage	  	 	60.9	  	 	64.9	
British pound denominated hotel loans	  	 	159.2	  	 	219.6	
Euro denominated hotel loans	  	 	71.8	  	 	78.5	
Fixed rate mortgages and notes payable – 6.0%—10.07%, collateralized by related land, buildings and improvements, and other related assets, payable in monthly, quarterly and annual principal and interest installments, maturing through 2016	  	 	81.6	  	 	85.6	
Revolving credit facility	  	 	30.0	  	 	—  	
Other (various, maturing through 2010)	  	 	5.3	  	 	16.0	
	  	 	 	  	 	 	
Long-term debt excluding capital lease obligations	  	 	1,008.8	  	 	1,064.6	
Capital lease obligations (see Note 15)	  	 	238.6	  	 	248.9	
	  	 	 	  	 	 	
Total debt	  	 	1,247.4	  	 	1,313.5	
Less current maturities	  	 	38.0	  	 	25.9	
	  	 	 	  	 	 	
Total long-term debt, net of current maturities	  	$	1,209.4	  	$	1,287.6	

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Under existing agreements, contractual maturities of debt as of December 31, 2008, for the next five years and thereafter are as follows:

Within 1 year	  	$	38.0	
Between 1 and 2 years	  	 	45.1	
Between 2 and 3 years	  	 	273.7	
Between 3 and 4 years	  	 	11.2	
Between 4 and 5 years	  	 	612.1	
Thereafter	  	 	267.3	
	  	 	 	
Total	  	$	1,247.4	
	  	 	 	
5.84% Senior Subordinated Notes —On August 28, 2007, the Company issued $500.0 million of 5.84% senior subordinated notes due 2013 (“Notes”) to an independent third party, combined with a stock purchase forward agreement (“Subscription Agreement”) that requires the purchaser to acquire a variable number of Hyatt Hotels Corporation common stock (“HHC Common Stock”) at a future date, as defined, for $500.0 million in cash. On October 25, 2007, the Company issued $100.0 million of additional Notes to an independent third party, combined with a Subscription Agreement for $100.0 million in cash. The purchasers’ obligations under the Subscription Agreements are secured by a pledge of the Notes to the Company.
The Notes bear interest at 5.84% and are due on September 1, 2013, unless extended under the Notes Indenture (“Indenture”), and can be remarketed in 2011 under then current market interest rates. Under the terms of the Indenture, at the time that the Notes are remarketed, the Company can extend the maturity date to any date not later than September 1, 2021. The Notes are not prepayable by the Company, except upon the occurrence of certain events, and are due at maturity, which may be extended. See Note 13 for details of this transaction.
9.26% Twenty Five Year Mortgage —On June 1, 2007, the Company acquired the Hyatt Regency San Antonio Riverwalk, which included the assumption of debt with a fair value of $66.6 million at the date of acquisition. The debt has a stated interest rate of 9.26% and a maturity date of 2021. Additionally, the Company may repay the debt at the optional prepayment date of September 11, 2011, without penalty. See Note 17 for details of this transaction.
Hotel Loans in British Pounds (GBP) —On November 30, 2007, the Company purchased the remaining interest in the Great Eastern Hotel Holding Company, which included the assumption of debt (see Note 17 for more details on this transaction). The total balance of debt at December 31, 2008 and 2007 was GBP 110.0 million ($159.2 million and $219.6 million, respectively) and includes a primary loan and a subordinated loan, both maturing on March 13, 2011. The loans are secured by the pledged shares of its wholly owned subsidiary and shareholder loans. The interest rate applicable to the primary loan is calculated at GBP LIBOR, plus 0.9%. The interest rate applicable to the subordinated loan is calculated at GBP LIBOR, plus 4%. As part of the acquisition, the Company also assumed an interest rate swap that converts this variable rate exposure to a fixed rate. The swap contains a floating rate option, which exchanges the variable GBP LIBOR rates on the primary and subordinated notes described in Note 19 for a fixed rate of 4.91%. Therefore, the effective rate is 6.16%. The principal payments of 1% of the loan balance are paid annually beginning in 2009.
Hotel Loans in Euro —On February 28, 2006, the Company purchased the remaining interest in the Park Hyatt Paris Vendome, which included the assumption of debt. The balance of debt at December 31, 2008 and 2007, was euro 50.9 million ($71.8 million) and euro 53.4 million ($78.5 million), respectively, and includes a primary loan and a subordinated loan. The primary loan matures on April 14, 2017, and the interest rate applicable to this loan is calculated at EURIBOR, plus 1.25%.
 
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The subordinated loan matures on November 30, 2011, and the interest rate applicable to this loan is calculated at EURIBOR, plus 0.7%. The effective rate on these loans as of December 31, 2008 is 5.06%.
Revolving Credit Facility —On June 29, 2005, the Company entered into a five-year, $1.0 billion revolving credit facility with a group of banks, which is set to expire on June 29, 2010. The interest rate applicable to borrowings under this facility is calculated at LIBOR plus a margin. The margin varies depending on the Company’s credit rating with the major rating agencies and includes a facility fee, which is charged regardless of the level of borrowings. As of December 31, 2008, the applicable rate for a 30-day borrowing is LIBOR, plus 0.5%, or 0.96%, inclusive of the facility fee. There was an outstanding balance of $30.0 million on this credit facility as of December 31, 2008; there was no outstanding balance as of December 31, 2007. During 2008, the Company had two borrowings under this credit facility, at an average interest rate of 3.02%. At December 31, 2008 and 2007, the Company had entered into various letter of credit agreements for $89.1 million and $82.8 million, respectively, which reduced its available capacity under this revolving credit facility. The available line of credit on our revolving credit facility at December 31, 2008 is $880.9 million.
The Company also has a total of $20.7 million and $21.0 million of letters of credit issued through additional banks as of December 31, 2008 and 2007, respectively.
Certain of the long-term debt and revolving credit agreements contain financial covenants requiring that certain financial measures be met such as maintaining a minimum net worth, not exceeding a maximum ratio of debt to earnings before interest, tax, depreciation and amortization (EBITDA), not falling below a minimum ratio of EBITDA to interest expense, or a maximum loan-to-value ratio. The Company is in compliance with all covenants at December 31, 2008.
Fair Value —The Company estimated the fair value of long-term debt excluding capital lease obligations at approximately $825.0 million and $1,065.0 million as of December 31, 2008 and 2007, respectively. We estimated the fair value of long-term debt using discounted cash flow analysis based on current market inputs for similar types of arrangements. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
 
10.	OTHER LONG-TERM LIABILITIES	
Other long-term liabilities at December 31, 2008 and 2007, consist of the following:

 	  	2008	  	2007	
Hyatt Gold Passport Fund (Note 2 and 8)	  	$	249.9	  	$	240.1	
Deferred Compensation Plans (Note 11)	  	 	163.3	  	 	184.6	
Other accrued income taxes (Note 12)	  	 	90.6	  	 	131.9	
Deferred income taxes (Note 12)	  	 	31.0	  	 	54.0	
Deferred incentive compensation plans (Note 11)	  	 	36.3	  	 	34.0	
Deferred gains on sale of hotel properties	  	 	32.3	  	 	34.9	
Defined benefit plans (Note 11)	  	 	15.9	  	 	61.1	
Other	  	 	45.4	  	 	53.0	
	  	 	 	  	 	 	
Total	  	$	664.7	  	$	793.6	

11.	EMPLOYEE BENEFIT PLANS	
The Company sponsors supplemental executive retirement plans consisting of funded and unfunded defined benefit plans for certain executives. Retirement benefits are based primarily on the employees’ salary, as defined, and are payable upon achievement of certain service requirements as defined by the plans.
 
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On December 31, 2006, the Company adopted the recognition and disclosure provisions of FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132R . FASB Statement No. 158 required the Company to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its pension plans in the December 31, 2006, consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The adjustment to accumulated other comprehensive income at adoption represents the net unrecognized actuarial losses, which were previously netted against the plan’s funded status in the Company’s consolidated balance sheet pursuant to the provisions of FASB Statement No. 87, Employers’ Accounting for Pensions.
On October 31, 2008, the Company merged its foreign funded and domestic unfunded defined benefit plans for active participants into the Company’s deferred compensation plans. The merger was effected by contributing an amount based on the value of each active participant’s benefits based on services rendered to-date. As a result, the Company recorded a net settlement charge of $20.5 million. The expense was recorded to selling, general and administrative expenses for the year ended December 31, 2008.
The following tables show the change in benefit obligation and the change in fair value of plan assets and the impact of the plan merger as of December 31, 2008 and 2007 (the measurement dates), for the unfunded U.S. plan and the funded foreign plan:

 	  	Unfunded U.S. Plan	 	 	Funded Foreign Plan	 	
 	  	    2008    	 	 	    2007    	 	 	    2008    	 	 	    2007    	 	
Change in benefit obligation:	  				 				 				 				
Benefit obligation—beginning of year	  	$	35.2	  	 	$	36.8	  	 	$	38.1	  	 	$	37.7	  	
Service cost	  	 	0.7	  	 	 	1.2	  	 	 	0.2	  	 	 	0.5	  	
Interest cost	  	 	2.3	  	 	 	2.0	  	 	 	1.5	  	 	 	2.1	  	
Actuarial (gains) loss	  	 	7.2	  	 	 	(4.2	) 	 	 	17.2	  	 	 	4.0	  	
Settlement payments	  	 	(24.3	) 	 	 	—  	  	 	 	(36.0	) 	 	 	—  	  	
Curtailment (gain)	  	 	(3.7	) 	 	 	—  	  	 	 	(18.9	) 	 	 	—  	  	
Benefits paid	  	 	(0.7	) 	 	 	(0.6	) 	 	 	(2.1	) 	 	 	(6.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Benefit obligation—end of year	  	$	16.7	  	 	$	35.2	  	 	$	—  	  	 	$	38.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Change in plan assets:	  				 				 				 				
Fair value of plan assets—beginning of year	  	$	—  	  	 	$	—  	  	 	$	10.5	  	 	$	11.1	  	
Actual return on plan assets	  	 	—  	  	 	 	—  	  	 	 	(0.5	) 	 	 	0.6	  	
Benefits Paid	  	 	—  	  	 	 	—  	  	 	 	(39.9	) 	 	 	(6.2	) 	
Employer contributions	  	 	—  	  	 	 	—  	  	 	 	29.9	  	 	 	5.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fair value of plan assets—end of year	  	$	—  	  	 	$	—  	  	 	$	—  	  	 	$	10.5	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Funded status at end of year	  	$	(16.7	) 	 	$	(35.2	) 	 	$	—  	  	 	$	(27.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Accumulated benefit obligation	  	$	16.7	  	 	$	30.1	  	 	$	—  	  	 	$	20.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amounts recognized in the consolidated balance sheets as of December 31, 2008 and 2007, in accordance with FASB Statement No. 158 consist of the following:

 	  	Unfunded U.S. Plan	 	 	Funded Foreign Plan	 	
 	  	    2008    	 	 	    2007    	 	 	    2008    	  	    2007    	 	
Accrued current benefit liability	  	$	(0.8	) 	 	$	(0.7	) 	 	$	—  	  	$	(1.0	) 	
Accrued long-term benefit liability	  	 	(15.9	) 	 	 	(34.5	) 	 	 	—  	  	 	(26.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Funded status	  	$	(16.7	) 	 	$	(35.2	) 	 	$	—  	  	$	(27.6	) 	

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Amounts recognized in the accumulated other comprehensive loss at December 31, 2008 and 2007, consist of the following:

 	  	Unfunded U.S. Plan	  	Funded Foreign Plan	
 	  	    2008    	  	    2007    	  	    2008    	  	    2007    	
Unrecognized net losses	  	$	5.0	  	$	2.5	  	$	—  	  	$	25.7	
Prior service cost	  	 	—  	  	 	0.1	  	 	—  	  	 	—  	
	  	 	 	  	 	 	  	 	 	  	 	 	
Amount recognized	  	$	5.0	  	$	2.6	  	$	—  	  	$	25.7	
	  	 	 	  	 	 	  	 	 	  	 	 	
The estimated unrecognized net losses and prior service costs that will be amortized into net periodic benefit cost over the next fiscal year are as follows:

 	  	Unfunded U.S. Plan	  	Funded Foreign Plan	
 	  	    2008    	  	    2007    	  	    2008    	  	    2007    	
Unrecognized net losses	  	$	0.2	  	$	0.1	  	$	—  	  	$	2.2	
Prior service cost	  	 	—  	  	 	—  	  	 	—  	  	 	—  	
	  	 	 	  	 	 	  	 	 	  	 	 	
Amount unrecognized	  	$	0.2	  	$	0.1	  	$	—  	  	$	2.2	
	  	 	 	  	 	 	  	 	 	  	 	 	
The net periodic pension cost for the unfunded U.S. plan and the funded foreign plan for the three years ended December 31, 2008, 2007, and 2006, is as follows:

 	  	Unfunded US Plan	  	Funded Foreign Plan	 	
 	  	2008	 	 	2007	 	 	2006	  	2008	 	 	2007	 	  	2006	 	
Service cost	  	$	0.7	  	 	$	1.2	  	 	$	1.1	  	$	0.2	  	 	$	0.5	  	  	$	0.5	  	
Interest cost	  	 	2.3	  	 	 	2.0	  	 	 	1.8	  	 	1.5	  	 	 	2.1	  	  	 	0.7	  	
Expected return on plan assets	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	(0.3	) 	 	 	(0.4	) 	  	 	(0.5	) 	
Amortization of transition obligation	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	—  	  	 	 	0.1	  	  	 	0.2	  	
Amortization of prior service cost	  	 	0.1	  	 	 	0.1	  	 	 	0.1	  	 	—  	  	 	 	—  	  	  	 	—  	  	
Amortization of net loss	  	 	0.1	  	 	 	0.4	  	 	 	0.6	  	 	1.5	  	 	 	2.8	  	  	 	0.3	  	
Reduction in benefit obligation	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	—  	  	 	 	—  	  	  	 	—  	  	
Special termination benefits	  	 	—  	  	 	 	—  	  	 	 	6.0	  	 	—  	  	 	 	—  	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Net periodic pension cost	  	$	3.2	  	 	$	3.7	  	 	$	9.6	  	$	2.9	  	 	$	5.1	  	  	$	1.2	  	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Settlement losses	  	$	—  	  	 	$	—  	  	 	$	—  	  	$	4.7	  	 	$	—  	  	  	$	—  	  	
Curtailment (gain)	  	 	(3.7	) 	 	 	—  	  	 	 	—  	  	 	(18.9	) 	 	 	—  	  	  	 	—  	  	
Settlement loss related to plan merger	  	 	4.6	  	 	 	—  	  	 	 	—  	  	 	39.3	  	 	 	—  	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Net pension cost	  	$	4.1	  	 	$	3.7	  	 	$	9.6	  	$	28.0	  	 	$	5.1	  	  	$	1.2	  	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Other comprehensive loss (gain) loss—net of income tax	  	$	1.5	  	 	$	(2.8	) 	 	$	0.4	  	$	(16.3	) 	 	$	0.6	  	  	$	13.5	  	
	  	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
The weighted average assumptions used in the measurement of our benefit obligation as of December 31, 2008 and 2007 (the measurement dates), for the unfunded U.S. plan and the funded foreign plan are as follows:

 	  	Unfunded US Plan	 	 	Funded Foreign Plan	 	
 	  	    2008    	 	 	    2007    	 	 	    2008    	  	    2007    	 	
Discount rate	  	6.25	% 	 	6.35	% 	 	—  	  	6.10	% 	
Rate of compensation increase	  	6.25	% 	 	6.25	% 	 	—  	  	5.00	% 	
 
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The weighted average assumptions used in the measurement of our net cost as of December 31, 2008 and 2007 (the measurement dates), for the unfunded U.S. plan and the funded foreign plan are as follows:

 	  	Unfunded US Plan	 	 	Funded Foreign Plan	 	
 	  	2008	 	 	2007	 	 	2006	 	 	2008	  	2007	 	 	2006	 	
Discount rate	  	6.35	% 	 	5.80	% 	 	5.60	% 	 	—  	  	5.60	% 	 	5.50	% 	
Rate of compensation increase	  	6.25	% 	 	6.25	% 	 	6.25	% 	 	—  	  	5.00	% 	 	3.50	% 	
Expected long-term rate of return on plan assets	  	—  	  	 	—  	  	 	—  	  	 	—  	  	6.10	% 	 	6.50	% 	
The Company’s contributions for 2009 are expected to be $0.8 for the unfunded U.S. plan and $0 for the funded foreign plan due to the complete settlement of the outstanding obligation. As of December 31, 2008, the benefits expected to be paid in each of the next five years, and in the aggregate for the five years thereafter, are disclosed below. The expected benefits are estimated based on the same assumptions used to measure our benefit obligation at the end of the year and include benefits attributable to estimated future employee service as follows:

Year Ending December 31	  	Unfunded US Plan	
2009	  	$	0.8	
2010	  	 	0.8	
2011	  	 	1.4	
2012	  	 	1.4	
2013	  	 	1.4	
2014-2018	  	 	6.8	
	  	 	 	
Total	  	$	12.6	
	  	 	 	
Defined Contribution Plans —The Company provides retirement benefits to certain qualified employees under the Retirement Saving Plan, the Field Retirement Plan, and other related plans. The Company’s expense related to these retirement plans, which is based on a percentage of qualified employee contributions, amounted to $30.1 million, $28.1 million, and $25.1 million for the years ended December 31, 2008, 2007, and 2006, respectively. A substantial portion of these contributions are included in the other revenues and other costs from managed property lines in the consolidated statements of income as the costs of this program are largely related to employees located at lodging properties managed by the Company and are therefore charged to the property owners. A certain portion of these contributions are funded in rabbi trusts, as described below.
Deferred Compensation Plans —We provide match savings and key management and match savings plans, which are nonqualified plans for certain employees. These plans are funded through contributions to rabbi trusts. Contributions and investment elections are determined by the employees. The Company also provides contributions according to a preapproved formula. For the years ended December 31, 2008, 2007, and 2006, employer contribution expenses for these plans were $4.3 million, $3.9 million, and $4.0 million, respectively. A portion of these expenses relate to hotel property level employees, which are reimbursable to us and are included in the other revenues and costs from managed properties lines in the consolidated statements of income. As of December 31, 2008 and 2007, the plans are fully funded. The assets of the plans are invested in mutual funds, which are recorded in other noncurrent assets in the consolidated balance sheets (see Note 8). The related deferred compensation liability is recorded in other long-term liabilities. All investment earnings and contributions will be paid to the participating employees upon the earlier of either termination of employment or retirement pursuant to a designated payment date.
 
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Deferred Incentive Compensation Plans —The deferred incentive compensation plans consist of funded and unfunded defined contribution plans for certain executives. Benefits are discretionary and are based primarily on achievement of certain operational goals and objectives. Participant benefits vest over time and are payable at either the later of retirement or upon termination of employment at age 55. The expense for these plans for the years ended December 31, 2008, 2007, and 2006, was $4.2 million, $6.3 million, and $5.8 million, respectively.
 
12.	INCOME TAXES	
The Company’s tax provision includes federal, state, and foreign income taxes payable. The domestic and foreign components of income before income taxes for the three years ended December 31 are as follows:

 	  	2008	  	2007	  	2006	
U.S. income before tax	  	$	198.8	  	$	333.2	  	$	406.9	
Foreign income before tax	  	 	4.7	  	 	141.1	  	 	117.4	
	  	 	 	  	 	 	  	 	 	
Income before income taxes	  	$	203.5	  	$	474.3	  	$	524.3	
	  	 	 	  	 	 	  	 	 	
The provision for income taxes from continuing operations for the three years ended December 31 is comprised of the following:

 	  	2008	 	 	2007	 	 	2006	 	
Current:	  				 				 				
Federal	  	$	45.1	  	 	$	220.7	  	 	$	149.4	  	
State	  	 	7.0	  	 	 	44.3	  	 	 	34.6	  	
Foreign	  	 	32.2	  	 	 	43.4	  	 	 	27.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total current	  	 	84.3	  	 	 	308.4	  	 	 	211.1	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred:	  				 				 				
Federal	  	 	11.2	  	 	 	(85.3	) 	 	 	(11.6	) 	
State	  	 	0.4	  	 	 	(11.2	) 	 	 	(6.9	) 	
Foreign	  	 	(6.3	) 	 	 	(3.6	) 	 	 	0.8	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total deferred	  	 	5.3	  	 	 	(100.1	) 	 	 	(17.7	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total	  	$	89.6	  	 	$	208.3	  	 	$	193.4	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The following is a reconciliation of the statutory federal income tax rate to the effective tax rate from continuing operations reported in the financial statements:

 	  	2008	 	 	2007	 	 	2006	 	
Statutory U.S. federal income tax rate	  	35.0	% 	 	35.0	% 	 	35.0	% 	
State income taxes—net of federal tax benefit	  	0.6	  	 	4.5	  	 	2.8	  	
Foreign and U.S. tax effects attributable to foreign operations	  	(4.3	) 	 	(5.7	) 	 	(1.9	) 	
Tax contingencies	  	0.8	  	 	6.4	  	 	0.2	  	
Change in valuation allowances	  	(0.5	) 	 	3.6	  	 	0.4	  	
Nondeductible asset impairments	  	13.5	  	 	—  	  	 	—  	  	
General business credits	  	(0.8	) 	 	(0.8	) 	 	(0.5	) 	
Other	  	(0.3	) 	 	0.9	  	 	1.0	  	
	  	 	 	 	 	 	 	 	 	
Effective income tax rate	  	44.0	% 	 	43.9	% 	 	37.0	% 	

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The net change in valuation allowance primarily consists of a decrease in valuation allowance related to the settlement of an issue with the Internal Revenue Service (“IRS”) for $13.8 million partially offset by an increase in valuation allowance for foreign net operating losses incurred in 2008 of $9.3 million. The other significant items impacting the tax rate relate to the impairment of goodwill that is not deductible for tax purposes and a tax benefit resulting from a change in estimate from previously filed state returns.
The components of net deferred tax asset from continuing operations at December 31, 2008 and 2007 is comprised of the following:

 	  	2008	 	 	2007	 	
Deferred tax assets related to:	  				 				
Employee benefits	  	$	143.1	  	 	$	154.3	  	
Foreign and State net operating losses	  	 	68.0	  	 	 	57.2	  	
Future deductions pursuant to IRS settlement	  	 	25.1	  	 	 	27.3	  	
Allowance for uncollectible assets	  	 	27.7	  	 	 	46.9	  	
Nonconsolidated investments	  	 	42.9	  	 	 	59.9	  	
Intangibles	  	 	23.1	  	 	 	19.3	  	
Interest and State benefits	  	 	20.5	  	 	 	16.9	  	
Unrealized investment losses	  	 	7.8	  	 	 	—  	  	
Other	  	 	55.4	  	 	 	48.1	  	
Valuation allowance	  	 	(68.9	) 	 	 	(69.9	) 	
	  	 	 	 	 	 	 	 	
Total deferred tax asset	  	 	344.7	  	 	 	360.0	  	
	  	 	 	 	 	 	 	 	
Deferred tax liabilities related to:	  				 				
Installment sales	  	 	(21.9	) 	 	 	(19.7	) 	
Property and equipment	  	 	(115.6	) 	 	 	(143.9	) 	
Nonconsolidated investments	  	 	(29.9	) 	 	 	(28.6	) 	
Prepaid expenses	  	 	(8.6	) 	 	 	(10.5	) 	
Unrealized investment gains	  	 	—  	  	 	 	(3.3	) 	
Other	  	 	(23.2	) 	 	 	(32.5	) 	
	  	 	 	 	 	 	 	 	
Total deferred tax liability	  	 	(199.2	) 	 	 	(238.5	) 	
	  	 	 	 	 	 	 	 	
Net deferred tax asset	  	$	145.5	  	 	$	121.5	  	
	  	 	 	 	 	 	 	 	
Recognized as:	  				 				
Deferred Taxes—Current	  	$	50.6	  	 	$	24.7	  	
Deferred Taxes—Non-Current	  	 	94.9	  	 	 	96.8	  	
	  	 	 	 	 	 	 	 	
Total	  	$	145.5	  	 	$	121.5	  	
	  	 	 	 	 	 	 	 	
The most significant items impacting the change in deferred taxes relate to the realized loss on a hotel development loan that was previously reserved for book purposes, and the realization of the deferred tax asset related to earnings of unconsolidated non-hospitality ventures. The decrease in deferred tax assets related to those items are approximately $23.6 million and $22.6 million respectively.
The Company provides for deferred taxes under Accounting Principals Board (APB) No. 23 “ Accounting for Income Taxes—Special Areas ,” for the presumed ultimate repatriation to the United States of America of earnings from all foreign subsidiaries and unconsolidated affiliates.
APB No. 23 allows the Company to overcome the presumption to the extent the earnings are indefinitely reinvested outside the United States of America.
 
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As of December 31, 2008 and 2007 respectively, the Company has determined that undistributed net earnings of $44.4 million and $42.2 million of certain foreign subsidiaries would be indefinitely reinvested in operations outside the U.S. These earnings will provide the Company with the opportunity to continue to expand its operations and growth in foreign locations. The Company’s current intentions meet the indefinite investment criteria of APB No. 23. The Company continues to provide deferred taxes, as required, on the undistributed earnings of foreign subsidiaries and unconsolidated affiliates that are not indefinitely reinvested in the operations outside the U.S.
The Company has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets. The valuation allowance reduces deferred tax assets to an amount that represents the Company’s best estimate of the amount of deferred tax assets that will be realized.
As of December 31, 2008, the Company has $68.0 million of state and foreign net operating losses. Some of these operating losses will begin to expire in 2009 and continue through 2028; however, a number of these operating losses have no expiration date and may be carried forward indefinitely. A valuation allowance of $59.9 million has been established for net operating losses, as we believe it is more likely than not that the Company will be unable to utilize these operating loss carry forwards. A valuation allowance has also been established against other foreign assets that are not expected to be realized.
The Company adopted the provisions of FIN 48 as of January 1, 2007. As a result of the adoption, the Company provided for a $16.4 million increase in the liability for unrecognized tax benefits. Of this amount, $8.8 million was recorded as an adjustment to the opening balance of retained earnings. Total unrecognized tax benefits as of December 31, 2008 and 2007 were $86.6 million and $86.1 million respectively, of which $62.4 million and $65.0 million respectively, would impact the effective tax rate if recognized. It is reasonably possible that a reduction of up to $50.8 million of unrecognized tax benefits could occur within 12 months resulting from the resolution of audit examinations and the expiration of certain tax statutes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 	  	2008	 	 	2007	 	
Unrecognized tax benefits–Beginning balance	  	$	86.1	  	 	$	71.4	  	
Total increases–current period tax positions	  	 	2.8	  	 	 	5.1	  	
Total increases–prior period tax positions	  	 	13.0	  	 	 	18.2	  	
Settlements	  	 	(15.0	) 	 	 	(8.1	) 	
Lapse of statute of limitations	  	 	(0.3	) 	 	 	(0.5	) 	
	  	 	 	 	 	 	 	 	
Unrecognized tax benefits–Ending balance	  	$	86.6	  	 	$	86.1	  	
	  	 	 	 	 	 	 	 	
During 2008, the IRS entered into a settlement agreement with H Group Holding, Inc. (the “Former Parent”) that provided full concession for certain protested benefits related to the taxable years ended January 31, 2002 and 2003. The agreement also included the same benefits reported by Hyatt Corporation, a subsidiary of the Company, and by the Company for taxable years after December 31, 2003. In connection with the resolution of these examinations, we reduced the liability for unrecognized tax benefits by $14.5 million and gross interest expense by $4.9 million.
In accordance with our accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The policy did not change as a result of the adoption of FIN 48. Total gross accrued interest and penalties were $57.7 million and $49.9 million as of December 31, 2008 and 2007 respectively, of which $8.1 million and
 
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$16.0 million was recognized as a component of income tax expense during the year ended December 31, 2008 and 2007 respectively.
The following consolidated federal income tax returns are currently under IRS examination: the Former Parent for the taxable years ended December 31, 2003 and 2004; Hyatt Corporation for the short-period ended December 31, 2004; AIC Holding Co., a subsidiary of the Company, for the taxable years ended December 31, 2003 and 2004 and the Company for the taxable years ended December 31, 2004 and 2005. Federal income tax returns for all subsequent taxable years remain subject to examination by the IRS.
The Company is under audit by various state and foreign tax authorities. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return however, the state impact of any federal changes remains subject to examination by various states for a period generally of up to one year after formal notification to the states. The statute of limitations for the foreign jurisdictions ranges from three to ten years after filing the respective tax return.
The Former Parent, Hyatt Corporation and another related party entered into a Tax Separation Agreement during 2004 in connection with the formation of the Company. As part of the Tax Separation Agreement, Hyatt Corporation agreed to indemnify the Former Parent for all pre-June 30, 2004 taxes attributable to Hyatt Corporation calculated as if it were a separate consolidated group. The Company has unrecognized tax benefits related to the various audits noted above, including those periods covered by the indemnification in the Tax Separation Agreement. The ultimate outcome and related liability for these matters cannot be fully determined at this time, however, the Company believes the payments made in prior years and the unrecognized tax benefits provided are adequate to cover any future liability.
In July 2005 the Company advanced the Former Parent approximately $32 million in connection with the Tax Separation Agreement. The amounts received from the Former Parent in 2006 were less than the original advance, and pursuant to the terms of the Tax Separation Agreement, the Company recorded a $10 million deemed distribution to the Former Parent.
In 2007, the Company paid the Former Parent approximately $16 million for amounts due under the Tax Separation Agreement. As of December 31, 2008 and 2007 amounts due to Former Parent under the Tax Separation Agreement were approximately $4 million.
 
13.	EQUITY AND COMPREHENSIVE INCOME	
Comprehensive Income —Comprehensive income primarily includes our reported earnings, changes in additional minimum pension liability (prior to the adoption of FASB Statement No. 158), changes in unrecognized pension cost (post FASB Statement No. 158 adoption), foreign currency translation and changes in value of the effective portion of cash flow hedges.
 
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The following table summarizes components of accumulated other comprehensive income at December 31, 2008, 2007, and 2006:

 	  	Balance at
December 31,
2008	 	 	Balance at
December 31,
2007	 	 	Balance at
December 31,
2006	 	
Foreign currency translation adjustments, net of income taxes of $8.1 million, $(4.8) million and $(5.0) million in 2008, 2007 and 2006, respectively	  	$	(54.0	) 	 	$	13.2	  	 	$	(2.2	) 	
Unrecognized pension cost including adoption of FAS 158 in 2006, net of income taxes of $2.1 million, $10.5 million and $12.1 million in 2008, 2007 and 2006, respectively	  	 	(3.8	) 	 	 	(17.6	) 	 	 	(20.0	) 	
Unrealized loss on hedge activity net of income taxes of $0.7 million in 2008	  	 	(1.8	) 	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total accumulated other comprehensive income	  	$	(59.6	) 	 	$	(4.4	) 	 	$	(22.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Treasury Stock —On August 22, 2007, a subsidiary of the Company acquired 24,271,808 shares of Hyatt Hotels Corporation common stock, par value $0.01 per share (HHC Common Stock) from certain subsidiaries of Marmon Holdings, Inc., an affiliate of the Company, for $745.4 million in cash. These shares of HHC Common Stock were substantially purchased with the proceeds from the issuance of a promissory note to a related party (see below). On September 14, 2007 and October 17, 2007, an additional 8,290,875 and 3,256,268 shares, respectively, of HHC Common Stock were acquired from other stockholders for $254.6 million and $100.0 million in cash, respectively. The aggregate 35,818,952 shares of HHC Common Stock purchased had been recorded as treasury stock under the cost method and are included as a separate component of stockholders’ equity. The Company’s board of directors approved the retirement of the treasury stock and during 2008 the Company retired the shares. The book value was allocated to common stock and additional paid-in-capital at the time of retirement.
On August 22, 2007, the Company borrowed $730.0 million, in the form of a promissory note, from a related party. The promissory note was unsecured and had an interest rate of 5.5%, and was due on August 22, 2010. The Company repaid the promissory note in full along with all accrued interest on September 25, 2007.
Senior Subordinated Notes and Stock Purchase Forward agreement —On August 28, 2007, the Company issued $500.0 million of 5.84% senior subordinated notes due 2013 (“Notes”) and a stock purchase forward agreement (“Subscription Agreement”) to an independent third party that requires the purchaser to acquire a variable number of shares, as defined, for a total of $500.0 million in cash. The holder of these Notes also received a seat on the Company’s board of directors. On October 25, 2007, the Company issued $100.0 million of additional Notes and a Subscription Agreement to an independent third party for a total of $100.0 million in cash. The purchasers’ obligations under the Subscription Agreement are secured by a pledge of the Notes to the Company.
The Notes bear interest at 5.84% and are due on September 1, 2013, unless extended under the Notes Indenture (“Indenture”), and can be remarketed in 2011 under then current market interest rates. Under the terms of the Indenture, at the time that the Notes are remarketed, the Company can extend the maturity date to any date not later than September 1, 2021. Immediately prior to the settlement of the purchase of the HHC Common Stock under the Subscription Agreement, the Notes will be remarketed and sold and the interest rate on the Notes reset. The Notes are not prepayable by the Company except upon the occurrence of certain events and are due at maturity, which may be extended.
 
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Under the Subscription Agreement, the purchasers are required to pay to the Company a subscription fee of 0.84% per year of the purchase price through the settlement date, as defined. The fair value of the subscription receivable of $18.2 million was recorded as additional paid-in capital at the date of issuance. The purchase of shares of HHC Common Stock under the Subscription Agreement is mandatory on September 1, 2011 (the “Settlement Date”). The Settlement Date is automatically accelerated upon the occurrence of a qualified public offering or a Board approved change of control, as defined. The purchase of the shares of HHC Common Stock will be settled in cash in exchange for a variable number of HHC Common Stock based upon the fair value per share of HHC Common Stock at the date of settlement.
Preferred Stock —On August 28, 2007, the Company issued 100,000 shares of a newly designated stock (“Convertible Preferred Stock”) for $500.0 million to an independent third party investor. The Convertible Preferred Stock is currently convertible into approximately 16,281,342 shares of HHC Common Stock. The holder of the Convertible Preferred Stock also received a seat on the Company’s board of directors. Conversion is at the option of the holder. The Convertible Preferred Stock participates in dividends and distributions equivalent to the HHC Common Stock on an if-converted basis. In addition, the Convertible Preferred Stock also participates in any liquidation, dissolution, or winding up on an equivalent basis as the HHC Common Stock. The Convertible Preferred Stock is non-voting. The Convertible Preferred Stock may be sold or transferred only in accordance with the terms of the Stockholders’ Agreement. Pursuant to the Stockholders’ Agreement, the Company has the right but not the obligation to acquire the stock from any selling stockholder. In addition, the holder of the Convertible Preferred Stock can request that the Company register for issuance any of its common stock, subject to certain limitations.
In connection with the purchase of the treasury stock and issuance of the senior notes, forward agreement and preferred stock, the Company incurred a total of $23.7 million in transaction costs. Of the total transaction costs, $6.9 million was recorded as Notes issuance costs included in other long-term assets and is being amortized over the term of the Notes; $12.8 million has been recorded as a prepaid asset included in other long-term assets; $3.0 million was recorded as a reduction in the proceeds related to the issuance of the Convertible Preferred Stock; and $1.0 million was recorded as part of the cost of acquiring treasury stock.
Common Stock —On February 3, 2006, the Company’s board of directors declared a stock dividend of 3,997.8 shares of common stock for each issued and outstanding share of common stock, which was paid on February 14, 2006. The effect of this stock dividend was reflected as if it occurred at the beginning of the earliest year presented. At December 31, 2008, the Company had a total of 239,660,762 common shares outstanding.
 
14.	COMMITMENTS AND CONTINGENCIES	
In the ordinary course of business, we enter into various commitments, guarantees, surety bonds, and letter of credit agreements, which are discussed below:
Guarantees and Commitments —As of December 31, 2008, we are committed, under certain conditions, to loan or invest up to $47.9 million in various business ventures.
Certain of our hotel lease or management agreements contain performance test clauses that stipulate certain minimum levels of operating performance. While the amount of shortfall from the stipulated performance to the actual amount is not limited, we are not obligated to fund such shortfalls. We have recorded in accrued liabilities $0.2 million as of December 31, 2008 related to these performance standards based on future expected fundings. In addition, we have one management agreement where we are required to make payments based on specified thresholds. The remaining maximum potential payments related to this agreement are $38 million through 2030.
 
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We have entered into various loan, lease, completion, and repayment guarantees related to investments held in hotel operations. Under certain of these agreements, the maximum exposure as of December 31, 2008, is $10.5 million. There was no accrual recorded as of December 31, 2008, related to these guarantees as the likelihood of performance under these guarantees is determined to be remote.
In connection with a Canadian property, a subsidiary of the Company guaranteed the payment of certain Canadian tax liabilities to the former owner, a related party, to the extent these become payable under the contract. The tax liability has been deferred until any one of a number of events, as defined in the contract, causes the liability to become payable. The potential future liability under this guarantee as of December 31, 2008, is 6.8 million Canadian Dollars ($5.6 million). There was no liability recorded as of December 31, 2008, related to this guarantee as the likelihood of performance was deemed to be remote.
Surety Bonds —Surety bonds issued on behalf of the Company totaled $22.3 million at December 31, 2008, and primarily relate to workers’ compensation, taxes, licenses, and utilities related to our lodging operations.
Letters of Credit —Letters of credit outstanding on the Company’s behalf as of December 31, 2008, totaled $109.8 million, the majority of which relate to the ongoing operations of the Company. Of the $109.8 million letters of credit outstanding, $89.1 million reduces the available capacity under the revolving credit facility (see Note 9).
Capital Expenditures —As part of our ongoing business operations, significant expenditures are required to complete renovation projects that have been approved.
In December 2006, a contract was signed to acquire a business jet for a total acquisition price of $42.0 million with a scheduled delivery date of June 30, 2009. The contract contained certain provisions that allowed us to exit the contract and receive a full refund of payments made. A total amount of $6.7 million had been paid as of October 31, 2008, which was capitalized and included in long-term assets. The contract was terminated in and full refund of payments plus interest was received in October 2008.
Other —The Company acts as general partner in various partnerships owning hotel facilities that are subject to mortgage indebtedness. These mortgage agreements generally limit the lender’s recourse to security interests in assets financed and/or other assets of the partnership and/or the general partner(s) thereof.
The Company is subject from time to time to various claims and contingencies related to lawsuits, taxes, and environmental matters, as well as commitments under contractual obligations. Many of these claims are covered under the current insurance programs, subject to deductibles. The Company recognizes a liability associated with commitments and contingencies when a loss is probable and reasonably estimable. Although the ultimate liability for these matters cannot be determined at this point, based on information currently available, the Company does not expect that the ultimate resolution of such claims and litigation will have a material adverse effect on its consolidated financial statements.
 
15.	LEASES	
We lease hotels and equipment under a combination of capital and operating leases, which generally require us to pay taxes, maintenance, and insurance. Most of the leases contain renewal options, which enable us to retain use of the facilities in desirable operating areas.
 
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The operating leases for the majority of our leased hotels call for the calculation of rental payments to be based on a percentage of the operating profit of the hotel, as defined by contract. As a result, future lease payments related to these leases are contingent upon operating results and are not included in the table below.
The future minimum lease payments due in each of the next five years and thereafter at December 31, 2008, are as follows:

Years Ending December 31	  	Operating
Leases	  	Capital
Leases	
2009	  	$	29.6	  	$	37.1	
2010	  	 	28.4	  	 	15.8	
2011	  	 	26.5	  	 	15.8	
2012	  	 	25.0	  	 	15.9	
2013	  	 	23.9	  	 	15.7	
Thereafter	  	 	283.4	  	 	215.5	
	  	 	 	  	 	 	
Total minimum lease payments	  	$	416.8	  	$	315.8	
	  	 	 	  			
Less amount representing interest	  			  	 	77.2	
	  			  	 	 	
Present value of minimum lease payments	  			  	$	238.6	
	  			  	 	 	
Hyatt Regency Grand Cypress —On April 9, 2007, the Company signed a 30-year lease agreement with the owners of the Hyatt Regency Grand Cypress to lease the hotel, including the land, as well as a parcel of land adjacent to the hotel. This lease agreement includes an option, at the Company’s discretion, to purchase the hotel, including the land, and the adjacent parcel of land for $200.0 million in the eighth lease year, or in the tenth lease year for $220.0 million or in the fifteenth lease year for $255.0 million. Separately, the lease agreement includes an option, at the Company’s discretion, to purchase the land adjacent to the hotel for $10.0 million at any time through the fifteenth lease year, which would reduce the option price of the hotel and land accordingly. On August 28, 2007, the Company exercised this option and purchased the adjacent land. This lease qualifies as a capital lease under FASB Statement No. 13, and, accordingly, the operating results of the hotel have been consolidated by the Company as of April 9, 2007. The leased assets are included in property and equipment, net, in the amount of $227.1 million. The lease agreement includes a commitment to spend $30.0 million on improvements to the property within the first five years. Total minimum lease payments were calculated over the seven years of the lease term assuming that the Company will exercise the option to purchase the hotel and land in the eighth lease year and $30.0 million of improvements will be spent within the first five years of the lease agreement. The Company is responsible for all operating costs related to the property, including insurance, maintenance, and taxes.
Hyatt Center—We lease our corporate office space at the Hyatt Center in Chicago, Illinois, from a related party. Under our master lease for Hyatt Center, we have entered into sublease agreements with certain related parties. The total minimum rentals to be received in the future under these noncancelable operating subleases as of December 31, 2008, are $45.5 million through 2020.
A summary of rent expense from continuing operations for all operating leases is as follows:

 	  	2008	  	2007	  	2006	
Minimum rentals	  	$	22.4	  	$	22.3	  	$	17.9	
Contingent rentals	  	 	56.2	  	 	45.1	  	 	65.1	
	  	 	 	  	 	 	  	 	 	
Total	  	$	78.6	  	$	67.4	  	$	83.0	

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The Company leases retail space at its owned hotel locations under operating leases. The future minimum lease receipts scheduled to be received in each of the next five years and thereafter at December 31, 2008, are as follows:

Years Ending
December 31	  	Amount	
2009	  	$	22.8	
2010	  	 	21.7	
2011	  	 	20.8	
2012	  	 	19.9	
2013	  	 	19.3	
Thereafter	  	 	50.5	
	  	 	 	
Total minimum lease receipts	  	$	155.0	

16.	STOCK-BASED COMPENSATION	
As part of the Company’s long-term incentive plan, the Company awards Stock Appreciation Rights (“SARs”) and Restricted Stock Units (“RSUs”) to certain executives.
Stock Appreciation Rights—Each vested SAR gives the holder the right to the difference between the value of a Hyatt Hotels Corporation common share at the exercise date and the value of a common share at the grant date. Vested SARs can be exercised annually, over their life, during the “exercise window” period as determined by the plan. The plan requires settlement in Hyatt Hotels Corporation common shares. The Company is accounting for these SARs as equity instruments, per the provisions of FASB Statement No. 123R, Share-Based Payments . The Company recognized $8.0 million, $6.8 million, and $0.7 million of total compensation expense for SARs in 2008, 2007, and 2006, respectively. The income tax benefit was $2.6 million, $2.4 million, and $0.2 million in 2008, 2007, and 2006, respectively.
In October 2006, the Company granted 1,168,750 SARs, resulting in $2.3 million, $2.8 million and $0.7 million of compensation expense in 2008, 2007, and 2006, respectively. With the exception of one award, the terms of all SARs granted in October were identical in all respects. The only difference between the group of identical awards (“Group A awards”) and the exception award (“Group B award”) relates to the timing of the vesting of the SARs. The Group A awards of 1,031,250 SARs vest over a four-year service period, with 25% of these SARs vesting in October of each year beginning in October 2007. The Group B award of 137,500 SARs vests 0% in 2007, 33.3% in October 2008, 33.3% in October 2009, and 33.3% in October 2010. Each of these SARs has a 10-year life, expiring in October 2016.
In July and November 2007, the Company granted 1,480,001 and 33,000 SARs, respectively. Associated with those grants, the Company recorded $4.5 million and $4.0 million of compensation expense in 2008 and 2007. With the exception of one award, the terms of all the SARs granted in July were identical in all respects. The only difference between Group A and Group B relates to the timing of the vesting of the SARs. The Group A award of 850,000 vests over a four-year service period, with 25% of these SARs vesting in December of each year beginning in December 2007. The Group B award of 630,001 vests over a four-year service period, with 25% of these SARs vesting in March of each year beginning in March 2008. Group C was granted in November 2007 and vests over a four-year service period, with 25% of these SARs vesting in August of each year beginning in August 2008. Each of these SARs has a 10-year contractual term, expiring in 2017.
In May 2008, the Company granted 569,275 SARs. Associated with that grant, the Company recorded $1.2 million of compensation expense in 2008. The 2008 SAR awards are all identical and
 
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vest over a four-year service period, with 25% of these SARs vesting in April of each year beginning in April 2009. Each of these SARs has a 10-year contractual term, expiring in 2018.
The weighted average grant date fair value for the awards granted in 2008, 2007, and 2006 was $13.00, $12.19, and $9.52, respectively.
The fair value of each SAR was estimated based on the date of grant using the Black-Scholes-Merton option-valuation model with the following assumptions:

 	  	2006 Group
A	 	 	2006 Group
B	 	 	2007 Group
A	 	 	2007 Group
B	 	 	2007 Group
C	 	 	2008 Group
A	 	
Exercise Price	  	$	24.95	  	 	$	24.95	  	 	$	31.40	  	 	$	31.40	  	 	$	30.71	  	 	$	29.09	  	
Expected Life in Years	  	 	6.25	  	 	 	6.5	  	 	 	5.983	  	 	 	6.124	  	 	 	6.116	  	 	 	6.208	  	
Risk-free Interest Rate	  	 	4.65	% 	 	 	4.65	% 	 	 	4.92	% 	 	 	4.92	% 	 	 	3.94	% 	 	 	3.36	% 	
Expected Volatility	  	 	27.50	% 	 	 	27.50	% 	 	 	28.50	% 	 	 	28.50	% 	 	 	38.00	% 	 	 	40.00	% 	
Annual Dividend Yield	  	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	
The Company used an estimated forfeiture rate of 0% because only a small group of executives received these grants and the Company has limited historical data on which to base these estimates. At December 31, 2008, the Company had $17.3 million of unearned compensation expense associated with SARs that will be earned over the next four years. The Company records the compensation expense earned for SARs on a straight-line basis from the date of grant. The exercise price of these SARs was the fair value of the Company’s common stock at the grant date, based on a valuation of the Company. The expected life was estimated based on the midpoint between the vesting period and the contractual life of each SAR, per guidance from the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107 and No. 110. The risk-free interest rate was based on U.S. Treasury instruments with similar expected life. The expected volatility was estimated using the average implied volatility of exchange-traded options of the Company’s major publicly traded competitors.
A summary of SAR activity as of December 31, 2008, and changes during 2008 are presented below:

 	  	SAR Units	 	 	Weighted
Average
Exercise Price
(in whole
dollars)	  	Weighted
Average
Contractual
Term	
Outstanding at December 31, 2007:	  	2,681,751	  	 	$	28.58	  	9.19	
Granted	  	569,275	  	 	 	29.09	  	9.34	
Exercised	  	—  	  	 	 	—  	  	—  	
Forfeited or canceled	  	(489,542	) 	 	 	26.85	  	8.08	
	  	 	 	 	 	 	  	 	
Outstanding at December 31, 2008:	  	2,761,484	  	 	 	28.99	  	8.44	
Exercisable as of December 31, 2008:	  	1,036,334	  	 	 	28.54	  	8.18	
Expected to vest as of December 31, 2008:	  	1,725,150	  	 	$	29.27	  	8.60	
In May 2008, an award was modified and, in May and December 2008, other awards were forfeited. As is consistent with the guidance in FASB Statement No. 123R, the Company reversed compensation expense associated with unvested, forfeited awards. For the year-ended December 31, 2008, the Company recognized net additional compensation expense of $0.3 million and recorded a liability for $0.7 million for the future cash settlement of the modified awards. The additional compensation expense is reflected in the 2008 expense recorded for the 2007 and 2006 SARs awards
 
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discussed above. The liability was reversed as a credit to equity as of December 31, 2008 as a cash payment for the settlement of the awards was determined to be remote.
Restricted Stock Units —The Company recognized $4.1 million, $2.2 million, and $0.1 million of total compensation expense for RSUs in 2008, 2007, and 2006, respectively. The income tax benefit was $1.3 million, $0.8 million, and $0 in 2008, 2007, and 2006, respectively.
Each vested RSU will be settled with a single share of Hyatt Hotels Corporation common stock. The value of the RSUs was based on a valuation of the Company’s common stock.

Grant Date	  	RSUs	  	Value	  	Total Value	  	Vesting Period	
December 2006	  	210,000	  	$	31.40	  	$	6.6	  	3 years	
May 2008	  	412,015	  	$	29.09	  	$	12.0	  	4 years	
September 2008	  	40,670	  	$	29.09	  	$	1.2	  	4 years & 10 years	
In December 2008, 28,295 RSUs from the May grant were forfeited. As is consistent with the guidance in FASB Statement No. 123R, the Company reversed compensation expense associated with the unvested, forfeited awards.
The Company records compensation expense earned for RSUs on a straight-line basis from the date of grant.
A summary of the status of the non-vested restricted stock unit awards outstanding under the plan as of December 31, 2008 is presented below:

 	  	Restricted Stock
Units	 	 	Weighted
Average Grant
Date Fair
Value (in
whole dollars)	
Nonvested at December 31, 2007:	  	140,000	  	 	$	31.40	
Granted	  	452,685	  	 	 	29.09	
Vested	  	(72,500	) 	 	 	31.32	
Forfeited or canceled	  	(28,295	) 	 	 	29.09	
	  	 	 	 	 	 	
Nonvested at December 31, 2008:	  	491,890	  	 	$	29.42	
The Company’s total unearned compensation for its stock-based compensation programs as of December 31, 2008 was $17.3 million for SARs and $12.6 million for RSUs, which will be recorded to compensation expense over the next ten years as follows:

 	  	2009	  	2010	  	2011	  	2012	  	2013 +	  	Total	
SARs	  	$	7.7	  	$	7.1	  	$	2.1	  	$	0.4	  	$	—  	  	$	17.3	
RSUs	  	 	5.2	  	 	3.1	  	 	3.1	  	 	0.9	  	 	0.3	  	 	12.6	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	12.9	  	$	10.2	  	$	5.2	  	$	1.3	  	$	0.3	  	$	29.9	
Director Deferred Compensation Plan —In July 2007, the Company adopted the Deferred Compensation Plan for its board of directors. Under the plan provisions, a director may elect to defer portions of the annual compensation package to be paid at a date in the future. The annual compensation package is comprised of fees paid in cash and stock. The plan is being accounted for under the provisions of FASB Statement 123R and other applicable guidance. As of December 31, 2008 and 2007, the Company has recorded a liability for $0.9 million and $0.9 million, respectively, associated with the stock-based portion of this plan.
 
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17.	ACQUISITIONS, DISPOSITIONS, AND DISCONTINUED OPERATIONS	
Acquisitions —The Company continually assesses strategic acquisitions to complement its current business. Assets acquired and liabilities assumed in business combinations were recorded on the Company’s consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the Company have been included in the consolidated statements of income since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when the Company receives final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of the following acquisition agreements except as otherwise disclosed below.
The Great Eastern Hotel Holding Company —The Company previously held a 50% interest in the Great Eastern Hotel Holding Company (GEHHC) and, accordingly, accounted for its investment as an unconsolidated hospitality venture under the equity method. GEHHC, through its wholly owned subsidiary, owns the Great Eastern Hotel in London, which was converted to the Andaz Liverpool Street hotel. On November 30, 2007, the Company purchased the remaining 50% interest in this hotel for approximately GBP 40.0 million ($82.9 million), including the assumption of debt of which GBP 55.0 million ($114.0 million) related to our 50% acquired interest (see Note 9), and an interest rate swap (see Note 19). The total purchase price of our interest at November 30, 2007 was $135.0 million, which is inclusive of our prior 50% ownership interest. As a result of the acquisition of GEHHC, the Company also assumed a 50% ownership interest in the Great Eastern Hotel Properties Limited (GEHP). In accordance with FIN 46R, we evaluated GEHHC’s investment in GEHP and determined that the investment qualified as a VIE. In addition, we concluded that GEHHC was the primary beneficiary of GEHP and, accordingly, consolidated the investment effective November 30, 2007. On February 6, 2008, the Great Eastern Hotel Company purchased the remaining 50% interest in the GEHP for GBP 16.0 million ($31.4 million), which included the settlement of shareholder loans and noncontrolling interest. Both company’s results are recorded in the owned and leased hotels segment.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of purchase:

 	  	November 30,
2007	
Cash and cash equivalents	  	$	7.2	
Inventories	  	 	0.7	
Property and equipment	  	 	178.6	
Acquired lease rights	  	 	158.0	
Goodwill	  	 	109.3	
Other assets	  	 	9.1	
	  	 	 	
Fair value of assets acquired	  	 	462.9	
	  	 	 	
Current liabilities	  	 	9.3	
Current maturities of long-term debt	  	 	15.6	
Long-term debt	  	 	228.0	
Noncontrolling interest	  	 	8.1	
Other long-term liabilities	  	 	66.9	
	  	 	 	
Fair value of liabilities assumed	  	 	327.9	
	  	 	 	
Total purchase price	  	$	135.0	

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As a result of the annual impairment review, goodwill of British Pounds 52.8 million ($78.5 million) assumed through the purchase of GEHHC was fully impaired. Refer to Note 7 for additional information.
Hyatt Regency San Antonio —On June 1, 2007, the Company acquired the Hyatt Regency San Antonio Riverwalk for $161.3 million in cash, the assumption of debt with a fair value of $66.6 million and net working capital of $2.9 million.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the owned and leased hotels segment at the date of purchase:

Current assets	  	$	7.8	
Property and equipment	  			
Land	  	 	12.8	
Building	  	 	195.6	
Furniture, fixtures and equipment	  	 	16.6	
	  	 	 	
Fair value of assets acquired	  	 	232.8	
	  	 	 	
Current liabilities	  	 	4.9	
Current maturities of long-term debt	  	 	3.3	
Long-term debt	  	 	63.3	
	  	 	 	
Fair value of liabilities assumed	  	 	71.5	
	  	 	 	
Net purchase price	  	$	161.3	
	  	 	 	
Dispositions:
AmeriSuites Hotels —On June 13, 2007, the Company sold six AmeriSuites hotels for $43.1 million, net of closing costs, to unrelated third parties, resulting in a pre-tax gain of $7.2 million. The Company secured long-term franchise contracts from the purchasers to franchise these hotels as Hyatt Place hotels once conversion to Hyatt Place is completed. Accordingly, the pre-tax gain of $7.2 million has been recognized and the operating results and financial position of these hotels have not been classified as part of discontinued operations, but are recorded within the owned and leased hotels segment.
Hyatt Regency Woodfield —On June 9, 2007, the Hyatt Regency Woodfield was sold for $48.2 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain on the sale in the amount of $13.8 million. The hotel continues to be operated as a Hyatt-branded hotel and the Company will continue to manage the hotel under a short-term management contract. On termination of such management contract, a long-term franchise contract was secured. Accordingly, the pre-tax gain of $13.8 million has been recognized and the operating results and financial position of this hotel have not been classified as discontinued operations, but are recorded within the owned and leased hotels segment.
AmeriSuites Hotels —On May 2, 2007, the Company sold an AmeriSuites hotel for $6.4 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $0.2 million. The Company secured a long-term franchise contract from the purchaser to franchise the hotel as a Hyatt Place hotel. Accordingly, the pre-tax gain of $0.2 million has been recognized and the operating results and financial position of this hotel has not been classified as part of discontinued operations, but are recorded within the owned and leased hotels segment.
Hyatt Regency Newport —On September 15, 2006, the Company sold the Hyatt Regency Newport for $52.5 million, net of closing costs, to an unrelated third party resulting in a pre-tax gain of
 
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$17.4 million. The Company secured a long-term franchise contract from the purchaser to franchise the hotel as a Hyatt full service hotel. Accordingly, the pre-tax gain of $17.4 million has been recognized and the operations of the hotel have not been classified as part of discontinued operations.
Hyatt Regency Belgrade —On June 6, 2006, the Company sold its interest in the Hyatt Regency Belgrade for $14.2 million in cash to an unrelated party. The hotel continues to be operated as a Hyatt-branded hotel and the Company continues to manage the hotel under a long-term management contract. Accordingly, the pre-tax gain on sale of $13.3 million was deferred and is being recognized in management fee revenues over the initial term of the management contract. In addition, a related note receivable was sold for $36.2 million, with a pre-tax gain of $7.2 million. This gain is also being deferred and will be recognized in management fee revenues over the term of the management contract.
Chesapeake Residential Land —On February 2, 2006, an entity in which we hold a significant investment and consolidate, sold residential land located in Maryland for $40.8 million in cash to an unrelated party. The Company recorded a pre-tax gain of $39.3 million and a charge for noncontrolling interest of $13.2 million related to our partner’s noncontrolling interest in this transaction.
Discontinued Operations —In accordance with FASB Statement No. 144, the operating results, assets, and liabilities of the following businesses have been reported separately by the Company as discontinued operations in the consolidated balance sheets and consolidated statements of income. We do not have any continuing involvement in these operations.
2008 Transactions:
Hawthorne Suites —On August 18, 2008, the Company sold the property known as Hawthorne Suites Orlando for $8.1 million, to an unrelated third party, resulting in a pre-tax gain of $4.2 million.
US Franchise Systems— On July 18, 2008, the Company sold US Franchise Systems, Inc. (“USFS”), a wholly owned subsidiary of the Company, as part of a stock purchase agreement with an unaffiliated third party for $131.2 million. The Company recorded a pre-tax gain of $78.3 million from the sale.
2007 Transactions:
AmeriSuites Hotel —On May 2, 2007, the Company sold an AmeriSuites hotel for $7.5 million to an unrelated third party. The Company recorded a pre-tax gain of $2.6 million from the sale.
2006 Transactions:
AmeriSuites Hotels —On November 15, 2006, the Company sold four AmeriSuites hotels for $20.7 million in cash to an unrelated party. The Company recorded a pre-tax gain of $0.4 million from the sale.
Hawthorn Suites —On November 15, 2006, the Company sold the properties known as Hawthorn Suites Durham and Hawthorn Suites Tulsa for $5.9 million. These hotels were sold for a pre-tax loss of $2.3 million.
Summerfield Suites Seattle —On June 12, 2006, the Company sold the Summerfield Suites Seattle hotel for $32.9 million in cash to an unrelated party. The Company recorded a pre-tax loss on sale of $0.5 million.
Revenues for all discontinued operations for the years ended December 31, 2008, 2007, and 2006, were $13.4 million, $31.7 million, and $44.5 million, respectively.
 
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As a result of certain of the above-mentioned dispositions, the Company has agreed to provide indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
The table below shows the major classes of assets and liabilities related to the discontinued operations as of December 31, 2007. The assets and liabilities related to discontinued operations at December 31, 2008 are immaterial.

 	  	December 31,
2007	
Cash and cash equivalents	  	$	6.7	
Receivables and other current assets	  	 	4.9	
Property and equipment, net	  	 	4.8	
Intangibles	  	 	45.8	
Other assets	  	 	4.5	
	  	 	 	
Total assets	  	 	66.7	
	  	 	 	
Accounts payable and accrued expenses	  	 	7.5	
Noncontrolling interests	  	 	0.7	
	  	 	 	
Total liabilities	  	 	8.2	
	  	 	 	
Net assets	  	$	58.5	

18.	RELATED-PARTY TRANSACTIONS	
In addition to those included elsewhere in the notes to the consolidated financial statements, related-party transactions entered into by the Company are summarized as follows:
Investments —The Company is an investor in certain real estate partnerships that are managed by an affiliate. Generally, we are entitled to a preferred return on these investments, and we retain a small residual ownership interest after our preferred capital balance is repaid. While the carrying value of these cost method investments at December 31, 2008 and 2007 is zero, we received distributions of $0.2 million, $13.6 million and $59.5 million during 2008, 2007, and 2006, respectively. Amounts included in other income, net in our consolidated statements of income related to these investments were $0.2 million, $13.6 million and $40.0 million during 2008, 2007 and 2006, respectively.
In addition, we own a 5% limited partnership interest and limited liability company interests in three privately held investment entities, which invest in life science technology companies and are managed by an affiliate. The carrying value of these cost method investments at December 31, 2008 and 2007 is $0.3 million and $124.4 million, respectively. We received distributions during the years ended December 31, 2008, 2007, and 2006 of $183.8 million, $5.5 million, and $12.3 million, respectively, of which $122 million represented a return of capital in 2008. The distribution in 2008 was a result of the sale of one of the underlying investments. These distributions are included in other income, net in our consolidated statements of income.
Transition Services Agreements —The Company is a party to Transition Services Agreements whereby we agree to provide certain administrative services to other related parties at cost, as defined, for a maximum of three years. These agreements expired on June 30, 2007. Nominal services continue to be rendered by the Company.
Leases —The Company’s corporate headquarters have been located at the Hyatt Center in Chicago, Illinois since 2005. A related party owns the Hyatt Center and a subsidiary of Hyatt Hotels
 
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Corporation has signed a master lease for a portion of this building and has entered into sublease agreements with certain related parties. The gross future operating lease payments for the entire term of this lease, ending January 31, 2020, is $116.6 million. Future sublease income for this space from related parties is $45.5 million. As of December 31, 2008 and 2007, the Company did not have a payable due to the landlord. The Company recorded, in selling, general and administrative expenses, $10.6 million, $10.0 million and $8.5 million in 2008, 2007 and 2006, respectively, for rent, taxes and our share of operating expenses and shared facility costs under the lease.
Property and Equipment —A related party provides services for the operation and maintenance of Company’s aircraft. The Company is charged for the cost of operating the aircraft. Additionally, the Company has a timesharing agreement with certain affiliates whereby the participating entities have use of a shared aircraft pool. Under the timeshare agreements, the Company is charged for its use of other aircrafts subject to the timeshare agreement and charges out the use of its aircraft by the participating entities. The Company recorded expenses of $3.9 million, $4.4 million, and $0.7 million for the years ended December 31, 2008, 2007, and 2006, respectively, associated with these aircraft operations and maintenance services and included them in selling, general and administrative expenses. As of December 31, 2008 and 2007, the Company had immaterial amounts due to the service provider.
Legal Services —A member of the Family is a partner in a law firm that provided services to the Company throughout fiscal years 2008, 2007, and 2006. The Company incurred legal fees of $5.5 million, $4.4 million, and $2.2 million, for years ended December 31, 2008, 2007, and 2006, respectively and is included in selling, general and administrative expenses. As of December 31, 2008 and 2007, the Company had immaterial amounts due to the law firm.
Gaming —The Company has a Gaming Space Lease Agreement with HCC Corporation (HCC), a related party, in relation to the Hyatt Regency Lake Tahoe Resort, Spa and Casino. In 2008, 2007, and 2006, the Company received $4.4 million, $4.2 million, and $4.1 million, under this lease.
Also related to the Hyatt Regency Lake Tahoe Resort, Spa and Casino, the Company has a Casino Facilities Agreement to provide certain sales, marketing, and other general and administrative services at agreed-upon rates. The Company received $0.8 million in 2008, 2007, and 2006, under this agreement. In addition, the Company billed HCC for complimentary goods and services provided to casino customers in the amount of $2.4 million, $3.3 million, and $3.2 million, respectively.
Other Transactions —Through a series of transactions with affiliates of the Family, in December 2008, the Company acquired the rights, interest, and title to a trademark and related domain names. The overall transaction was between entities under common control. As a result of these transactions, the Company recognized a deferred tax asset and a deemed capital contribution of $4.7 million.
In 2006 the Company received a capital contribution from the Family of approximately $11.7 million pursuant to an agreement which was entered into in connection with the formation of the Company. This amount is included in additional paid in capital.
Other Services — A member of the Company’s board of directors that was appointed in 2007 is a partner in a firm from which the Company receives financial advisory services. During 2008 and 2007, the Company paid advisory fees to this firm amounting to $1.5 million and $19.3 million, respectively, included in selling, general and administrative expenses. At December 31, 2008 and 2007, no amounts were owed to the firm. Additionally, affiliates of the financial advisory firm own hotels from which the Company received management and franchise fees of $1.6 million in 2008. The Company did not receive management and franchise fees from these hotels in 2007.
The Company has various cost sharing and advisory service agreements in place with businesses associated with the Family and certain of its affiliates. The income and expenses incurred
 
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as a result of these agreements did not result in material amounts recorded in the financial statements for the years ended December 31, 2008, 2007, or 2006. As of December 31, 2008 and 2007, the Company had receivables due from these properties of $0 and $2.3 million, respectively.
Equity Method Investments —We have equity method investments in entities that own properties for which we provide management and/or franchise services and receive fees. The Company recorded fees of $35.5 million, $34.0 million, and $26.9 million for the years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008 and 2007, the Company had receivables due from these properties of $2.0 million and $5.5 million, respectively. In addition, in some cases we provide loans (see Note 6) or guarantees (see Note 14) to these entities. Our ownership interest in these equity method investments generally varies from 8 to 50 percent. See Note 3 for further details regarding our investments.
 
19.	DERIVATIVE INSTRUMENTS	
Interest Rate Instruments —In the normal course of business, the Company is exposed to the impact of interest rate changes. Our objective is to manage the risk of interest rate changes on the results of operations, cash flows, and the market value of our debt by creating an appropriate balance between our fixed- and floating-rate debt.
As a result of the use of derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit rating and other factors.
In its hedging programs, the Company uses interest rate swaps. The Company does not use derivatives for trading or speculative purposes. On November 30, 2007, the Company assumed debt as part of its purchase of the remaining interest in the Great Eastern Hotel Holding Company. The debt includes a primary loan and a subordinated loan, totaling GBP 110.0 million ($159.2 million), both maturing on March 13, 2011. The primary loan bears interest at GBP LIBOR, plus 90 basis points. The subordinated loan bears interest at GBP LIBOR, plus 400 basis points. As part of the acquisition, the Company also assumed an interest rate swap that converts this variable rate exposure to a fixed rate. This contract protects against the risk that the eventual cash flows resulting from such transactions will be adversely affected by changes in interest rates. The interest rate swap has a notional amount of GBP 110.0 ($159.2) million through March 31, 2009, GBP 108.9 ($157.6) million through March 31, 2010, and GBP 107.8 ($156.0) million through maturity on March 13, 2011. The swap contains a floating rate option, which exchanges the variable GBP LIBOR rates on the primary and subordinated notes described in Note 9 for a fixed rate of 4.91%. The swap was designated as a cash flow hedge in November 2008 under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (“FASB Statement No. 133”) and was highly effective in offsetting fluctuations in GBP LIBOR rates.
All derivatives are recognized in the balance sheet at fair value. Changes in the fair value of derivatives that are highly effective are recorded in other comprehensive income until the underlying transactions occur. Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction in the consolidated statements of operations. At inception date, the Company formally documents all relationships between hedging activities. This process includes matching all derivatives that are designated as cash flow hedges to specific forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. At December 31, 2008, the hedge was determined to be highly effective.
Prior to the hedge designation date, the swap was marked to market through earnings. The market value adjustment for the year ended December 31, 2008 was $9.0 million, of which $2.4 million
 
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was included in other comprehensive income, which represents the market value adjustment for the period subsequent to the hedge designation date. The market value adjustment for the year ended December 31, 2007 was $2.5 million. At December 31, 2008 and 2007, the net fair value of this contract was recorded as other long-term liabilities of $8.5 million and other assets of $1.0 million, respectively.
The Company has two other interest rate swaps which were not designated as hedges, and therefore, have been marked to market each period through earnings. The notional dollar amount of these outstanding interest rate swap agreements (in US dollars) at December 31, 2008 was $61.4 million. At December 2008 and 2007, the net fair value of these contracts was recorded as a net current liability of $2.2 million and long-term liability of $1.5 million, respectively. These swaps were marked to market in the amounts of $(0.7) million, $0.1 million, and $(1.6) million for the years ended December 31, 2008, 2007 and 2006, respectively.
Foreign Currency Exchange Rate Instruments —We are exposed to the impact of foreign currency exchange rate fluctuations. Our objective is to manage a portion of the risk of foreign currency exposures through the use of derivative instruments. In 2008 and 2007, the Company entered into various forward currency exchange contracts, which were marked to market each period through earnings and are included in other income, net. At December 31, 2008 and 2007, the net fair value of these contracts was recorded as a net current liability of $8.8 million and $1.4 million, respectively. The notional dollar amount of the outstanding Euro, Swiss Franc, Pound Sterling, Japanese Yen and Korean Won forward contracts at December 31, 2008 is (in US dollars) $84.1 million, $66.2 million, $65.6 million, $2.8 million and $41.2 million, respectively, with terms of less than one year.
Certain energy contracts at our hotel facilities include derivatives. However, these derivatives qualify for the normal purchases or sales exemption under FASB Statement No. 133.
 
20.	SEGMENT AND GEOGRAPHIC INFORMATION	
Our operating segments are components of the business which are managed discretely and for which discrete financial information is reviewed regularly by the chief operating decision maker to assess performance and make decisions regarding the allocation of resources. Our chief operating decision maker is the Chief Executive Officer. We define our reportable segments as follows:
Owned and Leased Hotels —This segment derives its earnings from owned and leased hotel properties located predominantly in North America but also from limited international locations.
North American Management and Franchising —This segment derives its earnings from services provided including hotel management and licensing of our family of brands to franchisees located in the U.S. and Canada. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation.
International Management and Franchising —This segment derives its earnings from services provided including hotel management and licensing of our family of brands to franchisees located in countries outside of the U.S. and Canada. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to marketing and
 
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IT costs. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation.
The table below shows summarized consolidated financial information by segment. Included within Corporate and Other are unallocated corporate expenses and revenues and expenses on our timeshare properties, which are not material enough to warrant a separate segment.

(in millions)	  	2008	 	 	2007	 	 	2006	 	
North American Management and Franchising	  				 				 				
Revenues	  	$	1,474.8	  	 	$	1,439.5	  	 	$	1,375.5	  	
Intersegment Revenues (a)	  	 	86.2	  	 	 	69.2	  	 	 	63.7	  	
Adjusted EBITDA	  	 	162.6	  	 	 	163.6	  	 	 	171.5	  	
Depreciation and Amortization	  	 	16.9	  	 	 	14.9	  	 	 	14.8	  	
Total Assets	  	 	290.8	  	 	 	387.3	  	 				
Capital Expenditures	  	 	3.9	  	 	 	12.9	  	 	 	6.6	  	
				
International Management and Franchising	  				 				 				
Revenues	  	 	225.4	  	 	 	225.8	  	 	 	188.4	  	
Intersegment Revenues (a)	  	 	20.4	  	 	 	16.5	  	 	 	13.6	  	
Adjusted EBITDA	  	 	102.0	  	 	 	110.2	  	 	 	100.7	  	
Depreciation and Amortization	  	 	2.0	  	 	 	1.8	  	 	 	1.6	  	
Total Assets	  	 	164.5	  	 	 	181.4	  	 				
Capital Expenditures	  	 	1.9	  	 	 	3.2	  	 	 	2.4	  	
				
Owned and Leased Hotels	  				 				 				
Revenues	  	 	2,138.6	  	 	 	2,039.3	  	 	 	1,860.1	  	
Adjusted EBITDA	  	 	522.0	  	 	 	517.9	  	 	 	421.4	  	
Depreciation and Amortization	  	 	225.6	  	 	 	192.3	  	 	 	175.0	  	
Total Assets	  	 	4,124.3	  	 	 	4,341.8	  	 				
Capital Expenditures	  	 	249.4	  	 	 	360.1	  	 	 	279.5	  	
				
Corporate and Other	  				 				 				
Revenues	  	 	104.5	  	 	 	119.3	  	 	 	124.4	  	
Adjusted EBITDA	  	 	(99.4	) 	 	 	(83.5	) 	 	 	(65.4	) 	
Depreciation and Amortization	  	 	4.5	  	 	 	4.7	  	 	 	3.6	  	
Total Assets	  	 	1,539.1	  	 	 	1,337.2	  	 				
Capital Expenditures	  	 	2.4	  	 	 	1.2	  	 	 	37.0	  	
				
Eliminations (a)	  				 				 				
Revenues	  	 	(106.6	) 	 	 	(85.7	) 	 	 	(77.3	) 	
Adjusted EBITDA	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Depreciation and Amortization	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Total Assets	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Capital Expenditures	  	 	—  	  	 	 	—  	  	 	 	—  	  	
				
TOTAL	  				 				 				
Revenues	  	$	3,836.7	  	 	$	3,738.2	  	 	$	3,471.1	  	
Adjusted EBITDA	  	 	687.2	  	 	 	708.2	  	 	 	628.2	  	
Depreciation and Amortization	  	 	249.0	  	 	 	213.7	  	 	 	195.0	  	
Total Assets	  	 	6,118.7	  	 	 	6,247.7	  	 				
Capital Expenditures	  	 	257.6	  	 	 	377.4	  	 	 	325.5	  	

(a)	Intersegment revenues are included in the segment revenue totals and eliminated in Eliminations	
 
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The following table presents revenues and long-lived assets by geographical region:

Revenues:	  			  			  			
United States	  	$	3,064.4	  	$	3,046.3	  	$	2,858.7	
All Foreign	  	 	772.3	  	 	691.9	  	 	612.4	
	  	 	 	  	 	 	  	 	 	
Total	  	 	3,836.7	  	 	3,738.2	  	 	3,471.1	

Long-Lived Assets	  			  			  			
United States	  	$	2,967.7	  	$	2,898.0	  			
All Foreign	  	 	902.9	  	 	1,182.4	  			
	  	 	 	  	 	 	  			
Total	  	$	3,870.6	  	$	4,080.4	  			
	  	 	 	  	 	 	  			
The Company’s chief operating decision maker evaluates performance based on each segment’s adjusted EBITDA. We define Adjusted EBITDA as net income attributable to Hyatt Hotels Corporation before interest expense; other income, net; provision for income taxes; depreciation and amortization; net gains on sales of real estate; asset impairments; charge resulting from the termination of our supplemental executive defined benefit plan; and discontinued operations and changes in accounting principles, net of tax and equity earnings from unconsolidated hospitality ventures to which we add our pro-rata share of Adjusted EBITDA from unconsolidated hospitality ventures based on our ownership percentage of each venture and net income attributable to noncontrolling interests.
The table below provides a reconciliation of our Adjusted EBITDA to net income attributable to Hyatt Hotels Corporation for 2008, 2007 and 2006.

		
(In millions of dollars)	  	Year Ended December 31,	 	
	  	2008	 	 	2007	 	 	2006	 	
				
Adjusted EBITDA	  	$	687	  	 	$	708	  	 	$	628	  	
Interest expense	  	 	(75	) 	 	 	(43	) 	 	 	(36	) 	
Other income, net	  	 	23	  	 	 	145	  	 	 	126	  	
Provision for income taxes	  	 	(90	) 	 	 	(208	) 	 	 	(193	) 	
Depreciation and amortization	  	 	(249	) 	 	 	(214	) 	 	 	(195	) 	
Gains on sales of real estate	  	 	—  	  	 	 	22	  	 	 	57	  	
Asset impairments	  	 	(86	) 	 	 	(61	) 	 	 	—  	  	
Charge resulting from the termination of our supplemental executive defined benefit plans	  	 	(20	) 	 	 	—  	  	 	 	—  	  	
Discontinued operations and changes in accounting principles, net of tax	  	 	56	  	 	 	5	  	 	 	(2	) 	
Equity earnings from unconsolidated hospitality ventures	  	 	14	  	 	 	11	  	 	 	13	  	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	  	 	(90	) 	 	 	(94	) 	 	 	(69	) 	
Net income attributable to noncontrolling interests	  	 	(2	) 	 	 	(1	) 	 	 	(14	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Hyatt Hotels Corporation	  	$	168	  	 	$	270	  	 	$	315	  	

21.	SUBSEQUENT EVENT	
On February 17, 2009 we acquired 100% of the 498 room Hyatt Regency Boston hotel from a third party for a total purchase price of $110 million.
 
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22.	Earnings Per Share	
The calculation of basic and diluted earnings per share including a reconciliation of the numerator and denominator are as follows:

 	  	Years Ended December 31,	 	
 	  	2008	 	 	2007	 	 	2006	 	
Numerator:	  				 				 				
Income from Continuing Operations	  	$	114	  	 	$	266	  	 	$	331	  	
Income from discontinued operations	  	 	1	  	 	 	3	  	 	 	4	  	
Gain (loss) on sale of discontinued operations	  	 	55	  	 	 	2	  	 	 	(2	) 	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	 	(4	) 	
Net (income) attributable to noncontrolling interests	  	 	(2	) 	 	 	(1	) 	 	 	(14	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	168	  	 	$	270	  	 	$	315	  	

Denominator:	  				 				 				
Basic weighted average shares outstanding:	  	 	256,074,029	  	 	 	269,170,628	  	 	 	275,117,476	  	
Share-based compensation	  	 	48,265	  	 				 				
Shares pursuant to a subscription agreement	  				 	 	97,411	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	  	 	256,122,294	  	 	 	269,268,039	  	 	 	275,117,476	  	

Basic Earnings Per Share:	  				 				 				
Income from Continuing Operations	  	$	0.45	  	 	$	0.98	  	 	$	1.20	  	
Income from discontinued operations	  	 	—  	  	 	 	0.01	  	 	 	0.02	  	
Gain (loss) on sale of discontinued operations	  	 	0.22	  	 	 	0.01	  	 	 	—  	  	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	 	(0.02	) 	
Net (income) attributable to noncontrolling interests	  	 	(0.01	) 	 	 	—  	  	 	 	(0.05	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	0.66	  	 	$	1.00	  	 	$	1.15	  	

Diluted Earnings Per Share:	  				 				 				
Income from Continuing Operations	  	$	0.45	  	 	$	0.98	  	 	$	1.20	  	
Income from discontinued operations	  	 	—  	  	 	 	0.01	  	 	 	0.02	  	
Gain (loss) on sale of discontinued operations	  	 	0.22	  	 	 	0.01	  	 	 	—  	  	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	 	(0.02	) 	
Net (income) attributable to noncontrolling interests	  	 	(0.01	)  	 	 	—  	  	 	 	(0.05	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	0.66	  	 	$	1.00	  	 	$	1.15	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The computations of diluted net income per share for the years ended December 31, 2008, 2007, and 2006 do not include approximately 55,000, 180,000, and 3,000 of shares of stock assumed to be issued as stock-settled stock appreciation rights and approximately 492,000, 140,000, and 210,000 of restricted stock units, respectively. In 2008 the shares pursuant to a subscription agreement were antidilutive. The effect of their inclusion would have been anti-dilutive to earnings per share.
 
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HYATT HOTELS CORPORATION AND SUBSIDIARIES
 SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
(In millions)

Description	  	Balance
at
Beginning
of Year	  	Charged to
Costs and
Expenses	  	 	  	Charged to
Other
Accounts	  	 	  	Deductions	 	 	 	  	Balance at
End of
Year	
Year Ended December 31, 2008:	  			  			  		  			  		  				 		  			
Trade receivables—allowance for doubtful accounts	  	$	21	  	$	18	  		  	$	—  	  		  	$	(15	) 	 		  	$	24	
Notes receivable—allowance for losses	  	 	109	  	 	20	  		  	 	—  	  		  	 	(75	) 	 	A	  	 	54	
Deferred tax asset—valuation allowance	  	 	70	  	 	13	  		  	 	—  	  		  	 	(14	) 	 	B	  	 	69	
									
Year Ended December 31, 2007:	  			  			  		  			  		  				 		  			
Trade receivables—allowance for doubtful accounts	  	 	12	  	 	11	  		  	 	—  	  		  	 	(2	) 	 		  	 	21	
Notes receivable—allowance for losses	  	 	38	  	 	72	  	A	  	 	—  	  		  	 	(1	) 	 		  	 	109	
Deferred tax asset—valuation allowance	  	 	52	  	 	17	  		  	 	1	  	C	  	 	—  	  	 		  	 	70	
									
Year Ended December 31, 2006:	  			  			  		  			  		  				 		  			
Trade receivables—allowance for doubtful accounts	  	 	11	  	 	5	  		  	 	—  	  		  	 	(4	) 	 		  	 	12	
Notes receivable—allowance for losses	  	 	42	  	 	2	  		  	 	—  	  		  	 	(6	) 	 		  	 	38	
Deferred tax asset—valuation allowance	  	 	36	  	 	3	  		  	 	13	  	C	  	 	—  	  	 		  	 	52	
 	  			
Note A—The year ended December 31, 2008 included a $61 million write-off of a development loan, the related expense was recorded in the year ended December 31, 2007.	  			
Note B—Amount includes a release of $14 million related to an IRS settlement.	  			
Note C—These amounts represent valuation allowances recorded as a result of our acquisitions of the Andaz Liverpool Street and Park Hyatt Paris Vendome in 2007 and 2006, respectively.	  			
 
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 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the Six Months Ended June 30, 2009 and 2008
(In millions of dollars, except per share amounts)
(Unaudited)

 	  	Six Months
Ended June 30,	 	
 	  	2009	 	 	2008	 	
REVENUES:	  				 				
Owned and leased hotels	  	$	876	  	 	 	1,125	  	
Management and franchise fees	  	 	109	  	 	 	162	  	
Other revenues	  	 	29	  	 	 	48	  	
Other revenues from managed properties	  	 	623	  	 	 	674	  	
	  	 	 	 	 	 	 	 	
Total revenues	  	 	1,637	  	 	 	2,009	  	
			
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:	  				 				
Owned and leased hotels	  	 	710	  	 	 	807	  	
Depreciation and amortization	  	 	130	  	 	 	125	  	
Other direct costs	  	 	8	  	 	 	15	  	
Selling, general, and administrative	  	 	122	  	 	 	138	  	
Other costs from managed properties	  	 	623	  	 	 	674	  	
	  	 	 	 	 	 	 	 	
Direct and selling, general, and administrative expenses	  	 	1,593	  	 	 	1,759	  	
Net gains (losses) and interest income from marketable securities held to fund operating programs	  	 	8	  	 	 	(7	) 	
Equity earnings (losses) from unconsolidated hospitality ventures	  	 	(13	) 	 	 	12	  	
Interest expense	  	 	(27	) 	 	 	(28	) 	
Asset impairments	  	 	(8	) 	 	 	—  	  	
Other income (loss), net	  	 	(56	) 	 	 	55	  	
	  	 	 	 	 	 	 	 	
INCOME (LOSS) BEFORE INCOME TAXES	  	 	(52	) 	 	 	282	  	
(PROVISION) BENEFIT FOR INCOME TAXES	  	 	14	  	 	 	(107	) 	
	  	 	 	 	 	 	 	 	
INCOME (LOSS) FROM CONTINUING OPERATIONS	  	 	(38	) 	 	 	175	  	
DISCONTINUED OPERATIONS:	  				 				
Income from discontinued operations, net of income tax expense (benefit) of $—and $ (1) for the six months ended June 30, 2009 and 2008, respectively	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations, net of income tax expense (benefit) of $—and $—for the six months ended June 30, 2009 and 2008, respectively	  	 	—  	  	 	 	—  	  	
NET INCOME (LOSS)	  	 	(38	) 	 	 	175	  	
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	  	 	2	  	 	 	(2	) 	
	  	 	 	 	 	 	 	 	
NET INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION	  	$	(36	) 	 	$	173	  	
	  	 	 	 	 	 	 	 	
EARNINGS PER SHARE—Basic	  				 				
Income (loss) from continuing operations	  	$	(0.14	) 	 	$	0.68	  	
Net income (loss) attributable to Hyatt Hotels Corporation	  	$	(0.14	) 	 	$	0.68	  	
EARNINGS PER SHARE—Diluted	  				 				
Income (loss) from continuing operations	  	$	(0.14	) 	 	$	0.68	  	
Net income (loss) attributable to Hyatt Hotels Corporation	  	$	(0.14	) 	 	$	0.68	  	
See accompanying notes to consolidated financial statements.
 
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 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of June 30, 2009 and December 31, 2008
(In millions of dollars, except share and per share amounts)
(Unaudited)

 	  	June 30,
2009	 	 	December 31,
2008	 	
ASSETS	  				 				
CURRENT ASSETS:	  				 				
Cash and cash equivalents	  	$	968	  	 	$	428	  	
Restricted cash	  	 	12	  	 	 	37	  	
Receivables, net of allowances of $15 and $24 at June 30, 2009 and December 31, 2008, respectively	  	 	255	  	 	 	281	  	
Inventories	  	 	134	  	 	 	170	  	
Prepaids and other assets	  	 	84	  	 	 	72	  	
Prepaid income taxes	  	 	25	  	 	 	18	  	
Deferred tax assets	  	 	51	  	 	 	51	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	1,529	  	 	 	1,057	  	
Investments	  	 	224	  	 	 	204	  	
Property and equipment, net	  	 	3,616	  	 	 	3,495	  	
Notes receivable, net of allowances	  	 	396	  	 	 	410	  	
Goodwill	  	 	120	  	 	 	120	  	
Intangibles, net	  	 	276	  	 	 	256	  	
Deferred tax assets	  	 	140	  	 	 	126	  	
Other assets	  	 	438	  	 	 	451	  	
	  	 	 	 	 	 	 	 	
TOTAL ASSETS	  	$	6,739	  	 	$	6,119	  	

LIABILITIES AND STOCKHOLDERS’ EQUITY	  				 				
CURRENT LIABILITIES:	  				 				
Current maturities of long-term debt	  	$	17	  	 	$	38	  	
Accounts payable	  	 	291	  	 	 	318	  	
Accrued expenses	  	 	161	  	 	 	177	  	
Accrued income taxes	  	 	11	  	 	 	23	  	
Accrued compensation and benefits	  	 	94	  	 	 	97	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	574	  	 	 	653	  	
Long-term debt	  	 	595	  	 	 	1,209	  	
Other long-term liabilities	  	 	670	  	 	 	665	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	1,839	  	 	 	2,527	  	
Commitments and contingencies (see Note 14)	  				 				
			
STOCKHOLDERS’ EQUITY:	  				 				
Preferred stock, $0.01 par value per share, 9,900,000 shares authorized and none outstanding as of June 30, 2009 and 10,000,000 shares authorized, 100,000 issued and outstanding as of December 31, 2008	  	 	—  	  	 	 	—  	  	
Common stock, $0.01 par value per share, 400,000,000 shares authorized, 336,063,783 and 239,660,762 issued and outstanding at June 30, 2009 and December 31, 2008, respectively	  	 	3	  	 	 	2	  	
Additional paid-in capital	  	 	3,590	  	 	 	2,241	  	
Retained earnings	  	 	1,345	  	 	 	1,381	  	
Accumulated other comprehensive loss	  	 	(64	) 	 	 	(60	) 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	4,874	  	 	 	3,564	  	
	  	 	 	 	 	 	 	 	
Noncontrolling interests in consolidated subsidiaries	  	 	26	  	 	 	28	  	
	  	 	 	 	 	 	 	 	
Total equity	  	 	4,900	  	 	 	3,592	  	
	  	 	 	 	 	 	 	 	
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	  	$	6,739	  	 	$	6,119	  	
	  	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
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 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2009 and 2008
(In millions of dollars)
(Unaudited)

 	  	Six Months Ended
June 30,	 	
 	  	2009	 	  	2008	 	
CASH FLOWS FROM OPERATING ACTIVITIES:	  				  				
Net income (loss)	  	$	(38	) 	  	$	175	  	
Income (loss) from discontinued operations	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	
Income (loss) from continuing operations	  	 	(38	) 	  	 	175	  	
	  	 	 	 	  	 	 	 	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	  				  				
Depreciation and amortization	  	 	130	  	  	 	125	  	
Deferred income taxes	  	 	(9	) 	  	 	(1	) 	
Asset impairments .	  	 	8	  	  	 	—  	  	
Equity (earnings) losses from unconsolidated hospitality ventures, less distributions received	  	 	19	  	  	 	(6	) 	
Income from cost method investments	  	 	(22	) 	  	 	(62	) 	
Foreign currency exchange (losses) gains	  	 	(7	) 	  	 	3	  	
Net unrealized (gains) losses from marketable securities	  	 	(2	) 	  	 	13	  	
Other	  	 	22	  	  	 	12	  	
Increase (decrease) in cash attributable to changes in assets and liabilities:	  				  				
Receivables, net	  	 	26	  	  	 	(23	) 	
Inventories	  	 	(11	) 	  	 	(10	) 	
Accounts payable	  	 	(15	) 	  	 	(8	) 	
Accrued compensation and benefits	  	 	2	  	  	 	(35	) 	
Accrued expenses and other current liabilities	  	 	(18	) 	  	 	(55	) 	
Other, net	  	 	(24	) 	  	 	4	  	
	  	 	 	 	  	 	 	 	
Net cash provided by operating activities of continuing operations	  	 	61	  	  	 	132	  	
	  	 	 	 	  	 	 	 	
(Continued)
 
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HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2009 and 2008
(In millions of dollars)
(Unaudited)

 	  	Six Months Ended
June 30,	 	
 	  	  2009  	 	 	  2008  	 	
CASH FLOWS FROM INVESTING ACTIVITIES:	  				 				
Contributions to investments and purchases of marketable securities	  	 	(39	) 	 	 	(68	) 	
Distributions from investments	  	 	24	  	 	 	195	  	
Proceeds from notes receivable	  	 	14	  	 	 	10	  	
Issuance of notes receivable	  	 	(2	) 	 	 	(2	) 	
Acquisitions, net of cash acquired	  	 	(109	) 	 	 	(27	) 	
Purchase of property and equipment	  	 	(104	) 	 	 	(116	) 	
Contract acquisition costs	  	 	(3	) 	 	 	(5	) 	
Decrease in restricted cash	  	 	5	  	 	 	4	  	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities of continuing operations	  	 	(214	) 	 	 	(9	) 	
	  	 	 	 	 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	  				 				
Payments on revolver, net	  	 	(30	) 	 	 	—  	  	
Repurchase of senior subordinated notes	  	 	(600	) 	 	 	(16	) 	
Other debt payments	  	 	(26	) 	 	 	—  	  	
Distributions to noncontrolling interests	  	 	—  	  	 	 	(2	) 	
Purchase of noncontrolling interests	  	 	—  	  	 	 	(7	) 	
Issuance of common stock, net of related costs of $4 million	  	 	1,355	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash provided by (used in) financing activities of continuing operations	  	 	699	  	 	 	(25	) 	
	  	 	 	 	 	 	 	 	
CASH PROVIDED BY DISCONTINUED OPERATIONS:	  				 				
Net cash provided by operating activities of discontinued operations	  	 	—  	  	 	 	11	  	
	  	 	 	 	 	 	 	 	
Net cash provided by discontinued operations	  	 	—  	  	 	 	11	  	
	  	 	 	 	 	 	 	 	
EFFECT OF EXCHANGE RATE CHANGES ON CASH	  	 	(6	) 	 	 	(8	) 	
NET INCREASE IN CASH AND CASH EQUIVALENTS	  	 	540	  	 	 	101	  	
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	  	 	428	  	 	 	412	  	
	  	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS - END OF PERIOD	  	$	968	  	 	$	513	  	
	  	 	 	 	 	 	 	 	
LESS CASH AND CASH EQUIVALENTS DISCONTINUED OPERATIONS	  	 	—  	  	 	 	1	  	
	  	 	 	 	 	 	 	 	
CASH AND CASH EQUIVALENTS CONTINUING OPERATIONS - END OF PERIOD	  	$	968	  	 	$	512	  	
	  	 	 	 	 	 	 	 	
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	  				 				
Cash paid during the period for interest	  	$	33	  	 	$	30	  	
	  	 	 	 	 	 	 	 	
Cash paid during the period for income taxes	  	$	12	  	 	$	151	  	
	  	 	 	 	 	 	 	 	
Non-cash investing activities are as follows:	  				 				
Transfer of timeshare inventory to fixed assets (see Note 2)	  	$	47	  	 	$	—  	  	
	  	 	 	 	 	 	 	 	
(Concluded)
See accompanying notes to consolidated financial statements.
 
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 HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(In millions of dollars)
(Unaudited)

 	 	Total	 	 	Common
Stock
Amount	 	Additional
Paid-in
Capital	 	 	Retained
Earnings	 	 	Treasury
Stock
Amount	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Noncontrolling
Interests in
Consolidated
Subsidiaries	 	
BALANCE—January 1, 2008	 	$	3,469	  	 	$	3	 	$	3,323	  	 	$	1,213	  	 	$	(1,101	) 	 	$	(4	) 	 	$	35	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	175	  	 	 	—  	 	 	—  	  	 	 	173	  	 	 	—  	  	 	 	—  	  	 	 	2	  	
Foreign currency translation adjustments, net of income tax of $(2)	 	 	(13	) 	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(13	) 	 	 	—  	  	
Unrecognized pension cost, net of income tax of $(1)	 	 	2	  	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	2	  	 	 	—  	  	
	 	 	 	 	 			 				 				 				 				 				
Comprehensive Income	 	 	164	  	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Distributions to noncontrolling interests	 	 	(2	) 	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(2	) 	
Purchase of non-controlling interests	 	 	(7	) 	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(7	) 	
Attribution of share based payments	 	 	6	  	 	 	—  	 	 	6	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Modification of share based payments	 	 	(1	) 	 	 	—  	 	 	(1	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—June 30, 2008	 	$	3,629	  	 	$	3	 	$	3,328	  	 	$	1,386	  	 	$	(1,101	) 	 	$	(15	) 	 	$	28	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—January 1, 2009	 	$	3,592	  	 	$	2	 	$	2,241	  	 	$	1,381	  	 	$	—  	  	 	$	(60	) 	 	$	28	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss)	 	 	(38	) 	 	 	—  	 	 	—  	  	 	 	(36	) 	 	 	—  	  	 	 	—  	  	 	 	(2	) 	
Foreign currency translation adjustments, net of income tax	 	 	(4	) 	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(4	) 	 	 	—  	  	
	 	 	 	 	 			 				 				 				 				 				
Comprehensive (loss)	 	 	(42	) 	 	 	—  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Issuance of common stock through rights offering, net of related costs of $4 million
(See Note 13)	 	 	755	  	 	 	1	 	 	754	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Issuance of common stock through Subscription Agreement, net of related costs of $13 million
(See Note 13)	 	 	587	  	 	 	—  	 	 	587	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Attribution of share based payments	 	 	8	  	 	 	—  	 	 	8	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—June 30, 2009	 	$	4,900	  	 	$	3	 	$	3,590	  	 	$	1,345	  	 	$	—  	  	 	$	(64	) 	 	$	26	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
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 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In millions of dollars, unless otherwise indicated)
(Unaudited)
 
1.	ORGANIZATION	
Hyatt Hotels Corporation, a Delaware Corporation, and subsidiaries, (“Hyatt Hotels Corporation”), which, collectively, may be referred to as “we,” “us,” “our,” “HHC,” or the “Company,” is principally owned directly and indirectly by trusts for the benefit of various members of the Pritzker family (the “Family”).
The Company provides hospitality services on a worldwide basis through the management and ownership of hospitality related businesses. We operate or franchise 220 full-service, Hyatt-branded hotels, consisting of 95,845 rooms, in 45 countries throughout the world. We hold ownership interests in certain of these hotels. We operate or franchise 168 select-service, Hyatt-branded hotels with 21,409 rooms in the United States and Canada. We hold ownership interests in certain of these hotels. We develop and operate Hyatt-branded timeshare, fractional and other forms of residential or vacation properties.
Our North American management and hotel ownership company, Hyatt Corporation, was founded in 1957. Our international management and hotel ownership company, Hyatt International Corporation, was founded in 1968. On August 4, 2004, our predecessor, Global Hyatt, Inc., was incorporated in Delaware as a holding company to combine our North American and international hospitality operations and increase the scale and scope of our company. Effective October 13, 2004, the name Global Hyatt, Inc. was changed to Global Hyatt Corporation. On December 31, 2004, the stock of Hyatt Corporation and AIC, which owned Hyatt International Corporation, and the other hospitality-related assets of the Pritzker family business interests were contributed to Global Hyatt Corporation in exchange for shares of Global Hyatt Corporation common stock. The contribution was accounted for as a transaction between entities under common control in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations . As such, the contribution was recorded on the Company’s books at the same historical cost as that carried on the books for the transferors. Effective June 30, 2009 Global Hyatt Corporation changed its name to Hyatt Hotels Corporation.
 
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	
Principles of Consolidation —The consolidated financial statements present the results of operations, financial position, and cash flows of Hyatt Hotels Corporation and its majority owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Management has evaluated subsequent events through August 3, 2009, the date the financial statements were available to be issued.
Investments in hospitality ventures are accounted for using the guidance of the revised Financial Accounting Standards Board (FASB) Interpretation No. 46, Consolidation of Variable Interest Entities (revised December 2003) — an interpretation of ARB No. 51 (“FASB Interpretation No. 46(R)”), for all ventures deemed to be variable interest entities.
Use of Estimates —We are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from such estimated amounts.
 
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Revenue Recognition —Our revenues are primarily derived from the following sources and are generally recognized when services have been rendered:
 
 	Ÿ 	 	Owned and leased hotel revenues are derived from room rentals and services provided at our owned, leased, and consolidated hospitality venture properties and are recorded when rooms are occupied and services have been rendered. Sales and occupancy taxes are recorded on a net basis in the consolidated statements of income (loss).	
 
 	Ÿ 	 	Management and franchise fees earned from hotels managed and franchised worldwide:	
 
 	–	 	Management fees primarily consist of a base fee, which is generally computed as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Base fee revenues are recognized when earned in accordance with the terms of the contract. We recognize incentive fees that would be due as if the contract were to terminate at that date, exclusive of any termination fees payable or receivable by us.	
 
 	–	 	We account for the sale of real estate assets in accordance with FASB Statement No. 66, Accounting for Sales of Real Estate . Realized gains from the sale of hotel real estate assets where we maintain continuing involvement in the form of a long-term management contract are deferred and recognized as management fee revenue over the term of the underlying management contract.	
 
 	–	 	Franchise fees are generally based on a percentage of hotel rooms’ revenues and are recognized in accordance with FASB Statement No. 45, Accounting for Franchise Fee Revenue , as the fees are earned and become due from the franchisee when all material services or conditions relating to the sale have been substantially performed or satisfied by the franchisor.	
 
 	Ÿ 	 	Other revenues	
 
 	–	 	Other revenues primarily include revenues from our timeshare business. Consistent with the guidance in FASB Statement No. 152, Accounting for Real Estate Time-Sharing Transactions , an amendment of FASB Statements No. 66 and 67 , we recognize timeshare revenue when a minimum of 10% of the purchase price for the interval has been received, the period of cancellation with refund has expired, and receivables are deemed collectible. For sales that do not qualify for full revenue recognition as the project has progressed beyond the preliminary stages but has not yet reached completion, all revenue and associated direct expenses are initially deferred and recognized in earnings through the percentage-of-completion method.	
 
 	–	 	Other revenues from managed properties represent the reimbursement of costs incurred on behalf of the owners of hotel properties we manage. These costs relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our net income.	
Cash Equivalents —We consider all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash —We had restricted cash of $12 million and $37 million at June 30, 2009 and December 31, 2008, respectively. Of these amounts: (i) $0 and $17 million, respectively, were funds deposited in an interest bearing account for security of long-term loans and satisfying debt covenant requirements. As of June 30, 2009 the $17 million of restricted cash related to this deposit had been reclassified to other long term assets; (ii) $1 million and $5 million at June 30, 2009 and December 31, 2008, respectively, were escrow deposits on purchases of our timeshare intervals; and (iii) $2 and $6 million at June 30, 2009 and December 31, 2008, respectively, were advance payments of certain
 
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taxes and fees related to timeshare units that were required to be held in escrow under statutory law. The remaining $9 million and $9 million at June 30, 2009 and December 31, 2008, respectively, secured real estate taxes, property insurance, security deposits, property and equipment reserves, and long-term loans. These amounts are invested in interest-bearing accounts.
Investments —We consolidate entities under our control. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, are accounted for by the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.
Marketable Securities —Our portfolio of marketable securities is accounted for as trading securities and consists of various types of common stock, fixed income securities, and mutual funds. Marketable securities are principally included within other noncurrent assets in the consolidated balance sheets (see Note 8). Fair value is based on listed market prices or dealer price quotations where available. Marketable securities are recorded at fair value with unrealized gains and losses reflected in the consolidated statements of income.
Other Income (Loss), Net —Other income (loss), net includes interest income on interest-bearing cash and cash equivalents, gains (losses) on other marketable securities (see Note 8), income from cost method investments (see Note 3), foreign currency gains (losses) including gains (losses) on foreign currency exchange rate instruments (see Note 19) and costs related to the repurchase of $600 million of 5.84% senior subordinated notes due 2013 (the “Notes”) and early settlement of a stock purchase forward agreement (the “Subscription Agreement”) (see Notes 9 and 13). The table below provides a reconciliation of the components in other income (loss), net for the six months ended June 30, 2009 and 2008, respectively:

 	    	For the six months
ended June 30,	 	
 	    	2009	 	    	2008	 	
Interest income on interest-bearing cash and cash equivalents	    	$	10	  	    	$	9	  	
Gains (losses) on other marketable securities	    	 	2	  	    	 	(13	) 	
Income from cost method investments	    	 	22	  	    	 	62	  	
Foreign currency gains (losses)	    	 	7	  	    	 	(3	) 	
Debt settlement costs	    	 	(93	) 	    	 	—  	  	
Other	    	 	(4	) 	    	 	—  	  	
	    	 	 	 	    	 	 	 	
Other income (loss), net	    	$	(56	) 	    	$	55	  	
	    	 	 	 	    	 	 	 	
Foreign Currency —The functional currency of our consolidated and nonconsolidated entities located outside the United States of America is generally the local currency. The assets and liabilities of these entities are translated into U.S. dollars at period-end exchange rates, and the related gains and losses, net of applicable deferred income taxes, are reflected in stockholders’ equity. Gains and losses from foreign currency transactions are included in earnings. Income and expense accounts are translated at the average exchange rate for the period. Gains and losses from foreign exchange rate changes related to intercompany receivables and payables of a long-term nature are generally included in other comprehensive income. Gains and losses from foreign exchange rate movement related to intercompany receivables and payables that are not of a long-term nature are reported in income.
Notes Receivable —These receivables reflect the amounts due from our financing of timeshare interval sales, as well as receivables from certain franchisees and other hotel owners or developers.
 
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We carry mortgages receivable at amortized cost in current receivables and noncurrent receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. The adequacy of the allowance is determined by management through the analysis of several factors, such as economic conditions and industry trends, defaults, past-due aging, and historical write-offs of mortgages and contracts receivable. The allowance is maintained at a level believed adequate by management based on a periodic analysis of the portfolio of receivables.
Inventories —Inventories are comprised principally of unsold timeshare intervals of $120 million and $154 million at June 30, 2009 and December 31, 2008, respectively, and food and beverage inventories at our owned and leased hotels. Timeshare inventory is carried at the lower of cost or market, based on relative sales value or net realizable value. Food and beverage inventories are generally valued at the lower of cost (first-in, first-out) or market. Timeshare interval products inventory, which has an operating cycle that exceeds 12 months, is classified as a current asset consistent with recognized industry practice. During the first six months of 2009, we reclassified $47 million in timeshare inventory to property and equipment as we have changed our intended use with respect to certain of our vacation ownership units.
Property and Equipment —Property and equipment are stated at cost, including interest incurred during development and construction periods. Depreciation and amortization are provided over the estimated useful lives of the assets, primarily on the straight-line method. All repair and maintenance costs are expensed as incurred.
Useful lives assigned to property and equipment are as follows:

Buildings and improvements	  	15–50 years	
Leasehold improvements	  	The shorter of the lease term or useful life of asset	
Furniture and equipment	  	2–21 years	
Computers	  	3–6 years	
Long-Lived Assets and Definite-Lived Intangibles —We evaluate the carrying value of our long-lived assets and definite-lived intangibles for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when certain triggering events occur. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the carrying value of our long-lived assets and definite-lived intangibles based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition. Changes to our plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.
Goodwill —We evaluate goodwill and indefinite lived intangibles for impairment on an annual basis during the fourth quarter of each year using balances as of the end of September, or at an interim date if a triggering event occurs, whichever is sooner. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount with an impairment being recognized only where the fair value is less than carrying value. See Note 7 for additional information about goodwill.
Income Taxes —We account for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes . The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax assets and liabilities for
 
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the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is not more likely than not to be substantiated on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. For additional information about income taxes, see Note 12.
Fair Value —In accordance with FASB Statement No. 107, Disclosures about Fair Values of Financial Instruments , the Company discloses the fair value of its financial assets and liabilities as determined under the guidance of FASB Statement No. 157, Fair Value Measurements , based on observable market information where available, or on market participant assumptions. These assumptions are subjective in nature, involve matters of judgment, and, therefore, fair values cannot always be determined with precision.
The carrying values of cash equivalents, accounts receivable, notes receivable – current, accounts payable, and current maturities of long-term debt approximate fair value due to the short-term nature of these items and their close proximity to maturity.
For additional information about fair value, see Note 4. The fair value of notes receivable is discussed in Note 6; the fair value of marketable securities is discussed in Note 8; and the fair value of long-term debt is discussed in Note 9.
Hyatt Gold Passport Fund —The Hyatt Gold Passport Program (the “Program”) is our loyalty program. We operate the Program for the benefit of Hyatt branded properties, whether owned, operated, managed, or franchised by the Company. The Program is operated through the Hyatt Gold Passport Fund, which is an entity that is owned collectively by the owners of Hyatt branded properties, whether owned, operated, managed or franchised by the Company. The Hyatt Gold Passport Fund (the “Fund”) has been established to provide for the payment of operating expenses and redemptions of member awards associated with the Program. The Fund is maintained and managed by us on behalf of and for the benefit of Hyatt branded properties. In accordance with FIN 46R, we have evaluated our investment in the Fund and have determined that the Fund qualifies as a variable interest entity and, as a result of the Company being the primary beneficiary, we have consolidated the Fund.
The Program allows members to earn points based on their spending at Hyatt branded properties. Points earned by members can be redeemed for goods and services at Hyatt branded properties, and to a lesser degree, through other redemption opportunities with third parties, such as the conversion to airline miles. Points cannot be redeemed for cash. We charge the cost of operating the Program, including the estimated cost of award redemption, to the hotel properties based on members’ qualified expenditures. Due to the requirements under the Program that the hotel properties reimburse us for its operating costs as incurred, we recognize this revenue from properties at the time such costs are incurred and expensed. We defer revenue received from the hotel properties equal to the fair value of our future redemption obligation. Upon the redemption of points, we recognize as revenue the amounts previously deferred and recognize the corresponding expense relating to the costs of the awards redeemed. Revenue is recognized by the hotel properties when the points are redeemed, and expenses are recognized when the points are earned by the members.
The Company actuarially determines the expected fair value of the future redemption obligation based on statistical formulas that project the timing of future point redemption based on historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the points that will eventually be redeemed. Actual expenditures for the Program may differ from the actuarially determined liability.
 
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The Fund is financed by payments from the properties and returns on marketable securities. The Fund invests amounts received from the properties in marketable securities (see Note 8). As of June 30, 2009 and December 31, 2008, total assets of the Fund were $294 million and $297 million, respectively, including $55 million and $47 million of current assets, respectively. Marketable securities held by the Fund and included in other noncurrent assets were $239 million and $250 million, respectively (see Note 8). As of June 30, 2009 and December 31, 2008, total liabilities of the Fund were $294 million and $297 million, respectively, including $55 million and $47 million of current liabilities, respectively. The non-current liabilities of the Fund are included in other long-term liabilities (see Note 10).
Recently Issued Accounting Pronouncements
Adopted Accounting Standards
In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events . FASB Statement No. 165 establishes the accounting for and disclosure requirements of events or transactions that occur after the balance sheet date, but before the financial statements are issued. FASB Statement No. 165 is effective for interim and annual periods ending after June 15, 2009. The Company adopted FASB Statement No. 165 as of June 30, 2009. See Note 2 and Note 22 for disclosures relating to the Company’s subsequent events.
FASB Statement No. 157, Fair Value Measurements , issued by the FASB in September 2006, provides enhanced guidance for using fair value to measure assets and liabilities. FASB Statement No. 157 establishes a common definition of fair value, provides a framework for measuring fair value under accounting principles generally accepted in the United States of America (“GAAP”), and expands disclosure requirements about fair value measurements. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2 (“FSP No. FAS 157-2”) which deferred the adoption of FASB Statement No. 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. The Company adopted FASB Statement No. 157 for nonfinancial assets and nonfinancial liabilities on January 1, 2009 with no material impact to the consolidated financial results of the Company.
In April 2009, the FASB issued FASB Staff Position No. FAS 157-4 (“FSP No. FAS 157-4”), Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. FSP No. FAS 157-4 provides (a) additional application guidance for estimating fair value when the volume and activity for the asset or liability have greatly decreased and (b) indicators for identifying transactions that are not considered orderly. FSP No. FAS 157-4 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company adopted the provisions of the FSP No. FAS 157-4 on January 1, 2009.
Additionally, in April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1 (“FSP No. FAS 107-1 and APB 28-1”), Interim Disclosures about Fair Value of Financial Instruments . FSP No. FAS 107-1 and APB 28-1 requires companies to include the annual disclosure requirements of FASB Statement No. 107 in their interim financial statements. Furthermore, FSP No. FAS 107-1 and APB 28-1 requires that the method and significant assumptions used to estimate fair value be disclosed. FSP No. FAS 107-1 and APB 28-1 is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company adopted the provisions of FSP No. FAS 107-1 and APB 28-1 on January 1, 2009 with no material impact to the consolidated financial statements of the Company.
In December 2007, the FASB issued FASB Statement No. 141(R) (revised 2007), Business Combinations (FASB Statement No. 141(R)), which revises how entities will account for acquisitions.
 
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The more significant changes are the (1) expanded definitions of a business and business combination, (2) increased use of fair value, (3) the expensing of acquisition costs, and (4) expanded financial statement disclosures. FASB Statement No. 141(R) is to be applied prospectively to business combinations with acquisition dates on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted FASB Statement No. 141(R) effective January 1, 2009, and applied the provisions of the standard to all business combinations completed during the six months ended June 30, 2009. See Note 17 for discussion of acquisitions.
In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1 (“FSP No. FAS 141(R)-1”), Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arises from Contingencies . FSP No. FAS 141(R)-1 addresses the application of the recognition and measurement guidance of assets acquired and liabilities assumed in a business combination that arise from contingencies. FSP No. FAS 141(R)-1 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company adopted FASB Statement No. 141(R) effective January 1, 2009, and applied the provisions of FSP No. FAS 141(R)-1 to all business combinations completed during the six months ended June 30, 2009. See Note 17 for discussion of acquisitions.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements, (FASB Statement No. 160). FASB Statement No. 160 amends the accounting and reporting requirements for minority interests in Accounting Research Bulletin No. 51, Consolidated Financial Statements . FASB Statement No. 160 requires that minority interests be labeled noncontrolling interests and recorded as a component of equity. FASB Statement No. 160 is effective for fiscal years beginning on or after December 15, 2008. Effective January 1, 2009, we have adopted FASB Statement No. 160, which defines a non-controlling interest in a subsidiary as “the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent” and requires non-controlling interests to be presented as a separate component of equity in the consolidated balance sheet. FASB Statement No. 160 also modifies the presentation of net income by requiring earnings and other comprehensive income to be attributed to controlling and noncontrolling interests.
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133 (“FASB Statement No. 161”). FASB Statement No. 161 requires companies to enhance the transparency of their disclosures by addressing (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (FASB Statement No. 133) and related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. FASB Statement No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of FASB Statement No. 161 on January 1, 2009 did not have a material impact on the consolidated financial statements of the Company. See Note 19 for the disclosures around the Company’s derivative activity.
In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP No. FAS 142-3”). FSP No. FAS 142-3 amends the factors that the Company should consider when developing renewal or extension assumptions used in the determination of useful lives of intangible assets recognized under FASB Statement No. 142 Goodwill and Other Intangible Assets (FASB Statement No. 142). These assumptions should be consistent with the expected cash flow method used to measure the fair value of the intangible asset. FSP No. FAS 142-3 is applicable prospectively to intangible assets acquired after January 1, 2009. The
 
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Company adopted FSP FAS 142-3 on January 1, 2009 with no material impact on its consolidated financial results. See Note 17 for discussion of acquisitions.
In November 2008, the FASB ratified EITF Issue No. 08-6, Equity Method Investment Accounting Considerations (“EITF 08-6”). EITF 08-6 addresses how certain guidance in FASB Statement No. 141R and FASB Statement No. 160 might impact the accounting for equity method investments. EITF 08-6 is effective prospectively for new investments acquired in fiscal years beginning on or after December 15, 2008. The Company adopted EITF 08-6 on January 1, 2009 with no material impact on its consolidated financial results.
Future Adoption of Accounting Standards
In June 2009, the FASB issued FASB Statement No. 168, “The FASB Accounting Standards Codification” and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 (FASB Statement No. 168). FASB Statement No. 168 establishes the “FASB Accounting Standards Codification” as the source of authoritative GAAP for nongovernmental entities. Additionally, FASB Statement No. 168 modifies the GAAP Hierarchy to only include two levels of GAAP—authoritative and nonauthoritative. FASB Statement No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company does not expect the adoption of FASB Statement No. 168 to have a material impact on its consolidated financial results.
In June 2009, the FASB issued FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R), (FASB Statement No. 167). FASB Statement No. 167 amends the consolidation rules related to variable interest entities (VIEs) under FASB Interpretation No. 46(R). The new rules expand the primary beneficiary analysis to incorporate a qualitative review of which entity controls and directs the activities of the VIE. FASB Statement No. 167 also modifies the rules regarding the frequency of ongoing reassessments of whether a company is the primary beneficiary. Under FASB Statement No. 167, companies are required to perform ongoing reassessments as opposed to only when certain triggering events occur, as was previously required. FASB Statement No. 167 is effective for the first annual reporting period that begins after November 15, 2009 and for interim periods therein. The Company is currently evaluating the impact, if any, the adoption of FASB Statement No. 167 will have on its consolidated financial statements.
 
3.	INVESTMENTS	
We have investments that are recorded under both the equity and cost methods. Those investments categorized as hospitality ventures are recorded under the equity method. These investments are considered to be an integral part of our business, and strategically and operationally important to our overall results. Our equity and cost method investment balances recorded at June 30, 2009 and December 31, 2008 are as follows:

 	  	2009	  	2008	
Equity method investments	  	$	213	  	$	191	
Cost method investments	  	 	11	  	 	13	
	  	 	 	  	 	 	
Total investments	  	$	224	  	$	204	
	  	 	 	  	 	 	
Income (loss) from equity method investments included in our consolidated statements of income (loss) for the six months ended June 30, 2009 and 2008 was $(13) million and $12 million, respectively. Income from cost method investments included in our consolidated statements of income (loss) for the six months ended June 30, 2009 and 2008 was $22 million and $62 million, respectively, and are included in other income (loss), net.
 
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The carrying value and ownership percentages of our unconsolidated investments in hotel and vacation properties accounted for under the equity method as of June 30, 2009 and December 31, 2008 are as follows:

 	  	Ownership
Interests	 	 	As of June 30, 2009	  	As of December 31, 2008	
	  			 	Our Investment	  	Our Investment	
Juniper Hotels Private Ltd	  	50.0	% 	 	$	38	  	$	37	
Hotel Investments, LP (see below)	  	30.0	% 	 	 	31	  	 	—  	
Hedreen Hotel Two, LLC	  	50.0	% 	 	 	22	  	 	21	
Nuevo Plaza Hotel Mendoza Limited	  	50.0	% 	 	 	18	  	 	18	
Hedreen Hotel, LLC	  	50.0	% 	 	 	17	  	 	17	
Sao Paulo Investment Co.	  	50.0	% 	 	 	10	  	 	11	
Bear Creek DFW Associates, LTD	  	50.0	% 	 	 	9	  	 	9	
East West Resort Development XII, LP, LLLP	  	41.4	% 	 	 	8	  	 	9	
Grand Aspen Holdings, LLC & Top of Mill Investors, LLC	  	25.8	% 	 	 	8	  	 	9	
Cal Harbor South Pier Urban Renewal Associates, LP	  	50.0	% 	 	 	7	  	 	8	
Other	  			 	 	45	  	 	52	
	  			 	 	 	  	 	 	
Total	  			 	$	213	  	$	191	
	  			 	 	 	  	 	 	
In March 2009, the Company acquired a 30.0% equity interest in Hotel Investments, LP, a hospitality venture that owns an interest in a hotel property located in Texas for a cash contribution of $31 million.
In July 2008, the Company paid $7 million for a 9.99% equity interest in an acquired hotel property in Waikiki, Hawaii. The hotel acquisition was financed from the equity interests in the venture, as well as a loan from the Company for $278 million, which has been recorded as a note receivable (see Note 6) on our consolidated balance sheets. The note matures July 2010 and earns interest at a 30-day London InterBank Offered Rate (“LIBOR”) plus 3.8%.
For the six months ended June 30, 2009 and 2008, we incurred $10 million and $1 million, respectively, of impairment charges recorded in equity earnings (losses) from unconsolidated hospitality ventures. These impairment charges were the result of the carrying amount of the assets exceeding the fair value as calculated using discounted operating cash flows and a determination that the decline was other than temporary. These impairments related to interests in a hospitality venture property and vacation ownership property.
During the six months ended June 30, 2009, we recorded $22 million as a result of distributions from privately held investment entities that invest in non-hospitality related real estate and life science technology companies and are managed by an affiliate. During the six months ended June 30, 2008, we recorded $62 million as a result of distributions from three privately held investment entities that invest in life science technology companies and are managed by an affiliate. On January 24, 2008, the Company received distributions of $184 million from these investments, representing all of the preferred returns and return of capital of $122 million.
 
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4.	FAIR VALUE MEASUREMENT	
FASB Statement No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). When determining fair value, FASB Statement No. 157 requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. FASB Statement No. 157 establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. The three levels of the hierarchy are as follows:
Level One—Values based on unadjusted quoted prices in active markets for identical assets and liabilities;
Level Two—Values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability;
Level Three—Values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques. The Company does not currently have any instruments with fair value determined using level three inputs.
We have various financial instruments that must be measured under the new fair value standard including certain marketable securities, interest bearing money market funds and derivatives instruments. We currently do not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis.
We utilize the market approach and income approach for valuing our financial instruments. According to FASB Statement No. 157, the market approach “utilizes prices and information generated by market transactions involving identical or similar assets and liabilities” and the income approach “uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted).” For instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy.
 
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As of June 30, 2009, the Company had the following financial assets and liabilities measured at fair value on a recurring basis:

 	  	June 30,
2009	 	 	Quoted Prices in
Active Markets for
Identical Assets
(Level 1)	  	Significant Other
Observable Inputs
(Level 2)	 	 	Significant
Unobservable Inputs
(Level 3)	
Marketable securities included in other current and long-term assets:	  				 			  				 			
Mutual funds	  	$	166	  	 	$	166	  	$	—  	  	 	$	—  	
Equity securities	  	 	15	  	 	 	15	  	 	—  	  	 	 	—  	
U.S. government obligations	  	 	89	  	 	 	—  	  	 	89	  	 	 	—  	
U.S. government agencies	  	 	48	  	 	 	—  	  	 	48	  	 	 	—  	
Corporate debt securities	  	 	75	  	 	 	—  	  	 	75	  	 	 	—  	
Mortgage-backed securities	  	 	36	  	 	 	—  	  	 	31	  	 	 	5	
Asset-backed securities	  	 	14	  	 	 	—  	  	 	14	  	 	 	—  	
Other	  	 	6	  	 	 	—  	  	 	6	  	 	 	—  	
Interest bearing money market funds recorded in cash and cash equivalents	  	 	684	  	 	 	684	  	 	—  	  	 	 	—  	
Derivative instruments:	  				 			  				 			
Interest rate swap	  	 	(11	) 	 	 	—  	  	 	(11	) 	 	 	—  	
Foreign currency forward contracts	  	 	(13	) 	 	 	—  	  	 	(13	) 	 	 	—  	
Our portfolio of marketable securities consists of various types of U.S. Treasury securities, mutual funds, common stock, preferred stock and fixed income securities, including government and corporate bonds all of which are valued using the market approach. The fair values of our mutual funds and equity securities were classified as level one as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. The remaining securities, except for certain mortgage-backed securities, were classified as level two due to the use and weighting of multiple market inputs being considered in the final price of the security. Market inputs include quoted market prices from active markets for identical securities, quoted market prices for identical securities in inactive markets, and quoted market prices in active and inactive markets for similar securities. See Note 8 for further details on our marketable securities.
Due to limited observability of market data and limited activity during the six months ended June 30, 2009, we determined that the fair value of certain of our mortgage-back securities would be best classified as Level 3. However, these securities are held within an investment-grade portfolio with many of these securities having a credit rating of AAA/Aaa. The following table summarizes the changes in fair value of our Level 3 securities for the six months ended June 30, 2009:

Beginning Balance—1/1/2009	  	$	—  	
Transfers into Level 3	  	 	5	
Purchases, issuances, and settlements	  	 	—  	
Total gains (losses) (realized or unrealized)	  	 	—  	
	  	 	 	
Ending Balance—6/30/2009	  	$	5	

The amount of total gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at the reporting date:	  	$	—  	
We invest a portion of our cash balance into short-term interest bearing money market funds that have a maturity of less than ninety days. Consequently, the balances are recorded in cash and cash
 
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equivalents. The funds are held with open-ended registered investment companies and the fair value of the fund is classified as level one as we are able to obtain market available pricing information on an ongoing basis.
Our derivative instruments are foreign currency exchange rate instruments and interest rate swaps. The instruments are valued using an income approach with factors such as interest rates and yield curves, which represent market observable inputs and are generally classified as level two. Credit valuation adjustments may be made to ensure that derivatives are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality and the Company’s nonperformance risk. As of June 30, 2009, the credit valuation adjustments are not material. See Note 19 for further details on our derivative instruments.
 
5.	PROPERTY AND EQUIPMENT	
Property and equipment at cost as of June 30, 2009 and December 31, 2008 consist of the following:

 	  	2009	 	 	2008	 	
Land	  	$	560	  	 	$	560	  	
Buildings	  	 	3,276	  	 	 	3,158	  	
Leasehold improvements	  	 	264	  	 	 	234	  	
Furniture, equipment and computers	  	 	1,077	  	 	 	1,057	  	
Construction in progress	  	 	235	  	 	 	202	  	
	  	 	 	 	 	 	 	 	
	  	 	5,412	  	 	 	5,211	  	
Less accumulated depreciation	  	 	(1,796	) 	 	 	(1,716	) 	
	  	 	 	 	 	 	 	 	
Total	  	$	3,616	  	 	$	3,495	  	
	  	 	 	 	 	 	 	 	
Depreciation expense from continuing operations was $123 million and $117 million for the six months ended June 30, 2009 and 2008, respectively. The net book value of capital leased assets at June 30, 2009 and December 31, 2008, was $235 million and $242 million, respectively, which is net of accumulated depreciation of $24 million and $17 million, respectively. Capitalized interest for the six months ended June 30, 2009 and 2008 was $6 million and $8 million, respectively.
 
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6.	NOTES RECEIVABLE	
Notes receivable at June 30, 2009 and December 31, 2008 are as follows:

 	  	June 30,
2009	 	 	December 31,
2008	 	
Senior loan receivable to provide acquisition financing to a hospitality venture investment in Hawaii, interest set at 30-day LIBOR + 3.8% due monthly, principal matures July 2010 (see below)	  	$	278	  	 	$	278	  	
Mortgages receivable from individuals participating in timeshare investment activities at various interest rates with varying payments through 2018 (see below)	  	 	72	  	 	 	83	  	
Mortgage receivables from franchisees, interest rates between 5.5% and 7.5%, due 2011 and 2012 (see below)	  	 	47	  	 	 	46	  	
Note receivable from a third party guarantor related to the operations of an Australian hotel, 6.5% interest, principal and interest payable as per agreement; amounts fully reserved	  	 	15	  	 	 	13	  	
Note receivable from third party owned hotel in Poland, 6.8% effective interest, due quarterly, matures 2018; amounts fully reserved	  	 	10	  	 	 	10	  	
Loan receivable from a hotel in Buenos Aires, 6.0% interest due annually, matures October 2016	  	 	6	  	 	 	5	  	
Loan receivable from affiliated hotel company in Maryland, 9.0% interest due monthly based on available net revenues, matures November 2029	  	 	5	  	 	 	5	  	
Subscription receivable due annually through settlement	  	 	—  	  	 	 	14	  	
Other	  	 	30	  	 	 	25	  	
	  	 	 	 	 	 	 	 	
	  	 	463	  	 	 	479	  	
Less allowance for losses	  	 	(58	) 	 	 	(54	) 	
Less current portion included in receivables	  	 	(9	) 	 	 	(15	) 	
	  	 	 	 	 	 	 	 	
Total	  	$	396	  	 	$	410	  	
	  	 	 	 	 	 	 	 	
Senior Loan Receivable —On July 16, 2008, the Company provided financing to a subsidiary of W2007 Waikiki Holdings, LLC (“W2007”). W2007 is an unconsolidated hospitality venture, which is accounted for under the equity method (see Note 3) and was formed to acquire ownership of a hotel property in Hawaii. The loan is collateralized by the hotel property and there is a recorded mortgage consent by the ground lessors. The loan has a stated maturity date of 2010 with three, one-year options to extend through 2013.
Timeshare Mortgages Receivable —These receivables reflect the amounts due from our financing of timeshare interval sales. We carry mortgages receivable at amortized cost in current and long-term receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. As of June 30, 2009 and December 31, 2008, the allowance for such timeshare mortgages was $15 million and $16 million, respectively. As of June 30, 2009, the weighted-average interest rate on timeshare mortgages receivable was 14.1%. The adequacy of the allowance is determined by management through the analysis of several factors, such as current economic conditions, industry trends, defaults, past due aging and historical write-offs of mortgages and contracts receivable. The allowance is maintained at a level believed adequate by management based on a periodic analysis of the mortgage portfolio.
 
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Mortgages receivable held by the Company as of June 30, 2009 are scheduled to mature as follows:

Years Ending December 31,	  	Amount	 	
Remainder of 2009	  	$	4	  	
2010	  	 	8	  	
2011	  	 	8	  	
2012	  	 	8	  	
2013	  	 	9	  	
2014	  	 	10	  	
Thereafter	  	 	25	  	
	  	 	 	 	
Total mortgages receivable	  	 	72	  	
Less allowance	  	 	(15	) 	
	  	 	 	 	
Net mortgages receivable	  	$	57	  	
	  	 	 	 	
Mortgages Receivable from Franchisees —These receivables reflect financing provided to certain franchisees for the renovations and conversion of certain franchised hotels. As of June 30, 2009, five mortgages have been provided to franchisees with a total loan commitment of $47 million, which have been fully funded. These mortgages receivable are collateralized by the underlying properties and all loans accrue interest at fixed rates ranging between 5.5% and 7.5%.
Mortgages receivable held by the Company as of June 30, 2009 are scheduled to mature as follows:

Years Ending December 31	  	Amount	
Remainder of 2009	  	$	—  	
2010	  	 	1	
2011	  	 	29	
2012	  	 	17	
2013	  	 	—  	
2014	  	 	—  	
Thereafter	  	 	—  	
	  	 	 	
Total mortgages receivable	  	 	47	
Less allowance	  	 	—  	
	  	 	 	
Net mortgages receivable	  	$	47	
	  	 	 	
Fair Value —In accordance with FASB Statement No. 107, the Company estimated the fair value of notes receivable to approximate $370 million and $413 million as of June 30, 2009 and December 31, 2008, respectively. We estimated the fair value of notes receivables using discounted cash flow analyses based on current market inputs for similar types of arrangements. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
 
7.	GOODWILL AND INTANGIBLE ASSETS	
We review the carrying value of all our goodwill in accordance with FASB Statement No. 142, by comparing the carrying value of our reporting units to their fair values in the two-step process. We define a reporting unit at the individual property or business level. We are required to perform this comparison at least annually or more frequently if circumstances indicate that a possible impairment
 
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exists. When determining fair value in step one, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our consolidated capital structure (equity and long-term debt). Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value. If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination. We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.
The following is a summary of changes in the carrying amount of goodwill for the six months ended June 30, 2009:

 	  	Balance at
January 1, 2009	  	Activity during
2009	  	Balance at
June 30, 2009	
Owned and Leased Hotels	  	$	83	  	$	—  	  	$	83	
Management and Franchising—North America	  	 	33	  	 	—  	  	 	33	
Management and Franchising—International	  	 	—  	  	 	—  	  	 	—  	
Corporate and Other	  	 	4	  	 	—  	  	 	4	
	  	 	 	  	 	 	  	 	 	
Total	  	$	120	  	$	—  	  	$	120	
	  	 	 	  	 	 	  	 	 	
Definite lived intangible assets primarily include acquired management and franchise contracts, contract acquisition costs, and acquired lease rights. Franchise contracts are amortized on a straight-line basis over their contract terms, which are typically 20 years. Contract acquisition costs are generally amortized on a straight-line basis over the life of the management contracts, which range from approximately 10 to 40 years. Acquired lease rights are amortized on a straight-line basis over the lease term. Definite lived intangibles are tested for impairment whenever indicators of impairment arise. During the six months ended June 30, 2009 and 2008, we recorded impairment charges of $5 million and $0, respectively, which are included in asset impairments on the consolidated statements of income (loss) and relate to intangible assets with definite lives. The $5 million charge recorded in 2009 related to the full amount of an intangible asset relating to a management agreement covering certain select service hotels in our North American management and franchising segment. During the six months ended June 30, 2009, we determined a triggering event occurred indicating a possible impairment of the respective definite lived intangible asset described above. After comparing the projected undiscounted cash flows derived from the respective management agreement to the carrying value of the intangible asset we determined that an impairment existed. The impairment charge represents the difference between the fair value and the carrying value of the intangible asset. The fair value was estimated by utilizing discounted projected cash flows.
 
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The following is a summary of intangible assets at June 30, 2009 and December 31, 2008:

 	  	2009	 	 	Weighted
Average
Useful Lives	  	2008	 	
Acquired lease rights	  	$	152	  	 	110	  	$	122	  	
Contract acquisition costs	  	 	127	  	 	20	  	 	124	  	
Franchise intangibles	  	 	51	  	 	22	  	 	56	  	
Brand intangibles	  	 	11	  	 	7	  	 	11	  	
Other	  	 	2	  	 	6	  	 	3	  	
	  	 	 	 	 		  	 	 	 	
	  	 	343	  	 		  	 	316	  	
Accumulated amortization	  	 	(67	) 	 		  	 	(60	) 	
	  	 	 	 	 		  	 	 	 	
Intangibles, net	  	$	276	  	 		  	$	256	  	
	  	 	 	 	 		  	 	 	 	
Amortization expense relating to intangible assets for the six months ended June 30, 2009 and 2008, was $7 million and $8 million, respectively.
We estimate amortization expense for the definite lived intangibles for the years 2009 through 2014 to be:

Years Ending December 31,	
Remainder of 2009	  	$	8	
2010	  	 	13	
2011	  	 	14	
2012	  	 	12	
2013	  	 	12	
2014	  	 	12	
 
8.	OTHER ASSETS	
Other assets primarily consist of marketable securities and deferred financing charges. Marketable securities are primarily held for the Gold Passport Fund (see Note 2) and to fund certain deferred compensation plans (see Note 10).
Marketable Securities —At June 30, 2009 and December 31, 2008, total marketable securities carried at fair value and included in the consolidated balance sheets were as follows:

 	  	June 30,
2009	 	 	December 31,
2008	 	
Marketable securities held by the Gold Passport Fund	  	$	269	  	 	$	266	  	
Marketable securities held to fund deferred compensation plans	  	 	162	  	 	 	163	  	
Other marketable securities	  	 	18	  	 	 	15	  	
	  	 	 	 	 	 	 	 	
Total marketable securities	  	 	449	  	 	 	444	  	
Less current portion of marketable securities included in prepaids and other assets	  	 	(45	) 	 	 	(28	) 	
	  	 	 	 	 	 	 	 	
Marketable securities included in other assets	  	$	404	  	 	$	416	  	
	  	 	 	 	 	 	 	 	
Included in net gains (losses) and interest income from marketable securities held to fund operating programs in the consolidated statements of income (loss) are $2 million and $1 million, respectively of realized and unrealized gains (losses) and interest income, net related to marketable securities held by the Gold Passport Fund for the six months ended June 30, 2009 and 2008. Also
 
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included are $6 million and $(8) million, of net realized and unrealized gains (losses) related to marketable securities held to fund deferred compensation plans for the six months ended June 30, 2009 and 2008, respectively.
 
9.	DEBT	
Debt as of June 30, 2009 and December 31, 2008 consists of the following:

 	  	June 30,
2009	 	 	December 31,
2008	 	
Senior subordinated notes—5.84%	  	$	—  	  	 	$	600	  	
9.26% twenty-five year mortgage	  	 	59	  	 	 	61	  	
British pound denominated hotel loans	  	 	180	  	 	 	159	  	
Euro denominated hotel loans	  	 	72	  	 	 	72	  	
Fixed rate mortgages and notes payable—6.0%—10.07%, collateralized by related land, buildings and improvements, and other related assets, payable in monthly, quarterly and annual principal and interest installments, maturing through 2016	  	 	80	  	 	 	82	  	
Revolving credit facility	  	 	—  	  	 	 	30	  	
Other (various, maturing through 2010)	  	 	4	  	 	 	5	  	
	  	 	 	 	 	 	 	 	
Long-term debt before capital lease obligations	  	 	395	  	 	 	1,009	  	
Capital lease obligations	  	 	217	  	 	 	238	  	
	  	 	 	 	 	 	 	 	
Total debt	  	 	612	  	 	 	1,247	  	
Less current maturities	  	 	(17	) 	 	 	(38	) 	
	  	 	 	 	 	 	 	 	
Total long-term debt, net of current maturities	  	$	595	  	 	$	1,209	  	
	  	 	 	 	 	 	 	 	
Under existing agreements, contractual maturities of debt for the next five years and thereafter are as follows:

Remainder of 2009	  	$	10	
2010	  	 	16	
2011	  	 	324	
2012	  	 	7	
2013	  	 	8	
2014	  	 	196	
Thereafter	  	 	51	
	  	 	 	
Total	  	$	612	
	  	 	 	
5.84% Senior Subordinated Notes —On August 28, 2007, the Company issued $500 million of Notes to an independent third party, combined with the Subscription Agreement that requires the purchaser to acquire a variable number of Hyatt Hotels Corporation common stock (“HHC Common Stock”) at a future date, as defined, for $500 million in cash. On October 25, 2007, the Company issued $100 million of additional Notes to an independent third party, combined with a Subscription Agreement for $100 million in cash. The purchasers’ obligations under the Subscription Agreements are secured by a pledge of the Notes to the Company.
On May 13, 2009, HHC repurchased and cancelled the outstanding senior subordinated notes for $600 million plus $88 million in make whole interest and early settlement premiums. Other income (loss) includes these costs plus the write off of $5 million in deferred financing costs associated with these notes. In addition, the Company received $11 million due to us under the Subscription Agreement. See Note 13 for details of this transaction.
 
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9.26% Twenty Five Year Mortgage —On June 1, 2007, the Company acquired the Hyatt Regency San Antonio Riverwalk, which included the assumption of debt with a fair value of $67 million at the date of acquisition. The debt has a stated interest rate of 9.26% and a maturity date of 2021. Additionally, the Company may repay the debt at the optional prepayment date of September 11, 2011, without penalty.
Hotel Loans in British Pounds (GBP) —On November 30, 2007, the Company purchased the remaining interest in the Great Eastern Hotel Holding Company, which included the assumption of debt. The total balance of debt at June 30, 2009 and December 31, 2008 was GBP 109 million and GBP 110 million ($180 million and $159 million), respectively, and included a primary loan and a subordinated loan, both maturing on March 13, 2011. The loans are secured by the pledged shares of its wholly owned subsidiary and shareholder loans. The interest rate applicable to the primary loan is calculated at GBP LIBOR, plus 0.9%. The interest rate applicable to the subordinated loan is calculated at GBP LIBOR, plus 4%. As part of the acquisition, the Company also assumed an interest rate swap that converts this variable rate exposure to a fixed rate. The swap contains a floating rate option, which exchanges the variable GBP LIBOR rates on the primary and subordinated notes described in Note 19 to a fixed rate of 4.91%. Therefore, the net effective interest rate for both the primary and subordinated loans is 6.16%. The annual principal payments of 1% of the loan balance began in March 2009.
Hotel Loans in Euro —On February 28, 2006, the Company purchased the remaining interest in the Park Hyatt Paris Vendome, which included the assumption of debt. The balance of debt at June 30, 2009 and December 31, 2008, was euro 51 million ($72 million) and euro 51 million ($72 million), respectively, and includes a primary loan and a subordinated loan. The primary loan matures on April 14, 2017, and the interest rate applicable to this loan is calculated at EURIBOR, plus 1.25%. The subordinated loan matures on November 30, 2011, and the interest rate applicable to this loan is calculated at EURIBOR, plus 0.7%. As part of the acquisition, the Company also assumed an interest rate swap that converts a portion of this variable rate exposure to a fixed rate under most EURIBOR scenarios. The net effective interest rate on these loans as of June 30, 2009 was 7.33%.
Revolving Credit Facility —On June 29, 2005, the Company entered into a five-year, $1.0 billion revolving credit facility with a group of banks, which is set to expire on June 29, 2010. The interest rate applicable to borrowings under this facility is calculated at LIBOR plus a margin. The margin varies depending on the Company’s credit rating with the major rating agencies and includes a facility fee, which is charged regardless of the level of borrowings. As of June 30, 2009, the applicable rate for a 30-day borrowing would have been LIBOR plus 0.5%, or 0.81%, inclusive of the facility fee. There was an outstanding balance of $0 and $30 million on this credit facility at June 30, 2009 and December 31, 2008, respectively. In July 2009, we extended the maturity and increased the borrowing availability under our revolving credit facility to $1.5 billion, for further details refer to Note 22. At June 30, 2009 and December 31, 2008, the Company had entered into various letter of credit agreements for $88 million and $89 million, respectively, which reduced its available capacity under this revolving credit facility. The available line of credit on our revolving credit facility at June 30, 2009 was $912 million.
The Company also had a total of $21 million and $21 million of letters of credit issued through additional banks as of June 30, 2009 and December 31, 2008, respectively.
Certain of the long-term debt and revolving credit agreements contain financial covenants requiring that certain financial measures be met such as maintaining a minimum net worth, not to exceed a maximum ratio of debt to earnings before interest, tax, depreciation and amortization (EBITDA), not to fall below a minimum ratio of EBITDA to interest expense, or adherence to a maximum loan-to-value ratio. The Company is in compliance with all covenants as of June 30, 2009.
 
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Fair Value —The Company estimated the fair value of long-term debt, excluding capital lease obligations, at approximately $395 million and $825 million at June 30, 2009 and December 31, 2008, respectively. We estimated the fair value of long-term debt using a discounted cash flow analysis based on current market inputs for similar types of arrangements. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
 
10.	OTHER LONG-TERM LIABILITIES	
Other long-term liabilities at June 30, 2009 and December 31, 2008 consist of the following:

 	  	2009	  	2008	
Hyatt Gold Passport Fund (see Note 2 and 8)	  	$	239	  	$	250	
Deferred Compensation Plans (see Note 11)	  	 	162	  	 	163	
Other accrued income taxes (see Note 12)	  	 	98	  	 	91	
Deferred income taxes (see Note 12)	  	 	36	  	 	31	
Deferred incentive compensation plans (see Note 11)	  	 	36	  	 	36	
Deferred gains on sale of hotel properties	  	 	31	  	 	32	
Defined benefit plans (see Note 11)	  	 	16	  	 	16	
Other	  	 	52	  	 	46	
	  	 	 	  	 	 	
Total	  	$	670	  	$	665	

11.	EMPLOYEE BENEFIT PLANS	
Defined Benefit Plans —The Company sponsors supplemental executive retirement plans consisting of funded and unfunded defined benefit plans for certain executives. In 2008 we merged our foreign funded and U.S. unfunded plans for active participants into our deferred compensation plans. For the six months ended June 30, 2009 and 2008, net periodic pension cost of $1 million and $2 million, respectively, was recognized on the unfunded U.S. plan. There was no net periodic pension cost recognized on the Foreign Funded Plan for the six months ended June 30, 2009, as all benefits from this plan were settled in full at the end of 2008. For the six months ended June 30, 2008, the Foreign Funded Plan recognized $5 million of net periodic pension cost.
Defined Contribution Plans —The Company provides retirement benefits to certain qualified employees under the Retirement Savings Plan, the Field Retirement Plan, and other related plans. The Company records expenses related to the Retirement Savings Plan based on a percentage of qualified employee contributions on stipulated amounts; a substantial portion of these contributions are included in the “Other revenues from managed properties” and “Other costs from managed properties” lines in the consolidated statements of income (loss) as the costs of these programs are largely related to employees located at lodging properties managed by the Company and are therefore charged to the property owners. For the six months ended June 30, 2009 and 2008, costs related to these contribution plans were $16 million and $16 million, respectively. Certain portions of these contributions are funded in rabbi trusts, as described below.
Deferred Compensation Plans —We provide nonqualified deferred compensation plans for certain employees. These plans are funded through contributions to rabbi trusts. Contributions and investment elections are determined by the employees. The Company also provides contributions according to a preapproved formula. A portion of these contributions relate to hotel property level employees, which are reimbursable to us and are included in the other revenues and costs from managed properties lines in the consolidated statements of income. For the six months ended June 30, 2009 and 2008, costs related to these compensation plans were $1 million and $1 million, respectively.
 
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As of June 30, 2009 and December 31, 2008, the plans are fully funded in rabbi trusts. The assets of the plans are invested in mutual funds, which are recorded in other noncurrent assets in the consolidated balance sheets (see Note 8). The related deferred compensation liability is recorded in other long-term liabilities. All investment earnings and contributions will be paid to the participating employees upon the earlier of either termination of employment or retirement pursuant to a designated payment date.
Deferred Incentive Compensation Plans —The deferred incentive compensation plans consist of funded and unfunded defined contribution plans for certain executives. Benefits are discretionary and are based primarily on achievement of certain operational goals and objectives. Participant benefits vest over time and are payable at either the later of retirement or upon termination of employment at age 55. For the six months ended June 30, 2009 and 2008, costs related to these compensation plans were $1 million and $1 million, respectively.
 
12.	INCOME TAXES	
The effective income tax rate from continuing operations for the six-month period ended June 30, 2009 and 2008 was 27.1% and 38.0% respectively. Total unrecognized tax benefits at June 30, 2009 and December 31, 2008 were $83 million and $87 million respectively, of which $56 million and $62 million respectively, would impact the effective tax rate if recognized.
In accordance with our accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Total gross accrued interest and penalties were $66 million and $58 million at June 30, 2009 and December 31, 2008, respectively. Interest and penalties of $10 million and $8 million were recognized as a component of income tax expense during the six-month period ended June 30, 2009 and 2008, respectively.
It is reasonably possible that a reduction of up to $45 million of unrecognized tax benefits, accrued interest, and penalties could occur within twelve months from the resolution of audit examinations and the expiration of certain tax statutes for taxable years ended through 2005.
Prior to July 1, 2004, Hyatt Corporation was a member of the H Group Holding, Inc. consolidated group (“Former Parent”). Hyatt Corporation filed its own consolidated income tax return for the second half of 2004. The Former Parent, Hyatt Corporation and another related party entered into a Tax Separation Agreement (“Agreement”) during 2004 in connection with the formation of the Company. As part of the Agreement, Hyatt Corporation agreed to indemnify the Former Parent for all pre-June 30, 2004 taxes attributable to Hyatt Corporation calculated as if it were a separate consolidated group. Unrecognized tax benefits of $4 million were reclassified to other accrued expenses in the current year to record amounts due to the Former Parent in accordance with the Agreement.
AIC Holding Co, Inc (“AIC”), a subsidiary of the Company, filed consolidated income tax returns for taxable years through December 31, 2004. The IRS has examined the AIC returns and concluded all federal income tax matters for all years through the taxable year ended December 31, 2002.
The Internal Revenue Service completed its examination of the consolidated federal income tax returns for the taxable years ending December 31, 2003, 2004 and 2005 for the Former Parent and Hyatt Corporation. Following are the consolidated federal income tax returns that were examined: the Former Parent for the taxable years ended December 31, 2003, 2004 and 2005, Hyatt Corporation for the short-period ended December 31, 2004; AIC for the taxable years ended December 31, 2003 and 2004 and the Company for the taxable years ended December 31, 2004 and 2005. The Company, Hyatt Corporation, AIC and the Former Parent filed protests with the IRS Appeals Office contesting
 
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certain proposed examination liabilities. The Former Parent also continues to protest certain proposed adjustments that primarily involve benefits for the taxable year ended January 31, 2001. The IRS proposed adjustments of $42 million that relate to the Company are currently being protested with the IRS Appeals Office. A portion of this potential liability has been accrued based on the Company’s analyses of these items under FASB Interpretation No. 48. Federal income tax returns for all subsequent taxable years remain subject to examination by the IRS.
The Company is under audit by various state and foreign tax authorities. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period generally of up to one year after formal notification to the states. The statute of limitations for the foreign jurisdictions ranges from three to ten years after filing the respective tax return.
The Company has unrecognized tax benefits related to the various audits noted above. The ultimate outcome and the related liability for these matters cannot be fully determined at this time, however, the Company believes the payments made in prior years and the unrecognized tax benefits provided are adequate to cover any future liability.
 
13.	STOCKHOLDERS’ EQUITY AND COMPREHENSIVE LOSS	
Comprehensive Loss — Comprehensive loss primarily relates to reported earnings (losses), foreign currency translation, changes in unrecognized pension cost and changes in the value of the effective portion of cash flow hedges.
The following table summarizes components of accumulated other comprehensive loss at June 30, 2009 and December 31, 2008:

 	  	June 30,
2009	 	 	December 31,
2008	 	
Foreign currency translation adjustments, net of income taxes of $8 million and $8 million in 2009 and 2008, respectively	  	$	(58	) 	 	$	(54	) 	
Unrecognized pension cost, net of income taxes of $2 million and $2 million in 2009 and 2008, respectively	  	 	(4	) 	 	 	(4	) 	
Unrealized loss on hedge activity net of income taxes of $1 million and $1 million in 2009 and 2008, respectively	  	 	(2	) 	 	 	(2	) 	
	  	 	 	 	 	 	 	 	
Total accumulated other comprehensive loss	  	$	(64	) 	 	$	(60	) 	
	  	 	 	 	 	 	 	 	
Senior Subordinated Notes and Stock Purchase Forward Agreement —On August 28, 2007, the Company issued $500 million of 5.84% senior subordinated notes due 2013 (“Notes”) to an independent third party. At the same time, the Company entered into a stock purchase forward agreement (“Subscription Agreement”) with that independent third party, which required such third party to acquire a variable number of shares of the Company’s Common Stock for a total of $500 million in cash. This independent third party also received a seat on the Company’s Board of Directors. On October 25, 2007, the Company issued $100 million of additional Notes to, and executed an amendment to the Subscription Agreement with, a second independent third party that required such independent third party to acquire a variable number of shares of the Company’s Common Stock for a total of $100 million in cash. On May 13 and May 18, 2009, HHC repurchased and cancelled the outstanding Notes for $600 million plus $88 million in make whole interest and early settlement premiums. Other income (loss) includes these costs plus the write off of $5 million in deferred financing costs associated with these Notes.
Under the Subscription Agreement, the purchasers were required to pay to the Company a subscription fee of 0.84% per year of the purchase price through the settlement date, as defined below.
 
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The fair value of the subscription receivable of $18 million was recorded as additional paid-in capital at the date the Subscription Agreement was executed. The purchase of shares of HHC Common Stock under the Subscription Agreement was mandatory on September 1, 2011, or earlier in the event of a change of control of the Company or an initial public offering of the Company’s Common Stock (the “Settlement Date”). The purchase of the shares of HHC Common Stock was to have been settled in cash in exchange for a variable number of HHC Common Stock based upon the fair value per share of HHC Common Stock on the Settlement Date. If the fair value per share of the Company’s Common Stock on the Settlement Date was less than or equal to $27.64, the purchasers would be obligated to purchase shares of Common Stock from the Company at a price of $27.64 per share. The purchasers’ obligations under the Subscription Agreements were secured by a pledge of the Notes to the Company. In connection with the repurchase of the Notes, on May 13 and May 18, 2009, the purchasers and the Company agreed to early settle their rights and obligations under the Subscription Agreement. Such settlement included a purchase of the Company’s Common Stock by the purchasers on the terms of the Subscription Agreement. Accordingly, the purchasers purchased 21,706,283 shares of Common Stock for $600 million, for a purchase price per share of $27.64. As part of this transaction the Company recognized $13 million of transaction costs as a reduction of additional paid in capital. These costs have been deferred from the date of the original Subscription Agreement. In addition, the Company received the remaining $11 million due to us under the Subscription Agreement.
Preferred Stock —On August 28, 2007, the Company issued 100,000 shares of newly designated stock (“Convertible Preferred Stock”) for $500 million to an independent third party investor. The Convertible Preferred Stock is currently convertible into approximately 16,281,342 shares of HHC Common Stock. The holder of the Convertible Preferred Stock also received a seat on the Company’s Board of Directors. Conversion is at the option of the holder. The Convertible Preferred Stock participates in dividends and distributions equivalent to the HHC Common Stock on an if-converted basis. In addition, the Convertible Preferred Stock also participates in any liquidation, dissolution, or winding up on an equivalent basis as the HHC Common Stock. The Convertible Preferred Stock is non-voting. The Convertible Preferred Stock may be sold or transferred only in accordance with the terms of the Stockholders’ Agreement. Pursuant to the Stockholders’ Agreement, the Company has the right but not the obligation to acquire the stock from any selling stockholder. In addition, the holder of the Convertible Preferred Stock can request that the Company register for issuance any of its common stock, subject to certain limitations. On May 14, 2009, the investor elected to convert its 100,000 shares of Convertible Preferred Stock to 16,281,342 shares of HHC Common Stock.
Common Stock —On May 14, 2009, the Company sold 58,390,397 shares of HHC Common Stock at $13 per share in exchange for $755 million in cash, net of $4 million in transaction costs through a rights offering to certain of our existing investors and their affiliates.
 
14.	COMMITMENTS AND CONTINGENCIES	
In the ordinary course of business, we enter into various commitments, guarantees, surety bonds and letter of credit agreements, which are discussed below:
Guarantees and Commitments —As of June 30, 2009, we are committed, under certain conditions, to loan or invest up to $58 million in various business ventures.
Certain of our hotel lease or management agreements contain performance test clauses that stipulate certain minimum levels of operating performance. We guarantee certain of our hotel owners certain levels of hotel profitability based on various metrics. These performance test clauses provide us the option to fund a shortfall in profit performance. If we choose not to fund the shortfall the hotel owner has the option to terminate the management contract. As of June 30, 2009, no amounts had been accrued related to these performance guarantees. In addition, we have one management agreement
 
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where we are required to make payments based on specified thresholds and have recorded $3 million under this agreement in the six months ended June 30, 2009. The remaining maximum potential payments related to this agreement are $35 million through 2030.
We have entered into various loan, lease, completion and repayment guarantees related to investments held in hotel operations. The maximum exposure as of June 30, 2009 is $22 million. There was no accrual recorded as of June 30, 2009 related to these guarantees as the likelihood of performance under these guarantees is determined to be remote.
In connection with a Canadian property, a subsidiary of the Company guaranteed the payment of certain Canadian tax liabilities, to the extent they become payable under the contract. The tax liability has been deferred until any one of a number of events, as defined in the contract, causes the liability to become payable. The potential future liability under this guarantee as of June 30, 2009 is 7 million Canadian dollars ($6 million). There was no liability recorded as of June 30, 2009, related to this guarantee as the likelihood of performance was deemed to be remote.
Surety Bonds —Surety bonds issued on behalf of the Company totaled $24 million at June 30, 2009, and primarily relate to workers’ compensation, taxes, licenses and utilities related to our lodging operations.
Letters of Credit —Letters of credit outstanding on the Company’s behalf as of June 30, 2009, totaled $109 million, the majority of which relate to the ongoing operations of the Company. Of the $109 million letters of credit outstanding, $88 million reduces the available capacity under the revolving credit facility (see Note 9).
Capital Expenditures —As part of our ongoing business operations, significant expenditures are required to complete renovation projects that have been approved.
Other —The Company acts as general partner in various partnerships owning hotel facilities, which are subject to mortgage indebtedness. These mortgage agreements generally limit the lender’s recourse to security interests in assets financed and/or other assets of the partnership and/or the general partner(s) thereof.
The Company is subject from time to time to various claims and contingencies related to lawsuits, taxes and environmental matters, as well as commitments under contractual obligations. Many of these claims are covered under the current insurance programs, subject to deductibles. For those matters not covered by insurance we reasonably recognize a liability associated with the commitments or contingencies when a loss is probable and reasonably estimable. Although the ultimate liability for these matters cannot be determined at this point, based on information currently available, the Company does not expect that the ultimate resolution of such claims and litigation will have a material adverse effect on its consolidated financial statements.
 
15.	STOCK-BASED COMPENSATION	
As part of the Company’s long-term incentive plan, the Company awards Stock Appreciation Rights (“SARs”) and Restricted Stock Units (“RSUs”) to certain executives.
Stock Appreciation Rights —Each vested SAR gives the holder the right to the difference between the value of a Hyatt Hotels Corporation common share at the exercise date and the value of a common share at the grant date. Vested SARs can be exercised annually over their life during the “exercise window” period as determined by the plan. The plan requires settlement in Hyatt Hotels Corporation common shares. The Company is accounting for these SARs as equity instruments per the provisions of FASB Statement No. 123(R), Share-Based Payments . The Company recognized $5
 
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million and $4 million, respectively of total compensation expense for SARs for each of the six months ended June 30, 2009 and 2008, respectively. The income tax benefit was $2 million and $2 million for the six months ended June 30, 2009 and 2008, respectively.
In October 2006, the Company granted 1,168,750 SARs. Associated with those grants, the Company recognized $1 million and $2 million, respectively of compensation expense for each of the six months ended June 30, 2009 and 2008, respectively. With the exception of one award, the terms of all SARs granted in October were identical in all respects. The only difference between the group of identical awards (“Group A awards”) and the exception award (“Group B award”) relates to the timing of the vesting of the SARs. The Group A awards of 1,031,250 SARs vest over a four-year service period, with 25% of these SARs vesting in October of each year beginning in October 2007. The Group B award of 137,500 SARs vests 0% in 2007, 33.3% in October 2008, 33.3% in October 2009, and 33.3% in October 2010. Each of these SARs has a 10-year life, expiring in October 2016.
In July and November 2007, the Company granted 1,480,001 and 33,000 SARs, respectively. Associated with those grants, the Company recognized $2 million and $2 million, respectively of compensation expense for each of the six months ended June 30, 2009 and 2008, respectively. With the exception of one award, the terms of all the SARs granted in July were identical in all respects. The only difference between Group A and Group B relates to the timing of the vesting of the SARs. The Group A award of 850,000 vests over a four-year service period, with 25% of these SARs vesting in December of each year beginning in December 2007. The Group B award of 630,001 vests over a four-year service period, with 25% of these SARs vesting in March of each year beginning in March 2008. Group C was granted in November 2007 and vests over a four-year service period, with 25% of these SARs vesting in August of each year beginning in August 2008. Each of these SARs has a 10-year contractual term, expiring in 2017.
In May 2008, the Company granted 569,275 SARs. Associated with those grants, the Company recognized $1 million and $0.3 million, respectively of compensation expense for each of the six months ended June 30, 2009 and 2008, respectively. The 2008 SAR awards are all identical and vest over a four-year service period, with 25% of these SARs vesting in April of each year beginning in April 2009. Each of these SARs has a 10-year contractual term, expiring in 2018.
In May 2009, the Company granted 984,420 SARs. Associated with those grants, the Company recognized $0.3 million of compensation expense for the six months ended June 30, 2009. The 2009 SAR awards are all identical and vest over a four-year service period, with 25% of these SARs vesting in April of each year beginning in April 2010. Each of these SARs has a 10-year contractual term, expiring in 2019.
The weighted average grant date fair value for the awards granted in 2009, 2008, 2007 and 2006 was $7.20, $13.00, $12.19 and $9.52, respectively.
The fair value of each SAR was estimated on the date of grant using the Black-Scholes-Merton option-valuation model with the following assumptions:

 	 	2006 Group
A	 	 	2006 Group
B	 	 	2007 Group
A	 	 	2007 Group
B	 	 	2007 Group
C	 	 	2008 Group
A	 	 	2009 Group
A	 	
Exercise Price	 	$	24.95	  	 	$	24.95	  	 	$	31.40	  	 	$	31.40	  	 	$	30.71	  	 	$	29.09	  	 	$	13.00	  	
Expected Life in Years	 	 	6.25	  	 	 	6.5	  	 	 	5.983	  	 	 	6.124	  	 	 	6.116	  	 	 	6.208	  	 	 	6.196	  	
Risk-free Interest Rate	 	 	4.65	% 	 	 	4.65	% 	 	 	4.92	% 	 	 	4.92	% 	 	 	3.94	% 	 	 	3.36	% 	 	 	2.42	% 	
Expected Volatility	 	 	27.50	% 	 	 	27.50	% 	 	 	28.50	% 	 	 	28.50	% 	 	 	38.00	% 	 	 	40.00	% 	 	 	56.50	% 	
Annual Dividend Yield	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	 	 	0	% 	
 
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The Company used an estimated forfeiture rate of 0% because only a small group of executives received these grants and the Company has limited historical data on which to base these estimates. At June 30, 2009, the Company had $20 million of unearned compensation expense associated with SARs that will be earned over the next five years. The Company records the compensation expense earned for SARs on a straight-line basis from the date of grant. The exercise price of these SARs was the fair value of the Company’s common stock at the grant date, based on a valuation of the Company. The expected life was estimated based on the midpoint between the vesting period and the contractual life of each SAR, per guidance from the Securities and Exchange Commission’s Staff Accounting Bulletin No. 107 and No. 110. The risk-free interest rate was based on U.S. Treasury instruments with similar expected life. The expected volatility was estimated using the average implied volatility of exchange-traded options of the Company’s major publicly traded competitors.
A summary of SAR activity as of June 30, 2009, and changes during the six months then ended, is presented below:

 	  	SAR Units	  	Weighted
Average
Exercise Price
(in whole
dollars)	  	Weighted
Average
Contractual
Term	
Outstanding at December 31, 2008:	  	2,761,484	  	$	28.99	  	8.44	
Granted	  	984,420	  	 	13.00	  	9.95	
Exercised	  	—  	  	 	—  	  	—  	
Forfeited or cancelled	  	—  	  	 	—  	  	—  	
	  	 	  	 	 	  	 	
Outstanding at June 30, 2009:	  	3,745,904	  	 	24.79	  	8.47	
Exercisable as of June 30, 2009:	  	1,290,393	  	$	28.87	  	7.83	
In May 2008, an award was modified and in May and December 2008, other awards were forfeited. As is consistent with the guidance in FASB Statement No. 123(R), the Company reversed compensation expense associated with unvested, forfeited awards and recognized additional compensation expense of $0.3 million in the second quarter of 2008 for the modified awards.
Restricted Stock Units —The Company recognized $3 million and $2 million, respectively, of total compensation expense for RSUs for each of the six months ended June 30, 2009 and 2008, respectively. The income tax benefit was $1 million and $1 million for the six months ended June 30, 2009 and 2008, respectively.
Each vested RSU will be settled with a single share of Hyatt Hotels Corporation common stock. The value of the RSUs was based on a valuation of the Company’s common stock.

Grant Date	  	RSUs	  	Value	  	Total Value
(in millions)	  	Vesting Period	
December 2006	  	210,000	  	$	31.40	  	$	7	  	3 years	
May 2008	  	412,015	  	$	29.09	  	$	12	  	4 years	
September 2008	  	40,670	  	$	29.09	  	$	1	  	4 years & 10 years	
May 2009	  	232,693	  	$	13.00	  	$	3	  	4 years	
May 2009	  	320,757	  	$	13.00	  	$	4	  	Immediately to 11 years	
In December 2008, 28,295 RSUs from the May grant were forfeited. As is consistent with the guidance in FASB Statement No. 123(R), the Company reversed compensation expense associated with the unvested, forfeited awards.
The Company records compensation expense earned for RSUs on a straight-line basis from the date of grant.
 
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A summary of the status of the non-vested restricted stock unit awards outstanding under the plan as of June 30, 2009 is presented below:

 	  	Restricted Stock
Units	 	 	Weighted
Average Grant
Date Fair
Value (in
whole dollars)	
Nonvested at December 31, 2008:	  	491,890	  	 	$	29.42	
Granted	  	553,450	  	 	 	13.00	
Vested	  	(78,811	) 	 	 	22.14	
Forfeited or cancelled	  	—  	  	 	 	—  	
	  	 	 	 	 	 	
Nonvested at June 30, 2009:	  	966,529	  	 	$	20.61	
The Company’s total unearned compensation for its stock-based compensation programs as of June 30, 2009 was $20 million for SARs and $16 million for RSUs, which will be recorded to compensation expense over the next eleven years as follows:

 	  	2009	  	2010	  	2011	  	2012	  	2013 +	  	Total	
SARs	  	$	5	  	$	9	  	$	4	  	$	2	  	$	—  	  	$	20	
RSUs	  	 	3	  	 	4	  	 	4	  	 	2	  	 	3	  	 	16	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	8	  	$	13	  	$	8	  	$	4	  	$	3	  	$	36	
Director Deferred Compensation Plan —In July 2007, the Company adopted the Deferred Compensation Plan for its Board of Directors. Under the plan provisions, a director may elect to defer portions of the annual compensation package to be paid at a date in the future. The annual compensation package is comprised of fees paid in cash and stock. The plan is being accounted for under the provisions of FASB Statement No. 123R and other applicable guidance. As of June 30, 2009 and December 31, 2008, the Company has recorded a liability for $0.4 million and $1 million, respectively, associated with the stock-based portion of this plan.
 
16.	LEASES	
We lease hotels and equipment under a combination of capital and operating leases, which generally require us to pay taxes, maintenance, and insurance. Most of the leases contain renewal options, which enable us to retain use of the facilities in desirable operating areas.
The operating leases for the majority of our leased hotels call for the calculation of rental payments to be based on a percentage of the operating profit of the hotel, as defined by contract. As a result, future lease payments related to these leases are contingent upon operating results and are not included in the table below.
 
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The future minimum lease payments due in each of the next five years and thereafter are as follows:

Years Ending December 31,	  	Operating
Leases	  	Capital
Leases	 	
2009	  	$	16	  	$	9	  	
2010	  	 	30	  	 	17	  	
2011	  	 	27	  	 	16	  	
2012	  	 	25	  	 	16	  	
2013	  	 	24	  	 	16	  	
2014	  	 	24	  	 	195	  	
Thereafter	  	 	261	  	 	21	  	
	  	 	 	  	 	 	 	
Total minimum lease payments	  	$	407	  	$	290	  	
	  	 	 	  	 	 	 	
Less amount representing interest	  			  	 	(73	) 	
	  			  	 	 	 	
Present value of minimum lease payments	  			  	$	217	  	
	  			  	 	 	 	
Hyatt Regency Grand Cypress —On April 9, 2007, the Company signed a 30-year lease agreement with the owners of the Hyatt Regency Grand Cypress to lease the hotel, including the land, as well as a parcel of land adjacent to the hotel. This lease agreement includes an option, at the Company’s discretion, to purchase the hotel, including the land, and the adjacent parcel of land for $200 million in the eighth lease year, or in the tenth lease year for $220 million or in the fifteenth lease year for $255 million. Separately, the lease agreement includes an option, at the Company’s discretion, to purchase the land adjacent to the hotel for $10 million at any time through the fifteenth lease year, which would reduce the option price of the hotel and land accordingly. On August 28, 2007, the Company exercised this option and purchased the adjacent land. This lease qualifies as a capital lease under FASB Statement No. 13, and, accordingly, the operating results of the hotel have been consolidated by the Company as of April 9, 2007. The leased assets are included in property and equipment, net, in the amount of $227 million. The lease agreement includes a commitment to spend $30 million on improvements to the property within the first five years. As of June 30, 2009, the full amount has been contracted and $27 million has been paid. Total minimum lease payments were calculated over the seven years of the lease term assuming that the Company will exercise the option to purchase the hotel and land in the eighth lease year. The Company is responsible for all operating costs related to the property, including insurance, maintenance, and taxes.
Hyatt Center —We lease our corporate office space at the Hyatt Center in Chicago, Illinois, from a related party. Under our master lease for Hyatt Center, we have entered into sublease agreements with certain related parties. The total minimum rentals to be received in the future under these noncancelable operating subleases as of June 30, 2009, are $44 million through 2020.
A summary of rent expense from continuing operations for all operating leases as of June 30 is as follows:

 	  	2009	  	2008	
Minimum rentals	  	$	11	  	$	8	
Contingent rentals	  	 	19	  	 	31	
	  	 	 	  	 	 	
Total	  	$	30	  	$	39	

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The Company leases retail space at its owned hotel locations under operating leases. The future minimum lease receipts scheduled to be received in each of the next five years and thereafter are as follows:

Years Ending
December 31,	  	Amount	
2009	  	$	11	
2010	  	 	22	
2011	  	 	21	
2012	  	 	20	
2013	  	 	18	
2014	  	 	16	
Thereafter	  	 	32	
	  	 	 	
Total minimum lease receipts	  	$	140	

17.	ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS	
Acquisitions —The Company continually assesses strategic acquisitions to complement its current business. Assets acquired and liabilities assumed in business combinations were recorded on the Company’s consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the Company have been included in the consolidated statements of income (loss) since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when the Company receives final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of the following acquisition agreements unless as otherwise disclosed below.
Hyatt Regency Boston —On February 17, 2009, a subsidiary of the Company acquired the assets of the Hyatt Regency Boston, a 498-room hotel, for a total purchase price of $110 million.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed in the owned and leased hotels segment for the acquisition. Total consideration paid was $110 million.

Receivables	  	$	2	  	
Other current assets	  	 	1	  	
Property and equipment	  	 	96	  	
Acquired lease rights	  	 	14	  	
	  	 	 	 	
Fair value of assets acquired	  	 	113	  	
Fair value of liabilities assumed	  	 	(3	) 	
	  	 	 	 	
Total purchase price	  	 	110	  	
Less: cash acquired	  	 	1	  	
	  	 	 	 	
Net purchase price	  	$	109	  	
	  	 	 	 	
Revenues included in owned and leased hotels revenues for the period from the date of acquisition to June 30, 2009 were $13 million.
The Great Eastern Hotel Holding Company —As a result of the acquisition of the Great Eastern Hotel Holding Company (GEHHC), the Company also assumed a 50% ownership interest in the Great
 
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Eastern Hotel Properties Limited (GEHP). On February 6, 2008, the Company purchased the remaining 50% interest in the Great Eastern Hotel Properties Limited for British Pounds Sterling (GBP) 16 million ($31 million), which included the settlement of stock loans and noncontrolling interest. The final purchase price allocation was completed as of December 31, 2008. Goodwill assumed through the acquisition of GEHHC was fully impaired as of December 31, 2008.
Discontinued Operations —In accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets the operating results, assets, and liabilities of the following businesses have been reported separately by the Company as discontinued operations in the consolidated balance sheets and consolidated statements of income. We do not have any continuing involvement in these operations.
On August 18, 2008, the Company sold the property known as Hawthorne Suites Orlando for $8 million, to a third party.
On July 18, 2008, the Company sold US Franchise Systems, Inc. (“USFS”), a wholly owned subsidiary of the Company, as part of a stock purchase agreement with a third party for $131 million.
Revenues for all discontinued operations for the six months ended June 30, 2009 and 2008 were $0 and $15 million, respectively.
As a result of certain of the above-mentioned dispositions, the Company has agreed to provide indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
The assets and liabilities related to discontinued operations at June 30, 2009 and December 31, 2008 were immaterial. The net earnings for the six months ended June 30, 2009 and June 30, 2008 were also immaterial.
 
18.	RELATED-PARTY TRANSACTIONS	
In addition to those included elsewhere in the notes to the consolidated financial statements, related-party transactions entered into by the Company are summarized as follows:
Investments —The Company is an investor in certain real estate partnerships that are managed by an affiliate. Generally, we are entitled to a preferred return on these investments, and we retain a small residual ownership interest after our preferred capital balance is repaid. While the carrying value of these cost method investments at June 30, 2009 and December 31, 2008 was zero, we received distributions from the sale of underlying investments during the six months ended June 30, 2009 and 2008 of $21 million and $0, respectively. The distributions are included in other income (loss), net in our consolidated statements of income (loss).
In addition, we own a 5% limited partnership interest and limited liability company interests in three privately held investment entities, which invest in life science technology companies and are managed by an affiliate. The carrying value of these cost method investments at June 30, 2009 and December 31, 2008 was $0 and $0.3 million, respectively. We received distributions during the six months ended June 30, 2009 of $1 million. As a result of the sale of one of the underlying investments, the Company received additional distributions of $184 million in the six months ended June 30, 2008, representing preferred returns of $62 million and return of capital of $122 million. These distributions are included in other income (loss), net in our consolidated statements of income (loss).
 
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Leases —The Company’s corporate headquarters has been located at the Hyatt Center in Chicago, Illinois since 2005. A related party owns the Hyatt Center and a subsidiary of Hyatt Hotels Corporation has signed a master lease for a portion of this building and has entered into sublease agreements with certain related parties. The gross future operating lease payments for the entire term of this lease, ending January 31, 2020, are $112 million. Future sublease income for this space from related parties is $44 million. The Company recorded, in selling, general and administrative expenses, $5 million and $5 million for the six months ended June 30, 2009 and 2008, respectively, for net rent, taxes and our share of operating expenses and shared facilities under the lease. As of June 30, 2009 and December 31, 2008, the Company had recorded prepaid rent of $1 million and $1 million, respectively.
Property and Equipment —A related party provides services for the operation and maintenance of the Company’s aircraft. The Company is charged for the cost of operating the aircraft. Additionally, the Company has a timesharing agreement with certain affiliates whereby the participating entities have use of a shared aircraft pool. Under the timeshare agreements, the Company is charged for its use of other aircrafts subject to the timeshare agreement and charges out the use of its aircraft by the participating entities. The Company recorded expenses of $2 million and $2 million for the six months ended June 30, 2009 and 2008, respectively, associated with these aircraft operating and maintenance services, which are included in selling, general and administrative expenses. As of June 30, 2009 and December 31, 2008, the Company had immaterial payables due to the owner.
Legal Services —A member of the Family is a partner in a law firm that provided services to the Company throughout the six months ended June 30, 2009 and 2008. The Company incurred legal fees of $2 million and $1 million for the six months ended June 30, 2009 and 2008, respectively. Legal fees are included in selling, general and administrative expenses. As of June 30, 2009 and December 31, 2008, the Company had immaterial amounts payable due to the law firm.
Gaming— The Company has a Gaming Space Lease Agreement with HCC Corporation (HCC), a related party, in relation to the Hyatt Regency Lake Tahoe Resort, Spa and Casino. For the six months ended June 30, 2009 and 2008, the Company received $2 million and $2 million, respectively, under this lease.
Also related to the Hyatt Regency Lake Tahoe Resort, Spa and Casino, the Company has a Casino Facilities Agreement to provide certain sales, marketing and other general and administrative services. In exchange for such services, HCC pays us fees based on the type of service being provided and for complimentary goods and services provided to casino customers. The Company received $1 million and $2 million in the six months ended June 30, 2009 and 2008, respectively, under this agreement.
Other Services — A member of the Company’s Board of Directors that was appointed in 2007 is a partner in a firm from which the Company receives financial advisory services. During the six months ended June 30, 2009, the Company paid $3.5 million in advisory fees to this firm. During the six months ended June 30, 2008, the Company paid no advisory fees to this firm. At June 30, 2009 and December 31, 2008, no amounts were owed to the firm. Additionally, affiliates of the financial advisory firm own hotels from which the Company received management and franchise fees of $1.2 million and $0.1 million in the six months ended June 30, 2009 and 2008, respectively. As of June 30, 2009 and December 31, 2008, the Company had immaterial receivables due from these properties.
The Company has various cost sharing and advisory service agreements in place with businesses associated with the Family and certain of its affiliates. The income and expenses incurred as a result of these agreements did not result in material amounts recorded in the financial statements for the six months ended June 30, 2009 or 2008.
 
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Equity Method Investments —We have equity method investments in entities that own properties for which we provide management and/or franchise services and receive fees. The Company recorded fees of $15 million and $19 million for the six months ended June 30, 2009 and 2008, respectively. As of June 30, 2009 and December 31, 2008, the Company had receivables due from these properties of $2 million and $2 million, respectively. In addition, in some cases we provide loans (see Note 6) or guarantees (see Note 14) to these entities. Our ownership interest in these equity method investments generally varies from 8 to 50 percent. See Note 3 for further details regarding our investments.
 
19.	DERIVATIVE INSTRUMENTS	
As discussed in Note 2, on January 1, 2009, we adopted FASB Statement No. 161. We have applied the requirements of FASB Statement No. 161 on a prospective basis. Accordingly, disclosures related to interim periods prior to the date of adoption have not been presented.
It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. As a result of the use of derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. To mitigate the counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected major financial institutions based upon their credit rating and other factors. The Company’s derivative instruments do not contain credit-risk related contingent features.
Interest Rate Swap Agreements —In the normal course of business, the Company is exposed to the impact of interest rate changes. Our objective is to manage the risk of interest rate changes on the results of operations, cash flows, and the market value of our debt by creating an appropriate balance between our fixed and floating-rate debt.
In its hedging programs, the Company uses interest rate swaps. On November 30, 2007, the Company assumed debt as part of its purchase of the remaining interest in the Great Eastern Hotel Holding Company. The debt includes a primary loan and a subordinated loan, totaling GBP 109 million ($180 million), both maturing on March 13, 2011. The primary loan bears interest at GBP LIBOR, plus 0.9%. The subordinated loan bears interest at GBP LIBOR, plus 4.0%. As part of the acquisition, the Company also assumed an interest rate swap that converts this variable rate exposure to a fixed rate. This contract protects against the risk that the eventual cash flows resulting from such transactions will be adversely affected by changes in interest rates. The interest rate swap has a notional amount of GBP 109 ($180) million through March 31, 2010, and GBP 108 ($178) million through maturity on March 13, 2011. The swap exchanges the variable GBP LIBOR rates on the primary and subordinated notes described in Note 9 for a fixed rate of 4.91%. The swap was designated as a cash flow hedge in November 2008 under FASB Statement No. 133, and was highly effective in offsetting fluctuations in GBP LIBOR rates.
This interest rate swap is recognized in the balance sheet at fair value. Changes in the fair value of the swap are recorded in other comprehensive income until the underlying transactions occur, and the corresponding fair value payables are included in other long-term liabilities in our consolidated balance sheet. Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction in the consolidated statements of income and are recorded as interest expense. The amount of loss recorded in other comprehensive loss at June 30, 2009 that is expected to be reclassified to interest expense in the next twelve months if interest rates remain unchanged is immaterial. At the designation date, the Company formally documents all relationships between hedging activities. This process includes matching all derivatives that are designated as cash flow hedges to specific forecasted transactions. The Company also formally assesses, both at the
 
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hedge’s designation date and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. At June 30, 2009, the hedge was determined to be highly effective. Prior to the hedge designation date, the swap was marked to market through earnings.
The Company has two other interest rate swaps that were not designated as hedges, and therefore have been marked-to-market each period through earnings. These derivatives were held as economic hedges to convert variable interest rate exposures to fixed rates. These interest rate swaps are recognized in the balance sheet at fair value. The balance sheet classification for the fair values of these interest rate swaps is to prepaids and other assets for unrealized gains and to other long-term liabilities for unrealized losses. The statement of income classification for the fair values of these interest rate swaps is to other income (loss), net, for both realized and unrealized gains and losses. The notional dollar amount of these outstanding interest rate swap agreements (in US dollars) at June 30, 2009 was $56 million.
Foreign Currency Exchange Rate Instruments —We transact business in various foreign currencies and utilize foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures. Our strategy is to have increases or decreases in our foreign currency exposures offset by gains or losses on the foreign currency forward contracts to mitigate the risks and volatility associated with foreign currency transaction gains or losses. These foreign currency exposures typically arise from intercompany loans and other intercompany transactions. Our foreign currency forward contracts generally settle within 12 months. We do not use these forward contracts for trading purposes. We do not designate these forward contracts as hedging instruments pursuant to FASB Statement No. 133. Accordingly, we record the fair value of these contracts as of the end of our reporting period to our consolidated balance sheet with changes in fair value recorded in our consolidated statement of operations. The balance sheet classification for the fair values of these forward contracts is to prepaids and other assets for unrealized gains and to accounts payable for unrealized losses. The statement of income classification for the fair values of these forward contracts is to other income (loss), net, for both realized and unrealized gains and losses.
The notional dollar amount of the outstanding Swiss Franc, Euro, Pound Sterling, Korean Won, and Japanese Yen forward contracts at June 30, 2009 is (in US dollars) $129 million, $79 million, $66 million, $52 million and $3 million, respectively, with terms of less than one year.
Certain energy contracts at our hotel facilities include derivatives. However, these derivatives qualify for the normal purchases or sales exemption under FASB Statement No. 133.
The effects of derivative instruments on our consolidated financial statements were as follows as of June 30, 2009 and for the six months then ended:
Fair Values of Derivative Instruments

 	 	Asset Derivatives	 	Liability Derivatives	
 	 	June 30, 2009	 	June 30, 2009	
 	 	Balance Sheet Location	 	Fair Value	 	Balance Sheet Location	 	Fair Value	
Derivatives designated as hedging instruments under Statement 133	 		 			 		 			
Interest rate swaps	 		 			 	Other long-term liabilities	 	$	9	
Derivatives not designated as hedging instruments under Statement 133	 		 			 		 			
Interest rate swaps	 		 			 	Other long-term liabilities	 	$	2	
Foreign currency forward contracts	 	Prepaids and other assets	 	$	2	 	Account payables	 	 	15	
	 		 	 	 	 		 	 	 	
Total derivatives	 		 	$	2	 		 	$	26	

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Effect of Derivative Instruments on Income and Other Comprehensive Loss

 	 	Amount of Gain (Loss)
Recognized in
Accumulated Other
Comprehensive Loss
on Derivative (Effective
Portion)	 	Amount and Location of Gain
(Loss) Reclassified from
Accumulated Other
Comprehensive Loss into
Income (Effective Portion)	 	Amount and Location of Gain
(Loss) Recognized in Income on
Derivative (Ineffective Portion
and Amount Excluded from
Effectiveness Testing*)	
 	 	Six Months Ended
June 30, 2009	 	Six Months Ended
June 30, 2009	 	Six Months Ended
June 30, 2009	
Cash flow hedges:	 			 		 		
Interest rate swaps	 	 	$ —  	 	$1 Interest expense	 	$ —  Other income, net	
				
 	 	Amount and Location of
Gain (Loss) Recognized
in Income on Derivative	 	 	 	 	
 	 	Six Months Ended
June 30, 2009	 	 	 	 	
Derivatives not designated as hedges:	 			 		 		
Interest rate swaps	 	$	—  	 	Other income, net	 		
Foreign currency forward contracts	 	 	—  	 	Other income, net	 		
	 	 	 	 		 		
	 	$	—  	 		 		

*	For the six months ended June 30, 2009 there was an immaterial gain recognized in income related to the ineffective portion of the hedge. No amounts were excluded from the assessment of hedge effectiveness for the six months ended June 30, 2009.	
 
20.	SEGMENT AND GEOGRAPHIC INFORMATION	
Our operating segments are components of the business that are managed discretely and for which discrete financial information is reviewed regularly by the chief operating decision maker to assess performance and make decisions regarding the allocation of resources. Our chief operating decision maker is the Chief Executive Officer. We define our reportable segments as follows:
Owned and Leased Hotels —This segment derives its earnings from owned and leased hotel properties located predominantly in North America but also from limited international locations.
North American Management and Franchising —This segment derives its earnings from services provided including hotel management and licensing of our family of brands to franchisees located in the U.S., Canada and the Caribbean. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer. These revenues and costs are recorded on the lines “Other revenues from managed properties” and “Other costs from managed properties,” respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels and are eliminated in consolidation.
International Management and Franchising —This segment derives its earnings from services provided including hotel management and licensing of our family of brands to franchisees located in countries outside of the U.S., Canada and the Caribbean. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to reservations, marketing and IT costs. These revenues and costs are recorded on the lines “Other revenues from managed properties” and “Other costs from managed properties,” respectively. The
 
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intersegment revenues relate to management fees that are collected from the Company’s owned hotels, and are eliminated in consolidation.
The Company’s chief operating decision maker evaluates performance based on each segment’s adjusted EBITDA. We define Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation before interest expense; other income (loss), net; benefit (provision) for income taxes; depreciation and amortization; asset impairments; discontinued operations, net of tax; equity earnings (losses) from unconsolidated hospitality ventures; net loss (income) from noncontrolling interests; and to which we add our pro-rata share of unconsolidated hospitality ventures Adjusted EBITDA.
The table below shows summarized consolidated financial information by segment. Included within Corporate and Other are unallocated corporate expenses and revenue and expenses on our vacation ownership properties, which are not material enough to warrant a separate segment.

 	  	Six Months Ended
June 30,	 	
 	  	2009	 	 	2008	 	
North American Management and Franchising	  				 				
Revenues	  	$	680	  	 	$	764	  	
Intersegment Revenues (a)	  	 	31	  	 	 	47	  	
Adjusted EBITDA	  	 	63	  	 	 	101	  	
Depreciation and Amortization	  	 	5	  	 	 	9	  	
Capital Expenditures	  	 	1	  	 	 	2	  	
			
International Management and Franchising	  				 				
Revenues	  	 	82	  	 	 	118	  	
Intersegment Revenues (a)	  	 	7	  	 	 	10	  	
Adjusted EBITDA	  	 	26	  	 	 	59	  	
Depreciation and Amortization	  	 	1	  	 	 	1	  	
Capital Expenditures	  	 	1	  	 	 	1	  	
			
Owned and Leased Hotels	  				 				
Revenues	  	 	876	  	 	 	1,125	  	
Adjusted EBITDA	  	 	156	  	 	 	303	  	
Depreciation and Amortization	  	 	119	  	 	 	113	  	
Capital Expenditures	  	 	101	  	 	 	111	  	
			
Corporate and other	  				 				
Revenues	  	 	37	  	 	 	59	  	
Adjusted EBITDA	  	 	(35	) 	 	 	(46	) 	
Depreciation and Amortization	  	 	5	  	 	 	2	  	
Capital Expenditures	  	 	1	  	 	 	2	  	
			
Eliminations (a)	  				 				
Revenues	  	 	(38	) 	 	 	(57	) 	
Adjusted EBITDA	  	 	—  	  	 	 	—  	  	
Depreciation and Amortization	  	 	—  	  	 	 	—  	  	
Capital Expenditures	  	 	—  	  	 	 	—  	  	
			
TOTAL	  				 				
Revenues	  	$	1,637	  	 	$	2,009	  	
Adjusted EBITDA	  	 	210	  	 	 	417	  	
Depreciation and Amortization	  	 	130	  	 	 	125	  	
Capital Expenditures	  	 	104	  	 	 	116	  	

(a)	Intersegment revenues are included in the segment revenue totals and eliminated in Eliminations	
 
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The table below shows summarized consolidated balance sheet information by segment:
Total Assets

 	  	June 30,
2009	  	December 31,
2008	
North American Management and Franchising	  	$	249	  	$	291	
International Management and Franchising	  	 	164	  	 	165	
Owned and Leased Hotels	  	 	4,337	  	 	4,124	
Corporate and other	  	 	1,989	  	 	1,539	
	  	 	 	  	 	 	
TOTAL	  	$	6,739	  	$	6,119	
	  	 	 	  	 	 	
The following table presents revenues and long-lived assets by geographical region:

 	  	Six Months Ended June 30,	
 	  	2009	  	2008	
Revenues:	  			  			
United States	  	$	1,331	  	$	1,596	
All Foreign	  	 	306	  	 	413	
	  	 	 	  	 	 	
Total	  	$	1,637	  	$	2,009	

 	  	June 30,
2009	  	December 31,
2008	
Long-Lived Assets	  			  			
United States	  	$	3,087	  	$	2,968	
All Foreign	  	 	925	  	 	903	
	  	 	 	  	 	 	
Total	  	$	4,012	  	$	3,871	
	  	 	 	  	 	 	
The table below provides a reconciliation of the Company’s net income (loss) attributable to Hyatt Hotels Corporation to adjusted EBITDA, a non-GAAP measure, for the six months ended June 30, 2009 and 2008, respectively:

 	  	Six Months Ended June 30,	 	
 	  	  2009  	 	 	  2008  	 	
Adjusted EBITDA	  	$	210	  	 	$	417	  	
Interest expense	  	 	(27	) 	 	 	(28	) 	
Other income (loss), net	  	 	(56	) 	 	 	55	  	
(Provision) benefit for income taxes	  	 	14	  	 	 	(107	) 	
Depreciation and amortization	  	 	(130	) 	 	 	(125	) 	
Asset impairments	  	 	(8	) 	 	 	—  	  	
Discontinued operations, net of tax	  	 	—  	  	 	 	—  	  	
Equity (losses) earnings from unconsolidated hospitality ventures	  	 	(13	) 	 	 	12	  	
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	  	 	(28	) 	 	 	(49	) 	
Net income (losses) from noncontrolling interests	  	 	2	  	 	 	(2	) 	
	  	 	 	 	 	 	 	 	
Net Income (Loss) Attributable to Hyatt Hotels Corporation	  	$	(36	) 	 	$	173	  	

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21.	EARNINGS PER SHARE	
The calculation of basic and diluted earnings (losses) per share including a reconciliation of the numerator and denominator was calculated as follows:

 	  	Six Months Ended June 30,	 	
 	  	2009	 	 	2008	 	
Numerator: 	  				 				
(Loss) Income from Continuing Operations	  	$	(38	) 	 	$	175	  	
Income from discontinued operations	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income	  	$	(38	) 	 	$	175	  	
Net Loss (Income) Attributable to Noncontrolling Interests	  	$	2	  	 	$	(2	) 	
	  	 	 	 	 	 	 	 	
Net (Loss) Income Attributable to Hyatt Hotels Corporation	  	$	(36	) 	 	$	173	  	
	  	 	 	 	 	 	 	 	
Denominator: 	  				 				
Basic weighted average shares outstanding:	  	 	265,673,636	  	 	 	256,057,671	  	
Share-based compensation and subscription receivable	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	  	 	265,673,636	  	 	 	256,057,671	  	
	  	 	 	 	 	 	 	 	
Basic Earnings Per Share: 	  				 				
(Loss) Income from Continuing Operations	  	$	(0.14	) 	 	$	0.68	  	
Income from discontinued operations	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income	  	$	(0.14	) 	 	$	0.68	  	
Net Loss (Income) Attributable to Noncontrolling Interests	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income Attributable to Hyatt Hotels Corporation	  	$	(0.14	) 	 	$	0.68	  	
	  	 	 	 	 	 	 	 	
Diluted Earnings Per Share:	  				 				
(Loss) Income from Continuing Operations	  	$	(0.14	) 	 	$	0.68	  	
Income from discontinued operations	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income	  	$	(0.14	) 	 	$	0.68	  	
Net Loss (Income) Attributable to Noncontrolling Interests	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income Attributable to Hyatt Hotels Corporation	  	$	(0.14	) 	 	$	0.68	  	
	  	 	 	 	 	 	 	 	
The computations of diluted net income (loss) per share for the six months ended June 30, 2009 and 2008 do not include approximately 362,000 and 108,000 of shares of stock assumed to be issued as stock-settled stock appreciation rights and approximately 967,000 and 552,000 of restricted stock units, respectively.
 
22.	SUBSEQUENT EVENTS	
In July 2009, we extended the maturity and increased the borrowing availability under our revolving credit facility to $1.5 billion. Under the terms of the extension, approximately $370 million of credit availability matures on June 29, 2010, with the remaining availability maturing on June 29, 2012. Interest rates on outstanding borrowings are either LIBOR-based or based on an alternate base rate, with margins in each case based on our credit rating.
* * * * * *
 
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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

 TABLE OF CONTENTS

 	 	Page	
Prospectus Summary	 	1	
Risk Factors	 	16	
Special Note Regarding Forward-Looking Statements	 	44	
Use of Proceeds	 	45	
Dividend Policy	 	45	
Capitalization	 	46	
Dilution	 	48	
Selected Consolidated Financial Data	 	50	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	52	
The Lodging Industry	 	93	
Business	 	96	
Management	 	118	
Compensation Discussion and Analysis	 	128	
Certain Relationships and Related Party Transactions	 	156	
Stockholder Agreements	 	178	
Principal and Selling Stockholders	 	181	
Description of Principal Indebtedness	 	186	
Description of Capital Stock	 	190	
Shares Eligible for Future Sale	 	198	
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Class A Common Stock	 	205	
Underwriting	 	209	
Legal Matters	 	213	
Experts	 	213	
Where You Can Find More Information	 	213	
Index to Consolidated Financial Statements	 	F-1	

Through and including                      , 2009 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

 

             Shares
Hyatt Hotels Corporation
Class A Common Stock

 
 
Goldman, Sachs & Co.
Deutsche Bank Securities
J.P. Morgan

 

Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13.	Other Expenses of Issuance and Distribution.	
The following table sets forth the various expenses, other than underwriting discounts, payable by us in connection with the sale of the common stock being registered. All of the amounts shown are estimated, except the Securities and Exchange Commission registration fee and FINRA filing fee.

SEC registration fee	  	$	64,170	
FINRA filing fee	  	 	75,500	
New York Stock Exchange listing fee	  	 	250,000	
Printing and engraving expenses	  	 	*	
Legal fees and expenses	  	 	*	
Accounting fees and expenses	  	 	*	
Transfer agent and registrar fees	  	 	16,200	
Miscellaneous fees and expenses	  	 	*	
	  	 	 	
Total	  	$	*	

*	To be filed by amendment	
 
Item 14.	Indemnification of Directors and Officers.	
Hyatt Hotels Corporation is a Delaware corporation. Section 145 of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit, or proceeding, provided the person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. A similar standard of care is applicable in the case of actions by or in the right of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such person will have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or the court in which such action was brought determines that, despite the adjudication of liability but in view of all of the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses that the Delaware Court of Chancery or other court shall deem proper. Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify and advance expenses to our directors, officers and employees to the fullest extent permitted by Delaware law in connection with any threatened, pending or completed action, suit or proceeding to which such person was or is a party or is threatened to be made a party by reason of the fact that he or she is or was our director, officer or employee, or is or was serving at our request as a director, officer, employee or agent of another corporation or enterprise. In addition, members of our board of directors and compensation committee are also indemnified for actions under our LTIP.
 
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Section 102(b)(7) of the Delaware General Corporation Law provides that a Delaware corporation may in its certificate of incorporation or an amendment thereto eliminate or limit the personal liability of a director to a corporation or its stockholders for monetary damages for violations of the director’s fiduciary duty of care, except (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit. Our amended and restated certificate of incorporation generally provides that we will eliminate or limit the personal liability of our directors to the fullest extent permitted by law.
We currently have directors’ and officers’ liability insurance policies to insure our directors and officers against liability for actions or omissions occurring in their capacity as a director or officer, subject to certain exclusions and limitations.
Reference is made to the form of underwriting agreement filed as Exhibit 1.1 hereto for provisions providing that the underwriters are obligated, under certain circumstances, to indemnify our directors, officers and controlling persons against certain liabilities under the Securities Act of 1933, as amended (the Securities Act).
 
Item 15.	Recent Sales of Unregistered Securities.	
Equity Securities
The following is a summary of our issuances or sales of securities during the past three years that were not registered under the Securities Act:
In October 2006, the registrant issued an aggregate of 466,074 shares of common stock to one accredited investor in exchange for a capital contribution of $11,655,334 pursuant to the Master Contribution Agreement.
From October 6, 2006 through June 30, 2009, the registrant issued an aggregate of 4,674,664 stock appreciation rights to certain employees under our LTIP.
On December 18, 2006, the registrant issued an aggregate of 210,000 restricted stock units to our chief executive officer pursuant to the terms of a Restricted Stock Unit Agreement.
On August 28, 2007, the registrant issued and sold an aggregate of 100,000 shares of Series A convertible preferred stock to two accredited investors at $5,000 per share, for aggregate proceeds of $500,000,000. On May 13, 2009, the registrant issued 16,281,341.582546 shares of common stock upon conversion of all outstanding shares of Series A convertible preferred stock.
From May 2, 2008 through June 30, 2009, the registrant issued an aggregate of 1,050,791 restricted stock units to certain employees under our LTIP.
From May 2, 2008 through June 30, 2009, the registrant issued an aggregate of 36,139 fully vested shares of common stock to three non-employee directors under our LTIP.
In May 2009, the registrant issued and sold an aggregate of 21,706,283 shares of its common stock to seven accredited investors in connection with the settlement of such investors’ and certain of their affiliates’ obligations under a subscription agreement entered into in August 2007. Such shares were sold at the purchase price negotiated under the subscription agreement of $27.64 per share for aggregate proceeds of $600,000,000.
 
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In May 2009, the registrant issued and sold an aggregate of 58,390,397 shares of its common stock to its existing stockholders and certain of their affiliates, as well as certain non-employee directors, at $13.00 per share, for aggregate proceeds of $759,075,161.
The issuances of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act or Rule 701 promulgated under Section 3(b) of the Securities Act, as transactions by an issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The purchasers of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to offer or sell, in connection with any distribution of the securities, and appropriate legends were affixed to the share certificates and instruments issued in such transactions. All recipients either received adequate information about the registrant or had access, through their relationships with the registrant, to such information.
There were no underwriters employed in connection with any of the transactions set forth above. 
Debt Securities
On August 28, 2007, the registrant issued and sold an aggregate of $500,000,000 principal amount of 5.84% Senior Subordinated Notes due September 1, 2013 to one accredited investor. The issuance was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.
On October 25, 2007, the registrant issued and sold an aggregate of $100,000,000 principal amount of 5.84% Senior Subordinated Notes due September 1, 2013 to one accredited investor. The issuance was deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.
On August 14, 2009, the registrant issued and sold an aggregate of $250,000,000 principal amount of 5.750% Senior Notes due 2015 (the 2015 notes) and $250,000,000 principal amount of 6.875% Senior Notes due 2019 (the 2019 notes and, together with the 2015 notes, the senior notes) to certain initial purchasers represented by Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and UBS Securities LLC. The registrant issued the senior notes to the initial purchasers in reliance on Section 4(2) of the Securities Act on the basis that each initial purchaser represented and warranted to the registrant that it was (i) a qualified institutional buyer as defined in Rule 144A under the Securities Act and (ii) an “accredited investor” within the meaning of Rule 501(a) under the Securities Act. The initial purchasers then offered and resold the senior notes to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.
 
Item 16.	Exhibits and Financial Statement Schedules.	
 
(a)	Exhibits	
See the Exhibit Index beginning on page E-1, which follows the signature pages hereof and is incorporated herein by reference.
 
(b)	Financial Statement Schedules	
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto.
 
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Item 17.	Undertakings.	
The undersigned registrant hereby undertakes that:
(1) for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective;
(2) for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3) for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) any other communication that is an offer in the offering made by the undersigned registrant to the purchaser; and
(4) the undersigned will provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Chicago, Illinois, on the 9 th day of September, 2009.

Hyatt Hotels Corporation	
		
By:	 	/ S /    M ARK S. H OPLAMAZIAN	
	 	Name:    Mark S. Hoplamazian	
	 	Title:       President and Chief Executive
                Officer	
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities approved on the 9 th  day of September, 2009.

Signature	  	Title	
		
/ S /    M ARK S. H OPLAMAZIAN
Mark S. Hoplamazian	  	President and Chief Executive Officer (Principal Executive Officer)	
		
*
Harmit J. Singh	  	Chief Financial Officer (Principal Accounting and Financial Officer)	
		
*
Thomas J. Pritzker	  	Executive Chairman of the board of directors	
		
*
Bernard W. Aronson	  	Director	
		
*
Richard A. Friedman	  	Director	
		
*
Susan D. Kronick	  	Director	
		
*
Mackey J. McDonald	  	Director	
		
*
John D. Nichols	  	Director	
		
*
Gregory B. Penner	  	Director	
		
*
Penny Pritzker	  	Director	
		
*
Michael A. Rocca	  	Director	
 
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Signature	  	Title	
		
*
Byron D. Trott	  	Director	
		
*
Richard C. Tuttle	  	Director	

		
*By:
 	 	/ S / M ARK S. H OPLAMAZIAN        	
	 	As Attorney-in-Fact        	
 
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Exhibit Index

Exhibit
Number	  	Exhibit Description	
  1.1*	  	Form of Underwriting Agreement	
		
  3.1*	  	Form of Amended and Restated Certificate of Incorporation of Hyatt Hotels Corporation (to be in effect prior to the consummation of this offering)	
		
  3.2*	  	Form of Amended and Restated Bylaws of Hyatt Hotels Corporation (to be in effect prior to the consummation of this offering)	
		
  4.1*	  	Specimen Common Stock Certificate	
		
  4.2**	  	Registration Rights Agreement, dated as of August 28, 2007, as amended, by and among Global Hyatt Corporation, Madrone GHC, LLC, Lake GHC, LLC, Shimoda GHC, LLC, GS Sunray Holdings, L.L.C., GS Sunray Holdings Subco I, L.L.C., GS Sunray Holdings Subco II, L.L.C., GS Sunray Holdings Parallel, L.L.C., GS Sunray Holdings Parallel Subco, L.L.C., Mori Building Capital Investment LLC and others party thereto	
		
  4.3	  	Indenture, dated as of August 14, 2009, as amended, between Hyatt Hotels Corporation and Wells Fargo Bank, National Association, as trustee.	
		
  4.4	  	First Supplemental Indenture, dated as of August 14, 2009, between Hyatt Hotels Corporation and Wells Fargo Bank, National Association, as trustee.	
		
  5.1*	  	Opinion of Latham & Watkins LLP	
		
10.1**	  	2007 Stockholders’ Agreement, dated as of August 28, 2007, as amended, by and among Hyatt Hotels Corporation, Madrone GHC, LLC, Lake GHC, LLC, Shimoda GHC, LLC, GS Sunray Holdings, L.L.C., GS Sunray Holdings Subco I, L.L.C., GS Sunray Holdings Subco II, L.L.C., GS Sunray Holdings Parallel, L.L.C., GS Sunray Holdings Parallel Subco, L.L.C., Mori Building Capital Investment LLC and others party thereto	
		
10.2**	  	Amended and Restated Hyatt Hotels Corporation Long-Term Incentive Plan, dated as of March 11, 2008, as amended 	
		
10.3**	  	Form of Non-Employee Director Restricted Stock Unit Award Agreement	
		
10.4**	  	Form of Non-Employee Director Restricted Stock Award Agreement	
		
10.5**	  	Form of Special Cash Award Agreement under Long-Term Incentive Plan	
		
10.6**	  	Form of Special Restricted Stock Unit Award Agreement under Long-Term Incentive Plan	
		
10.7**	  	Form of 2008 Special Restricted Stock Unit Award Agreement under Long-Term Incentive Plan	
		
10.8**	  	Form of Restricted Stock Unit Award Agreement under Long-Term Incentive Plan	
		
10.9**	  	Form of 2008 Restricted Stock Unit Award Agreement under Long-Term Incentive Plan	
		
10.10**	  	Form of 2008 Stock Appreciation Rights Award Agreement under Long-Term Incentive Plan	
		
10.11**	  	Form of 2007 Stock Appreciation Rights Award Agreement under Long-Term Incentive Plan	
		
10.12**	  	Form of 2006 Stock Appreciation Rights Award Agreement under Long-Term Incentive Plan	
		
10.13**	  	Form of Stock Appreciation Rights Award Agreement under Long-Term Incentive Plan	
		
10.14**	  	Global Hyatt Corporation Deferred Compensation Plan for Directors, dated as of July 1, 2007	
		
10.15**	  	Hyatt Hotels Corporation Summary of Non-Employee Director Compensation Program	
 
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Exhibit
Number	  	Exhibit Description	
10.16**	  	Restricted Stock Unit Agreement, dated as of December 18, 2006, between Global Hyatt Corporation and Mark S. Hoplamazian	
		
10.17**	  	Employment Letter, dated as of July 30, 2009, between Hyatt Hotels Corporation and Mark S. Hoplamazian 	
		
10.18**	  	Employment Letter, dated as of June 9, 2008, between Hyatt Corporation and Harmit J. Singh	
		
10.19**	  	Employment Letter, dated as of July 30, 2009, between Hyatt Hotels Corporation and Thomas J. Pritzker	
		
10.20	  	Separation and Transition Agreement, dated as of May 5, 2008, between Global Hyatt Corporation, Hyatt Corporation and Kirk Rose	
		
10.21**	  	Amended and Restated Office Lease, dated as of June 15, 2004, as amended, between Hyatt Corporation and FrankMon LLC	
		
10.22**	  	Sublease Agreement, dated as of June 15, 2004, as amended, between Hyatt Corporation and Pritzker Realty Group, L.P.	
		
10.23**	  	Sublease Agreement, dated as of June 15, 2004, as amended, between Hyatt Corporation and The Pritzker Organization, L.L.C.	
		
10.24**	  	Sublease Agreement, dated as of June 15, 2004, as amended, between Hyatt Corporation and H Group Holding, Inc.	
		
10.25**	  	Sublease Agreement, dated as of June 15, 2004, as amended, between Hyatt Corporation and CC-Development Group, Inc.	
		
10.26**	  	Allocation of Certain Office Costs Relating to Thomas J. Pritzker, dated as of December 8, 2006, between Global Hyatt Corporation and The Pritzker Organization, L.L.C.	
		
10.27**	  	Omnibus Office Services Agreement, dated as of August 3, 2006, between Global Hyatt Corporation, Pritzker Realty Group, L.P., CC-Development Group, H Group Holding, Inc., The Pritzker Organization, L.L.C., Pritzker Family Office, L.L.C. and Pritzker Realty Group, L.P. and others party thereto	
		
10.28**	  	Time Sharing Agreement, dated as of October 2, 2006, among Rosemont Project Management, L.L.C., Marmon Holdings, Inc., Global Hyatt Corporation, Pritzker Realty Group, L.P., CC-Development Group, Inc., The Pritzker Organization, L.L.C., U.S. Financial Advisors, Inc., Diversified Financial Management Corp., TransUnion Corp., H Group Holding, Inc., International Financial Advisors, Inc., Marshall E. Eisenberg, Thomas J. Pritzker and Karl J. Breyer, as co-trustees	
		
10.29**	  	Time Sharing Agreement, dated as of January 1, 2008, between Rosemont Project Management, L.L.C. and Thomas J. Pritzker	
		
10.30**	  	Aircraft Administrative and Flight Services Agreement, dated as of March 18, 2008, between Rosemont Project Management, L.L.C. and The Marmon Group LLC	
		
10.31**	  	Time Sharing Agreement, dated as of July 1, 2009 among Navigator Investments, L.L.C. and Global Hyatt Corporation	
		
10.32	  	Gaming Space Lease Agreement, dated as of February 1, 1997, as amended, between Hyatt Equities, L.L.C. and HCC Corporation	
		
10.33	  	Casino Facilities Agreement, dated as of June 30, 2004, between Hyatt Corporation and HCC Corporation	
		
10.34	  	Master (Permanent) Non-Gaming Services Agreement, dated as of July 19, 2002, between Hyatt Corporation and Falls Management Company	
 
E-2

Table of Contents

Exhibit
Number	  	Exhibit Description	
10.35	  	Consulting Agreement, dated as of September 1, 1997, as amended, between Hyatt Aruba, N.V. and Hyatt Gaming Management, Inc.	
		
10.36	  	Hotel Management Agreement, dated as of July 1, 2000, between HDG Associates and Pritzker Realty Group, L.P.	
		
10.37**	  	License Agreement, dated as of December 31, 2008, between Hyatt Corporation and CC-Development Group, Inc.	
		
10.38**	  	Letter regarding employee benefit administration dated as of February 12, 2008, by Hyatt Gaming Management, Inc.	
		
10.39**	  	Employee Benefits and Other Employment Matters Allocation and Separation Agreement, dated as of July 1, 2004, among Hyatt Corporation, Hyatt Gaming Management, Inc., H Group Holding, Inc., HCC Corporation and Grand Victoria Casino & Resort, L.P.	
		
10.40**	  	Letter regarding indemnification of Hyatt Corporation by SMG, dated as of June 14, 2007	
		
10.41**	  	Letter regarding indemnification of Hyatt Corporation by Aramark Corporation, dated as of June 14, 2007	
		
10.42**	  	Tax Separation Agreement, dated as of June 30, 2004, as amended, among H Group Holding, Inc., Hyatt Corporation, CC-Development Group, Inc. and each of their respective direct and indirect Subsidiaries	
		
10.43*	  	Amended and Restated Limited Liability Company Agreement of W2007 Waikiki Holdings, L.L.C., dated as of July 15, 2008	
		
10.44*	  	Senior Loan Agreement, dated as of July 16, 2008, between W2007 WKH Senior Borrower, LLC and SDI, Inc.	
		
10.45**	  	Credit Agreement, dated as of June 29, 2005, as amended, among Hyatt Hotels Corporation, certain Material Domestic Subsidiaries of Global Hyatt Corporation from time to time party thereto, the lenders party thereto, Wachovia Bank, National Association, as administrative agent, The Royal Bank of Scotland plc, as syndication agent, and JPMorgan Chase Bank, N.A, Bank of America, N.A, Deutsche Bank AG New York Branch and BNP Paribas, as co-documentation agents, as amended by the First Amendment to Credit Agreement, dated as of July 10, 2009, between Hyatt Hotels Corporation, the Subsidiaries of Hyatt Hotels Corporation party thereto, the lenders party thereto, Wachovia Bank, National Association, as the prior issuing lender and as the administrative agent prior to the effectiveness of the amendment, and Wells Fargo Bank, National Association, as administrative agent	
		
10.46**	  	Form of Franchise Agreement with Hyatt Place Franchising, L.L.C., as amended	
		
10.47	  	Hyatt Hotels Corporation Executive Officer Change in Control Plan and Summary Plan Description	
		
10.48	  	Hyatt Hotels Corporation Corporate Office Severance Plan and Summary Plan Description	
		
10.49	  	Hyatt Hotels Corporation Executive Incentive Plan	
		
14.1*	  	Code of Business Conduct and Ethics	
		
21.1**	  	List of Subsidiaries, dated as of June 30, 2009	
		
23.1*	  	Consent of Latham & Watkins LLP (included in Exhibit 5.1)	
		
23.2  	  	Consent of Deloitte & Touche LLP	
		
24.1**	  	Powers of Attorney (see pages II-5 and II-6 of original filing)	
 
E-3

Table of Contents

Exhibit
Number	  	Exhibit Description	
99.1**	  	Global Hyatt Agreement, dated as of March 12, 2008 by and among Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, solely in their capacity as co-trustees, and each signatory thereto	
		
99.2**	  	Foreign Global Hyatt Agreement, dated as of March 12, 2008 by and among each signatory thereto	
		
99.3*	  	Amended and Restated Agreement Relating to Stock, dated as of July 30, 2009	

*	To be filed by amendment	
**	Previously filed	
 
E-4

Exhibit 4.3

 
HYATT HOTELS CORPORATION

INDENTURE
Dated as of August 14, 2009

WELLS FARGO BANK, National Association
Trustee

 

TABLE OF CONTENTS

 	  	Page	
ARTICLE I	
	
DEFINITIONS	
		
SECTION 1.01. Definitions	  	1	
SECTION 1.02. Other Definitions	  	7	
SECTION 1.03. Incorporation by Reference of Trust Indenture Act	  	8	
SECTION 1.04. Rules of Construction	  	8	
	
ARTICLE II	
	
THE SECURITIES	
		
SECTION 2.01. Issuable in Series	  	9	
SECTION 2.02. Establishment of Terms of Series of Notes	  	9	
SECTION 2.03. Denominations; Provisions for Payment	  	12	
SECTION 2.04. Execution and Authentication	  	13	
SECTION 2.05. Registrar and Paying Agent	  	14	
SECTION 2.06. Paying Agent To Hold Money in Trust	  	14	
SECTION 2.07. Holder Lists	  	15	
SECTION 2.08. Transfer and Exchange	  	15	
SECTION 2.09. Mutilated, Destroyed, Lost and Stolen Notes	  	16	
SECTION 2.10. Outstanding Notes	  	17	
SECTION 2.11. Treasury Notes	  	17	
SECTION 2.12. Temporary Notes	  	17	
SECTION 2.13. Cancellation	  	18	
SECTION 2.14. Defaulted Interest	  	18	
SECTION 2.15. Global Notes	  	18	
SECTION 2.16. CUSIP or ISIN Numbers	  	20	
SECTION 2.17. Benefits of Indenture	  	21	
	
ARTICLE III	
	
REDEMPTION AND PREPAYMENT	
		
SECTION 3.01. Notices to Trustee	  	21	
SECTION 3.02. Selection of Notes To Be Redeemed	  	21	
SECTION 3.03. Notice of Redemption	  	22	
SECTION 3.04. Effect of Notice of Redemption	  	23	

			
SECTION 3.05. Deposit of Redemption Price	  	23	
SECTION 3.06. Notes Redeemed in Part	  	23	
	
ARTICLE IV	
	
COVENANTS	
		
SECTION 4.01. Payment of Notes	  	24	
SECTION 4.02. Provision of Financial Information	  	24	
SECTION 4.03. Compliance Certificate	  	25	
SECTION 4.04. Further Instruments and Acts	  	25	
SECTION 4.05. Corporate Existence	  	26	
SECTION 4.06. Calculation of Original Issue Discount	  	26	
SECTION 4.07. Limitations on Liens	  	26	
SECTION 4.08. Limitations on Sale and Leaseback Transactions	  	27	
	
ARTICLE V	
	
SUCCESSORS	
		
SECTION 5.01. Mergers, Consolidations, Sales	  	28	
SECTION 5.02. Successor Substituted	  	28	
	
ARTICLE VI	
	
DEFAULTS AND REMEDIES	
		
SECTION 6.01. Events of Default	  	29	
SECTION 6.02. Acceleration	  	31	
SECTION 6.03. Other Remedies	  	32	
SECTION 6.04. Waiver of Past Defaults	  	32	
SECTION 6.05. Control by Majority	  	32	
SECTION 6.06. Limitation on Suits	  	33	
SECTION 6.07. Rights of Holders to Receive Payment	  	33	
SECTION 6.08. Collection Suit by Trustee	  	33	
SECTION 6.09. Trustee May File Proofs of Claim	  	33	
SECTION 6.10. Priorities	  	34	
SECTION 6.11. Undertaking for Costs	  	34	
SECTION 6.12. Waiver of Stay or Extension Laws	  	34	
 
ii

			
	
ARTICLE VII	
	
TRUSTEE	
		
SECTION 7.01. Duties of Trustee	  	35	
SECTION 7.02. Rights of Trustee	  	36	
SECTION 7.03. Individual Rights of Trustee	  	38	
SECTION 7.04. Trustee’s Disclaimer	  	38	
SECTION 7.05. Notice of Defaults	  	38	
SECTION 7.06. Reports by Trustee to Holder	  	38	
SECTION 7.07. Compensation and Indemnity	  	38	
SECTION 7.08. Replacement of Trustee	  	39	
SECTION 7.09. Successor Trustee by Merger	  	40	
SECTION 7.10. Eligibility; Disqualification	  	40	
SECTION 7.11. Preferential Collection of Claims Against Company	  	40	
	
ARTICLE VIII	
	
LEGAL DEFEASANCE, COVENANT DEFEASANCE
AND SATISFACTION AND DISCHARGE	
		
SECTION 8.01. Option To Effect Legal Defeasance or Covenant Defeasance	  	41	
SECTION 8.02. Legal Defeasance and Discharge	  	41	
SECTION 8.03. Covenant Defeasance	  	41	
SECTION 8.04. Conditions to Legal or Covenant Defeasance	  	42	
SECTION 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions	  	43	
SECTION 8.06. Repayment to Company	  	43	
SECTION 8.07. Satisfaction and Discharge of Indenture	  	44	
SECTION 8.08. Reinstatement	  	45	
	
ARTICLE IX	
	
AMENDMENTS	
		
SECTION 9.01. Without Consent of Holders	  	45	
SECTION 9.02. With Consent of Holders	  	46	
SECTION 9.03. Revocation and Effect of Consents and Waivers	  	47	
SECTION 9.04. Notation on or Exchange of Notes	  	48	
SECTION 9.05. Trustee to Sign Amendments	  	48	
SECTION 9.06. Payment for Consent	  	48	
	
ARTICLE X	
	
MISCELLANEOUS	
		
SECTION 10.01. Trust Indenture Act Controls	  	48	
SECTION 10.02. Notices	  	49	
SECTION 10.03. Communication by Holders with Other Holders	  	49	
 
iii

			
SECTION 10.04. Certificate and Opinion as to Conditions Precedent	  	49	
SECTION 10.05. Statements Required in Certificate or Opinion	  	50	
SECTION 10.06. Rules by Trustee, Paying Agent and Registrar	  	50	
SECTION 10.07. Legal Holidays	  	50	
SECTION 10.08. Governing Law	  	50	
SECTION 10.09. No Recourse Against Others	  	50	
SECTION 10.10. Successors	  	50	
SECTION 10.11. Multiple Originals; Electronic Signatures	  	51	
SECTION 10.12. Waiver of Jury Trial	  	51	
SECTION 10.13. Table of Contents; Headings	  	51	
SECTION 10.14. Severability	  	51	
SECTION 10.15. Submission to Jurisdiction and Venue	  	51	
 
iv

INDENTURE dated as of August 14, 2009, between HYATT HOTELS CORPORATION, a corporation organized under the laws of Delaware (the “ Company ”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”).
The Company and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes authenticated and delivered under this Indenture (the “ Notes ”):
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . The following terms shall have the following meanings:
“ Affiliate ” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, a Person shall be deemed to be “controlled by” a Person if such Person possesses, directly or indirectly, power either (a) to vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
“ Agent ” means any Registrar, Paying Agent or co-registrar.
“ Attributable Indebtedness ” in respect of any Sale and Leaseback Transaction, means, as of the time of determination, the total obligation (discounted to present value at the rate per annum equal to the discount rate which would be applicable to a capital lease obligation with like term in accordance with GAAP) of the lessee for rental payments (other than amounts required to be paid on account of property taxes, maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the initial term of the lease included in such Sale and Leaseback Transaction.
“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“ Board of Directors ” means the Board of Directors of the Company (or, if the Company is not a corporation, the board or committee of the Company serving a similar function), or any authorized committee thereof.
“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certificate and delivered to the Trustee.

“ Business Day ” means, unless otherwise provided by Board Resolutions, Officers’ Certificate or supplemental indenture hereto for a particular Series, any day other than a Legal Holiday.
“ Capital Lease ” means any lease of any Principal Property that is or should be accounted for as a capital lease on the consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP.
“ Capital Stock ” means (i) in the case of a corporation, capital stock, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock, (iii) in the case of a partnership, partnership interests (whether general or limited), (iv) in the case of a limited liability company, membership interests and (v) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing Person (excluding hypothetical shares of stock of the Company issued to employees as part of a “phantom stock” compensation plan).
“ Clearstream ” means Clearstream Banking, société anonyme , or any successor thereto.
“ Company ” means Hyatt Hotels Corporation, until a successor replaces it and thereafter means only the successor.
“ Company Order ” means a written order signed in the name of the Company by two Officers, one of whom must be the Company’s principal executive officer, principal financial officer or principal accounting officer.
“ Consolidated Net Tangible Assets ” means, at any date of determination, the amount representing the assets of the Company and its Subsidiaries that would appear on the most recent fiscal quarter end consolidated balance sheet of the Company and its Subsidiaries on such date prepared in accordance with GAAP, less (i) all current liabilities and non-controlling interests and (ii) goodwill and other intangibles.
“ Corporate Trust Office of the Trustee ” shall be the address of the Trustee specified in Section 10.02 hereof or such other address at which at any particular time its corporate trust business is principally administered.
“ Custodian ” means the Trustee, as Custodian with respect to the Notes in global form, or any successor entity thereto.
“ Default ” means any event that is, or after notice or passage of time or both would be, an Event of Default.
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.08 hereof.
 
2

“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.15 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture, and, if at any time there is more than one such person, “Depositary” as used with respect to the Notes of any Series shall mean the Depositary with respect to the Notes of such Series.
“ Dollar ” means a dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debt.
“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, or any successor thereto.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ GAAP ” means generally accepted accounting principles in the United States of America as in effect from time to time, including those principles set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board, (iii) such other statements by such other entity as approved by a significant segment of the accounting profession and (iv) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.
“ Global Note ” when used with respect to any Series of Notes issued hereunder, means, individually and collectively, Notes executed by the Company and authenticated and delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction, all in accordance with this Indenture and an indenture supplemental hereto, if any, or Board Resolution and pursuant to a Company Order, which shall be registered in the name of the Depositary or its nominee and which shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all the outstanding Notes of such Series or any portion thereof, in either case having the same terms, including, without limitation, the same original Issue Date, date or dates on which principal is due, and interest rate or method of determining interest and which shall bear the legend as prescribed by Section 2.15(c).
“ Global Note Legend ” means the legend set forth in Section 2.15(c), which is required to be placed on all Global Notes issued under this Indenture.
“ Government Securities ” means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States of America pledges its full faith and credit.
“ Governmental Authority ” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial regulatory or administrative functions of government.
 
3

“ Holder ” means a Person in whose name a Note is registered on the Registrar’s books.
“ Indebtedness ” means indebtedness of, or guaranteed or assumed by, the Company for borrowed money, including indebtedness evidenced by bonds, debentures, notes or other similar instruments and reimbursement and cash collateralization of letters of credit, bankers’ acceptances, interest rate hedge and currency hedge agreements, if any such indebtedness would appear as a liability upon a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP (not including contingent liabilities that appear only in a footnote to such balance sheet).
“ Indenture ” means this Indenture, as amended or supplemented from time to time.
“ Interest Payment Date ” when used with respect to any Series of Notes, means the date specified in such Notes for the payment of any installment of interest on those Notes.
“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.
“ Issue Date ” means the date on which the Original Notes are initially issued.
“ Lien ” means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing).
“ Maturity ,” when used with respect to any Note or installment of principal thereof, means the date on which the principal of such Note or such installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, notice of option to elect repayment or otherwise.
“ Non-Recourse Indebtedness ” means any Indebtedness the terms of which provide that the lender’s claim for repayment of such Indebtedness is limited solely to the single property or group of related properties that secure such Indebtedness.
“ Notes ” has the meaning assigned to it in the preamble to this Indenture.
“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.
 
4

“ Officers’ Certificate ” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Sections 10.04 and 10.05 hereof.
“ Opinion of Counsel ” means an opinion from legal counsel, that meets the requirements of Section 10.04 and 10.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.
“ Original Issue Discount Note ” means any Note that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.02.
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Clearstream or other indirect participants in The Depository Trust Company serving a similar function).
“ Paying Agent ” shall have the meaning set forth in Section 2.05.
“ Permitted Liens ” means:
(a) Liens existing on the date of this Indenture;
(b) Liens in favor of the Company or a Restricted Subsidiary;
(c) Liens on any property existing at the time of the acquisition thereof;
(d) Liens on any property of a Person or its subsidiaries existing at the time such Person is consolidated with or merged into the Company or a Restricted Subsidiary, or Liens on any property of a Person existing at the time such Person becomes a Restricted Subsidiary;
(e) Liens to secure all or part of the cost of acquisition (including Liens created as a result of an acquisition by way of Capital Lease), construction, development or improvement of the underlying property, or to secure Indebtedness incurred to provide funds for any such purposes; provided , that the commitment of the creditor to extend the credit secured by any such Lien shall have been obtained not later than 18 months after the later of (A) the completion of the acquisition, construction, development or improvement of such property and (B) the placing in operation of such property or of such property as so constructed, developed or improved;
(f) Liens securing industrial revenue, pollution control or similar bonds; and
 
5

(g) any extension, renewal or replacement (including successive extensions, renewals and replacements), in whole or in part, of any Lien referred to in any of clauses (a), (c), (d) or (e) of this definition of Permitted Liens that would not otherwise be permitted pursuant to any of clauses (a) through (f) of this definition of Permitted Liens, to the extent that (A) the principal amount of Indebtedness secured thereby and not otherwise permitted to be secured pursuant to any of clauses (a) through (f) of this definition of Permitted Liens does not exceed the principal amount of Indebtedness, plus any premium or fee payable in connection with any such extension, renewal or replacement, so secured at the time of any such extension, renewal or replacement, except that where (1) the Indebtedness so secured at the time of any such extension, renewal or replacement was incurred for the sole purpose of financing a specific project and (2) additional Indebtedness is to be incurred in connection with such extension, renewal or replacement solely to finance the completion of the same project, the additional Indebtedness may also be secured by such Lien; and (B) the property that is subject to the Lien serving as an extension, renewal or replacement is limited to some or all of the property that was subject to the Lien so extended, renewed or replaced.
“ Person ” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated) or any Governmental Authority.
“ Principal Property ” means any contiguous or proximate parcel of real property owned by, or leased to, the Company or any of its Subsidiaries, and any equipment located at or comprising a part of any such property, having a gross book value (without deduction of any depreciation reserves), as of the date of determination, in excess of the greater of $150,000,000 and 5% of Consolidated Net Tangible Assets.
“ Registrar ” shall have the meaning set forth in Section 2.05.
“ Responsible Officer ” with respect to the Trustee, means any Vice President, Assistant Vice President, Trust Officer, Assistant Trust Officer or any other officer of the Trustee who (i) (A) is assigned by the Trustee to administer its corporate trust matters and who customarily performs functions similar to those performed by such Persons who at the time shall be such officers, respectively, or (B) to whom any corporate trust matter is referred because of such Person’s knowledge of and familiarity with the particular subject or (ii) has direct responsibility for the administration of this Indenture.
“ Restricted Subsidiary ” means any Subsidiary of the Company which owns or leases Principal Property.
“ Sale and Leaseback Transaction ” means any direct or indirect arrangement relating to property now owned or hereafter acquired whereby the Company or any Restricted Subsidiary transfers such property to another Person and the Company or the Restricted Subsidiary leases or rents it from such Person.
“ SEC ” means the Securities and Exchange Commission.
“ Securities Act ” means the Securities Act of 1933, as amended.
 
6

“ Series ” or “ Series of Notes ” means each series of debentures, notes or other debt instruments of the Company created pursuant to Sections 2.01 and 2.02 hereof.
“ Service Agent ” shall have the meaning set forth in Section 2.05.
“ Significant Subsidiary ” means each “significant subsidiary” of the Company as defined in Rule 1-02 of Regulation S-X under the Securities Act as of the Time of Sale.
“ Stated Maturity ,” when used with respect to any Note, means the date specified in such Note as the fixed date on which an amount equal to the principal amount of such Note is due and payable.
“ Subsidiary ” means any Person in which a majority of the partnership interests, outstanding Voting Stock or other equity interests is owned, directly or indirectly, by the Company and/or a Subsidiary and which is consolidated in such the accounts of the Company and/or a Subsidiary.
“ TIA ” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) and the rules and regulations thereunder as in effect on the date on which this Indenture is qualified under the TIA; provided , however , that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act as so amended.
“ Trustee ” means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder, and if at any time there is more than one such person, “Trustee” as used with respect to the Notes of any Series shall mean the Trustee with respect to Notes of that Series.
“ U.S. Person ” means a U.S. person as defined in Rule 902(k) under the Securities Act.
“ Voting Stock ” means, with respect to any Person, Capital Stock issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has been suspended by the happening of a contingency.
SECTION 1.02. Other Definitions .

Term	  	Defined in Section	
“ Covenant Defeasance ”	  	8.03	
“ Event of Default ”	  	6.01	
“ Legal Defeasance ”	  	8.02	
“ Legal Holiday ”	  	10.07	
“ OID ”	  	4.06	
“ Paying Agent ”	  	2.05	
“ Registrar ”	  	2.05	
“ Regular Record Date ”	  	2.03	
“ Service Agent ”	  	2.05	
 
7

SECTION 1.03. Incorporation by Reference of Trust Indenture Act . When qualified under the TIA, this Indenture shall be subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. Whether or not this Indenture is so qualified, the following TIA terms used in this Indenture have the following meanings:
“indenture securities” means the Notes;
“indenture security Holder” means a Holder of a Note;
“indenture to be qualified” means this Indenture;
“indenture trustee” or “institutional trustee” means the Trustee; and
“obligor” on the Notes means the Company, until a successor replaces it and thereafter means the successor.
When qualified under the TIA, all other terms used in this Indenture that are defined by the TIA, defined by the TIA’s reference to another statute or defined by SEC rule under the TIA shall have the meanings so assigned to them.
SECTION 1.04. Rules of Construction . Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(3) “or” is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time.
 
8

ARTICLE II
THE SECURITIES
SECTION 2.01. Issuable in Series . The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited. The Notes may be issued in one or more Series. All Notes of a Series shall be identical except as may be set forth in a Board Resolution, a supplemental indenture or an Officers’ Certificate detailing the adoption of the terms thereof pursuant to the authority granted under a Board Resolution. In the case of Notes of a Series to be issued from time to time, the Board Resolution, supplemental indenture or Officers’ Certificate may provide for the method by which specified terms (such as interest rate, maturity date, record date or date from which interest shall accrue) are to be determined. Notes may differ between Series in respect of any matters.
SECTION 2.02. Establishment of Terms of Series of Notes . At or prior to the issuance of any Notes within a Series, the Company may establish (as to the Series generally, in the case of Subsection 2.02(a) and either as to such Notes within the Series or as to the Series generally in the case of Subsections 2.02(b) through 2.02(x)) by a Board Resolution, a supplemental indenture or an Officers’ Certificate pursuant to authority granted under a Board Resolution the following terms applicable to such Notes:
(a) the title of the Notes of the Series (which shall distinguish the Notes of that particular Series from the Notes of any other Series);
(b) any limit upon the aggregate principal amount of the Notes of the Series which may be authenticated and delivered under this Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes of the Series);
(c) the date or dates on which the principal and premium, if any, of the Notes of the Series are payable;
(d) the rate or rates (which may be fixed or variable per annum) at which the Notes of the Series shall bear interest, if any, or the method of determining such rate or rates, the date or dates from which such interest, if any, shall accrue, the Interest Payment Dates on which such interest, if any, shall be payable or the method by which such dates will be determined, the record dates, for the determination of Holders thereof to whom such interest is payable (in the case of Notes in registered form), and the basis upon which such interest will be calculated if other than that of a 360-day year of twelve 30-day months;
(e) the currency or currencies, including composite currencies in which Notes of the Series shall be denominated, if other than Dollars, the place or places, if any, in addition to or instead of the Corporate Trust Office of the Trustee (in the case of Notes in registered form) or the principal New York office of the Trustee (in the case of Notes in bearer form), where the principal, premium and interest with respect to Notes of such Series shall be payable or the method of such payment, if by wire transfer, mail or other means;
 
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(f) the price or prices at which, the period or periods within which, and the terms and conditions upon which, Notes of the Series may be redeemed, in whole or in part at the option of the Company or otherwise;
(g) whether Notes of the Series are to be issued in registered form or bearer form or both and, if Notes are to be issued in bearer form, whether coupons will be attached to them, whether Notes of the Series in bearer form may be exchanged for Notes of the Series issued in registered form, and the circumstances under which and the places at which any such exchanges, if permitted, may be made;
(h) if any Notes of the Series are to be issued in bearer form or as one or more Global Notes representing individual Notes of the Series in bearer form, whether certain provisions for the payment of additional interest or tax redemptions shall apply; whether interest with respect to any portion of a temporary Note of the Series in bearer form payable with respect to any Interest Payment Date prior to the exchange of such temporary Note in bearer form for definitive Notes of the Series in bearer form shall be paid to any clearing organization with respect to the portion of such temporary Note in bearer form held for its account and, in such event, the terms and conditions (including any certification requirements) upon which any such interest payment received by a clearing organization will be credited to the Persons entitled to interest payable on such Interest Payment Date; and the terms upon which a temporary Note in bearer form may be exchanged for one or more definitive Notes of the Series in bearer form;
(i) the obligation, if any, of the Company to redeem, purchase or repay the Notes of the Series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which, the period or periods within which, and the terms and conditions upon which, Notes of the Series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligations;
(j) the terms, if any, upon which the Notes of the Series may be convertible into or exchanged for any of the Company’s common stock, preferred stock, other debt securities or warrants for common stock, preferred stock or other securities of any kind and the terms and conditions upon which such conversion or exchange shall be effected, including the initial conversion or exchange price or rate, the conversion or exchange period and any other additional provisions;
(k) if other than denominations of $2,000 and any integral multiple of $1,000 in excess thereof, the denominations in which the Notes of the Series shall be issuable;
(l) if the amount of principal, premium or interest with respect to the Notes of the Series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts will be determined;
 
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(m) if the principal amount payable at the Stated Maturity of Notes of the Series will not be determinable as of any one or more dates prior to such Stated Maturity, the amount that will be deemed to be such principal amount as of any such date for any purpose, including the principal amount thereof which will be due and payable upon any Maturity other than the Stated Maturity and which will be deemed to be outstanding as of any such date (or, in any such case, the manner in which such deemed principal amount is to be determined), and if necessary, the manner of determining the equivalent thereof in Dollars;
(n) any changes or additions to Article Eight;
(o) if other than the principal amount thereof, the portion of the principal amount of the Notes of the Series that shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 6.02;
(p) the terms, if any, of the transfer, mortgage, pledge or assignment as security for the Notes of the Series of any properties, assets, moneys, proceeds, securities or other collateral, including whether any provisions of the TIA are applicable and any corresponding changes to provisions of this Indenture as then in effect;
(q) any addition to or change in the Events of Default which applies to any Notes of the Series and any change in the right of the Trustee or the requisite Holders of such Series of Notes to declare the principal amount of, premium, if any, and interest on such Series of Notes due and payable pursuant to Section 6.02;
(r) if the Notes of the Series shall be issued in whole or in part in the form of a Global Note, the terms and conditions, if any, upon which such Global Note may be exchanged in whole or in part for other individual Definitive Notes of such Series, the Depositary for such Global Note and the form of any legend or legends to be borne by any such Global Note in addition to or in lieu of the Global Note Legend;
(s) any Trustee, authenticating agent, Paying Agent, transfer agent, Service Agent or Registrar;
(t) the applicability of, and any addition to or change in, the covenants (and the related definitions) set forth in Articles Four or Five which applies to Notes of the Series;
(u) with regard to Notes of the Series that do not bear interest, the dates for certain required reports to the Trustee;
(v) the intended United States Federal income tax consequences of the Notes;
(w) the terms applicable to Original Issue Discount Notes, including the rate or rates at which original issue discount will accrue; and
 
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(x) any other terms of Notes of the Series (which terms shall not be prohibited by the provisions of this Indenture).
All Notes of any one Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to the Board Resolution, supplemental indenture or Officers’ Certificate referred to above, and the authorized principal amount of any Series may not be increased to provide for issuances of additional Notes of such Series, unless otherwise provided in such Board Resolution, supplemental indenture or Officers’ Certificate.
SECTION 2.03. Denominations; Provisions for Payment . The Notes shall be issuable, except as otherwise provided with respect to any series of Notes pursuant to Section 2.02, as registered Notes in the denominations of two thousand Dollars ($2,000) or any integral multiple of one thousand Dollars ($1,000) in excess thereof, subject to Section 2.02(k). The Notes of any Series shall bear interest payable on the dates and at the rate specified with respect to that Series. Unless otherwise provided as contemplated by Section 2.02 with respect to Notes of any Series, the principal of and the interest on the Notes of any Series, as well as any premium thereon in case of redemption thereof prior to maturity, shall be payable in Dollars. Such payment shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, the City and State of New York. Each Note shall be dated the date of its authentication. Unless otherwise provided as contemplated by Section 2.02, interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months.
The interest installment on any Note that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Notes of that Series shall be paid to the Person in whose name said Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date for such interest installment. In the event that any Note of any Series or portion thereof is called for redemption and the redemption date is subsequent to a Regular Record Date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Note will be paid upon presentation and surrender of such Note as provided in Section 3.05 and Section 3.06.
Unless otherwise set forth in a Board Resolution, a supplemental indenture or an Officers’ Certificate establishing the terms of any series of Notes pursuant to Section 2.02 hereof, the term “Regular Record Date” as used in this Section with respect to Notes of any Series with respect to any Interest Payment Date for such Series shall mean (i) either the fifteenth day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.02 hereof shall occur, if such Interest Payment Date is the first day of a month or (ii) the last day of the month immediately preceding the month in which an Interest Payment Date established for such series pursuant to Section 2.02 hereof shall occur, if such Interest Payment Date is the fifteenth day of a month, whether or not such date is a Business Day.
 
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Subject to the foregoing provisions of this Section, each Note of a Series delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note of such Series shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Note.
SECTION 2.04. Execution and Authentication . One or more Officers shall sign the Notes for the Company by manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Notes may contain such notations, legends or endorsements required by law, stock exchange rule or usage.
The Trustee shall at any time, and from time to time, authenticate Notes for original issue in the principal amount provided in the Board Resolution, supplemental indenture hereto or Officers’ Certificate, upon receipt by the Trustee of a Company Order. Such Company Order shall specify the amount of Notes to be authenticated, the date on which the issue of Notes is to be authenticated, the number of separate Notes to be authenticated, the registered holder of each Note and delivery instructions. Each Note shall be dated the date of its authentication unless otherwise provided by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate.
The aggregate principal amount of Notes of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such Series set forth in the Board Resolution, supplemental indenture hereto or Officers’ Certificate delivered pursuant to Section 2.02, except as provided in Section 2.09.
Prior to the issuance of Notes of any Series, the Trustee shall have received and (subject to Section 7.02) shall be fully protected in relying on: (a) the Board Resolution, supplemental indenture hereto or Officers’ Certificate establishing the form of the Notes of that Series or of Notes within that Series and the terms of the Notes of that Series or of Notes within that Series, (b) an Officers’ Certificate complying with Section 10.04, and (c) an Opinion of Counsel complying with Section 10.04.
The Trustee shall have the right to decline to authenticate and deliver any Notes of such Series: (a) if the Trustee, being advised by counsel, determines that such action may not lawfully be taken; or (b) if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors and/or vice-presidents shall determine that such action would expose the Trustee to personal liability to Holders of any then outstanding Series of Notes or otherwise exposes the Trustee to liability hereunder or under any Series of Notes.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.
 
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SECTION 2.05. Registrar and Paying Agent . So long as Notes of any Series remaining outstanding, the Company agrees to maintain an office or agency in the Borough of Manhattan, the City and State of New York (or any other place or places specified with respect to such Series pursuant to Section 2.02), where Notes of such Series may be presented or surrendered for payment (“ Paying Agent ”), where Notes of such Series may be presented for registration of transfer or exchange (“ Registrar ”). The Registrar shall keep a register with respect to each Series of Notes and to their transfer and exchange. The Company will give prompt written notice to the Trustee of the name and address, and any change in the name or address, of each Registrar, Paying Agent or Service Agent. If at any time the Company shall fail to maintain any such required Registrar, Paying Agent or Service Agent or shall fail to furnish the Trustee with the name and address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more co-registrars, additional paying agents or additional service agents and may from time to time rescind such designations; provided , however , that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain a Registrar, Paying Agent and Service Agent in each place so specified pursuant to Section 2.02 for Notes of any Series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar, additional paying agent or additional service agent. The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Service Agent” includes any additional service agent.
The Company hereby appoints the Trustee as the initial Registrar, Paying Agent and Service Agent for each Series unless another Registrar, Paying Agent or Service Agent, as the case may be, is appointed prior to the time Notes of that Series are first issued.
The Company shall appoint a service agent where notices and demands to or upon the Company in respect of the Notes of such Series and this Indenture may be served (“ Service Agent ”), which shall initially be Corporation Service Company.
SECTION 2.06. Paying Agent To Hold Money in Trust . The Company shall require each Paying Agent, other than the Trustee, to agree in writing that the Paying Agent will hold in trust, for the benefit of Holders of any Series of Notes, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on the Series of Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. Notwithstanding anything in this
 
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Section to the contrary, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 8.06, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent (if other than the Company or a Subsidiary) shall be released from all further liability with respect to the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Holders of any Series of Notes all money held by it as Paying Agent.
SECTION 2.07. Holder Lists . (a) The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of each Series of Notes and the Company undertakes to provide, or cause the Depositary to provide, such a list at the Trustee’s reasonable request but in any case no more often than at stated intervals of six months, unless the Company and the Trustee shall otherwise agree. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten days before each Interest Payment Date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Holders of each Series of Notes.
(b) The Trustee may destroy any list furnished to it as provided in Section 2.07(a) upon receipt of a new list so furnished.
SECTION 2.08. Transfer and Exchange . When Notes of a Series are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Notes at the Registrar’s request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly permitted herein), but the Company may require payment from the transferring or exchanging Holder, as the case may be, of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant to Section 2.12, 3.06 or 9.04).
Neither the Company nor the Registrar shall be required (a) to issue, register the transfer of, or exchange Notes of any Series for the period beginning at the opening of business 15 days immediately preceding the mailing of a notice of redemption of Notes of that Series selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer or exchange of Notes of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Notes selected, called or being called for redemption in part.
 
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All Notes presented or surrendered for exchange or registration of transfer, as provided in this Section, shall be accompanied by a written instrument or instruments of transfer, in the form set forth in the supplemental indenture for such Series of Notes and satisfactory to the Company or the Registrar, duly executed by the registered holder or by such holder’s duly authorized attorney in writing.
The provisions of this Section 2.08 are, with respect to any Global Note, subject to Section 2.15 hereof.
SECTION 2.09. Mutilated, Destroyed, Lost and Stolen Notes . If any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Note, a new Note of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note (without surrender thereof except in the case of a mutilated Note) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, and, in case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
Upon the issuance of any new Note under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Note of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes of that Series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) any and all other rights and remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary, with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes, negotiable instruments or other securities.
 
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SECTION 2.10. Outstanding Notes . The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest on a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding until the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of any thereof) holds on the Maturity of Notes of a Series money sufficient to pay such Notes payable on that date, then on and after that date such Notes of the Series cease to be outstanding and interest on them ceases to accrue.
A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
In determining whether the Holders of the requisite principal amount of outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, the principal amount of an Original Issue Discount Note that shall be deemed to be outstanding for such purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a declaration of acceleration of the Maturity thereof pursuant to Section 6.02.
SECTION 2.11. Treasury Notes . In determining whether the Holders of the required principal amount of Notes of a Series have concurred in any request, demand, authorization, direction, notice, consent or waiver, Notes of a Series owned by the Company or an Affiliate of the Company shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such request, demand, authorization, direction, notice, consent or waiver only Notes of a Series that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.
SECTION 2.12. Temporary Notes . Until Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes upon a Company Order. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee upon request shall authenticate Definitive Notes of the same Series and date of maturity in exchange for temporary Notes. Until so exchanged, temporary Notes shall have the same rights under this Indenture as the Definitive Notes.
 
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SECTION 2.13. Cancellation . The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Notes (subject to the record retention requirement of the Exchange Act) and deliver a certificate of such destruction to the Company, unless the Company otherwise directs. The Company may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation.
SECTION 2.14. Defaulted Interest . If the Company defaults in a payment of interest on a Series of Notes, it shall pay the defaulted interest, plus, to the extent permitted by law and if the terms of such Series so provide, any interest payable on the defaulted interest, to the persons who are Holders of the Series on a subsequent special record date. The Company shall fix the record date and payment date. At least 10 days before the record date, the Company shall mail to the Trustee and to each Holder of the Series a notice that states the record date, the payment date and the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner.
SECTION 2.15. Global Notes . (a) Terms of Notes . A Board Resolution, a supplemental indenture hereto or an Officers’ Certificate shall establish whether the Notes of a Series shall be issued in whole or in part in the form of one or more Global Notes and the Depositary for such Global Note or Notes.
(b) Transfer and Exchange . Notwithstanding any provisions to the contrary contained in Section 2.08 of the Indenture and in addition thereto, any Global Note shall be exchangeable pursuant to Section 2.08 of the Indenture for Notes registered in the names of Holders other than the Depositary for such Note or its nominee only if (i) such Depositary notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or if at any time such Depositary ceases to be a clearing agency registered under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary within 90 days of such event, and (ii) the Company executes and delivers to the Trustee an Officers’ Certificate to the effect that such Global Note shall be so exchangeable. Any Global Note that is exchangeable pursuant to the preceding sentence shall be exchangeable for Notes registered in such names as the Depositary shall direct in writing in an aggregate principal amount equal to the principal amount of the Global Note with like tenor and terms.
Except as provided in this Section 2.15(b), a Global Note may only be transferred in whole but not in part (i) by the Depositary with respect to such Global Note to a nominee of such Depositary, (ii) by a nominee of such Depositary to such Depositary or another nominee of such Depositary or (iii) by the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.
 
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(c) Legend . Any Global Note issued hereunder shall bear a legend in substantially the following form:
“This Note is held by the Depositary (as defined in the Indenture governing this Note) or its nominee in custody for the benefit of the beneficial owners hereof, and is not transferable to any person under any circumstances except that (a) the Trustee may make such notations hereon as may be required pursuant to Section 2.04 of the Indenture, (b) this Note may be exchanged in whole but not in part pursuant to Section 2.15(b) of the Indenture, (c) this Note may be delivered to the Trustee for cancellation pursuant to Section 2.13 of the Indenture and (d) except as otherwise provided in Section 2.15(b) of the Indenture, this Note may be transferred, in whole but not in part, only (x) by the Depositary to a nominee of the Depositary, (y) by a nominee of the Depositary to the Depositary or another nominee of the Depositary or (z) by the Depositary or any nominee to a successor Depositary or to a nominee of such successor Depositary.”
(d) Acts of Holders . (i) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(ii) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof. Where such execution is by a signer acting in a capacity other than such signer’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer’s authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(iii) The ownership of bearer securities may be proved by the production of such bearer securities. The Trustee and the Company may assume that such ownership of any bearer security continues until (i) such bearer security is produced to the Trustee by some other Person, (ii) such bearer security is surrendered in exchange for a registered security or (iii) such bearer security is no longer outstanding. The ownership of bearer securities may also be proved in any other manner which a Responsible Officer of the Trustee deems sufficient.
(iv) The ownership of registered securities shall be proved by the register maintained by the Registrar.
 
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(v) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(vi) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Notes shall be computed as of such record date; provided , that such authorization, agreement or consent by the Holders on such record date shall not be deemed effective unless it shall become effective pursuant to the provisions of this Indenture within six months after the record date.
The Depositary, as a Holder, may establish procedures for beneficial owners of Notes who hold interests in the Notes through Participants to provide any request, demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under the Indenture and it may take actions as Holder consistent with such instructions in accordance with such procedures.
(e) Payments . Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.02, payment of the principal of and interest, if any, on any Global Note shall be made to the Holder thereof.
(f) Consents, Declaration and Directions . Except as provided in Section 2.15(e), the Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount of outstanding Notes of such Series represented by a Global Note as shall be specified in a written statement of the Depositary with respect to such Global Note, for purposes of obtaining any consents, declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.
SECTION 2.16. CUSIP or ISIN Numbers . The Company in issuing the Notes may use “CUSIP” or “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” or “ISIN” numbers in notices of redemption as provided in Section 3.03; provided , that neither the Company nor the Trustee shall have any responsibility for any defect in the “CUSIP” or “ISIN” number that appears on any Note, check, advice of payment or redemption notice, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the
 
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Notes or as contained in any notice of a redemption and that reliance may be placed only on the other elements of identification printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall notify the Trustee of changes in the “CUSIP” or “ISIN” numbers for the Notes of which it becomes aware.
SECTION 2.17. Benefits of Indenture . Nothing in this Indenture or in the Notes, express or implied, shall give or be construed to give to any Person, other than the parties hereto and the Holders of the Notes, any legal or equitable right, remedy or claim under or in respect of this Indenture, or under any covenant, condition or provision herein contained; all such covenants, conditions and provisions being for the sole benefit of the parties hereto and of the Holders of the Notes.
ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01. Notices to Trustee . The Company may, with respect to any Series of Notes, reserve the right to redeem and pay the Series of Notes or may covenant to redeem and pay the Series of Notes or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in such Series of Notes. If a Series of Notes is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity thereof all or part of the Series of Notes pursuant to the terms of such Notes, it shall notify the Trustee in writing of the redemption date and the principal amount of Notes of the Series to be redeemed and the redemption price. The Company shall give such written notice to the Trustee at least 30 but no more that 60 days before the redemption date (or such shorter notice as may be acceptable to the Trustee).
SECTION 3.02. Selection of Notes To Be Redeemed . Unless otherwise indicated for a particular Series by a Board Resolution, a supplemental indenture or an Officer’s Certificate, if less than all of the Notes of a Series are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased as follows:
(1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or
(2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such other method as the Trustee shall deem fair and appropriate.
No Notes of $2,000 of principal amount or less will be redeemed in part. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall make the selection at least 25 days but not more than 60 days before the redemption date from outstanding Notes of a Series not previously called for redemption.
 
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If any Note is to be redeemed in part only, the notice of redemption that relates to such Note of the same Series and Stated Maturity shall state the portion of the principal amount of that Note to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note presented for redemption will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become irrevocably due on the date fixed for redemption at the applicable redemption price, plus accrued and unpaid interest to the redemption date. On and after the redemption date, interest ceases to accrue or accrete on Notes or portions of them called for redemption.
SECTION 3.03. Notice of Redemption . Unless otherwise provided for a particular Series of Notes by a Board Resolution, a supplemental indenture or an Officers’ Certificate, at least 25 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price, which will include interest accrued and unpaid to the date fixed for redemption;
(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or provision of this Indenture or any supplemental indenture pursuant to which the Notes called for redemption are being redeemed; and
(8) the CUSIP or ISIN number, if any, printed on the Notes being redeemed;
(9) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
 
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At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided, however, that the Company shall deliver to the Trustee, at least 10 days prior to the intended mailing of any such notice (or such shorter period as the Company and the Trustee shall agree), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as required by this Section.
SECTION 3.04. Effect of Notice of Redemption . Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price . Prior to 10:00 a.m. (New York City time) on the redemption date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary of the Company is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of, and accrued interest on, all Notes to be redeemed on that date, other than Notes or portions of Notes called for redemption that have been delivered by the Company to the Trustee for cancellation. The Trustee or the Paying Agent shall as promptly as practicable return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If such money is then held by the Company in trust and is not required for such purpose it shall be discharged from such trust.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid on the redemption date to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and, to the extent permitted by law and if the terms of such Series so provide, on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes.
SECTION 3.06. Notes Redeemed in Part . Upon surrender of a Note that is redeemed in part, the Company shall execute and, upon the Company’s written request, the Trustee shall authenticate for the Holder (at the Company’s expense) a new Note of the same Series and Stated Maturity equal in principal amount to the unredeemed portion of the Note surrendered.
 
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ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes . The Company covenants and agrees for the benefit of the Holders of each Series of Notes that it will duly and punctually make all payments in respect of each Series of Notes on the dates and in the manner provided in such series of Notes and this Indenture. Such payments shall be considered made on the date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, money sufficient to make all payments with respect to such Notes then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.
SECTION 4.02. Provision of Financial Information .
(a) Unless otherwise indicated in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, so long as any Notes are outstanding (unless satisfied and discharged or defeased), and so long as the Company is not subject to reporting requirements under Section 13 or 15(d) of the Exchange Act, the Company will furnish without cost to the Holders and provide to the Trustee, no later than 90 days after the end of each fiscal year (in the case of annual financial statements) and 45 days after the end of each fiscal quarter other than the last fiscal quarter (in the case of quarterly financial statements), unaudited quarterly and audited annual consolidated financial statements of the Company and its Subsidiaries (including balance sheets, statements of operations and statements of cash flows that would be required from an SEC registrant in an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q, as the case may be) prepared in accordance with GAAP, subject, with respect to quarterly financial statements, to the absence of footnote disclosure and normal year end audit adjustments. All such audited annual consolidated financial statements shall be audited by an internationally recognized independent public accountant.
The Company will distribute (or cause the Trustee to distribute) such information and such reports electronically to:
(i) any Holder;
(ii) any beneficial owner of the Notes that provides its email address to the Company and certifies that it is a beneficial owner of the Notes;
(iii) any prospective investor in the Notes that provides its email address to the Company and certifies that it is (i) a prospective investor in the Notes and (ii) a Qualified Institutional Buyer (as defined in the Securities Act) or not a U.S. Person (as defined in Rule 902(k) under the Securities Act);
(iv) any market maker that provides its email address to the Company and certifies that it is or intends to be a market maker with respect to the Notes; and
 
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(v) any securities analyst that provides its email address to the Company and certifies that it is a securities analyst.
Any person who requests or receives such financial information from the Company will be required to represent to the Company that (i) it is a Holder, a beneficial owner of the Notes, a prospective investor in the Notes, a market maker or a securities analyst; (ii) it will not use the information in violation of applicable securities laws or regulations; (iii) it will not communicate the information any person; and (iv) it is not a Person (which includes such Person’s Affiliates) that (i) is principally engaged in the hospitality or lodging business or (ii) derives a significant portion of its revenues from operating, owning or franchising hospitality or lodging assets.
(b) The Company has also agreed that it will furnish to the Holders and to any prospective investor that certifies it is a Qualified Institutional Buyer, upon request and if not previously provided, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, unless the Notes are not purchased or sold pursuant to Rule 144A under the Securities Act.
(c) Notwithstanding anything in this Section 4.02, the Company may fulfill the requirement to distribute financial information under Section 4.02 by filing the information with the SEC.
Delivery of reports, information and documents to the Trustee under this Section 4.02 is for informational purposes only, and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely on Officers’ Certificates).
SECTION 4.03. Compliance Certificate . The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that, to such Officer’s knowledge, the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which such Officer has knowledge and what action the Company is taking or proposes to take, if any, with respect thereto).
SECTION 4.04. Further Instruments and Acts . The Company shall execute and deliver to the Trustee such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.
 
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SECTION 4.05. Corporate Existence . Subject to Article V hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect:
(1) its existence in accordance with its organizational documents (as the same may be amended from time to time) and
(2) the rights (charter and statutory), licenses and franchises of the Company; provided , however , that the Company shall not be required to preserve any such right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.06. Calculation of Original Issue Discount . If the Notes are issued with original issue discount (other than de minimis original issue discount) (“ OID ”), as defined under the Internal Revenue Code, the Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of OID (including daily rates and accrual periods) accrued on outstanding Notes as of the end of such year and (ii) such other specific information relating to such OID as may then be relevant under the Internal Revenue Code.
SECTION 4.07. Limitations on Liens .
(a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, assume or permit to exist, any Lien, other than Permitted Liens, on any Principal Property, or upon Capital Stock or Indebtedness issued by any Restricted Subsidiary and owned by the Company or any Subsidiary, now or hereafter acquired, to secure Indebtedness, without effectively providing concurrently that the Notes are secured equally and ratably with such Indebtedness, for so long as such Indebtedness shall be so secured.
(b) Notwithstanding the restrictions described in Section 4.07(a), the Company and its Restricted Subsidiaries may, directly or indirectly, create, assume or permit to exist any Lien that would otherwise be subject to the restrictions set forth in Section 4.07(a) without equally and ratably securing the Notes if, at the time of such creation, assumption or permission, after giving effect thereto and to the retirement of any Indebtedness which is concurrently being retired, the aggregate principal amount of outstanding Indebtedness secured by Liens which would otherwise be subject to the restrictions of Section 4.07(a) (not including Permitted Liens) plus all Attributable Indebtedness of the Company and its Restricted Subsidiaries in respect of Sale and Leaseback Transactions with respect to any Principal Property (not including such transactions described under any of clauses (a) through (e) as set forth in Section 4.08), does not exceed 15% of Consolidated Net Tangible Assets.
 
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SECTION 4.08. Limitations on Sale and Leaseback Transactions . The Company will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any Principal Property unless:
(a) the Sale and Leaseback Transaction is solely with the Company or another Subsidiary;
(b) the lease in such Sale and Leaseback Transaction is for a period not in excess of three years, including renewal rights;
(c) the lease in such Sale and Leaseback Transaction secures or relates to industrial revenue, pollution control or similar bonds;
(d) the Sale and Leaseback Transaction is entered into prior to or within 18 months after the purchase or acquisition of the Principal Property which is the subject of such Sale and Leaseback Transaction;
(e) the proceeds of the Sale and Leaseback Transaction are at least equal to the fair market value (as determined by the Board of Directors in good faith) of the Principal Property which is the subject of the Sale and Leaseback Transaction and prior to or within 180 days after the sale of such Principal Property, the Company applies an amount equal to the greater of (A) the net proceeds of such sale, and (B) the Attributable Indebtedness of the Company and its Restricted Subsidiaries in respect of such Sale and Leaseback Transaction to (1) the retirement of long-term Indebtedness that is not subordinated to any Notes and that is not Indebtedness owed to the Company or a Subsidiary, or (2) the purchase of other property which will constitute a Principal Property having a value at least equal to the value of the Principal Property leased; or
(f) the Attributable Indebtedness of the Company and its Restricted Subsidiaries in respect of such Sale and Leaseback Transaction and all other Sale and Leaseback Transactions with respect to any Principal Property (not including any Sale and Leaseback Transactions described under any of clauses (a) through (e) of this Section 4.08), plus the aggregate principal amount of outstanding Indebtedness secured by Liens upon Principal Properties or Capital Stock or Indebtedness issued by any Restricted Subsidiary and owned by the Company or any Subsidiary then outstanding (not including any such Indebtedness secured by Permitted Liens) which do not secure such Notes equally and ratably with (or on a basis that is prior to) the other Indebtedness secured thereby, would not exceed 15% of Consolidated Net Tangible Assets.
 
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ARTICLE V
SUCCESSORS
SECTION 5.01. Mergers, Consolidations, Sales . Unless otherwise provided for a particular Series of Notes by a Board Resolution, a supplemental indenture or an Officers’ Certificate, the Company shall not consolidate with or merge into any
other Person or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the Company’s and its Subsidiaries’ properties and assets, taken as a whole, to any Person, unless:
(a) the Person surviving such consolidation or merger (if not the Company) or the Person that acquires by sale, assignment, transfer, lease, conveyance or other disposition all or substantially all of the Company’s and its Subsidiaries’ properties and assets, taken as a whole, shall be a corporation, partnership, limited liability company, trust or other entity organized and existing under the laws of the United States of America, any state thereof or the District of Columbia or Canada, Mexico, Switzerland or any other country that is a member country of the European Union on the date of the hereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Notes and the performance or observance of every covenant of the Indenture on the part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction and treating any Indebtedness that becomes an obligation of the Company or any Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Default or Event of Default shall have occurred and be continuing; and
(c) the Company shall have delivered to the trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with the terms of this Indenture and that all conditions precedent provided for herein relating to such transaction have been complied with.
The restrictions of this Section 5.01 will not apply to (i) any sale, assignment, transfer, conveyance, lease or other disposition of assets solely between or among the Company and its Subsidiaries; or (ii) any conversion of the Company from a corporation to a limited liability company, from a limited liability company to a corporation, from a limited liability company to a limited partnership or a similar conversion.
SECTION 5.02. Successor Substituted . (a) In case of any such consolidation, merger, sale, conveyance, assignment, transfer, lease or other disposition and upon the assumption by the successor entity, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of, premium, if any, and interest on all of the Notes of all series outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture or established with respect to each series of the Notes pursuant to Section 2.02 to be performed by the Company with respect to each series, such successor entity shall succeed to and be substituted for and may exercise every right and power of the Company under this Indenture with the same effect as if it had been named as the Company herein, and thereupon the predecessor entity shall be relieved of all obligations and covenants under this Indenture and the Notes.
 
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(b) In case of any such consolidation, merger, sale, conveyance, assignment, transfer, lease or other disposition such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.
(c) Nothing contained in this Indenture or in any of the Notes shall prevent the Company from merging into itself or acquiring by purchase or otherwise all or any part of the property of any other Person (whether or not affiliated with the Company).
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default . Unless otherwise indicated for a particular Series of Notes by a Board Resolution, a supplemental indenture hereto, or an Officers’ Certificate, each of the following constitutes an “Event of Default” with respect to each Series of Notes:
(1) default in the payment of the principal of or premium, if any, when due on the Notes;
(2) default for 30 days in the payment of interest when due on the Notes;
(3) the Company fails to comply with any of its covenants or agreements in the Notes or this Indenture and such failure continues for 60 days after the written notice specified below has been given;
(4) default by the Company or any Subsidiary under any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any Subsidiary having an aggregate principal amount equal to the greater of $100,000,000 or 2% of Consolidated Net Tangible Assets, or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any Subsidiary having an aggregate principal amount equal to the greater of $100,000,000 or 2% of Consolidated Net Tangible Assets, whether such Indebtedness now exists or shall hereafter be created, which default shall constitute a failure to pay any portion of the principal of such Indebtedness when due and payable after the expiration of any applicable grace period with respect thereto or shall have resulted in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable; provided , that such acceleration shall not have been rescinded or annulled within 10 days after written notice is given to the Company by the Trustee or Holders of at least 25% of the outstanding principal amount of Notes of such series as specified below; and provided , further , that prior to any declaration of acceleration of the Notes pursuant to Section 6.02, an Event of Default under this clause (4) will be remedied, cured or waived without further action on the part of either the Trustee or any of the Holders if the default under such other Indebtedness is remedied, cured or waived;
 
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(5) a final judgment or judgments outstanding against the Company or against any property or assets of the Company in an amount in excess of the greater of $100,000,000 or 2% of Consolidated Net Tangible Assets is or are not paid, vacated, bonded, undischarged or unstayed for a period of 30 days after the date of its or their entry; provided , that prior to any declaration of acceleration of the Notes pursuant to Section 6.02, an Event of Default under this clause (5) will be remedied, cured or waived without further action on the part of either the Trustee or any of the Holders if the judgment is vacated, bonded, discharged or stayed.
(6) the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an involuntary case; or
(C) consents to the appointment of a Custodian of it or for all or substantially all of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to insolvency; or
(7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant Subsidiary for all or substantially all of its property; or
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days.
The term “Custodian” means, for the purposes of this Article VI only, any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
 
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A Default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.”
The Company shall deliver to the Trustee, within 30 days after the Company first gains knowledge of the occurrence thereof, written notice in the form of an Officers’ Certificate of any Event of Default and any event which with the giving of notice or the lapse of time would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration . (a) If an Event of Default with respect to any Series of Notes at the time outstanding (other than an Event of Default specified in Section 6.01(6) or (7)) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes of that Series by notice to the Company, may declare the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on all the Notes of that Series to be due and payable. Upon such a declaration, such amounts shall be due and payable immediately. If an Event of Default specified in Section 6.01(6) or (7) occurs, the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on all the Notes of each Series of Note shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
(b) At any time after the principal of the Notes of any Series of Notes shall have been so declared due and payable (or have become immediately due and payable), and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Holders of a majority in principal amount of the Notes of that Series then outstanding hereunder, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Notes of that Series and the principal of (and premium, if any, on) any and all Notes of that Series that shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Notes of that Series to the date of such payment or deposit) and (ii) any and all Events of Default under the Indenture with respect to such Series of Notes, other than the nonpayment of principal (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note) and interest, if any, on Notes of that Series that have become due solely by such declaration of acceleration, shall have been remedied or waived as provided in Section 6.04. No such rescission shall affect any subsequent Default or impair any right consequent thereto.
 
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SECTION 6.03. Other Remedies . If an Event of Default with respect to any Series of Notes occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on the Notes of that Series or to enforce the performance of any provision of the Notes of that Series or this Indenture.
The Trustee may institute and maintain a suit or legal proceeding even if it does not possess any of the Notes of a Series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default with respect to any Series of Notes shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.
SECTION 6.04. Waiver of Past Defaults . The Holders of a majority in principal amount of the outstanding Notes of any Series may on behalf of the Holders of all the Notes of such Series by written notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on a Note of that Series, (ii) a Default arising from the failure to redeem or purchase any Note of that Series when required pursuant to the terms of this Indenture or (iii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder of that Series affected provided, however , that the Holders of a majority in principal amount of the outstanding Notes of any Series may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration in accordance with Section 6.2. When a Default is waived, it shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority . The Holders of a majority in principal amount of the outstanding Notes of any Series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to that Series, provided that such direction shall not conflict with law or this Indenture, the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction and, subject to Section 7.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer of the Trustee, determine that proceeding as so directed would subject the Trustee to personal liability. Prior to taking any action hereunder, the Trustee shall be entitled to security or indemnity against all losses and expenses caused by taking or not taking such action reasonably satisfactory to the Trustee.
 
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SECTION 6.06. Limitation on Suits . Except to enforce the right to receive payment of the principal amount of (or, in the case of Original Issue Discount Notes, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on the Notes of any Series held by such Holder when due, no Holder of a Note of that Series may pursue any remedy with respect to this Indenture or the Notes of that Series unless:
(i) the Holder previously gave the Trustee written notice stating that an Event of Default with respect to that Series is continuing;
(ii) the Holders of at least 25% in aggregate principal amount of the outstanding Notes of that Series make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders of that Series offer to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense caused by taking such action;
(iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and
(v) the Holders of a majority in aggregate principal amount of the outstanding Notes of that Series do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Holder of Notes of any Series may not use this Indenture to prejudice the rights of another Holder of that Series or to obtain a preference or priority over another Holder of that Series.
SECTION 6.07. Rights of Holders to Receive Payment . Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount of (or, in the case of Original Issue Discount Notes, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest on the Notes held by such Holder, on or after their Maturity, or to bring suit for the enforcement of any such payment on or after their Maturity, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee . If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim . The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to
 
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the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities . If the Trustee collects any money or property pursuant to this Article VI with respect to any Series of Notes, it shall pay out the money or property in the following order, and, in case of the distribution of such money on account of principal or interest, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Holders for amounts due and unpaid on the Notes of that Series for the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes of that Series for the principal amount of (or, in the case of Original Issue Discount Notes of that Series, the portion thereby specified in the terms of such Note), premium, if any, and accrued and unpaid interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Holder and the Company a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs . In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing, by any party litigant in the suit, of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the then outstanding Notes of any Series.
SECTION 6.12. Waiver of Stay or Extension Laws . The Company (to the extent it may lawfully do so) shall not at any time insist upon, plead, or in any manner whatsoever claim to take the benefit or advantage of, any stay or extension law, wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.
 
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ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee . (a) If an Event of Default has occurred and is continuing with respect to any Series of Notes, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise thereof as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.
(b) Except during the continuance of an Event of Default with respect to any Series of Notes:
(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture with respect to the Notes of that Series, as modified or supplemented by a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may, with respect to Notes of that Series, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.
 
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(f) Money held in trust by the Trustee need not be segregated from funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and, if this Indenture is qualified under the TIA, to the provisions of the TIA.
SECTION 7.02. Rights of Trustee . (a) The Trustee may conclusively rely on, and shall be protected in acting or refraining from acting by, any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order or other document believed by it to be genuine and to have been signed or presented by the proper Person or Persons. The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.
(c) The Trustee may act through agents or attorneys and shall not be responsible for the misconduct or negligence of any agent or attorney appointed by it with due care. No Depositary shall be deemed an agent of the Trustee, and the Trustee shall not be responsible for any act or omission by any Depositary.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided , however , that the Trustee’s conduct does not constitute negligence or willful misconduct.
(e) The Trustee may consult with counsel of its choice, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes, shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder without negligence and in good faith and in accordance with the advice or opinion of such counsel.
(f) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company, and the Trustee may rely thereon.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default with respect to the Notes of any Series unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references such Notes and this Indenture.
 
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(h) The rights, privileges, protections, immunities and benefits given to the Trustee hereunder, including, without limitation, its right to be indemnified, are extended to and shall be enforceable by, the Trustee in each of its capacities.
(i) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by the Trustee in compliance with such request or direction.
(j) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(k) The Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its duties or powers hereunder.
(m) The Trustee may request that the Company deliver a certificate of incumbency setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
(n) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or other force majeure events, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use commercially reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
(o) The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, as amended, the Trustee, in accordance with requirements applicable to financial institutions, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. Each party to this Indenture agrees that it will provide the Trustee with such information as the Trustee may request in order for the Trustee to comply with the requirements of the U.S.A. Patriot Act applicable to the Trustee.
 
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(p) The Trustee shall not be responsible or liable for special, indirect or consequential losses or damages (including, but not limited to, loss of profit).
SECTION 7.03. Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee’s Disclaimer . The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture, in the Notes or in any document executed in connection with the sale of the Notes, other than those set forth in the Trustee’s certificate of authentication.
SECTION 7.05. Notice of Defaults . If a Default with respect to Notes of any Series occurs and is continuing and if it is actually known to a Responsible Officer of the Trustee, the Trustee shall mail to each Holder of that Series notice of the Default within 90 days after it occurs. The Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Holders.
SECTION 7.06. Reports by Trustee to Holder . Unless otherwise specified in the applicable Board Resolution, supplemental indenture hereto or Officers’ Certificate, as promptly as practicable after each July 15 beginning with July 15. 2010 for so long as Notes remain outstanding, the Trustee shall mail to each Holder a brief report dated as of such reporting date that complies with § 313(a) of the TIA. The Trustee shall also comply with § 313(b)(2) of the TIA.
A copy of each report at the time of its mailing to Holders shall be filed with each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity . The Company shall pay to the Trustee from time to time such compensation for its services as the Company and the Trustee shall from time to time agree in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable and documented out-of-pocket expenses incurred or made by it in connection with its administration of the trust hereunder, including costs of collection. The Company shall indemnify and hold harmless the Trustee and its officers, directors, employees and agents against any and all loss, liability or expense (including the reasonable and documented fees of one outside counsel) incurred by or in connection with its acceptance or administration of this trust and the performance of its duties hereunder as Trustee. The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual
 
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knowledge thereof; provided , however , that any failure to so notify the Company shall not relieve the Company of its indemnity obligations hereunder. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, negligence or bad faith.
To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay the principal of and interest and any additional payments on particular Notes.
The Company’s payment obligations pursuant to this Section 7.07 shall survive the satisfaction or discharge of this Indenture or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(5) or (6) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee . The Trustee may resign with respect to the Notes of any Series by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the Notes of any Series may remove the Trustee and may appoint a successor Trustee with respect to such Series of Notes by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company shall remove the Trustee with respect to Notes of one or more Series if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Notes of any Series and such Holders do not reasonably promptly appoint a successor Trustee or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee with respect to each Series of Notes for which it is acting as Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of that Series of Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.
 
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If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least a majority in principal amount of the Notes of that Series may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder of that Series of Notes may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee with respect to expenses and liabilities incurred by it prior to such replacement.
SECTION 7.09. Successor Trustee by Merger . If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and if at that time any of the Notes shall not have been authenticated, any such successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification . The Trustee shall at all times satisfy the requirements of TIA § 310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b); provided , however , that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company . The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or has been removed shall be subject to TIA § 311(a) to the extent indicated.
 
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ARTICLE VIII
LEGAL DEFEASANCE, COVENANT DEFEASANCE
AND SATISFACTION AND DISCHARGE
SECTION 8.01. Option To Effect Legal Defeasance or Covenant Defeasance . The Company may, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes of any Series upon compliance with the conditions set forth below in this Article VIII.
SECTION 8.02. Legal Defeasance and Discharge . Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes of that Series on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:
(a) the Company’s obligations with respect to such Notes of that Series under Sections 2.05, 2.08 and 2.09 hereof;
(b) the rights, powers, trusts, duties, indemnities and immunities of the Trustee hereunder and the Company’s obligations in connection therewith (including, but not limited to, the rights of the Trustee and the duties of the Company under Section 7.07, which shall survive despite the satisfaction in full of all obligations hereunder); and
(c) Sections 8.02, 8.04, 8.05, 8.06 and 8.07 hereof.
Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. Covenant Defeasance . Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 with respect to any Series of Notes, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.02(a), 4.07 and 4.08 of this Indenture (if applicable to such series) and any covenants made applicable to the Series of Notes which are subject to defeasance under the terms of a Board Resolution, a supplemental indenture hereto or an Officers’ Certificate with respect to the outstanding Notes of that Series on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “ Covenant Defeasance ”), and the Notes of that Series shall thereafter be deemed not “outstanding” for the purposes
 
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of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes of that Series, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof with respect to any Series of Notes, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(3), 6.01(4) and 6.01(5) hereof shall not constitute Events of Default with respect to such Notes.
SECTION 8.04. Conditions to Legal or Covenant Defeasance . The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance with respect to any Series of Notes:
(1) the Company must irrevocably deposit or cause to be irrevocably deposited with the Trustee, in trust, for the benefit of the Holders of that Series of Notes, cash in Dollars, noncallable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes of that Series on the stated date for payment thereof or on the applicable redemption date, as the case may be;
(2) in the case of an election under Section 8.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the 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 this 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 the outstanding 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 an election under Section 8.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes of that Series 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;
 
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(4) no Default or Event of Default with respect to that Series of Notes shall have occurred and be continuing under Sections 6.01(6) or 6.01(7) hereof at any time in the period ending on the 91st day after the date of deposit; and
(5) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with.
SECTION 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions . Subject to Section 8.06 hereof, all money and noncallable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes of the Series shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or noncallable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes of that Series.
Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or noncallable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. Repayment to Company . Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or, if then held by the Company, shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Company for payment thereof as general creditors, unless an applicable
 
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abandoned property law designates another person, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times or The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. Satisfaction and Discharge of Indenture . If at any time: (a) the Company shall have delivered to the Trustee for cancellation all Notes of a series theretofore authenticated (other than any Notes that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.09 and Notes for whose payment money and/or Government Securities have theretofore been deposited in trust or segregated and held in trust by the Company and thereupon repaid to the Company or discharged from such trust, as provided in Section 8.06); or (b) all such Notes of a particular series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company has irrevocably deposited or caused to be deposited with the Trustee, in trust, for the benefit of the Holders of that Series of Notes, cash in Dollars, noncallable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay at maturity or upon redemption all Notes of that Series not theretofore delivered to the Trustee for cancellation, including principal of, premium, if any, and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder with respect to such Series by the Company, and shall have delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that all conditions precedent relating to the satisfaction and discharge of this Indenture with respect to such Series have been complied with, then this Indenture shall thereupon cease to be of further effect with respect to such Series except for the rights, powers, trusts, duties, indemnities and immunities of the Trustee hereunder and the Company’s obligations in connection therewith (including, but not limited to, the rights of the Trustee and the duties of the Company under Section 7.07, which shall survive despite the satisfaction in full of all obligations hereunder) and, if money shall have been deposited with the trustee pursuant to this Section 8.08(a):
(i) the Company’s obligations with respect to such Notes of that Series under Sections 2.05, 2.08 and 2.09 hereof;
(ii) the Company’s agreements set forth in Sections 5.01 and 5.02; and
(iii) Sections 8.02, 8.04, 8.05, 8.06 and 8.07 hereof,
 
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each of which shall survive until the Notes have been paid in full.
Upon the Company’s exercise of this Section 8.07, the Trustee, on demand of the Company and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to such Series.
SECTION 8.08. Reinstatement . If the Trustee or Paying Agent is unable to apply any Dollars or noncallable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided , however , that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Holders . The Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder:
(1) to cure any ambiguity, defect, omission or inconsistency;
(2) to provide for uncertificated Notes in addition to, or in place of, certificated Notes;
(3) to evidence the succession of another Person to the Company pursuant to Article V and the assumption by such successor of the Company’s obligations in this Indenture and in the Notes to Holders of such Notes pursuant to Article V;
(4) to make any changes that would provide additional rights or benefits to the Holders of Notes of a Series that does not adversely affect the legal rights under the Indenture of any such Holder, including to add to the covenants of the Company such further covenants, restrictions, conditions or provisions for the protection of the Holders of all or any Series of Notes as the Board of Directors of the Company shall consider to be for the protection of the Holders of such Notes, to secure the Notes or to make the occurrence, or the occurrence and continuance, of a default in respect of any such additional covenants, restrictions, conditions or provisions a Default or an Event of Default under this Indenture; provided , however , that with respect to any such additional covenant, restriction, condition or provision, such amendment may provide for a period of grace after default, which may be shorter or longer than that allowed in the case of other Defaults or may provide for an immediate enforcement upon such Default;
 
45

(5) to modify or amend this Indenture in such a manner as to comply with the requirements of the SEC in order to effect or maintain the qualification of this Indenture or any supplemental indenture hereto under the TIA;
(6) to provide for the issuance of additional Notes in accordance with the Indenture;
(7) to evidence and provide for the acceptance of appointment by a successor or separate Trustee with respect to the Notes of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of this Indenture by more than one Trustee;
(8) to conform the text of the Indenture or the Notes to any provision of the section “Description of notes” in the Offering Memorandum relating to the initial offering of the Notes.
(9) to establish the form or terms of Notes and coupons of any Series pursuant to Article Two; or
(10) to add to, change, or eliminate any of the provisions of this Indenture with respect to one or more Series of Notes, so long as any such addition, change or elimination not otherwise permitted under this Indenture shall (A) neither apply to any Note of any Series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor modify the rights of the Holders of any such Note with respect to the benefit of such provision or (B) become effective only when there is no such Note outstanding;
SECTION 9.02. With Consent of Holders . The Company and the Trustee may amend or supplement this Indenture or the Notes of any Series without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Notes of each Series then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes) affected by such amendment or supplement by execution of a supplemental indenture hereto. However, without the consent of each Holder affected, an amendment or supplement may not:
(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest, including default interest, on any Note;
(3) reduce the principal of or change the Stated Maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes;
 
46

(4) reduce the amount payable upon the redemption of any Note or change the time at which such Note may be redeemed, if applicable;
(5) make any Note payable in money other than that stated in the Note;
(6) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);
(7) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or premium, if any, or interest on the Notes;
(8) waive a redemption payment with respect to any Note; or
(9) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions.
It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or supplement, but it shall be sufficient if such consent approves the substance thereof. After an amendment or supplement under this Section becomes effective, the Company shall mail to all affected Holders a notice briefly describing such amendment or supplement. The failure to give such notice to all such Holders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section.
SECTION 9.03. Revocation and Effect of Consents and Waivers . A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder of each Series affected by such amendment, supplement or waiver. An amendment, supplement or waiver becomes effective once both (i) the requisite number of consents have been received by the Company or the Trustee and (ii) such amendment or waiver has been executed by the Company and the Trustee.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.
 
47

SECTION 9.04. Notation on or Exchange of Notes . If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.
SECTION 9.05. Trustee to Sign Amendments . The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article Nine if the amendment, supplement or waiver does not adversely affect the rights of the Trustee. If it does, the Trustee may, but need not, sign it. In signing such amendment, supplement or waiver the Trustee shall (subject to Section 7.02) be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture. The Trustee shall also be entitled to request indemnity reasonably satisfactory to it in connection with signing an amendment, supplement or waiver.
SECTION 9.06. Payment for Consent . Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders, ratably, that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act Controls . If this Indenture is qualified under the TIA and any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.
 
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SECTION 10.02. Notices . Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:
If to the Company:
Hyatt Hotels Corporation
71 South Wacker Drive
Chicago, Illinois 60606
Attention: Chief Financial Officer
If to the Trustee:
Wells Fargo Bank, National Association
Corporate Trust Services
45 Broadway, 14 th Floor
New York, New York 10006
Attention: Hyatt Hotels Corp. Administrator
The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders . Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Trustee shall be entitled to receive:
(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
 
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SECTION 10.05. Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.
SECTION 10.06. Rules by Trustee, Paying Agent and Registrar . The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 10.07. Legal Holidays . Unless otherwise provide by Board Resolution, Officers’ Certificates or supplemental indenture hereto for any particular series, a “Legal Holiday” is a Saturday, Sunday or other day on which banking institutions in New York State are authorized or required by law to close. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a Regular Record Date is a Legal Holiday, the record date shall not be affected.
SECTION 10.08. Governing Law . THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 10.09. No Recourse Against Others . No director, officer, employee, incorporator or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Notes, this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. This waiver and release shall be part of the consideration for the issuance of the Notes.
SECTION 10.10. Successors . All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.
 
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SECTION 10.11. Multiple Originals; Electronic Signatures . The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this
Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 10.12. Waiver of Jury Trial . EACH OF THE COMPANY, AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 10.13. Table of Contents; Headings . The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.
SECTION 10.14. Severability . If any provision in this Indenture is deemed unenforceable, it shall not affect the validity or enforceability of any other provision set forth herein, or of the Indenture as a whole.
SECTION 10.15. Submission to Jurisdiction and Venue . ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS INDENTURE, EACH PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY SUBMITS TO AND ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY; AGREES THAT SERVICE AS PROVIDED ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND AGREES EACH OTHER PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY PARTY IN THE COURTS OF ANY OTHER JURISDICTION HAVING JURISDICTION OVER SUCH PARTY.
[Signatures on following page]
 
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

HYATT HOTELS CORPORATION	
		
By:	 	/s/ Harmit J. Singh	
	 	Name:	 	Harmit J. Singh	
	 	Title:	 	Chief Financial Officer	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee	
		
By:	 	/s/ Martin G. Reed	
	 	Name:	 	Martin G. Reed	
	 	Title:	 	Vice President	
[Signature Page to Indenture]

Exhibit 4.4

 
HYATT HOTELS CORPORATION

FIRST SUPPLEMENTAL INDENTURE
Dated as of August 14, 2009
to
INDENTURE
Dated as of August 14, 2009

WELLS FARGO BANK, National Association
Trustee

 

TABLE OF CONTENTS

 	  	PAGE	
ARTICLE I	
		
SECTION 1.01. Definitions	  	2	
SECTION 1.02. Other Definitions	  	7	
	
ARTICLE II	
	
DESIGNATION AND TERMS OF THE NOTES	
		
SECTION 2.01. Title and Aggregate Principal Amount	  	7	
SECTION 2.02. Execution	  	7	
SECTION 2.03. Other Terms and Form of the Senior Notes	  	7	
SECTION 2.04. Further Issues	  	7	
SECTION 2.05. Interest and Principal	  	7	
SECTION 2.06. Place of Payment	  	8	
SECTION 2.07. Form and Dating	  	8	
SECTION 2.08. Euroclear and Clearstream Procedures Applicable	  	9	
SECTION 2.09. Depositary; Registrar	  	9	
SECTION 2.10. Optional Redemption	  	9	
	
ARTICLE III	
	
TRANSFER AND EXCHANGE	
		
SECTION 3.01. Transfer and Exchange of Global Notes	  	10	
SECTION 3.02. Transfer and Exchange of Beneficial Interests in the Global Notes	  	10	
SECTION 3.03. Transfer or Exchange of Beneficial Interests for Definitive Notes	  	13	
SECTION 3.04. Transfer and Exchange of Definitive Notes for Beneficial Interests	  	15	
SECTION 3.05. Transfer and Exchange of Definitive Notes for Definitive Notes	  	17	
SECTION 3.06. Legends	  	18	
SECTION 3.07. Cancellation and/or Adjustment of Global Notes	  	20	
SECTION 3.08. General Provisions Relating to Transfers and Exchanges	  	20	
 
i

			
	
ARTICLE IV	
	
LEGAL DEFEASANCE, COVENANT DEFEASANCE AND SATISFACTION AND
DISCHARGE	
		
SECTION 4.01. Legal Defeasance, Covenant Defeasance and Satisfaction and Discharge	  	22	
	
ARTICLE V	
		
SECTION 5.01. Offer to Purchase upon Change of Control	  	22	
	
ARTICLE VI	
	
MISCELLANEOUS	
		
SECTION 6.01. Ratification of Original Indenture; Supplemental Indentures Part of Original Indenture	  	24	
SECTION 6.02. Concerning the Trustee	  	24	
SECTION 6.03. Counterparts	  	24	
SECTION 6.04. GOVERNING LAW	  	24	

Exhibit A-1	  	Form of 5.75% Senior Notes due 2015	
Exhibit A-2	  	Form of 6.875% Senior Notes due 2019	
Exhibit A-3	  	Form of Regulation S Temporary Global Note due 2015	
Exhibit A-4	  	Form of Regulation S Temporary Global Note due 2019	
Exhibit B	  	Form of Certificate of Exchange	
Exhibit C	  	Form of Certificate of Exchange	
 
ii

FIRST SUPPLEMENTAL INDENTURE, dated as of August 14, 2009 (this “ First Supplemental Indenture ”), to the Indenture, dated as of August 14, 2009 (the “ Original Indenture ”), between HYATT HOTELS CORPORATION, a corporation organized under the laws of Delaware (the “ Company ”) , and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”).
WHEREAS, the Company and the Trustee have heretofore executed and delivered the Original Indenture to provide for the issuance from time to time of Notes (as defined in the Original Indenture) of the Company, to be issued in one or more Series;
WHEREAS, Sections 2.02 and 9.01 of the Original Indenture provide, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the designation, form, terms and conditions of Notes of any Series permitted by Sections 2.01 and 9.01 of the Original Indenture;
WHEREAS, the Company (i) desires the issuance of two Series of Notes to be designated as hereinafter provided and (ii) has requested the Trustee to enter into this First Supplemental Indenture for the purpose of establishing the designation, form, terms and conditions of the Notes of such Series;
WHEREAS, the Company has duly authorized the creation of (1) an issue of its 5.750% Senior Notes Due 2015 (the “ 2015 Notes ”), which expression includes any further 2015 Notes issued pursuant to Section 2.04 hereof and forming a single Series therewith of substantially the tenor and amount hereinafter set forth and (2) an issue of its 6.875% Senior Notes Due 2019 (the “ 2019 Notes ”, and together with the 2015 Senior Notes, the “ Notes ”), which expression includes any further 2019 Notes issued pursuant to Section 2.04 hereof and forming a single Series therewith of substantially the tenor and amount hereinafter set forth;
WHEREAS, the 2015 Notes and the 2019 Notes shall rank pari passu ; and
WHEREAS, all action on the part of the Company necessary to authorize the issuance of the Notes under the Original Indenture and this First Supplemental Indenture (the Original Indenture, as supplemented by this First Supplemental Indenture, being hereinafter called the “ Indenture ”) has been duly taken.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That, in order to establish the designation, form, terms and conditions of, and to authorize the authentication and delivery of the Notes and in consideration of the acceptance of the Notes by the Holders thereof and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
SECTION 1.01. Definitions .
(a) Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Original Indenture.
(b) The rules of interpretation set forth in the Original Indenture shall be applied hereto as if set forth in full herein.
(c) For all purposes of this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following meanings:
“ 144A Global Note ” means a Global Note substantially in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
“ Applicable Procedures ” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of DTC, Euroclear and Clearstream that apply to such transfer or exchange.
“ Beneficial Ownership ” shall have the meaning provided in Rule 13d-3 of the SEC under the Securities Act.
“ Change of Control ” means (i) any Person or two or more Persons acting in concert (other than, in either case, a Permitted Holder) shall have acquired Beneficial Ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 50% or more of the combined voting power of all Voting Stock of the Company, (ii) the direct or indirect sale, assignment, transfer, lease, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the Company’s and its Subsidiaries’ properties or assets, taken as a whole, to any “person” (individually and as that term is used in Section 13(d)(3) and Section 14(d)(2) of the Exchange Act), other than the Company or one of its Subsidiaries, or (iii) following any IPO, Continuing Directors shall cease for any reason to constitute a majority of the members of the board of directors of the Company then in office. Notwithstanding the foregoing, a transaction effected to create a holding company for the Company will not, in and of itself, constitute a Change of Control if (i) pursuant to such transaction the Company becomes a direct or indirect wholly owned subsidiary of such holding company, and (ii) immediately following that transaction no Person (other than a Permitted Holder ) is the Beneficial Owner, directly or indirectly, of Voting Stock of such holding company (or other securities convertible into such Voting Stock) representing 50% or more of the combined voting power of all Voting Stock of such holding company.
 
2

“ Change of Control Triggering Event ” means (i) the occurrence of a Change of Control and (ii) the Notes cease to be rated Investment Grade by both Rating Agencies, or in the absence of such rating for the Notes, the Company’s corporate rating, in the case of S&P, or the Company’s corporate family rating, in the case of Moody’s, for Dollar-denominated senior unsecured long-term debt ceases to be rated Investment Grade, by both Rating Agencies on any date during the Trigger Period. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“ Comparable Treasury Issue ” means, with respect to the Notes of a Series to be redeemed, the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes of such Series that would be used, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes of such Series.
“ Comparable Treasury Price ” means, with respect to any redemption date and any Notes of a Series to be redeemed (i) the average of four Reference Treasury Dealer Quotations for such Redemption Date and Series, after excluding the highest and lowest of such Reference Treasury Dealer Quotations or (ii) if the Company obtains fewer than four Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations obtained.
“ Continuing Directors ” means, during any period of up to 24 consecutive months commencing after the date of an IPO, individuals who at the beginning of such 24 month period were directors of the Company (together with any new director whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by a vote of (i) at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved or (ii) Permitted Holders representing not less than 50% of the combined voting power of all Voting Stock of the Company).
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Article III hereof substantially in the form of Exhibit A hereto, except that such Notes shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges or Interests in the Global Note” attached thereto.
“ Existing Shareholder ” means any stockholder of the Company which, together with such stockholder’s Affiliates, owns more than 5% of the Voting Stock of the Company as of August 14, 2009, so long as the Pritzker Affiliates continue to own more Voting Stock of the Company than such Existing Shareholder
“ Global Note Legend ” means the legend set forth in Section 3.06(b), which is required to be placed on all Global Notes issued hereunder.
 
3

“ Global Notes ” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depositary or its nominee, substantially in the form of Exhibit A-1 hereto (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) and that bears the Global Note Legend and that has the “Schedule of Exchanges or Interests in the Global Note” attached thereto, issued in accordance with Section 2.15 of the Original Indenture and Section 2.07 hereof.
“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.
“ Initial Purchaser ” means any initial purchaser identified as such in the “Plan of distribution” section of the Offering Memorandum.
“ Investment Grade ” means a rating equal to or higher than Baa3 by Moody’s (or its equivalent under any successor rating category of Moody’s); a rating equal to or higher than BBB- by S&P (or its equivalent under any successor rating category of S&P); and an equivalent rating of any replacement agency, respectively.
“ IPO ” means a public offering in which the Company offers for sale shares of its Voting Stock or other equity interests pursuant to an effective registration statement on Form S-1 or otherwise under the Securities Act.
“ Moody’s ” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“ Non-U.S. Person ” means a Person who is not a U.S. Person.
“ Offering Memorandum ” means that offering memorandum, dated as of August 10, 2009, relating to the Notes.
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear or Clearstream).
“ Permitted Holder ” means (A) (i) all lineal descendants of Nicholas J. Pritzker, deceased, and all spouses and adopted children of such descendants; (ii) all trusts for the benefit of any person described in clause (i) and trustees of such trusts; (iii) all legal representatives of any person or trust described in clauses (i) or (ii); and (iv) all partnerships, corporations, limited liability companies or other entities described in clauses (i), (ii) or (iii) (such Persons referred to in this clause (A) collectively, “ Pritzker Affiliates ”); or (B) any other Existing Shareholder.
“ Primary Treasury Dealer ” means an investment banking firm that is a primary Government Securities dealer in the United States.
 
4

“ Private Placement Legend ” means the legend set forth in Section 3.06(a) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.
“ QIB ” means any “qualified institutional buyer,” as defined in Rule 144A under the Securities Act.
“ Quotation Agent ” means one of the Reference Treasury Dealers selected by the Company.
“ Rating Agency ” means S&P and Moody’s or if S&P or Moody’s or both shall not make publicly available a rating of the notes or a rating of the Company’s corporate credit for Dollar-denominated senior unsecured long term debt generally, an internationally recognized statistical 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.
“ Reference Treasury Dealer ” means (i) Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and UBS Securities LLC or their respective successors or Affiliates that are Primary Treasury Dealers; provided , however , that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer and (ii) any other Primary Treasury Dealer selected by the Company.
“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding the date that a notice of redemption is given.
“ Regulation S ” means Regulation S under the Securities Act.
“ Regulation S Global Note ” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.
“ Regulation S Permanent Global Note ” means a permanent Global Note in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.
“ Regulation S Temporary Global Note ” means a temporary Global Note in the form of Exhibit A-3 (in the case of 2015 Notes) or Exhibit A-4 (in the case of 2019 Notes) and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.
 
5

“ Restricted Definitive Note ” means a Definitive Note bearing the Private Placement Legend.
“ Restricted Global Note ” means a Global Note bearing the Private Placement Legend.
“ Restricted Period ” means the 40-day distribution compliance period as defined in Regulation S.
“ Rule 144 ” means Rule 144 under the Securities Act.
“ Rule 144A ” means Rule 144A under the Securities Act.
“ Rule 903 ” means Rule 903 under the Securities Act.
“ Rule 904 ” means Rule 904 under the Securities Act.
“ S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and its successors.
“ Treasury Rate ” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. The Treasury Rate will be calculated on the third Business Day preceding the date that a notice of redemption is given.
“ Trigger Period ,” with respect to a Change of Control Triggering Event, means the period commencing 60 days prior to the first public announcement by the Company of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which will be extended following the consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced that it is considering a possible ratings change).
“ Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“ Unrestricted Global Note ” means a permanent Global Note substantially in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges or Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend.
“ U.S. Person ” means a U.S. Person as defined in Rule 902(o) under the Securities Act.
 
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SECTION 1.02. Other Definitions .

Term	  	Defined in Section	
“ Change of Control Offer ”	  	5.01	
“ Change of Control Payment ”	  	5.01	
“ Change of Control Payment Date ”	  	5.01	
“ DTC ”	  	2.09	
“ Interest Payment Date ”	  	2.05	
“ Record Date ”	  	2.05	
“ Redemption Price ”	  	2.10	
ARTICLE II
DESIGNATION AND TERMS OF THE NOTES
SECTION 2.01. Title and Aggregate Principal Amount . There is hereby created two Series of Notes designated: 5.750% Senior Notes Due 2015 (the “ 2015 Senior Notes ”) and 6.875% Senior Notes Due 2019 (the “ 2019 Senior Notes ”, and together with the 2015 Senior Notes, the “ Senior Notes ”).
SECTION 2.02. Execution . The Senior Notes may forthwith be executed by the Company and delivered to the Trustee for authentication and delivery by the Trustee in accordance with the provisions of Section 2.04 of the Original Indenture.
SECTION 2.03. Other Terms and Form of the Senior Notes . The Senior Notes shall have and be subject to such other terms as provided in the Original Indenture and this First Supplemental Indenture and shall be evidenced by one or more Global Notes in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) hereof and as set forth in Section 2.07 hereof.
SECTION 2.04. Further Issues . The Company may from time to time, without the consent of the Holders of the Senior Notes and in accordance with the Original Indenture and this First Supplemental Indenture, create and issue further notes having the same terms and conditions as the Senior Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Senior Notes.
SECTION 2.05. Interest and Principal . The 2015 Senior Notes will mature on August 15, 2015 and will bear interest at the rate of 5.750% per annum. The 2019 Senior Notes will mature on August 15, 2019 and will bear interest at the rate of 6.875% per annum. The Company will pay interest on the Senior Notes on each February 15 and August 15 (each an “ Interest Payment Date ”), beginning on February 15, 2010, to the holders of record on the immediately preceding February 1 or August 1 (each a “ Record Date ”), respectively. Interest on the Senior Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance. Payments of the principal of and interest on the Senior Notes shall be made in Dollars, and the Senior Notes shall be denominated in Dollars.
 
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SECTION 2.06. Place of Payment . The place of payment where the Senior Notes issued in the form of Definitive Notes may be presented or surrendered for payment, where the principal of and interest and any other payments due on the Senior Notes issued in the form of Definitive Notes are payable, where the Senior Notes may be surrendered for registration of transfer or exchange and where notices and demands to and upon the Company in respect of the Senior Notes and the Indenture may be served shall be in the Borough of Manhattan, The City of New York, and the office or agency maintained by the Company for such purpose shall initially be the Corporate Trust Office of the Trustee. All payments on Senior Notes issued in the form of Global Notes shall be made by wire transfer of immediately available funds to the Depositary and, at the option of the Company, payment of interest on the Senior Notes issued in the form of Definitive Notes may be made by check mailed to registered Holders.
SECTION 2.07. Form and Dating .
(a) General . The Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) hereto. The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes . Notes issued in global form will be substantially in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges or Interests in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A-1 (in the case of 2015 Notes) or Exhibit A-2 (in the case of 2019 Notes) attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges or Interests in the Global Note” attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Article III hereof.
 
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(c) Temporary Global Notes . Notes offered and sold in reliance on Regulation S will be issued initially in the form of the Regulation S Temporary Global Note, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period will be terminated upon the receipt by the Trustee of:
(A) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States Beneficial Ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any Beneficial Owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a Beneficial Ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by Section 3.02 hereof); and
(B) an Officers’ Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note will be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee will cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.
SECTION 2.08. Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream, in each case, as in effect from time to time, shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Note that are held by Participants through Euroclear or Clearstream.
SECTION 2.09. Depositary; Registrar . The Company initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as the Registrar and the paying agent and designates the Trustee’s New York office as the office or agency referred to in Section 2.05 of the Original Indenture.
SECTION 2.10. Optional Redemption . The Notes will be redeemable, in whole or in part, at the option of the Company at any time at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes being redeemed and (ii) as calculated by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed from the redemption date to the date of maturity (except for accrued but unpaid interest) discounted to the redemption date on a semi-annual basis (assuming a 360-day year
 
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consisting of twelve 30-day months) at the Treasury Rate, plus 50 basis points in the case of the 2015 Notes or 50 basis points in the case of the 2019 Notes; plus , in each case, accrued but unpaid interest on the notes to, but not including, the redemption date (the “ Redemption Price ”).
ARTICLE III
TRANSFER AND EXCHANGE
SECTION 3.01. Transfer and Exchange of Global Notes . A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes shall be exchangable pursuant to Section 2.08 of the Original Indenture for Definitive Notes if:
(a) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days after the date of such notice from the Depositary;
(b) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided , that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (i) the expiration of the Restricted Period and (ii) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or
(c) an Event of Default with respect to the Notes represented by such Global Note shall have occurred and be continuing.
Upon the occurrence of any of the preceding events in (a) or (b) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.09 and 2.12 of the Original Indenture. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Article III or Section 2.09 or 2.12 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 3.01; however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 3.02 or 3.03 hereof.
SECTION 3.02. Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this First Supplemental Indenture and the Applicable Procedures. Beneficial interests in the
 
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Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (a) or (b) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:
(a) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 3.02(a).
(b) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 3.02(a) above, the transferor of such beneficial interest must deliver to the Registrar either:
(A) both:
(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(2) instructions given in accordance with the Applicable Procedures con-taining information regarding the Participant account to be credited with such increase; or
(B) both:
(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and
(2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided , that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (i) the expiration of the Restricted Period and (ii) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act.
 
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Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 3.07 hereof.
(c) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 3.02(b) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Permanent Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(d) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 3.02(b) above and the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in the case of clause (A) and (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
 
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If any such transfer is effected at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.04 of the Original Indenture, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
SECTION 3.03. Transfer or Exchange of Beneficial Interests for Definitive Notes .
(a) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. Subject to the terms hereof, if any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore trans-action in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, in-cluding the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c),
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 3.07 hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions
 
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a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 3.03 shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 3.03(a) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(b) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes . Subject to the terms hereof, notwithstanding Sections 3.03(a)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (i) the expiration of the Restricted Period and (ii) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(c) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . Subject to the terms hereof, a holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(B) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in the case of clause (A) and (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
 
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(d) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . Subject to the terms hereof, if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 3.02(b) hereof, the Trustee will cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 3.07 hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 3.03(d) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 3.03(d) will not bear the Private Placement Legend.
SECTION 3.04. Transfer and Exchange of Definitive Notes for Beneficial Interests .
(a) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . Subject to the terms of hereof, if any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an off-shore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
 
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(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clauses (A), (D), (E) and (F) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, or in the case of clause (C) above, the Regulation S Global Note.
(b) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(A) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(B) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in the case of clause (A) and (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 3.04(b), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(c) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (b) or (c) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.04 of the Original Indenture, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
 
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SECTION 3.05. Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 3.05, the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 3.05.
(a) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(b) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(A) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(B) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
 
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and, in the case of clause (A) and (B), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(c) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
SECTION 3.06. Legends . The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(a) Private Placement Legend .
(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
This Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction. Neither this Note nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, such registration. The holder of this Note, by its acceptance hereof, agrees on its own behalf and on behalf of any investor account for which it has purchased Notes, to offer, sell or otherwise transfer such Note, prior to the date (the “Resale Restriction Termination Date”) that is one year (in the case of Notes transferred pursuant to Rule 144A under the Securities Act) or 40 days (in the case of Notes transferred pursuant to Regulation S under the Securities Act) after the later of the original issue date hereof and the last date on which the issuer or any affiliate of the issuer was the owner of this Note (or any predecessor of such Note), only (a) to the issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) for so long as the Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a “Qualified Institutional Buyer” as defined in Rule 144A under the Securities Act that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the U.S. within the meaning of Regulation S under the Securities Act, or (e) pursuant to
 
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another available exemption from the registration requirements of the Securities Act, subject to the issuer’s and the trustee’s right prior to any such offer, sale or transfer pursuant to clauses (d) or (e) to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them. This legend will be removed upon the request of the holder after the Resale Restriction Termination Date. In the case of Notes transferred pursuant to Regulation S under the Securities Act, by its acquisition hereof, the holder hereof represents that it is not a U.S. Person nor is it purchasing for the account of a U.S. Person and is acquiring this security in an offshore transaction in accordance with Regulation S under the Securities Act.
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to Sections 3.02(d), 3.03(c), 3.03(d), 3.04(b), 3.04(c), 3.05(b) or 3.05(c) of this Article III (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.
(b) Global Note Legend . Each Global Note will bear a legend in substantially the following form:
“This Global Note is held by the Depositary (as defined in the Indenture governing this Note) or its nominee in custody for the benefit of the Beneficial Owners hereof, and is not transferable to any person under any circumstances except that (1) the trustee may make such notations hereon as may be required pursuant to the Indenture, (2) this Global Note may be exchanged in whole but not in part pursuant to Article III of the First Supplemental Indenture, (3) this global note may be delivered to the trustee for cancellation pursuant to section 2.13 of the Indenture and (4) this Global Note may be transferred to a successor Depositary with the prior written consent of the Company.
Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein”
 
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(c) Regulation S Temporary Global Note Legend . The Regulation S Temporary Global Note will bear a legend in substantially the following form:
“This Global Note is a Temporary Global Note for purposes of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Neither this Temporary Global Note nor any interest herein may be offered, sold or delivered, except as permitted under the Indenture referred to below.
No Beneficial Owners of this Temporary Global Note shall be entitled to receive payment of principal or interest hereon unless the required certifications have been delivered pursuant to the terms of the Indenture.”
SECTION 3.07. Cancellation and/or Adjustment of Global Notes .
At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.13 of the Original Indenture. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
SECTION 3.08. General Provisions Relating to Transfers and Exchanges .
(a) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.04 of the Original Indenture or at the Registrar’s request.
(b) No service charge will be made to a Holder of a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.12, 3.06 and and 9.05 of the Original Indenture and Section 5.01 of this First Supplemental Indenture).
(c) The Registrar will not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
 
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(d) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(e) The Company will not be required:
(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Original Indenture and ending at the close of business on the day of selection;
(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
(f) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(g) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.04 of the Original Indenture.
(h) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to Article III to effect a registration of transfer or exchange may be submitted by facsimile.
(i) Each Holder agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder’s Note in violation of any provision of the Original Indenture and/or applicable United States federal or state securities law. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
 
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ARTICLE IV
LEGAL DEFEASANCE, COVENANT DEFEASANCE
AND SATISFACTION AND DISCHARGE
SECTION 4.01. Legal Defeasance, Covenant Defeasance and Satisfaction and Discharge . Article Eight of the Original Indenture shall be applicable to the Notes. The Company may defease the covenent contained in Section 5.01 under the provisions of Section 8.03 of the Original Indenture.
ARTICLE V
SECTION 5.01. Offer to Purchase upon Change of Control .
(a) If a Change of Control Triggering Event occurs, unless the Company has exercised any right to redeem the Notes, each Holder will have the right to require that the Company repurchase all or a portion (in excess of $2,000 in integral multiples of $1,000) of such Holder’s Notes pursuant to an offer by the Company (a “ Change of Control Offer ”) at a repurchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, on the Notes repurchased, to the date of repurchase (the “ Change of Control Payment ”). Within 30 days following any Change of Control Triggering Event, or at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, the Company will mail a notice to each Holder, with a copy to the Trustee, which terms will govern the terms of the Change of Control Offer. Such notice shall state, among other things:
(i) that the Change of Control Offer is being made pursuant to this Section 5.01 and that all Notes tendered will be accepted for payment;
(ii) that a Change of Control Triggering Event has occurred and that such Holder has the right to require the Company to repurchase all or a portion of such Holder’s Notes at the Change of Control Payment;
(iii) the circumstances and relevant facts regarding such Change of Control Triggering Event;
(iv) the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed, other than as may be required by law (the “ Change of Control Payment Date ”);
(v) the instructions, as determined by the Company, consistent with this Section 5.01;
(vi) that any Note not tendered will continue to accrue interest;
(vii) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;
 
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(viii) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;
(ix) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and
(x) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.
The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change in Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 5.01, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 5.01 by virtue of such compliance.
(b) On the Change of Control Payment Date, the Company will, to the extent lawful:
(i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and
(iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.
The Paying Agent will promptly mail to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided, that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof.
 
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The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
(c) A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer. The Change of Control Offer, if mailed prior to the date of consummation of the Change of Control, will state that the offer is conditioned on the Change of Control being consummated on or prior to the Change of Control Payment Date.
(d) Notwithstanding anything to the contrary in this Section 5.01, the Company will not be required to make a Change of Control Offer upon a Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 5.01 and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Ratification of Original Indenture; Supplemental Indentures Part of Original Indenture . Except as expressly amended hereby, the Original Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Original Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 6.02. Concerning the Trustee . The recitals contained herein and in the Notes, except with respect to the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture or of the Senior Notes.
SECTION 6.03. Multiple Originals; Electronic Signatures . This First Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
SECTION 6.04. GOVERNING LAW . THIS INDENTURE AND EACH NOTE OF THE SERIES CREATED HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
 
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[Signature Page Follows]
 
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IN WITNESS WHEREOF, the parties have caused this First Supplemental Indenture to be duly executed by their respective officers thereunto duly authorized as of the date first above written.

HYATT HOTELS CORPORATION,	
		
by 	 	/s/ Harmit J. Singh	
	 	Name:	 	Harmit J. Singh	
	 	Title:	 	Chief Financial Officer	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee,	
		
by	 	/s/ Martin G. Reed	
	 	Name:	 	Martin G. Reed	
	 	Title:	 	Vice President	
[Signature Page to First Supplemental Indenture]

EXHIBIT A-1
[Face of 2015 Note]
CUSIP/ISIN [            ]
5.750% Senior Notes due 2015

No. [    ]	 	$[            ]	
HYATT HOTELS CORPORATION promises to pay to [            ] or registered assigns, the principal sum of [            ] Dollars on August 15, 2015 or such greater or lesser amount as may be indicated in Schedule A hereto.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of this Note.
 
A-1-1

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

HYATT HOTELS CORPORATION,	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 		
 
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TRUSTEE’S CERTIFICATE OF AUTHENTICATION
Dated:

WELLS FARGO BANK, NATIONAL ASSOCIATION,	
		
by	 	 	
	 	Authorized Signatory	
 
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[Reverse of 2015 Note]
5.750% Senior Notes due 2015
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
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1.	Indenture	
This Note is one of a duly authorized issue of Notes of the Company, designated as its 5.750% Senior Notes Due 2015 (herein called the “ Notes ,” which expression includes any further notes issued pursuant to Section 2.04 of the First Supplemental Indenture (as hereinafter defined) and forming a single series therewith), issued and to be issued under an indenture, dated as of August 14, 2009 (herein called the “ Original Indenture ”), as supplemented by a supplemental indenture, dated as of August 14, 2009 (the “ First Supplemental Indenture ,” and together with the Original Indenture, the “ Indenture ”), between HYATT HOTELS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”). Reference is hereby made to the Indenture and all indentures supplemental thereto relevant to the Notes reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture.
The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to create or incur Liens and to enter into Sale and Leaseback Transactions. The Indenture also imposes certain limitations on the ability of the Company to merge, consolidate or amalgamate with or into any other person (other than a merger of a wholly owned subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the property of the Company in any one transaction or series of related transactions.
Each Note is subject to, and qualified by, all such terms as set forth in the Indenture certain of which are summarized herein and each Holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern.
 
2.	Interest	
The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year, commencing [            ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [            ]. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
 
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3.	Paying Agent, Registrar and Service Agent	
Initially the Trustee will act as paying agent and registrar. Initially, Corporation Service Company will act as service agent. The Company may appoint and change any paying agent, registrar or co-registrar and service agent without notice. The Company or any of its Subsidiaries may act as paying agent, registrar, co-registrar or service agent.
 
4.	Defaults and Remedies; Waiver	
If an Event of Default (other than an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture) with respect to the Notes shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice as provided in the Indenture may declare the principal amount of the Notes to be due and payable immediately. If an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture occurs, the principal amount of all Notes will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such declaration of acceleration, but before a judgment or decree based on such declaration of acceleration, the Holders of a majority in aggregate principal amount of the Notes then outstanding may, under certain circumstances, rescind and annul such declaration of acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee. Subject to such provisions for the indemnification of the Trustee and applicable law, the Holders of a majority in aggregate principal amount of Notes of that series then 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 the Notes. Except to enforce payment of the principal of or any premium or interest on a Note on or after the applicable due date specified in such Note, no Holder of a Note will have any right to pursue any remedy with respect to the Indenture or the Notes, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes; (ii) the Holders of at least 25% in aggregate principal amount of the Notes of that series then outstanding have made written request, and such Holder or Holders have offered indemnity reasonably satisfactory to the Trustee to institute such proceeding; and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request, within 60 days after such notice, request and offer.
 
5.	Amendment	
Modifications and amendments of the Indenture may be made by the Company and the Trustee without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of each affected series of Notes then outstanding (including consents obtained in connection with a tender offer or
 
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exchange offer for such Notes); provided , however , that no such modification or amendment may, without the consent of the Holder of each Note affected thereby, (i) reduce the principal amount of any Notes issued under the indenture whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or extend the time for payment of interest, including default interest, on any Note issued under the Indenture; (iii) reduce the principal of or change the Stated Maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes issued under the Indenture; (iv) reduce the amount payable upon the redemption of any Note issued under the Indenture or change the time at which such Notes may be redeemed, if applicable; (v) make any Note payable in money other than that stated in the Note; (vi) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the securities by the Holders of at least a majority in aggregate principal amount of then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (vii) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or premium, if any, or interest on the Notes; (viii) waive a redemption payment with respect to any Note issued under the Indenture; or (ix) make any change in the sections of the Indenture captioned “Waiver of Past Defaults” and “Rights of Holders to Receive Payment” or in the provisions described in this sentence.
The Holders of a series of Notes, through the written consent of a majority in principal amount of a series of the Notes of such series then outstanding, may waive compliance by the Company with certain covenants of the Indenture with respect to such series. The Holders of a series of Notes, through the written consent of a majority in principal amount of the Notes of such series then outstanding, may waive any past default under the Indenture with respect to such series, except (i) a default in the payment of principal, premium or interest; (ii) a default arising from the failure to redeem or purchase any such Notes when required pursuant to the terms of the Indenture; and (iii) certain covenants and provisions of the indenture which cannot be amended without the consent of the Holder of each outstanding Note of such series.
With respect to the Notes, notwithstanding the preceding paragraphs, without the consent of any Holder of such Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes (i) to cure any ambiguity, defect, omission or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company’s obligations to Holders of such Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s assets; (iv) to make any change that would provide any additional rights or benefits to the Holders of such Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; (v) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; (vi) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; (vii) to appoint a successor Trustee with respect to the Notes, (viii) to add or change any of the provisions of the Indenture necessary to provide for the administration of the trusts in the Indenture by more than one Trustee; or (ix) to conform the text of the Indenture or the Notes to any provision of the section “Description of notes” in the Offering Memorandum relating to the initial offering of the Notes.
 
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6.	Change of Control	
If a Change of Control Triggering Event occurs, and the Company has not previously exercised its option to redeem the Notes, each Holder will have the right to require that the Company repurchase all or a portion (in excess of $2,000 in integral multiples of $1,000) of such Holder’s Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
 
7.	Obligations Absolute	
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
 
8.	Sinking Fund	
The Notes shall not be redeemable at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Notes will not have the benefit of any sinking fund.
 
9.	Denominations; Transfer; Exchange	
The Notes are issuable in registered form without coupons in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. When Notes are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes of the same Series, the Registrar shall register the transfer or make the exchange in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06 and 9.04 of the Original Indenture and Section 5.01 of the First Supplemental Indenture).
The Company and the Registrar shall not be required (a) to issue, register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Original Indenture and ending at the close of business on the day of selection; (b) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (c) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
 
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10.	Further Issues	
The Company may from time to time, without the consent of the Holders of the Notes and in accordance with the Indenture, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.
 
11.	Optional Redemption	
The Notes will be redeemable, in whole or in part, at the option of the Company at any time at a Redemption Price equal to the greater of: (A) 100% of the principal amount of the Notes being redeemed; and (B) as calculated by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed from the Redemption Date to the date of maturity (except for accrued but unpaid interest) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points; plus accrued but unpaid interest on the notes to, but not including, the redemption date.
 
12.	Persons Deemed Owners	
The ownership of Notes shall be proved by the register maintained by the Registrar.
 
13.	No Recourse Against Others	
No director, officer, employee, incorporator or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
 
14.	Discharge and Defeasance	
Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money and/or U.S. Government Obligations for the payment of principal of, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.
 
15.	Unclaimed Money	
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request
 
A-1-9

or, if then held by the Company, shall be discharged from such trust. Thereafter the Holder of such Note shall look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
 
16.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Trust Indenture Act, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights.
 
17.	Abbreviations	
Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
18.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
19.	Governing Law	
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture.
 
A-1-10

ASSIGNMENT FORM
For value received                          hereby sell(s), assign(s) and transfer(s) unto                          (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints                          attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the second anniversary of the date of original issuance of such Note, the undersigned confirms that such Note is being transferred:

(1)	  	¨	  	To Hyatt Hotels Corporation; or	
			
(2)	  	¨	  	So long as this Note is eligible for resale pursuant to Rule 144A under the Securities Act, to a person whom the seller reasonably believes is a Qualified Institutional Buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A; or	
			
(3)	  	¨	  	In an offshore transaction in accordance with Regulation S under the Securities Act; or	
			
(4)	  	¨	  	Pursuant to any exemption from registration under the Securities Act.	
Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes in the name of any person other than the registered Holder thereof (or hereof); provided , however , that the Trustee may, in its sole discretion, register the transfer of such Notes if it has received such certifications, legal opinions and/or other information as the Company has required to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.
In addition, if box (3) or (4) above is checked, the Holder must furnish to the Trustee certifications, legal opinions or other information as it or the Company may require to confirm that such transfer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended.

Dated:	  	 	  		

		
 	  		
Signature(s)
 
A-1-11

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

   	
Signature Guarantee	
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended, and is aware that the sale is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

   	
Signature	
Dated:                     
 
A-1-12

Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, check the box:   ¨
If you want to elect to have only part of the Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, state the amount you elect to have purchased:
$                                 

Date:	 		
		
Your Signature:	 	 	
	 	(Sign exactly as your name appears on the face of this Note)	
Tax Identification No.:                                             
Signature Guarantee*:                                            
 
*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).	
 
A-1-13

Schedule A
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	  	Amount of decrease in
Principal Amount of
this Global Note	  	Amount of increase in
Principal Amount
of this Global Note	  	Principal Amount of
this Global Note
following such
decrease or increase	  	Signature of authorized
officer of Trustee or
Custodian	
 
*	This schedule should be included only if the Note is issued in Global Form.	
 
A-1-14

EXHIBIT A-2
[Face of 2019 Note]
CUSIP/ISIN [            ]
6.875% Senior Notes due 2019

No. [    ]	 	$[            ]	
HYATT HOTELS CORPORATION promises to pay to [            ] or registered assigns, the principal sum of [            ] Dollars on August 15, 2019 or such greater or lesser amount as may be indicated in Schedule A hereto.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of this Note.
 
A-2-1

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

HYATT HOTELS CORPORATION,	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 		
 
A-2-2

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
Dated:

WELLS FARGO BANK, NATIONAL ASSOCIATION,	
		
by 	 	 	
	 	Authorized Signatory	
 
A-2-3

[Reverse of 2019 Note]
6.875% Senior Notes due 2019
[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
A-2-4

1.	Indenture	
This Note is one of a duly authorized issue of Notes of the Company, designated as its 6.875% Senior Notes Due 2019 (herein called the “ Notes ,” which expression includes any further notes issued pursuant to Section 2.04 of the First Supplemental Indenture (as hereinafter defined) and forming a single series therewith), issued and to be issued under an indenture, dated as of August 14, 2009 (herein called the “ Original Indenture ”), as supplemented by a supplemental indenture, dated as of August 14, 2009 (the “ First Supplemental Indenture ,” and together with the Original Indenture, the “ Indenture ”), between HYATT HOTELS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”). Reference is hereby made to the Indenture and all indentures supplemental thereto relevant to the Notes reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture.
The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to create or incur Liens and to enter into Sale and Leaseback Transactions. The Indenture also imposes certain limitations on the ability of the Company to merge, consolidate or amalgamate with or into any other person (other than a merger of a wholly owned subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the property of the Company in any one transaction or series of related transactions.
Each Note is subject to, and qualified by, all such terms as set forth in the Indenture certain of which are summarized herein and each Holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern.
 
2.	Interest	
The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year, commencing [            ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [            ]. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
 
A-2-5

3.	Paying Agent, Registrar and Service Agent	
Initially the Trustee will act as paying agent and registrar. Initially, Corporation Service Company will act as service agent. The Company may appoint and change any paying agent, registrar or co-registrar and service agent without notice. The Company or any of its Subsidiaries may act as paying agent, registrar, co-registrar or service agent.
 
4.	Defaults and Remedies; Waiver	
If an Event of Default (other than an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture) with respect to the Notes shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice as provided in the Indenture may declare the principal amount of the Notes to be due and payable immediately. If an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture occurs, the principal amount of all Notes will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such declaration of acceleration, but before a judgment or decree based on such declaration of acceleration, the Holders of a majority in aggregate principal amount of the Notes then outstanding may, under certain circumstances, rescind and annul such declaration of acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee. Subject to such provisions for the indemnification of the Trustee and applicable law, the Holders of a majority in aggregate principal amount of Notes of that series then 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 the Notes. Except to enforce payment of the principal of or any premium or interest on a Note on or after the applicable due date specified in such Note, no Holder of a Note will have any right to pursue any remedy with respect to the Indenture or the Notes, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes; (ii) the Holders of at least 25% in aggregate principal amount of the Notes of that series then outstanding have made written request, and such Holder or Holders have offered indemnity reasonably satisfactory to the Trustee to institute such proceeding; and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request, within 60 days after such notice, request and offer.
 
5.	Amendment	
Modifications and amendments of the Indenture may be made by the Company and the Trustee without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of each affected series of Notes then outstanding (including consents obtained in connection with a tender offer or
 
A-2-6

exchange offer for such Notes); provided , however , that no such modification or amendment may, without the consent of the Holder of each Note affected thereby, (i) reduce the principal amount of any Notes issued under the indenture whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or extend the time for payment of interest, including default interest, on any Note issued under the Indenture; (iii) reduce the principal of or change the Stated Maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes issued under the Indenture; (iv) reduce the amount payable upon the redemption of any Note issued under the Indenture or change the time at which such Notes may be redeemed, if applicable; (v) make any Note payable in money other than that stated in the Note; (vi) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the securities by the Holders of at least a majority in aggregate principal amount of then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (vii) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or premium, if any, or interest on the Notes; (viii) waive a redemption payment with respect to any Note issued under the Indenture; or (ix) make any change in the sections of the Indenture captioned “Waiver of Past Defaults” and “Rights of Holders to Receive Payment” or in the provisions described in this sentence.
The Holders of a series of Notes, through the written consent of a majority in principal amount of a series of the Notes of such series then outstanding, may waive compliance by the Company with certain covenants of the Indenture with respect to such series. The Holders of a series of Notes, through the written consent of a majority in principal amount of the Notes of such series then outstanding, may waive any past default under the Indenture with respect to such series, except (i) a default in the payment of principal, premium or interest; (ii) a default arising from the failure to redeem or purchase any such Notes when required pursuant to the terms of the Indenture; and (iii) certain covenants and provisions of the indenture which cannot be amended without the consent of the Holder of each outstanding Note of such series.
With respect to the Notes, notwithstanding the preceding paragraphs, without the consent of any Holder of such Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes (i) to cure any ambiguity, defect, omission or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company’s obligations to Holders of such Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s assets; (iv) to make any change that would provide any additional rights or benefits to the Holders of such Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; (v) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; (vi) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; (vii) to appoint a successor Trustee with respect to the Notes, (viii) to add or change any of the provisions of the Indenture necessary to provide for the administration of the trusts in the Indenture by more than one Trustee; or (ix) to conform the text of the Indenture or the Notes to any provision of the section “Description of notes” in the Offering Memorandum relating to the initial offering of the Notes.
 
A-2-7

6.	Change of Control	
If a Change of Control Triggering Event occurs, and the Company has not previously exercised its option to redeem the Notes, each Holder will have the right to require that the Company repurchase all or a portion (in excess of $2,000 in integral multiples of $1,000) of such Holder’s Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
 
7.	Obligations Absolute	
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
 
8.	Sinking Fund	
The Notes shall not be redeemable at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Notes will not have the benefit of any sinking fund.
 
9.	Denominations; Transfer; Exchange	
The Notes are issuable in registered form without coupons in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. When Notes are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes of the same Series, the Registrar shall register the transfer or make the exchange in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06 and 9.04 of the Original Indenture and Section 5.01 of the First Supplemental Indenture).
The Company and the Registrar shall not be required (a) to issue, register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Original Indenture and ending at the close of business on the day of selection; (b) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (c) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
 
A-2-8

10.	Further Issues	
The Company may from time to time, without the consent of the Holders of the Notes and in accordance with the Indenture, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.
 
11.	Optional Redemption	
The Notes will be redeemable, in whole or in part, at the option of the Company at any time at a Redemption Price equal to the greater of: (A) 100% of the principal amount of the Notes being redeemed; and (B) as calculated by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed from the Redemption Date to the date of maturity (except for accrued but unpaid interest) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points; plus accrued but unpaid interest on the notes to, but not including, the redemption date.
 
12.	Persons Deemed Owners	
The ownership of Notes shall be proved by the register maintained by the Registrar.
 
13.	No Recourse Against Others	
No director, officer, employee, incorporator or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
 
14.	Discharge and Defeasance	
Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money and/or U.S. Government Obligations for the payment of principal of, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.
 
15.	Unclaimed Money	
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request
 
A-2-9

or, if then held by the Company, shall be discharged from such trust. Thereafter the Holder of such Note shall look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
 
16.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Trust Indenture Act, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights.
 
17.	Abbreviations	
Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
18.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
19.	Governing Law	
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture.
 
A-2-10

ASSIGNMENT FORM
For value received                          hereby sell(s), assign(s) and transfer(s) unto                          (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints                          attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the second anniversary of the date of original issuance of such Note, the undersigned confirms that such Note is being transferred:

(1)	  	¨	  	To Hyatt Hotels Corporation; or	
			
(2)	  	¨	  	So long as this Note is eligible for resale pursuant to Rule 144A under the Securities Act, to a person whom the seller reasonably believes is a Qualified Institutional Buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A; or	
			
(3)	  	¨	  	In an offshore transaction in accordance with Regulation S under the Securities Act; or	
			
(4)	  	¨	  	Pursuant to any exemption from registration under the Securities Act.	
Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes in the name of any person other than the registered Holder thereof (or hereof); provided , however , that the Trustee may, in its sole discretion, register the transfer of such Notes if it has received such certifications, legal opinions and/or other information as the Company has required to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.
In addition, if box (3) or (4) above is checked, the Holder must furnish to the Trustee certifications, legal opinions or other information as it or the Company may require to confirm that such transfer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended.

Dated:	  	 	  		

		
 	  		
Signature(s)
 
A-2-11

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

   	
Signature Guarantee	
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended, and is aware that the sale is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

   	
Signature	
Dated:                                 
 
A-2-12

Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, check the box:   ¨
If you want to elect to have only part of the Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, state the amount you elect to have purchased:
$                                 

Date:	 		
		
Your Signature:	 	 	
	 	(Sign exactly as your name appears on the face of this Note)	
Tax Identification No.:                                             
Signature Guarantee*:                                             
 
*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).	
 
A-2-13

Schedule A
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	  	Amount of decrease in
Principal Amount of
this Global Note	  	Amount of increase in
Principal Amount
of this Global Note	  	Principal Amount of
this Global Note
following such
decrease or increase	  	Signature of authorized
officer of Trustee or
Custodian	
 
*	This schedule should be included only if the Note is issued in Global Form.	
 
A-2-14

EXHIBIT A-3
[Face of 2015 Regulation S Temporary Global Note]
CUSIP/ISIN [            ]
5.750% Senior Notes due 2015

No. [    ]	  	$	[             	] 	
HYATT HOTELS CORPORATION promises to pay to [                ] or registered assigns, the principal sum of [            ] Dollars on August 15, 2015 or such greater or lesser amount as may be indicated in Schedule A hereto.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of this Note.
 
A-3-1

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

HYATT HOTELS CORPORATION,	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
A-3-2

			
TRUSTEE’S CERTIFICATE OF AUTHENTICATION	
	
Dated:	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION,	
		
by	 	 	
	 	Authorized Signatory	
 
A-3-3

[Reverse of 2015 Regulation S Temporary Global Note]
5.750% Senior Notes due 2015
This Global Note is a Temporary Global Note for purposes of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Neither this Temporary Global Note nor any interest herein may be offered, sold or delivered, except as permitted under the Indenture referred to below.
No Beneficial Owners of this Temporary Global Note shall be entitled to receive payment of principal or interest hereon unless the required certifications have been delivered pursuant to the terms of the Indenture.
This Global Note is held by the Depositary (as defined in the Indenture governing this Note) or its nominee in custody for the benefit of the Beneficial Owners hereof, and is not transferable to any person under any circumstances except that (1) the trustee may make such notations hereon as may be required pursuant to the Indenture, (2) this Global Note may be exchanged in whole but not in part pursuant to Article III of the First Supplemental Indenture, (3) this global note may be delivered to the trustee for cancellation pursuant to section 2.13 of the Indenture and (4) this Global Note may be transferred to a successor Depositary with the prior written consent of the Company.
Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein
This Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction. Neither this Note nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, such
 
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registration. The holder of this Note, by its acceptance hereof, agrees on its own behalf and on behalf of any investor account for which it has purchased Notes, to offer, sell or otherwise transfer such Note, prior to the date (the “Resale Restriction Termination Date”) that is 40 days after the later of the original issue date hereof and the last date on which the issuer or any affiliate of the issuer was the owner of this Note (or any predecessor of such Note), only (a) to the issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) for so long as the Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a “Qualified Institutional Buyer” as defined in Rule 144A under the Securities Act that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the U.S. within the meaning of Regulation S under the Securities Act, or (e) pursuant to another available exemption from the registration requirements of the Securities Act, subject to the issuer’s and the trustee’s right prior to any such offer, sale or transfer pursuant to clauses (d) or (e) to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them. This legend will be removed upon the request of the holder after the Resale Restriction Termination Date. By its acquisition hereof, the holder hereof represents that it is not a U.S. Person nor is it purchasing for the account of a U.S. Person and is acquiring this security in an offshore transaction in accordance with Regulation S under the Securities Act.
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
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1.	Indenture	
This Note is one of a duly authorized issue of Notes of the Company, designated as its 5.750% Senior Notes Due 2015 (herein called the “ Notes ,” which expression includes any further notes issued pursuant to Section 2.04 of the First Supplemental Indenture (as hereinafter defined) and forming a single series therewith), issued and to be issued under an indenture, dated as of August 14, 2009 (herein called the “ Original Indenture ”), as supplemented by a supplemental indenture, dated as of August 14, 2009 (the “ First Supplemental Indenture ,” and together with the Original Indenture, the “ Indenture ”), between HYATT HOTELS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”). Reference is hereby made to the Indenture and all indentures supplemental thereto relevant to the Notes reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture.
The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to create or incur Liens and to enter into Sale and Leaseback Transactions. The Indenture also imposes certain limitations on the ability of the Company to merge, consolidate or amalgamate with or into any other person (other than a merger of a wholly owned subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the property of the Company in any one transaction or series of related transactions.
Each Note is subject to, and qualified by, all such terms as set forth in the Indenture certain of which are summarized herein and each Holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern.
 
2.	Interest	
The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year, commencing [            ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [            ]. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
 
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3.	Paying Agent, Registrar and Service Agent	
Initially the Trustee will act as paying agent and registrar. Initially, Corporation Service Company will act as service agent. The Company may appoint and change any paying agent, registrar or co-registrar and service agent without notice. The Company or any of its Subsidiaries may act as paying agent, registrar, co-registrar or service agent.
 
4.	Defaults and Remedies; Waiver	
If an Event of Default (other than an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture) with respect to the Notes shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice as provided in the Indenture may declare the principal amount of the Notes to be due and payable immediately. If an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture occurs, the principal amount of all Notes will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such declaration of acceleration, but before a judgment or decree based on such declaration of acceleration, the Holders of a majority in aggregate principal amount of the Notes then outstanding may, under certain circumstances, rescind and annul such declaration of acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee. Subject to such provisions for the indemnification of the Trustee and applicable law, the Holders of a majority in aggregate principal amount of Notes of that series then 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 the Notes. Except to enforce payment of the principal of or any premium or interest on a Note on or after the applicable due date specified in such Note, no Holder of a Note will have any right to pursue any remedy with respect to the Indenture or the Notes, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes; (ii) the Holders of at least 25% in aggregate principal amount of the Notes of that series then outstanding have made written request, and such Holder or Holders have offered indemnity reasonably satisfactory to the Trustee to institute such proceeding; and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request, within 60 days after such notice, request and offer.
 
5.	Amendment	
Modifications and amendments of the Indenture may be made by the Company and the Trustee without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of each affected series of Notes then outstanding (including consents obtained in connection with a tender offer or
 
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exchange offer for such Notes); provided , however , that no such modification or amendment may, without the consent of the Holder of each Note affected thereby, (i) reduce the principal amount of any Notes issued under the indenture whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or extend the time for payment of interest, including default interest, on any Note issued under the Indenture; (iii) reduce the principal of or change the Stated Maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes issued under the Indenture; (iv) reduce the amount payable upon the redemption of any Note issued under the Indenture or change the time at which such Notes may be redeemed, if applicable; (v) make any Note payable in money other than that stated in the Note; (vi) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the securities by the Holders of at least a majority in aggregate principal amount of then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (vii) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or premium, if any, or interest on the Notes; (viii) waive a redemption payment with respect to any Note issued under the Indenture; or (ix) make any change in the sections of the Indenture captioned “Waiver of Past Defaults” and “Rights of Holders to Receive Payment” or in the provisions described in this sentence.
The Holders of a series of Notes, through the written consent of a majority in principal amount of a series of the Notes of such series then outstanding, may waive compliance by the Company with certain covenants of the Indenture with respect to such series. The Holders of a series of Notes, through the written consent of a majority in principal amount of the Notes of such series then outstanding, may waive any past default under the Indenture with respect to such series, except (i) a default in the payment of principal, premium or interest; (ii) a default arising from the failure to redeem or purchase any such Notes when required pursuant to the terms of the Indenture; and (iii) certain covenants and provisions of the indenture which cannot be amended without the consent of the Holder of each outstanding Note of such series.
With respect to the Notes, notwithstanding the preceding paragraphs, without the consent of any Holder of such Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes (i) to cure any ambiguity, defect, omission or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company’s obligations to Holders of such Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s assets; (iv) to make any change that would provide any additional rights or benefits to the Holders of such Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; (v) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; (vi) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; (vii) to appoint a successor Trustee with respect to the Notes, (viii) to add or change any of the provisions of the Indenture necessary to provide for the administration of the trusts in the Indenture by more than one Trustee; or (ix) to conform the text of the Indenture or the Notes to any provision of the section “Description of notes” in the Offering Memorandum relating to the initial offering of the Notes.
 
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6.	Change of Control	
If a Change of Control Triggering Event occurs, and the Company has not previously exercised its option to redeem the Notes, each Holder will have the right to require that the Company repurchase all or a portion (in excess of $2,000 in integral multiples of $1,000) of such Holder’s Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
 
7.	Obligations Absolute	
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
 
8.	Sinking Fund	
The Notes shall not be redeemable at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Notes will not have the benefit of any sinking fund.
 
9.	Denominations; Transfer; Exchange	
The Notes are issuable in registered form without coupons in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. When Notes are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes of the same Series, the Registrar shall register the transfer or make the exchange in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06 and 9.04 of the Original Indenture and Section 5.01 of the First Supplemental Indenture).
The Company and the Registrar shall not be required (a) to issue, register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Original Indenture and ending at the close of business on the day of selection; (b) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (c) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
 
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10.	Further Issues	
The Company may from time to time, without the consent of the Holders of the Notes and in accordance with the Indenture, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.
 
11.	Optional Redemption	
The Notes will be redeemable, in whole or in part, at the option of the Company at any time at a Redemption Price equal to the greater of: (A) 100% of the principal amount of the Notes being redeemed; and (B) as calculated by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed from the Redemption Date to the date of maturity (except for accrued but unpaid interest) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points; plus accrued but unpaid interest on the notes to, but not including, the redemption date.
 
12.	Persons Deemed Owners	
The ownership of Notes shall be proved by the register maintained by the Registrar.
 
13.	No Recourse Against Others	
No director, officer, employee, incorporator or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
 
14.	Discharge and Defeasance	
Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money and/or U.S. Government Obligations for the payment of principal of, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.
 
15.	Unclaimed Money	
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request
 
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or, if then held by the Company, shall be discharged from such trust. Thereafter the Holder of such Note shall look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
 
16.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Trust Indenture Act, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights.
 
17.	Abbreviations	
Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
18.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
19.	Governing Law	
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture.
 
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ASSIGNMENT FORM
For value received                          hereby sell(s), assign(s) and transfer(s) unto                          (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints                          attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the second anniversary of the date of original issuance of such Note, the undersigned confirms that such Note is being transferred:

(1)	  	¨	  	To Hyatt Hotels Corporation; or	
			
(2)	  	¨	  	So long as this Note is eligible for resale pursuant to Rule 144A under the Securities Act, to a person whom the seller reasonably believes is a Qualified Institutional Buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A; or	
			
(3)	  	¨	  	In an offshore transaction in accordance with Regulation S under the Securities Act; or	
			
(4)	  	¨	  	Pursuant to any exemption from registration under the Securities Act.	
Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes in the name of any person other than the registered Holder thereof (or hereof); provided , however , that the Trustee may, in its sole discretion, register the transfer of such Notes if it has received such certifications, legal opinions and/or other information as the Company has required to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.
In addition, if box (3) or (4) above is checked, the Holder must furnish to the Trustee certifications, legal opinions or other information as it or the Company may require to confirm that such transfer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended.

Dated:	  	 	  		

		
 	  		
Signature(s)
 
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Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

   	
Signature Guarantee	
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended, and is aware that the sale is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

   	
Signature	
Dated:                                     
 
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, check the box:   ¨
If you want to elect to have only part of the Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, state the amount you elect to have purchased:
$                                 

Date:	 		
		
Your Signature:	 	 	
	 	(Sign exactly as your name appears on the face of this Note)	
Tax Identification No.:                                            
Signature Guarantee*:                                            
 
*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).	
 
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Schedule A
SCHEDULE OF EXCHANGES OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	  	Amount of decrease in
Principal Amount of
this Global Note	  	Amount of increase in
Principal Amount
of this Global Note	  	Principal Amount of
this Global Note
following such
decrease or increase	  	Signature of authorized
officer of Trustee or
Custodian	

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EXHIBIT A-4
[Face of 2019 Regulation S Temporary Global Note]
CUSIP/ISIN [            ]
6.875% Senior Notes due 2019

No. [    ]	  	$	[             	] 	
HYATT HOTELS CORPORATION promises to pay to [                ] or registered assigns, the principal sum of [            ] Dollars on August 15, 2019 or such greater or lesser amount as may be indicated in Schedule A hereto.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of this Note.
 
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IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

HYATT HOTELS CORPORATION,	
		
By:	 	 	
	 	Name:	
	 	Title:	
 
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TRUSTEE’S CERTIFICATE OF AUTHENTICATION	
	
Dated:	
	
WELLS FARGO BANK, NATIONAL ASSOCIATION,	
		
by	 	 	
	 	Authorized Signatory	
 
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[Reverse of 2019 Regulation S Temporary Global Note]
6.875% Senior Notes due 2019
This Global Note is a Temporary Global Note for purposes of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). Neither this Temporary Global Note nor any interest herein may be offered, sold or delivered, except as permitted under the Indenture referred to below.
No Beneficial Owners of this Temporary Global Note shall be entitled to receive payment of principal or interest hereon unless the required certifications have been delivered pursuant to the terms of the Indenture.
This Global Note is held by the Depositary (as defined in the Indenture governing this Note) or its nominee in custody for the benefit of the Beneficial Owners hereof, and is not transferable to any person under any circumstances except that (1) the trustee may make such notations hereon as may be required pursuant to the Indenture, (2) this Global Note may be exchanged in whole but not in part pursuant to Article III of the First Supplemental Indenture, (3) this global note may be delivered to the trustee for cancellation pursuant to section 2.13 of the Indenture and (4) this Global Note may be transferred to a successor Depositary with the prior written consent of the Company.
Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) (“DTC”), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein
This Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction. Neither this Note nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the absence of such registration or unless such transaction is exempt from, or not subject to, such
 
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registration. The holder of this Note, by its acceptance hereof, agrees on its own behalf and on behalf of any investor account for which it has purchased Notes, to offer, sell or otherwise transfer such Note, prior to the date (the “Resale Restriction Termination Date”) that is 40 days after the later of the original issue date hereof and the last date on which the issuer or any affiliate of the issuer was the owner of this Note (or any predecessor of such Note), only (a) to the issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) for so long as the Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a person it reasonably believes is a “Qualified Institutional Buyer” as defined in Rule 144A under the Securities Act that purchases for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the U.S. within the meaning of Regulation S under the Securities Act, or (e) pursuant to another available exemption from the registration requirements of the Securities Act, subject to the issuer’s and the trustee’s right prior to any such offer, sale or transfer pursuant to clauses (d) or (e) to require the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them. This legend will be removed upon the request of the holder after the Resale Restriction Termination Date. By its acquisition hereof, the holder hereof represents that it is not a U.S. Person nor is it purchasing for the account of a U.S. Person and is acquiring this security in an offshore transaction in accordance with Regulation S under the Securities Act.
Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
 
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1.	Indenture	
This Note is one of a duly authorized issue of Notes of the Company, designated as its 6.875% Senior Notes Due 2019 (herein called the “ Notes ,” which expression includes any further notes issued pursuant to Section 2.04 of the First Supplemental Indenture (as hereinafter defined) and forming a single series therewith), issued and to be issued under an indenture, dated as of August 14, 2009 (herein called the “ Original Indenture ”), as supplemented by a supplemental indenture, dated as of August 14, 2009 (the “ First Supplemental Indenture ,” and together with the Original Indenture, the “ Indenture ”), between HYATT HOTELS CORPORATION, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “ Company ”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”). Reference is hereby made to the Indenture and all indentures supplemental thereto relevant to the Notes reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Capitalized terms used but not defined in this Note shall have the meanings ascribed to them in the Indenture.
The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to create or incur Liens and to enter into Sale and Leaseback Transactions. The Indenture also imposes certain limitations on the ability of the Company to merge, consolidate or amalgamate with or into any other person (other than a merger of a wholly owned subsidiary into the Company) or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of the property of the Company in any one transaction or series of related transactions.
Each Note is subject to, and qualified by, all such terms as set forth in the Indenture certain of which are summarized herein and each Holder of a Note is referred to the corresponding provisions of the Indenture for a complete statement of such terms. To the extent that there is any inconsistency between the summary provisions set forth in the Notes and the Indenture, the provisions of the Indenture shall govern.
 
2.	Interest	
The Company promises to pay interest on the principal amount of this Note at the rate per annum shown above. The Company will pay interest semiannually on February 15 and August 15 of each year, commencing [            ]. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from [            ]. Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
 
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3.	Paying Agent, Registrar and Service Agent	
Initially the Trustee will act as paying agent and registrar. Initially, Corporation Service Company will act as service agent. The Company may appoint and change any paying agent, registrar or co-registrar and service agent without notice. The Company or any of its Subsidiaries may act as paying agent, registrar, co-registrar or service agent.
 
4.	Defaults and Remedies; Waiver	
If an Event of Default (other than an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture) with respect to the Notes shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice as provided in the Indenture may declare the principal amount of the Notes to be due and payable immediately. If an Event of Default described in clauses (6) and (7) of Section 6.01 of the Indenture occurs, the principal amount of all Notes will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such declaration of acceleration, but before a judgment or decree based on such declaration of acceleration, the Holders of a majority in aggregate principal amount of the Notes then outstanding may, under certain circumstances, rescind and annul such declaration of acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee. Subject to such provisions for the indemnification of the Trustee and applicable law, the Holders of a majority in aggregate principal amount of Notes of that series then 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 the Notes. Except to enforce payment of the principal of or any premium or interest on a Note on or after the applicable due date specified in such Note, no Holder of a Note will have any right to pursue any remedy with respect to the Indenture or the Notes, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Notes; (ii) the Holders of at least 25% in aggregate principal amount of the Notes of that series then outstanding have made written request, and such Holder or Holders have offered indemnity reasonably satisfactory to the Trustee to institute such proceeding; and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request, within 60 days after such notice, request and offer.
 
5.	Amendment	
Modifications and amendments of the Indenture may be made by the Company and the Trustee without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of each affected series of Notes then outstanding (including consents obtained in connection with a tender offer or
 
A-4-7

exchange offer for such Notes); provided , however , that no such modification or amendment may, without the consent of the Holder of each Note affected thereby, (i) reduce the principal amount of any Notes issued under the indenture whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the rate of or extend the time for payment of interest, including default interest, on any Note issued under the Indenture; (iii) reduce the principal of or change the Stated Maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes issued under the Indenture; (iv) reduce the amount payable upon the redemption of any Note issued under the Indenture or change the time at which such Notes may be redeemed, if applicable; (v) make any Note payable in money other than that stated in the Note; (vi) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the securities by the Holders of at least a majority in aggregate principal amount of then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (vii) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or premium, if any, or interest on the Notes; (viii) waive a redemption payment with respect to any Note issued under the Indenture; or (ix) make any change in the sections of the Indenture captioned “Waiver of Past Defaults” and “Rights of Holders to Receive Payment” or in the provisions described in this sentence.
The Holders of a series of Notes, through the written consent of a majority in principal amount of a series of the Notes of such series then outstanding, may waive compliance by the Company with certain covenants of the Indenture with respect to such series. The Holders of a series of Notes, through the written consent of a majority in principal amount of the Notes of such series then outstanding, may waive any past default under the Indenture with respect to such series, except (i) a default in the payment of principal, premium or interest; (ii) a default arising from the failure to redeem or purchase any such Notes when required pursuant to the terms of the Indenture; and (iii) certain covenants and provisions of the indenture which cannot be amended without the consent of the Holder of each outstanding Note of such series.
With respect to the Notes, notwithstanding the preceding paragraphs, without the consent of any Holder of such Notes, the Company and the Trustee may amend or supplement the Indenture or the Notes (i) to cure any ambiguity, defect, omission or inconsistency; (ii) to provide for uncertificated Notes in addition to or in place of certificated Notes; (iii) to provide for the assumption of the Company’s obligations to Holders of such Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s assets; (iv) to make any change that would provide any additional rights or benefits to the Holders of such Notes or that does not adversely affect the legal rights under the Indenture of any such Holder; (v) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended; (vi) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; (vii) to appoint a successor Trustee with respect to the Notes, (viii) to add or change any of the provisions of the Indenture necessary to provide for the administration of the trusts in the Indenture by more than one Trustee; or (ix) to conform the text of the Indenture or the Notes to any provision of the section “Description of notes” in the Offering Memorandum relating to the initial offering of the Notes.
 
A-4-8

6.	Change of Control	
If a Change of Control Triggering Event occurs, and the Company has not previously exercised its option to redeem the Notes, each Holder will have the right to require that the Company repurchase all or a portion (in excess of $2,000 in integral multiples of $1,000) of such Holder’s Notes pursuant to a Change of Control Offer at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
 
7.	Obligations Absolute	
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the place, at the respective times, at the rate and in the coin or currency herein prescribed.
 
8.	Sinking Fund	
The Notes shall not be redeemable at the option of any Holder thereof, upon the occurrence of any particular circumstances or otherwise. The Notes will not have the benefit of any sinking fund.
 
9.	Denominations; Transfer; Exchange	
The Notes are issuable in registered form without coupons in denominations of $2,000 principal amount and any integral multiple of $1,000 in excess thereof. When Notes are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal amount of Notes of the same Series, the Registrar shall register the transfer or make the exchange in the manner and subject to the limitations provided in the Indenture, without payment of any service charge but with payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.06 and 9.04 of the Original Indenture and Section 5.01 of the First Supplemental Indenture).
The Company and the Registrar shall not be required (a) to issue, register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 of the Original Indenture and ending at the close of business on the day of selection; (b) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (c) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
 
A-4-9

10.	Further Issues	
The Company may from time to time, without the consent of the Holders of the Notes and in accordance with the Indenture, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest) so as to form a single series with the Notes.
 
11.	Optional Redemption	
The Notes will be redeemable, in whole or in part, at the option of the Company at any time at a Redemption Price equal to the greater of: (A) 100% of the principal amount of the Notes being redeemed; and (B) as calculated by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed from the Redemption Date to the date of maturity (except for accrued but unpaid interest) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points; plus accrued but unpaid interest on the notes to, but not including, the redemption date.
 
12.	Persons Deemed Owners	
The ownership of Notes shall be proved by the register maintained by the Registrar.
 
13.	No Recourse Against Others	
No director, officer, employee, incorporator or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes, the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
 
14.	Discharge and Defeasance	
Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money and/or U.S. Government Obligations for the payment of principal of, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.
 
15.	Unclaimed Money	
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request
 
A-4-10

or, if then held by the Company, shall be discharged from such trust. Thereafter the Holder of such Note shall look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.
 
16.	Trustee Dealings with the Company	
Subject to certain limitations imposed by the Trust Indenture Act, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-paying agent may do the same with like rights.
 
17.	Abbreviations	
Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
 
18.	CUSIP Numbers	
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
 
19.	Governing Law	
THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture.
 
A-4-11

ASSIGNMENT FORM
For value received                          hereby sell(s), assign(s) and transfer(s) unto                          (please insert social security or other identifying number of assignee) the within Note, and hereby irrevocably constitutes and appoints                          attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the second anniversary of the date of original issuance of such Note, the undersigned confirms that such Note is being transferred:

(1)	  	¨	  	To Hyatt Hotels Corporation; or	
			
(2)	  	¨	  	So long as this Note is eligible for resale pursuant to Rule 144A under the Securities Act, to a person whom the seller reasonably believes is a Qualified Institutional Buyer within the meaning of Rule 144A, purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A; or	
			
(3)	  	¨	  	In an offshore transaction in accordance with Regulation S under the Securities Act; or	
			
(4)	  	¨	  	Pursuant to any exemption from registration under the Securities Act.	
Unless one of the boxes above is checked, the Trustee will refuse to register any of the within Notes in the name of any person other than the registered Holder thereof (or hereof); provided , however , that the Trustee may, in its sole discretion, register the transfer of such Notes if it has received such certifications, legal opinions and/or other information as the Company has required to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.
In addition, if box (3) or (4) above is checked, the Holder must furnish to the Trustee certifications, legal opinions or other information as it or the Company may require to confirm that such transfer is being made pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended.

Dated:	  	 	  		

		
 	  		
Signature(s)
 
A-4-12

Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15.

   	
Signature Guarantee	
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended, and is aware that the sale is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

   	
Signature	
Dated:                                 
 
A-4-13

Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, check the box:   ¨
If you want to elect to have only part of the Note purchased by the Company pursuant to Section 5.01 of the First Supplemental Indenture, state the amount you elect to have purchased:
$                                 

Date:	 		
		
Your Signature:	 	 	
	 	(Sign exactly as your name appears on the face of this Note)	
Tax Identification No.:                                            
Signature Guarantee*:                                            
 
*	Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).	
 
A-4-14

Schedule A
SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	  	Amount of decrease in
Principal Amount of
this Global Note	  	Amount of increase in
Principal Amount
of this Global Note	  	Principal Amount of
this Global Note
following such
decrease or increase	  	Signature of authorized
officer of Trustee or
Custodian	

A-4-15

EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Hyatt Hotels Corporation
71 South Wacker Drive, 12 th Floor
Chicago, Illinois 60606
Wells Fargo Bank, National Association
MAC N9303-121
608 – 2nd Avenue South
Minneapolis, MN 55479
Attention: DAPS Reorg.
 
 	Re:	Hyatt Hotels Corporation Senior Notes	
¨ 5.750% Senior Notes due 2015
¨ 6.875% Senior Notes due 2019
Reference is hereby made to the Indenture, dated as of August 14, 2009, as amended (the “ Indenture ”), between Hyatt Hotels Corporation, as issuer (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
                         (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $               in such Note[s] or interests (the “ Transfer ”), to                          (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. ¨ Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A . The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
 
B-1

2. ¨ Check if Transferee will take delivery of a beneficial interest in the Regulation S Temporary Global Note, the Regulation S Permanent Global Note or a Restricted Definitive Note pursuant to Regulation S . The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.
3. ¨ Check and complete if Transferee will take delivery of a beneficial interest in a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S . The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) ¨ such Transfer is being effected to the Company or a Subsidiary thereof;
or
(c) ¨ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.
 
B-2

4. ¨ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note .
(a) ¨ Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) ¨ Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ¨ Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
 
B-3

  
 
[Insert Name of Transferor]

By:	 	 	
	 	Name:	
	 	Title:	
Dated:
 
B-4

ANNEX A TO CERTIFICATE OF TRANSFER
 
1.	The Transferor owns and proposes to transfer the following:	
[CHECK ONE OF (a) OR (b)]
 
 	(a)	¨ a beneficial interest in the:	
 
 	(i)	¨ 144A Global Note (CUSIP                 ), or	
 
 	(ii)	¨ Regulation S Global Note (CUSIP                 ), or	
 
 	(b)	¨ a Restricted Definitive Note.	
 
2.	After the Transfer the Transferee will hold:	
[CHECK ONE]
 
 	(a)	¨ a beneficial interest in the:	
 
 	(i)	¨ 144A Global Note (CUSIP                 ), or	
 
 	(ii)	¨ Regulation S Global Note (CUSIP                 ), or	
 
 	(iii)	¨ Unrestricted Global Note (CUSIP                 ); or	
 
 	(b)	¨ a Restricted Definitive Note; or	
 
 	(c)	¨ an Unrestricted Definitive Note,	
in accordance with the terms of the Indenture.
 
B-5

EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Hyatt Hotels Corporation
71 South Wacker Drive, 12 th Floor
Chicago, Illinois 60606
Wells Fargo Bank, National Association
MAC N9303-121
608 – 2nd Avenue South
Minneapolis, MN 55479
Attention: DAPS Reorg.
 
 	Re:	Hyatt Hotels Corporation Senior Notes	
¨ 5.750% Senior Notes due 2015
¨ 6.875% Senior Notes due 2019
Reference is hereby made to the Indenture, dated as of August 14, 2009, as amended (the “ Indenture ”), between Hyatt Hotels Corporation, as issuer (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
                         (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $              in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:
[CHECK ALL THAT APPLY]
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “ Securities
 
C-1

Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
 
C-2

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] ¨ 144A Global Note, ¨ Regulation S Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

[Insert Name of Transferor]

By:	 	 	
	 	Name:	
	 	Title:	
Dated:
 
C-3

Exhibit 10.20
SEPARATION AND TRANSITION AGREEMENT
THIS SEPARATION AND TRANSITION AGREEMENT (the “ Agreement” ) is entered into as of May 5, 2008 (the “ Effective Date ”), by and among Global Hyatt Corporation and Hyatt Corporation, each a Delaware corporation (together with each of its successors and assigns sometimes singularly or collectively referred to herein as the “ Company ”), and Kirk Rose (“ Executive ”).
RECITALS
WHEREAS, the Executive has been employed by the Company or its predecessor since September 7, 1999, and currently serves the Company as its principal financial officer with the title of Senior Vice President – Finance;
WHEREAS, Executive and the Company have agreed that Executive will voluntarily resign from his employment with the Company on May 15, 2008 (the “Resignation Date”);
WHEREAS, the Company desires to provide for an orderly transition of Executive’s duties and responsibilities and Executive desires to assist the Company in obtaining an orderly transition; and
WHEREAS, Executive and the Company have negotiated and reached an agreement with respect to all rights, duties and obligations arising between them, including, but in no way limited to, any rights, duties and obligations that have arisen or might arise out of or are in any way related to Executive’s continued employment with the Company and the conclusion of that employment;
NOW THEREFORE, in consideration of the covenants and mutual promises recited below, the parties agree as follows:
1. Duties . During the period beginning on the Effective Date and ending on the earlier of: (a) a date mutually agreed to by the Executive and the Company, (b) a date determined by the Company and communicated to the Executive with no less than seven (7) days advance written notice, (c) the date of the Executive’s death or permanent disability or (d) May 15, 2008 (such period referred to as the “ Transition Period ”), the Executive shall assist the Company with respect to matters relating to the Superior Bank matter, issuance of corporate bonds and/or other financing transactions, issuance of quarterly financial statements issued during the Transition Period, and the search for and hiring of a Treasurer and transition of duties and responsibilities to a Chief Financial Officer of the Company, if applicable during the Transition Period.
2. Compensation . In recognition of the Executive’s contributions to the Company and as consideration for the release and the other promises of Executive contained in this Agreement, which shall be deemed to include Executive’s agreement to faithfully discharge the duties and remain in the employ of the Company as described above through the last day of the Transition Period, and provided, further, that Executive timely signs and returns this Agreement and the release attached as Exhibit A hereto, and timely signs and returns the identical general release, pursuant to Paragraph 8 below, the Company will provide Executive with the following compensation and benefits:
(a) Base Salary and Benefit Plan Participation . During the Transition Period, the Executive will continue to (i) receive his Base Salary as in effect on the Effective Date and (ii) participate in the Company’s retirement and welfare benefit plans, perquisite programs, expense reimbursement and vacation policies, as such plans, programs and policies may be in effect from time to time.

(b) 2008 Annual Bonus . For his service in calendar year 2008, through and including May 15, 2008, Executive shall receive a pro-rated bonus in the amount of $107,000.00 (One Hundred Seven Thousand Dollars), which amount shall be paid to Executive in one lump sum by no later than five calendar days following the Resignation Date.
(c) Severance Payment . The Company agrees to pay Executive severance in the amount of $1,400,000.00 (one Million Four Hundred Thousand Dollars) (“Severance Payment”). The Severance Payment will be paid to Executive in one lump sum by no later than five calendar days following the Resignation Date.
(d) Stock Appreciation Rights (“SARs”) . Executive will not receive a 2008 SARs Award. With respect to the 2006 and 2007 SARs Awards (“Prior Awards”) made to Executive under the Global Hyatt Long Term Incentive Plan (the “GHLTIP”), Executive agrees that such Awards are cancelled as of the date of this Agreement. In consideration of such cancellation, Executive shall be entitled to a lump-sum cash payment equal to the sum of (a) the “Spread” (as defined below) with respect to 50% of the number of SARs granted to Executive in 2006 (such percentage being the percentage of 2006 SARs that would be vested as of the 2008 vesting date and reflects 103, 125 SARs), plus (b) the “Spread” (as defined below) attributable to 25% of the 2007 SARs (such percentage being the percentage of the 2007 SARs that would be vested as of the 2008 vesting date and reflects 12,750 SARs). For this purpose, the Spread is the amount by which the Share Value as of December 31, 2008, as defined and determined in accordance with the GHLTIP, exceeds the Base Value of $24.95 with respect to the 2006 SARs and $31.40 with respect to the 2007 SARs. In the event the Share Value does not exceed the applicable Base Value, then the Spread with respect to those SARs shall be zero. It is anticipated that the December 31, 2008 Share Value will be determined and communicated to GHLTIP participants on or about March 31, 2009. The lump sum cash payment, if any, required under this Section 2(d) shall be made to Executive on or before the later of April 30, 2009 or 30 days after the determination and communication of the December 31, 2008 Share Value to the GHLTIP participants assuming that this Agreement is executed and in full force and effect as of any such payment date.
(e) Payment of Accrued Vacation. Within fifteen days following the Resignation Date, the Company shall pay Executive the full amount of the 33.25 days of accrued but untaken vacation pay owing Executive as of the Resignation Date.
3. No Additional Entitlements . Executive understands and acknowledges that he will have no further entitlements, other than (a) those recited in this Agreement and (b) accrued rights and entitlements that have vested as of the Resignation Date under the Company’s plans. The Company will provide a Benefits Summary to Executive on or before the Resignation Date. Executive
 
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understands and agrees that benefits payable to Executive under the Company’s nonqualified deferred compensation plans will be paid in December 2008 and the Company acknowledges and agrees that time is of the essence with respect to the payment of such amounts in December 2008.
4. Withholding . All payments required to be made by the Company hereunder to the Executive shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
5. Section 409A Compliance . It is intended that any amounts payable under this Agreement and the Company’s and Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Internal Revenue Code Section 409A and the treasury regulations and guidance thereunder (“Section 409A”) so as not to subject the Executive to the payment of interest and tax penalty which may be imposed under Section 409A. Notwithstanding anything contained herein to the contrary, if, at the Executive’s separation from service, (a) Executive is a specified employee as defined in Section 409A. Notwithstanding anything contained herein to the contrary, if, at the Executive’s separation from service, (a) Executive is a specified employee as defined in Section 409A and (b) any of the payments or benefits provided hereunder constitute deferred compensation under Section 409A, the, and only to the extent required by such provisions, the date of payment of such payments or benefits otherwise provided shall be delayed for a period of six (6) months following the separation from service.
6. Post-Resignation Services . Executive Agrees that he will be available to Company after the Resignation Date to provide information and reasonable support for the Superior Bank matter and other matters in respect of which Executive has information (“Post-Resignation Services”). For the period of May 15, 2008 through November 30, 2008, the Company will pay to Executive $76,923.07 per month for six and one-half months (a total of $500,000) for Post Resignation Services. The Company shall reimburse Executive for reasonable out-of-pocket expenses incurred by Executive in performing Post-Resignation Services in accordance with the Company’s expense reimbursement policies and pay such compensation to Executive as the Company and Executive shall mutually agree with respect to any such services performed after November 30, 2008. The Company understands that Executive will be seeking and may obtain alternative employment after the Resignation Date and that Post-Resignation Services will be provided at times reasonably convenient for Executive. For a period of three months after the Resignation Date, the Company will provide Executive with an office and appropriate support services, such as computer, Blackberry, telephone, travel assistance for Company business, but not including a dedicated administrative assistant.
7. Execution of Agreement; Release of Claims . The payments and benefits to the Executive pursuant to this Agreement are contingent upon (i) the Executive executing and delivering to the Company this Agreement and a release of claims in the form attached to this Agreement as Attachment A (the “ Release ”) by 6:00 p.m. (CDT) on May 5, 2008, and (ii) the Executive executing and delivering to the Company on May 15, 2008, a release of claims in substantially the same form as the Release, effective as of that date.
 
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8. Non-Reliance . Executive represents to the Company and the Company represents to Executive that in executing this Agreement they do not rely and have not relied upon any representation or statement not set forth herein made by the other or by any of the other’s agents, representatives or attorneys with regard to the subject matter, basis or effect of this Agreement, or otherwise.
9. Assignability . The rights and benefits under this Agreement are personal to Executive and such rights and benefits shall not be subject to assignment, alienation or transfer, except to the extent such rights and benefits are lawfully available to the estate or beneficiaries of Executive upon death. The Company may assign this Agreement to any parent, affiliate or subsidiary or any entity which at any time whether by merger, purchase, or otherwise acquires all or substantially all of the assets, stock or business of the Company.
10. Confidentiality, Intellectual Property, Non-Solicitation and Non-Disparagement . The Company and Executive acknowledge and agree that, except as modified by the superseding provisions below, the provisions of the Confidentiality, Intellectual Property, Non-solicitation and Non-disparagement Agreement (the “Confidentiality Agreement”) to which Executive is a party (a copy of which is attached hereto as Exhibit B) shall continue to apply to the Company and Executive as if fully set forth in this Agreement and that the commitments on confidentiality shall also apply to the provisions of Sections 2 and 6 of this Agreement and to any information received by Executive while providing Post-Resignation Services. In consideration of the compensation described in Section 2 hereof and the Company’s commitments hereunder, the Confidentiality Agreement is clarified and modified by this Agreement as set forth above and as follows:
(a) Confidentiality . Following the Transition Period, Executive acknowledges and agrees that references in the Confidentiality Agreement and herein to “affiliates” of the Company include, but are not limited to, the Pritzker family (including its members and trusts established by or for the benefit of members of the Pritzker family), the Pritzker family business interests, including The Pritzker Organization, and the directors, officers, trustees and employees of each such business interest.
(b) Non-Solicitation . Executive further agrees that the provisions of Section 3 of the Confidentiality Agreement relating to non-solicitation of employees shall apply for a period of twenty-four months following termination of his employment and shall be modified and expanded to include Executive’s agreement not to, directly or indirectly, induce, solicit, or attempt to persuade any employee or individual who is, or at any time during the six-month period ending on the date of Executive’s termination of employment was, such an employee of the Company or its subsidiaries or affiliates, to accept employment with a Company, organization or other association at which Executive is then employed, provided, however, that:
(i) The scope of the non-solicitation set forth in this Section 10(b) shall be limited to employees for whom Executive had supervisory responsibility, daily interaction in the performance of his duties or about whom Executive had confidential personnel information including but not limited to performance reviews or advancement potential evaluations, and shall be further limited to exclude clerical employees; and
 
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(ii) The non-solicitation provisions set forth in this Section 10(b) shall not apply to any individual described in this Section 10(b) who has voluntarily resigned from the Company or whose employment was terminated buy the Company, or any of its affiliates, and seeks employment with an organization at which Executive is employed.
(c) Non-Disparagement . At all times prior to and after the Effective Date, Executive will not disparage, place in a false light or criticize, orally, in writing, or by action, gesture or innuendo, the business, products, policies, decisions, directors, officers or employees of the Company or any of its operating divisions or affiliates to any person. The Company also agrees that none of its officers will disparage, place in a false light or criticize Executive to any person or entity either orally, in writing, or by action, gesture or innuendo. The obligations of this Section 10(c) shall survive the expiration of this Agreement.
(d) Non-Competition . In addition, during the period from the date hereof through November 30, 2008, the Executive agrees he will not become associated with a Competitor. For purposes of this Section 10(d): (i) a “Competitor” means Marriott International, Starwood Hotels & Resorts Worldwide, Inc., Hilton Hotels Corporation, InterContinental Hotels Group PLC or any of their respective affiliates and successors; and (ii) the Executive shall be considered to have become “associated with a Competitor” if the Executive becomes directly or indirectly involved as an owner, principal, employee, officer, director, independent contractor, representative, stockholder, financial backer, agent, partner, advisor, lender, or in any other individual or representative capacity with a Competitor. Notwithstanding the foregoing, the Executive may make and retain investments in less than one percent of the equity of any Competitor, if such equity is listed on a national securities exchange or regularly traded in an over-the-counter market.
11. Entire Agreement . Executive acknowledges and agrees that this Agreement includes the entire agreement and understanding between the parties and supercedes any prior agreements, written or oral, with respect to the subject matter hereof, including the termination of Executive’s employment after the Effective Date and all amounts to which Executive shall be entitled whether during the Transition Period or thereafter.
12. Severability/Reasonable Alteration . In the event that any part or provision of this Agreement shall be held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable part or provision had not been included therein. Further, in the event that any part or provision hereof shall be declared by a court of competent jurisdiction to exceed the maximum time period, scope or activity restriction that such court deems reasonable and enforceable, then the parties expressly authorize the court to modify such part or provision so that it may be enforced to the maximum extent permitted by law.
13. No Strict Construction . The language used in this Agreement will be deemed to be the language chosen by Executive and the Company to express their mutual intent, and no rule of strict construction will be applied against Executive or the Company.
14. Insurance . The Company presently maintains general liability insurance on an occurrence basis which covers the professional activities of employed lawyers and accountants of the Company. The Company will continue to provide such coverage for the past activities of Executive to the same extent as such coverage is provided with respect to the past activities of other former employed lawyers and accountants of the Company
 
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15. Applicable Law, Venue and Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts of laws principles, rules or statutes of any jurisdiction. The exclusive venue for any litigation between Executive and the Company for any dispute arising out of this Agreement or relating in any way to Executive’s employment with the Company shall be the state or federal courts located in Cook County, Illinois, and Employee hereby consents to any such court’s exercise of personal jurisdiction over Executive for such purpose.
16. Counterparts and Facsimiles . This Separation and Transition Agreement may be executed in several counterparts, each of which shall be deemed as an original, but all of which together shall constitute one and the same instrument; signed copies of this Separation and Transition Agreement may be delivered by .pdf, .jpeg or fax and will be accepted as an original.
17. Notice . Any notice to be given hereunder shall be in writing and shall be deemed given when mailed by certified mail, return receipt requested, addressed as follows:
To Executive at:
403 North Vine
Hinsdale, Illinois 60521
To the Company at:
Global Hyatt Corporation
Hyatt Center
71 South Wacker Drive
12 th Floor
Chicago, Illinois 60606
Attn: General Counsel
[ Signature Page Follows ]
 
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Separation and Transition Agreement as of the date and year first set forth above.

GLOBAL HYATT CORPORATION	
		
By:	 	/s/ Mark S. Hoplamazian	
Its:	 	President and Chief Executive Officer	
	
HYATT CORPORATION	
		
By:	 	/s/ Mark S. Hoplamazian	
Its:	 	President and Chief Executive Officer	
	
EXECUTIVE	
	
/s/ Kirk Rose	
 
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Exhibit A
GENERAL RELEASE OF ALL CLAIMS
1. For valuable consideration, the adequacy of which is hereby acknowledged, the undersigned (“ Executive ”), for himself, his spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through Executive, if any (collectively, “ Releasers ”), does hereby release, waive, and forever discharge Global Hyatt Corporation and Hyatt Corporation (collectively, “ Company ”), and the Company’s subsidiaries, parents, affiliates, related organizations, and stockholders, and their respective affiliates (including trustees and beneficiaries of trust, stockholders), employees, officers, directors, attorneys, successors, and assigns or each of the foregoing (collectively, the “ Releasees ”) from, and does fully waive any obligations of Releasees to Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or claims for relief, remuneration, sums of money, accounts or expenses, the Separation and Transition Agreement between the Company and the Executive (the “ Separation and Transition Agreement ”), with respect to which this is the Release referred to in Paragraph 7 thereof, and any claims under any Stock Appreciation Rights agreements between Executive and the Company, and any action arising in tort including libel, slander, defamation or intentional infliction of emotional distress, and claims under any federal, state or local statute including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1871 (42 U.S.C. § 1981), the National Labor Relations Act, the Fair Labor Standards Act, the Americans with Disabilities Act of 1990, the Rehabilitation Act of 1973, the Illinois Human Rights Act, or the discrimination or employment laws of any state or municipality, and/or any claims under any express or implied contract which Releasers may claim existed with Releasees. This also includes a release by Executive of any claims for breach of contract, wrongful discharge and all claims for alleged physical or personal injury, emotional distress relating to or arising out of Executive’s employment with Company or the termination of that employment; and any claims under the WARN Act or any similar law, which requires, among other things, that advance notice be given of certain work force reductions. This release and waiver does not apply to any claims or rights that may arise after the date Executive signs this General Release. The foregoing release does not apply to (a) any claims or rights for compensation, benefits, indemnification and any other surviving rights now existing under the Separation and Transition Agreement, the organization documents of the Company or any other agreement providing for indemnification regardless of when any claim is filed, or (b) any claims or rights under directors and officers liability insurance.
2. Excluded from this release and waiver are any claims which cannot be waived by law, including but not limited to the right to participate in an investigation conducted by certain government agencies. Executive does, however, waive Executive’s right to any monetary recovery should any agency (such as the Equal Employment Opportunity Commission) pursue any claims on Executive’s behalf. Executive represents and warrants that Executive has not filed any complaint, charge, or lawsuit against the Releasees with any government agency or any court.
3. Executive agrees never to sue Releasees in any forum for any claim covered by the above waiver and release language. If Executive violates this General Release by suing Releasees, other than as set forth in Section 1 hereof, Executive shall be liable to the Company for its reasonable attorneys’ fees and other litigation costs incurred in defending against such a suit.
 
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4. Executive acknowledges and recites that:
(a) Executive has executed the Separation and Transition Agreement and this General Release knowingly and voluntarily;
(b) Executive has read and understands the Separation and Transition Agreement and this General Release in its entirety;
(c) Executive has been advised and directed orally and in writing (and this subparagraph (c) constitutes such written direction) to seek legal counsel and any other advice he wishes with respect to the terms of the Separation and Transition Agreement and this General Release before executing it; and
(d) Executive’s execution of the Separation and Transition Agreement and this General Release has not been forced by any employee or agent of the Company, and Executive has had an opportunity to negotiate about the terms of the Separation and Transition Agreement and this General Release.
5. This General Release shall be governed by the internal laws (and not the choice of laws) of the State of Illinois, except for the application of pre-emptive Federal law.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

Date:	  	 	  		 	Executive:	  	 	
 
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Exhibit B
CONFIDENTIALITY, INTELLECTUAL PROPERTY,
NON-SOLICITATION & NON-DISPARAGEMENT AGREEMENT
This Confidentiality, Intellectual Property, Nin-solicitation and Non-disparagement Agreement (this “ Agreement ”) is entered into by and among Global Hyatt Corporation, a Delaware corporation (“ Global Hyatt ”), Hyatt Corporation, a Delaware corporation and subsidiary of Global Hyatt (“ Employer ”), and Susan Smith (“ Employee ”).
WHEREAS, Employee is currently employer by Employer;
WHEREAS, Employee has access to confidential and proprietary information of Global Hyatt, its subsidiaries and its affiliates;
WHEREAS, the Board of Directors of Global Hyatt has adopted the Global Hyatt Corporation Long-Term Incentive Plan (the “ LTIP ”), and the Administrator of the LTIP has determined that it is in the best interest of Global Hyatt to make grants of Stock Appreciation Rights (as defined in the LTIP, the “ SARs ”) to Employee; and
WHEREAS, the grant of SARs to Employee is conditioned upon Employee’s execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of Employee’s employment, the grant of SARs to Employee, the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
Employee’s employment with Employer results and will result in Employee’s exposure and access to confidential and proprietary information including, but not limited to, financial information, investment opportunities, investment positions, business plans and strategies, business track record, acquisition information, prospect information, due diligence files, sales plans, marketing plans, information concerning actual and prospective customers and suppliers, pricing information, personnel information, trade secrets, and other secret or confidential operational, management, personnel, financial, accounting, marketing or tax information of Global Hyatt Corporation, its subsidiaries and affiliates, and any compilations thereof relating to the business or operations of Global Hyatt, its subsidiaries and affiliates (“ Confidential Information ”) which information is of great value to Global Hyatt. Confidential Information shall not be deemed to include information that otherwise is or has become generally available to the public (without breach of this Agreement), or as to which Employee obtained knowledge from sources other than Global Hyatt or any of its subsidiaries or affiliates, or any of the directors, managers, officers or employees thereof (provided that such source is not bound by a confidentiality agreement with Global Hyatt or any of its subsidiaries or affiliates).
During Employee’s employment with Global Hyatt or any of its subsidiaries or affiliates, Employee agrees that Employee shall at all times hold in confidence, keep secret and inviolate and not make available, divulge, disclose, or communicate in any manner whatsoever to anyone any such Confidential Information, or use any such Confidential Information for any purpose other than in the
 
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performance of Employee’s job duties and on Global Hyatt’s or any of its subsidiaries’ or affiliates’ behalf. Following Employee’s employment with Global Hyatt or any of its subsidiaries or affiliates, Employee shall not, at any time, make available, divulge, disclose, or communicate in any manner whatsoever to anyone any such Confidential Information, or use any such Confidential Information for any purpose unless authorized to do so in writing by Global Hyatt’s Chief Executive Officer or unless required to do so by a governmental authority by law or subpoena or judicial process, in which case Employee will give Global Hyatt immediate advance notice of such disclosure, including a copy of any subpoena or other document legally requiring Employee to make any otherwise prohibited disclosure, prior to making any such disclosure, so that Global Hyatt shall have the opportunity if it so desires to seek a protective order or other appropriate remedy.
2. From the time that Employee became employed by Employer, up to and including the effective termination date of Employee’s employment with Global Hyatt or any of its subsidiaries, any and all inventions, improvements, methodologies and discoveries including, but not limited to, processes, data, lists, systems, products, development materials, operating manuals, analytical tools, and computer programs discovered, developed, or learned by Employee, in whole or in part, that relate to Global Hyatt’s business are the sole and absolute property of Global Hyatt and are “works made for hire” as that term is defined in the copyright laws of the United States. Employee acknowledges and agrees that Global Hyatt is the sole and absolute owner of all patents, copyright, trademarks or other property rights to all such inventions, improvements, methodologies and discoveries. To the extent that any of those items are determined not to constitute works made for hire, Employee agrees that Employee’s signature on this Agreement constitutes an assignment (without any further consideration) to Global Hyatt for any and all of Employee’s respective copyrights and other rights, title, and interest in and to all such items. The foregoing provisions of this Section 2 do not apply to an invention for which no equipment, supplies, facilities or trade secret information of Global Hyatt was used and which was developed entirely on Employee’s own time, unless: (a) the invention relates (i) directly to the business of Global Hyatt or (ii) to Global Hyatt’s actual or demonstrably anticipated research and development, or (b) the invention results from any work performed by Employee for Global Hyatt.
3. Employee agrees that while Employee is employed by Global Hyatt or any of its subsidiaries or affiliates, and for a period of one year beginning on the date that Employee’s employment with Global Hyatt or any of its subsidiaries or affiliates terminates, regardless of the reason for such termination, Employee will not, directly or indirectly, induce, solicit, or attempt to persuade any employee of Global Hyatt or any of its subsidiaries or affiliates to terminate his or her employment with Global Hyatt or any of its subsidiaries or affiliates. In the event that Employee is found by a court of competent jurisdiction to have violated this Section 3, the time period in this Section that restricts Employee’s activity shall be extended for one day for each day that Employee is found to have been violating this Section, up to a maximum of one additional year.
4. Employee agrees that Employee shall not, at any time, disparage Global Hyatt or any of its respective subsidiaries, affiliates, directors, officers, or employees.
 
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5. Upon Global Hyatt’s demand, but no later than the effective date of the termination of Employee’s employment with Global Hyatt or any of its subsidiaries or affiliates, Employee will immediately return to Global Hyatt all of its property including, but not limited to, all of Global Hyatt’s, its subsidiaries’ and affiliates’ documents, files, forms, notes, records, charts, keys, credit cards, computer hardware, cell phones, personal digital assistants, blackberries and other electronic devices, computer software and all copies thereof. Employee’s duty to return such property extends to all locations where Employee has stored or maintained such property.
6. Employee acknowledges and agrees that any breach by Employee of any of the provisions of this Agreement will cause Global Hyatt to suffer immediate and irreparable harm for which damages are an inadequate remedy and are difficult to calculate. Accordingly, Employee agrees that if Employee violates any provision of this Agreement, without limiting any other available legal or equitable remedy (including the recovery of monetary damages), Global Hyatt will be entitled to an order from a court of competent jurisdiction (without the need to post bond or other security) to temporarily and preliminarily enjoin Employee from violating the provisions of this Agreement. Employee further agrees that should Global Hyatt successfully demonstrate in a court of competent jurisdiction that Employee has breached any provision of this Agreement, Global Hyatt shall be entitled to recover its attorneys’ fees and costs from Employee that Global Hyatt expended in enforcing this Agreement.
7. Employee acknowledges and agrees that this Agreement is not intended to be and shall not be construed as an express or implied employment contract to provide services for a specific duration of time or that limits any potential basis for termination.
8. Global Hyatt’s waiver of a breach by Employee of any provision of this Agreement or failure to enforce any such provision with respect to Employee shall not operate or be construed as a waiver of any subsequent breach of such provision or of any breach of any other provision. No act or omission of Global Hyatt shall constitute a waiver of any of its rights hereunder except for a written waiver signed by Global Hyatt’s Chief Executive Officer.
9. If for any reason any provision of this Agreement shall be deemed by a court of competent jurisdiction to be unreasonable or otherwise unenforceable, it is the purpose and intent of Global Hyatt and Employee that the court of competent jurisdiction modify or limit such provisions or restrictions so that, as modified or limited, such prohibitions or restrictions may be enforced to the fullest extent possible, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
 
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10. Other than as set forth in Section 9 above, this Agreement may not be amended except by written agreement executed by both Employee and Global Hyatt’s Chief Executive Officer.
11. This Agreement is enforceable by Global Hyatt and its affiliates and subsidiaries and may be assigned or transferred by Global Hyatt to, and upon such assignment or transfer, shall be binding upon and inure to the benefit of, any parent, subsidiary, affiliate, or other related entity of Global Hyatt or any entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets, stock or business of Global Hyatt. Employee may not assign any of Employee’s rights or obligations under this Agreement.
12. This Agreement will be governed by the internal laws of the State of Illinois without regard to its conflicts or choice of law rules.
13. This Agreement embodies the entire agreement and understanding between Global Hyatt and Employee with regard to the matters described herein and supersedes any and all prior and/or contemporaneous agreements and understandings, oral or written. The provisions of this Agreement shall survive any termination of Employee’s employment regardless of the reason for such termination.
14. Employee acknowledges and agrees that Employee is entering this Agreement voluntarily and that Employee has had an  opportunity to review this Agreement with counsel.
AGREED TO AND ACCEPTED:

Kirk Rose	 		 	GLOBAL HYATT CORPORATION	
				
 	 		 	By:	 	 	
Date:	 	 	 		 	Name:	 		
	 		 		 	Its:	 		
					
	 		 		 	Date:	 	 	
				
	 		 		 	HYATT CORPORATION	
					
	 		 		 	By:	 	 	
	 		 		 	Name:	 		
	 		 		 	Its:	 		
					
	 		 		 	Date:	 	 	
 
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Exhibit 10.32
GAMING SPACE LEASE AGREEMENT
This Gaming Space Lease Agreement (Agreement) is entered into as of the 1st day of February, 1997, by and between HYATT EQUITIES, L.L.C. , a Delaware limited liability company (“Landlord”), and HCC CORPORATION , a Nevada corporation (“Tenant”).
RECITALS
Landlord is the owner of the Hyatt Regency Lake Tahoe Resort & Casino (excluding any Gaming FF&E, as defined below) located in Incline Village, Nevada, and more particularly described on Exhibit A (Hyatt Tahoe); and
Tenant owns all gaming furniture, fixtures and equipment used in the operation of and located in the casino within the Hyatt Tahoe (Gaming FF&E) and desires to lease the casino space within the Hyatt Tahoe.
NOW, THEREFORE, in consideration of the foregoing premises, the terms, conditions, and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by both parties, the parties agree as follows:
1. Lease of Premises . Landlord leases to Tenant, and Tenant leases from Landlord, a portion of the Hyatt Tahoe consisting of approximately 21,819 square feet as depicted on Exhibit B (Premises).
2. Lease Term, Rent and Options . The term (Initial Term) of this Agreement shall commence on February 1, 1997 and shall terminate on January 31, 2002, all under the terms, rents and conditions as set forth below. Tenant shall have the option to renew this Agreement for two (2) successive periods of five (5) years each for the applicable rental payments set forth in this Agreement and otherwise on the same terms and conditions provided in this Agreement (Renewal Options). Tenant may exercise each of its Renewal Options by written notice to Landlord 180 days prior to the expiration of the then current term (the Initial Term, along with any exercised Renewal Options, are collectively referred to herein as the Term).
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(a) During the Initial Term, Tenant shall pay Landlord base rent in the amount of Four Hundred Eighty Three Thousand Three Hundred Thirty Three Dollars ($483,333) per month in advance;
(b) During the portion of the Term in which each Renewal Option is in effect Tenant shall pay Landlord monthly base rent in advance equal to the then-fair market rent (Fair Market Rent) as determined by the procedure set forth in Section 2.5 below.
2.2 All payments due under this Agreement shall be sent to Landlord by United States Mail, postage prepaid, addressed to Hyatt Equities, L.L.C., 200 West Madison, Suite 3800, Chicago, Illinois 60606, Attn: Harold S. Handelsman;

2.3 Payments of base rent and Operating Expenses billed to Tenant on or before the last day of the immediately preceding month shall be due by the 10th day of each month during the Term;
2.4 In the event Tenant fails to pay by the 15th day of each month the base rent due for such month and Operating Expenses billed to Tenant on or before the last day of the immediately preceding month , Landlord, at its option, may assess a late charge of Two Thousand Dollars ($2,000) per day until the monthly base rent and billed Operating Expenses, and any late charges, are paid; and
2.5 Landlord and Tenant shall agree to negotiate in good faith to determine Fair Market Rent. If Landlord and Tenant fail to agree as to Fair Market Rent by the one hundred and twentieth (120th) day prior to the commencement of any Renewal Option which Tenant has exercised in accordance with the terms of this Agreement, then the parties shall submit the matter to arbitration as set forth in this Section 2.5 . In the event that arbitration is required the arbitrator (Arbitrator) shall be Paul A. Bible (Bible), or if Bible is unable to serve, the senior partner of the law firm with which Bible was most recently associated (or any successor thereto). The Arbitrator shall proceed with all reasonable dispatch to determine the Fair Market Rent and shall notify the parties of his decision not later than the sixtieth (60th) day prior to the commencement of the applicable Renewal Option. Any decision reached under this Section 2.5 shall be in writing and in duplicate, one counterpart thereof to be delivered to each of the parties to this Agreement. The decision of the Arbitrator shall be binding, final and conclusive on the parties; provided that Tenant may withdraw its exercise of the applicable Renewal Option within ten (10) days of its receipt of the decision of the Arbitrator. The arbitration fees shall be divided equally between Landlord and Tenant.
3. Operating Expenses . Tenant shall pay when due all Operating Expenses (as defined below). For the purposes of this Agreement, “Operating Expenses” shall be defined as all costs and expenses related to the operation of the Hyatt Tahoe casino, including, but not limited to, all real and personal property taxes and assessments, all gaming and business license fees or taxes, all other federal, state and local taxes incurred as the result of Tenant’s operations under this Agreement, all utilities consumed or used in or upon the Premises, all employee wages and payroll taxes incurred during the Term, all equipment leases related to the Premises, costs of inventory, insurance, legal and accounting expenses, payment of settled or compromised claims and payment of judgments. Operating Expenses which are not paid directly by Tenant and are paid by Landlord for the benefit of Tenant shall be allocated between Landlord and Tenant as determined in good faith by Landlord (which determination shall be binding absent manifest error) and shall also include all amounts billed from time to time by Landlord to Tenant for miscellaneous building maintenance and other services rendered to Tenant or for the benefit of the Premises. Landlord shall provide to Tenant such supporting documentation regarding the allocation of Operating Expenses as Tenant may reasonably request from time to time.
4. Use of Premises . Tenant shall have the right to use and occupy the Premises for all lawful purposes in connection with the operation of a casino, and the Premises shall not be used for any unlawful purpose or in any manner that may damage or depreciate the Premises. Tenant shall have the exclusive right to conduct gaming operations at the Premises during the Term and as provided by law. Tenant shall conduct its operations in and from the Premises under the present name unless Landlord shall otherwise consent in
 
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writing. Tenant may engage a manager to manage the Premises, provided that (i) such manager is also the manager of the remainder of the Hyatt Tahoe, and (ii) such manager is authorized by all appropriate governmental authorities to manage and operate the Premises in accordance with the terms of this Agreement.
5. Maintenance of the Premises.
5.1 Tenant agrees that, from and after the date that possession of the Premises is delivered to Tenant, and until the end of the Term, it will keep the Premises neat and clean and maintained in good order, condition and repair, including, without limitation, the exterior and interior portions of all doors, windows and plate glass surrounding the Premises, all plumbing and sewage facilities within the Premises, fixtures and interior walls, floors, ceilings, signs (including exterior signs where permitted), and all wiring, electrical systems, sprinkler systems within the Premises, interior building appliances and similar equipment. Tenant shall repaint, refurbish and remodel the Premises and any part and portion thereof from time to time to assure that the Premises are kept in a tenantable and attractive condition throughout the term of this Agreement comparable to the present condition. Tenant further agrees that the Premises shall be kept in a clean, sanitary and safe condition in accordance with the laws of the State of Nevada and ordinances of Washoe County, and in accordance with all directions, rules and regulations of the Health Officer, Fire Marshall, Building Inspector and other proper officers of the governmental agencies having jurisdiction over the Premises.
5.2 Tenant shall not make alterations, improvements and/or additions to the Premises without first obtaining, in each instance, the prior written consent of Landlord, except that Tenant may make, at its own expense, nonstructural alterations to the interior of the Premises so long as the alterations do not decrease the value of the Premises and provided, however, that any alteration shall be (a) made in accordance with all applicable laws, and (b) completed in a good and first-class workmanlike manner.
6. Surrender of Possession . At the conclusion of this Agreement (whether by termination upon default, expiration or otherwise), Tenant covenants to peacefully surrender possession of the Premises to Landlord. At that time, Tenant shall repair any damage to the Premises, and shall leave the Premises in good and clean condition (ordinary wear and tear excepted).
7. Employee Costs . Landlord and Tenant acknowledge that Hyatt Tahoe Casino Management, Inc. (the “Manager”) will be the manager of the Premises and of the hotel associated therewith (the “Hotel”) pursuant to separate management agreements of even date herewith. Landlord and Tenant further acknowledge that the employees working at the Premises and at the Hotel are, for administrative convenience, employees of Tenant. Each of Landlord and Tenant agree that the costs and expenses of all such employees, including compensation, wages, fringe benefits and other related costs (collectively, “Employee Costs”) will be allocated between the operations of the Premises and the operations of the Hotel by the Manager upon a reasonable basis and that the Manager will, upon request, provide both Landlord and Tenant with evidence of the basis of such allocations. The allocation by Manager of Employee Costs to the Hotel and the Premises shall be deemed to constitute Total Compensation (as defined in the management
 
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agreements for the Premises and Hotel) for the Hotel and Premises, respectively, and shall be paid from the operation of the Premises and the Hotel pursuant to the terms of the applicable management agreement. The allocations of Employee Costs made by the Manager will be final and binding upon Landlord and Tenant in the absence of manifest error. In addition, expenses which are incurred on behalf of both the Premises and the Hotel, other than Employee Costs, may be paid out of the operations of the Premises by Tenant and out of the operations of the Hotel by Landlord, each on behalf of the other, and in any such event, similar allocations will be made by the Manager on like basis and with like effect.
8. Right of Entry . Landlord may, at all reasonable times, enter the Premises for the purpose of making repairs or alterations as are necessary or proper for the safety, protection, preservation or improvement of the Premises or any part thereof, and may authorize anyone else to do so, without first obtaining the consent of Tenant; provided, however, that any repairs or alterations shall be (a) made in accordance with all applicable laws, and (b) completed in a good and first-class workmanlike manner.
9. Quiet Enjoyment . Landlord covenants and agrees that Tenant, if in compliance with all conditions, terms, rules, regulations and covenants contained in this Agreement, shall and may, at all times during the Term, peaceably and quietly have, hold and enjoy the Premises without hindrance from Landlord, but in all respects subject to the terms and conditions set forth in this Agreement.
10. Risk of Loss . In the event that the Premises are damaged or destroyed by fire, wind storm or other casualty without fault on the part of Tenant, Landlord may, at its option, restore or replace the Premises in substantially the same condition within a period of three (3) months unless prevented by causes beyond Landlord’s control. During that period, an adjustment to the rental shall be made commensurate with the time necessary for repair or rebuilding. In the event that Landlord elects not to repair or restore the Premises, Landlord shall notify Tenant within forty-five (45) days after the damage or loss, and this Agreement shall terminate, and all rights and privileges hereunder shall cease.
11. Fixtures and Furnishings . All additions, improvements, furniture, fixtures and equipment which may be made or installed by Landlord upon the Premises prior to and during the term of this Agreement shall remain upon the Premises. Tenant may retain and place within the Premises the Gaming FF&E, which shall remain the property of Tenant and Tenant shall be entitled to remove all of the Gaming FF&E from the Premises at the termination of this Agreement, provided that Tenant has made all required payments to Landlord under the terms of this Agreement.
12. Liability Insurance . During the term of this Agreement, and any extensions thereof, Tenant shall purchase, procure and/or maintain public liability insurance applicable to the Premises complying with the requirements of Section 8 of the management agreement dated as of the date hereof (Management Agreement) pertaining to the Hyatt Tahoe executed by Landlord and Hyatt Tahoe Casino Management Inc., a Nevada corporation, as amended from time to time. Tenant shall be deemed to have complied with the requirements of this Section if insurance applicable to the Premises in the coverages and amounts set forth above is provided pursuant to the Management Agreement, whether or not such insurance is based on self-insurance or the inclusion of the Hyatt Tahoe in
 
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blanket policies of insurance as provided in Section 8 of the Management Agreement. Tenant shall reimburse Landlord for Tenant’s proportionate share of any insurance provided under the Management Agreement.
13. Operation of Business . Tenant shall operate the business conducted on the Premises in accordance with sound business practices and the past practices of Tenant. Tenant shall assume and be responsible for all liabilities and expenses created or generated by Tenant’s operation of its business upon the Premises. Tenant further agrees to indemnify and hold Landlord harmless from any claim of any kind, character or nature resulting from Tenant’s occupation and use of the Premises.
14. Signs . Tenant shall have the right to post reasonable signs on the Premises which might facilitate Tenant’s business.
15. Access to Premises and Parking .
15.1 Landlord hereby agrees to allow Tenant, its agents, employees, customers, subtenants, assignees and their customers to cross the Hyatt Tahoe for purposes of ingress to and egress from the Premises. Tenant shall further have the right to a reasonable number of parking spaces upon the Hyatt Tahoe for Tenant, its agents, employees, customers, subtenants, assignees and their customers, but Landlord shall retain control over the method and manner of parking.
15.2 Landlord hereby retains and reserves unto itself, and its successors and assigns, for the benefit of Landlord and its employees, agents, guests, patrons and others having business relations with Landlord, the right to enter upon any portions of the Premises for the purpose of ingress and egress to other portions of the Hyatt Tahoe.
16. Utilities and Telephones . Landlord shall provide, or cause to be provided to or for the use of the Premises, all utilities, including but not limited to gas, electricity and water, and other building services necessary for the operation of the Premises in accordance with terms of this Agreement. Landlord and Tenant agree that Landlord shall not be responsible for providing separate meters for Tenant’s utilities and such charges shall be allocated to the Premises by Landlord in accordance with Section 3 above.
17. Default, Remedies, and Termination . Any of the following occurrences, conditions, or acts shall constitute an “event of default” under this Agreement:
17.1 If Tenant (i) defaults in making payment when due of any base rent or Operating expenses and the default continues for ten (10) days after Landlord gives written notice to Tenant specifying the default and demanding that it be cured; or (ii) fails to maintain in good standing and in full force and effect, free from restriction or suspension (other than suspensions for a period not to exceed three days) all necessary governmental approvals and licenses as required pursuant to Section 18 below (whether held by Tenant or any manager of the Premises); or (iii) defaults in the observance or performance of any other provision of this Agreement and the default continues for fifteen (15) days after Landlord gives written notice to Tenant specifying the default and demanding that it be cured;
 
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17.2 If Tenant files a petition in bankruptcy, for reorganization or for an arrangement under the bankruptcy code or any similar federal or state law, is adjudicated a bankrupt or becomes insolvent, is unable to meet its obligations as they become due, or takes any corporate action in furtherance of any of the foregoing; or
17.3 If a petition or answer is filed proposing the adjudication of Tenant as a bankrupt or the reorganization of Tenant under the bankruptcy code or any similar federal or state law, and (i) Tenant consents to the filing thereof, or (ii) the petition or answer is not discharged or denied within sixty (60) days after its filing.
If there exists any event of default, Landlord may (i) terminate this Agreement and take possession of the Premises, in which event the all base rent and Operating Expenses shall immediately become due and be payable up to the time of termination; (ii) relet the Premises, or any part or parts of it, either in Landlord’s name or otherwise, for a term or terms which may, at Landlord’s option, be less than or exceed the remaining Term; (iii) recover from Tenant on a monthly basis, as liquidated damages for Tenant’s failure to observe and perform its covenants under this Agreement, the deficiency between the base rent and Operating Expenses hereby reserved and/or agreed to be paid and the net amount, if any, of the rents set forth in any subsequent lease or leases for the Premises for each month of the period which would otherwise have constituted the balance of the term of this Agreement; and (iv) exercise all other rights and remedies available at law or in equity. In computing liquidated damages, there shall be added to the deficiency all reasonable expenses that Landlord may incur in connection with reletting, such as brokerage and preparation for reletting. All remedies provided for in this Agreement shall be cumulative and not alternative, and pursuit of one remedy shall not bar pursuit of any other remedy.
Landlord may make all alterations, repairs, replacements, and decorations to the Premises that it considers advisable and necessary for the purpose of reletting the Premises. Such action by Landlord shall not be construed to release Tenant from its liability under this Agreement. Landlord shall use reasonable efforts to mitigate all damages and to relet the Premises if there is any event of default by Tenant.
18. Permits, Licenses, Illegal Activities . It is agreed that Tenant or any manager engaged by Tenant in accordance with the terms of this Agreement, at Tenant’s own expense, shall secure and maintain in good standing any and all necessary government permits and/or licenses necessary for the operation of Tenant’s business at or on the Premises. During the term of this Agreement and any extensions thereof, the Premises shall not be used for any illegal activity or purpose, nor shall any nuisance, public or private, be permitted or committed on or about the Premises.
19. Assignment and Subleasing . This Agreement shall be binding on and shall be for the benefit of the parties hereto and their respective successors and assigns; provided, however, that this Agreement may not be assigned or transferred by Tenant without the prior written consent of Landlord and any purported assignment by Tenant which is not consented to in writing by Landlord as required herein shall be null and void and of no force and effect. Tenant shall have the right to sublet the Sports and Race Book in accordance with Nevada law; provided that any such subletting shall not relieve Tenant of any of its obligations hereunder.
 
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20. Condemnation . If the whole or substantially all of the Premises shall be taken by any public authority under the power of eminent domain, this Agreement shall be terminated as of the day of possession by the public authority, and base rent shall be paid up to the day of possession. For purposes of this paragraph, “substantially all” of the Premises shall be deemed to have been taken if the remaining property cannot be practically used by Tenant for its stated purposes. In the event of a taking of a whole or substantially all of the Premises, Landlord shall be entitled to all awards in connection with the taking of the Premises. If there is a partial condemnation of the Premises so that Tenant can continue to use the Premises for its intended purpose, Tenant shall be entitled to an equitable adjustment of the base rent and Operating Expenses due under this Agreement, and any partial condemnation award shall be the sole property of Landlord.
21. Attorneys’ Fees . If any party brings legal action for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the conditions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees, interest, and other costs incurred in the action or proceeding, in addition to any other relief to which the party may be entitled.
22. Counterparts . This Agreement may be executed in any number of counterparts, or by different parties in different counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and in making proof hereof, it shall not be necessary to produce or account for more than one counterpart.
23. Miscellaneous . This Agreement sets forth the entire agreement between the parties concerning the Premises and no other promises, agreements or understandings between them shall be binding unless set forth in writing and signed by both parties. The parties agree that the covenants, conditions and agreements set forth herein shall be binding upon and enure to the benefit of the parties, their heirs, executors, administrators, successors and assigns. The parties acknowledge and agree that their respective interests, rights and obligations under this Agreement are mutually dependent and are all part of a single, integrated transaction which is not and shall not be severable in any respect or circumstance. If, however, any portion of this Agreement should ever be declared invalid for any reason, such invalidity shall not affect the remaining provisions of the Agreement. The parties further agree that this Agreement shall be construed and governed in accordance with the laws of the State of Nevada.
In the event of a conflict between the terms of this Agreement and the terms of the Casino Management Agreement of even date herewith between Hyatt Tahoe and Tenant, the terms of this Agreement shall govern for all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF , the parties have executed this Agreement as of the day and year first above written.

Landlord:	
	
HYATT EQUITIES, L.L.C.	
		
By:	 	/s/ Harold Handelsman	
Its:	 	Vice President	
	
Tenant:	
	
HCC CORPORATION	
		
By:	 	/s/ Kenneth Posner	
Its:	 	Vice President	
 
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EXHIBIT A
DESCRIPTION OF LAND
All that property situated in the County of Washoe, State of Nevada, more particularly described as follows:
PARCEL 1
Commencing at the United States Government Meander corner of Lake Tahoe common to Sections 22 and 23, Township 16 North, Range 18 East, M. D. B. & M., from which the section corner common to Sections 14, 15, 22 and 23, bears North 0°50’ East (original Government survey bearing North) a distance of 3372.60 feet; thence North 57°10’04” West along the Meander line of Lake Tahoe (being identical with the line of the original Government Survey bearing North 58°00’ West), a distance of 1378.75 feet to the Southwest corner of the parcel of land described in Parcel 1 in the deed to Rene Gaubert and wife, recorded in Book 431, File No. 268346, Deed Records; thence continuing North 57°l0’04” West along said Meander line of Lake Tahoe 306.98 feet to the true point of beginning of this description; thence continuing North 57°10’04” West along said Meander line of Lake Tahoe 511.63 feet; thence leaving said Meander line North 20°35’35” East 497.68 feet to the Southern line of said Nevada State Highway No. 28; thence South 69°24’25” East 500.00 feet along the Southerly line of said Nevada State Highway 28; thence South 20 35’35” West 606.14 feet to the true point of beginning.
PARCEL 2
Commencing at the United States Government Meander corner of Lake Tahoe common to Sections 22 and 23, Township 16 North, Range 18 East, M. D. B. & M., from which the section corner common to Sections 14, 15, 22 and 23 bears North 0°50’ East (original Government Survey bearing North) a distance of 3372.60 feet; thence North 57°10’04” West along the Meander line of Lake Tahoe (being identical with the line of the original Government Survey bearing North 58°00’ West) a distance of 1378.75 feet to the Southwest corner of the parcel of land described in Parcel 1 in the deed to Rene Gaubert and wife, recorded in Book 431, File No. 268346, Deed Records; thence continuing North 57°10’04” West along said Meander line of Lake Tahoe 306.98 feet to the true point of beginning of this description; thence continuing North 57°10’04” West along said Meander line of Lake Tahoe 511.63 feet; thence leaving said Meander line South 20°35’35” West 77.07 feet, more or less, to Lake Tahoe; thence Southeasterly along Lake Tahoe to a line drawn South 20°35’35” West from the true point of beginning; thence North 20°35’35” East 102.02 feet, more or less, to the true point of beginning.
EXCEPTING THEREFROM any portion of said land lying below the natural, ordinary, high water line of said Lake Tahoe.
PARCEL 3
Commencing at the intersection of the Western line of Lot 1 in Block A with the Northern line of Nevada State Highway No. 28, as said lot, block and highway are shown on the map of MILL CREEK ESTATES, WASHOE COUNTY, NEVADA, filed in the office of the County Recorder of Washoe County, State of Nevada, on October 27, 1960; thence North 69°24’25” West along said
 
Exhibit A – page 1

Northern line of Nevada State Highway No. 28, a distance of 592.07 feet to the true point of beginning; thence North 69°24’25” West along said Northern line of Nevada State Highway No. 28 a distance of 619.97 feet; thence North 37°48’16” East 1159.50 feet; thence South 64°04’50” East 344.47 feet; thence Southeasterly on the arc of a curve to the right with a radius of 1030.00 feet and tangent to the preceding course, a distance of 449.42 feet; thence South 39°04’50” East and tangent to the preceding arc a distance of 85.00 feet; thence Southeasterly, Southerly and Southwesterly on the arc of a curve to the right with a radius of 40.00 feet and tangent to the preceding course a distance of 62.83 feet; thence South 50°55’10” West and tangent to the preceding arc a distance of 888.83 feet; thence Southwesterly, Westerly and Northwesterly on the arc of a curve to the right with a radius of 150.00 feet and tangent to the preceding course, a distance of 156.22 feet to the true point of beginning. Situated in the E-1/2 of Section 22, Township 16 North, Range 18 East, M. D. B. & E.
 
Exhibit A – page 2

EXHIBIT B

AMENDMENT TO GAMING SPACE LEASE AGREEMENT
THIS AMENDMENT TO GAMING SPACE LEASE AGREEMENT (this “Amendment”) is entered into as of June 30, 2004, but effective as of January 1, 2004, by and between HYATT EQUITIES, L.L.C. , a Delaware limited liability company (“Landlord”) and HCC CORPORATION , a Nevada corporation (“Tenant”).
RECITALS
WHEREAS , Landlord and Tenant entered into that certain Gaming Space Lease Agreement dated as of February 1, 1997 (the “Original Lease”); and
WHEREAS , Landlord and Tenant desire to amend the Original Lease as provided herein.
NOW, THEREFORE , in consideration of the premises, covenants, conditions and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows:
1. Incorporation . The foregoing recitals are hereby incorporated into and made a part of this Amendment. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Original Lease.
2. Amendments to Original Lease .
 
 	A.	Paragraph 1 of Section 2 and the entirety of Section 2.1 of the Original Lease shall be deleted and replaced with the following:	
2. Lease Term, Rent and Options. The term (the “Initial Term”) of this Agreement commenced on February 1, 1997, and shall terminate on December 31, 2008, in accordance with the terms, rents and conditions as set forth below. Tenant shall have the option to renew this Agreement for three (3) successive periods of one (1) year (each, a “Renewal Term”) for the applicable rental payments set forth in this Agreement and otherwise on the same terms and conditions provided in this Agreement (the “Renewal Options”). Tenant may exercise each of its Renewal Options by providing Landlord with written notice ninety (90) days prior to the expiration of the then current term. The Initial Term and any exercised Renewal Term are collectively referred to herein as the “Term”.
2.1
 
 	(a)	Initial Rent. During the calendar year commencing January 1, 2004, Tenant shall pay Landlord rent in the amount of One Hundred and Fifty Thousand Dollars ($150,000) per month (the “Initial Rent”) in the manner prescribed in Section 2.2 below. The Initial Rent shall be increased annually by the CPI	

 	Adjustment at the beginning of each calendar year thereafter (the “Rent Adjustment Date”). As used herein, the term “CPI Adjustment” shall mean the increase, if any, in the Consumer Price Index for United States City Averages for All Urban Consumers, All Items, published from time to time by the United States Bureau of Labor Statistics (1982-84 = 100) (“CPI”) as of the applicable Rent Adjustment Date as compared to the CPI of the immediately preceding Rent Adjustment Date. If the CPI is discontinued or is unavailable or is substantially revised, a comparable index agreeable to Landlord and Tenant reflecting the changes in the cost of living or the purchasing power of the consumer dollar, published by any governmental agency or recognized authority shall be used in place thereof.	
 
 	(b)	Renewal Rent. During each Renewal Term, if applicable, Tenant shall pay Landlord rent in the manner prescribed in Section 2.2 below in an amount equal to the previous calendar year’s Initial Rent or Renewal Rent, as applicable, as increased by the CPI Adjustment (the “Renewal Rent”). Upon Tenant’s election to exercise a Renewal Option, either party may request that the Renewal Rent be adjusted to reflect the then fair market rental value of the Premises as determined by a real estate appraiser selected by Landlord familiar with the fair market rental values for casino space in the Lake Tahoe, Nevada area. The Renewal Rent shall be determined not later than sixty (60) days prior to the commencement of the applicable Renewal Term. The decision of the real estate appraiser shall be binding, final and conclusive on the parties; provided , however , Tenant may withdraw its exercise of the applicable Renewal Option within ten (10) days of its receipt of the appraiser’s determination of the adjusted Renewal Rent. The fees associated with the real estate appraisal shall be divided equally between Landlord and Tenant unless a real estate appraisal shall have already been obtained during the prior five (5) year period, in which case, the fees associated with the real estate appraisal shall be borne by the party requesting the real estate appraisal.	
 
 	(c)	All references to Initial Rent and Renewal Rent shall be collectively referred to herein as “base rent”.	
 
 	B.	Section 2.2 of the Original Lease shall be deleted in its entirety and replaced with the following:	
“Prior to February 1, 2005, all payments due under this Agreement shall be sent to Landlord by United States Mail, postage prepaid, addressed to Hyatt Equities, L.L.C., 200 West Madison, Suite 3900, Chicago, Illinois 60606, Attn: Finance Department. As of February 1, 2005 and for the remainder of the Term, all payments due under this Agreement shall be sent to Landlord by United States Mail, postage prepaid, addressed to Hyatt Equities, L.L.C., Hyatt Center, 71 South Wacker Drive, Chicago, Illinois 60606, Attn: Finance Department.”
 
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 	C.	Section 2.5 of the Original Lease shall be deleted in its entirety.	
 
 	D.	Section 3 of the Original Lease sets forth Tenant’s obligations with respect to the payment of certain Operating Expenses. The Original Lease is hereby modified to exclude the following from the definition of “Operating Expenses”: (i) all real property taxes and assessments; (ii) costs of property and general liability insurance; and (iii) all utilities consumed or used in or upon the Premises, all of which exclusions shall be paid by Landlord, subject to good faith allocation between Landlord and Tenant in accordance with Section 3.	
 
 	E.	The following language is hereby added to the end of Section 5.1 of the Original Lease: “Landlord shall pay for all costs associated with the maintenance of (i) the exterior of the Premises and (ii) the heating and air conditioning equipment servicing the Premises.”	
 
 	F.	Section 7 of the Original Lease shall be deleted in its entirety and replaced with the following:	
“7. Employee Costs. Landlord and Tenant acknowledge that the employees working at the Premises are employees of Tenant and that all costs and expenses of all such employees, including compensation, wages, fringe benefits and other related costs (collectively, the “Employee Costs”) shall be borne by Tenant. ”
 
 	G.	The following language is hereby added as Section 24 to the Original Lease:	
“24. Landlord’s Termination Right. Notwithstanding anything to the contrary contained herein, Landlord shall have the right to terminate this Agreement upon thirty (30) days’ prior written notice to Tenant in connection with a sale, transfer or other assignment of Landlord’s interest in the Hyatt Regency Lake Tahoe Resort Spa and Casino. In such event, Tenant shall be entitled to remove all Gaining FF&E from the Premises, provided Tenant has made all required payments to Landlord under the terms of this Agreement, and Tenant shall peacefully surrender possession of the Premises to Landlord in accordance with Section 6 above.”
 
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3. Reaffirmation . Except as otherwise provided in this Amendment, all other terms and conditions of the Original Lease shall remain unchanged and the Original Lease shall remain in full force and effect. In the event that the terms and conditions of the Original Lease are inconsistent with the terms and conditions of this Amendment, the terms and conditions of this Amendment shall prevail.
4. Counterparts . This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one instrument.
5. Entire Agreement . The Original Lease, as modified by this Amendment, constitutes the entire agreement and understanding between the parties and supercedes all prior agreement and understanding, both written and oral, between the parties with respect to the subject matter hereof.
6. Governing Law . This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of Nevada.
[signature page follows]
 
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IN WITNESS WHEREOF , the parties hereto have executed this Amendment as of the date and year first written above.

LANDLORD:	
	
HYATT EQUITIES, L.L.C. , a Delaware limited liability company	
		
By:	 	/s/ Kirk Rose	
Name:	 	Kirk Rose	
Its:	 	Vice President and Treasurer	
	
TENANT:	
	
HCC CORPORATION , a Nevada corporation	
		
By:	 	/s/ Peter Liguori	
Name:	 	Peter Liguori	
Its:	 	Vice President and Treasurer	
 
5

			

 	  	Stephen G. Haggerty
Global Head
Real Estate and
Development
 
71 South Wacker Drive        
Chicago, IL 60606
 
Tel: 312.780.5833
Fax: 312.780.5282	
August 4, 2009
 
RE:	Gaming Space Lease Agreement dated February 1, 1997, as amended by that certain Amendment to Gaming Space Lease Agreement dated June 30, 2004 and as further amended by that certain Amendment #2 to Gaming Space Lease Agreement dated July 25, 2005 (collectively, the “ Original Lease ”) by and between Hyatt Equities, L.L.C. (“ Landlord ”) and HCC Corporation (“ HCC ”) and that certain Casino Facilities Agreement dated June 30, 2004, as amended by that certain Amendment #1 to Casino Facilities Agreement (Lake Tahoe) dated July 25, 2005 and as further modified by that certain Memorandum of 2006 Casino Services and Fees dated December 31, 2005 (collectively, “ Facilities Agreement ”) by and between Hyatt Corporation (“ Hyatt ”) and HCC	
To Whom It May Concern:
Pursuant to the above-referenced Original Lease, Landlord leased to HCC and HCC leased from Landlord certain space commonly known as the Hyatt Regency Lake Tahoe Casino (the “ Tahoe Casino ”) in Lake Tahoe, Nevada. The Original Lease expired by its terms on December 31, 2008. However, the parties mutually agreed to extend the term of the Original Lease, and to revise other certain terms and provisions thereof, via an Amended and Restated Casino Lease (“ Amended Lease ”). The Amended Lease is currently under negotiation pending determination of the rent to be paid by HCC during the term of such Amended Lease.
In addition, pursuant to the above-referenced Facilities Agreement, Hyatt provides to HCC and HCC purchases from Hyatt various services in connection with the operation of the Tahoe Casino. The term of the Facilities Agreement was to expire on the earliest of (a) termination of the Facilities Agreement as set forth in Section 4.2 thereof, (b) termination or expiration of the Original Lease and (c) termination or expiration of that certain Casino Management Agreement dated February 1, 1997 by and between HCC and Hyatt Tahoe Casino Management, Inc. The parties mutually agreed to update the Facilities Agreement in conjunction with their negotiation of the Amended Lease, and an updated Facilities Agreement is also currently under negotiation.
This letter is to confirm and acknowledge the parties’ agreement that during the pendency of their negotiations to finalize the Amended Lease and the updated Facilities Agreement, the parties have continued to, and shall continue to, conduct themselves pursuant to the terms of the Original Lease and Facilities Agreement; except as follows:, 1) during the course of the negotiations, HCC has paid to Landlord $186,687.50 monthly through May 31, 2009, and 2) HCC has paid to Hyatt all amounts invoiced pursuant to the Facilities Agreement through May 31, 2009. The parties further confirm and acknowledge that the final rent as determined under the Amended Lease and any payment owed to either party pursuant to the updated Facilities Agreement shall be subject to reconciliation at the close of negotiations and pursuant to those respective documents.

Kindly acknowledge your agreement with the foregoing by signing this letter, in duplicate, and returning a fully executed original to my attention.
Sincerely,

HYATT EQUITIES, L.L.C.	
		
By:	 	/s/ Stephen G. Haggerty	
Name:	 	Stephen G. Haggerty	
Its:	 	SVP—Real Estate Development	
Acknowledged and agreed as of this 4 day of August, 2009:

HCC CORPORATION	
		
By:	 	/s/ Peter Liguori	
Name:	 	Peter Liguori	
Its:	 	President	

Exhibit 10.33
CASINO FACILITIES AGREEMENT
(Lake Tahoe)
THIS CASINO FACILITIES AGREEMENT (this “ Agreement ”), dated as of June 30, 2004 (the “ Effective Date ”), by and between HYATT CORPORATION, a Delaware corporation (“ Hyatt ”), and HCC CORPORATION, a Nevada corporation (“ HCC ”). Each of Hyatt and HCC are sometimes referred to herein, individually, as a “Party” and, collectively, as the “Parties”.
RECITALS
WHEREAS, pursuant to that certain Gaming Space Lease Agreement, dated as of February 1, 1997 (as the same may be amended or modified from time to time, the “ Lease Agreement ”) between Hyatt Equities, L.L.C., a Delaware limited liability company, and HCC, HCC leases approximately 19,000 square feet of space in the facility commonly known as the Hyatt Regency Lake Tahoe Resort & Casino (the “ Resort ”), located in Incline Village, Nevada, which space is used to operate a casino and certain related facilities; and
WHEREAS, in order to provide for the orderly conduct of the Business (as hereinafter defined) at the Facilities (as hereinafter defined), and upon the terms and subject to the conditions set forth in this Agreement, Hyatt and HCC desire to provide for certain services for the benefit of HCC.
NOW THEREFORE, in consideration of the foregoing and the representations, warranties, covenants, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.
(a) Certain Definitions. The following terms shall have the meanings specified below:
“ AAA ” means the American Arbitration Association.
“ Action ” means any action, claim, suit, arbitration, inquiry, proceeding or investigation by or before any court, any governmental or other regulatory or administrative agency or commission or any arbitration tribunal.
“ Affiliate ” means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. The terms “controls,” “controlled by” and “common control with” mean the ability, by ownership of voting securities or otherwise, directly or indirectly, to direct the managerial and operating policies of a Person.

“ Business ” means the ownership, management and/or operation of the Facilities, and/or rendering consulting services in connection therewith, by HCC and its Subsidiaries, including, but not limited to, the development, construction, equipping, finishing, furnishing, maintenance, operation, management, advertising, marketing and promotion of the Facilities.
“ Business Day ” means any day other than a Saturday or a Sunday or a day on which banks located in Chicago, Illinois generally are authorized or required by law or regulation to close.
“ Change of Control Event ” means, with respect to any Person, (i) the sale of all or substantially all of the assets of such Person and its Subsidiaries, taken as a whole, to one or more Persons other than PFBIs in one transaction or a series of related transactions, (ii) a merger, consolidation, refinancing or recapitalization as a result of which one or more PFBIs collectively own or control, directly or indirectly, less than a majority of the voting securities of such Person or, as applicable, the continuing or surviving entity immediately after such transaction, or (iii) the acquisition (in one or more transactions) by any Person or Persons acting together or constituting a “group” under Section 13(d) of the Exchange Act together with any Affiliates thereof (other than PFBIs) of beneficial ownership (as defined in Rule 13d-3 under such Exchange Act) or control, directly or indirectly, of at least a majority of the total voting power of all classes of securities of such Person entitled to vote generally in the election of directors or persons serving in similar functions.
“ Employee Benefits Allocation Agreement ” means that certain Employee Benefits Allocation Agreement, dated as of June 30, 2004, among Hyatt, Hyatt Gaming Management, Inc., H Group Holding, Inc., HCC, and Grand Victoria Casino & Resort, L.P.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
“ Facilities ” means those casino and certain related facilities associated with the Resort which offer games of chance, including, without limitation, slot machines, video lottery terminals, video machines, table games, “sport’s books,” bingo, racing, jai alai, and other games of chance and other endeavors that are common in gaming facilities in the respective locations in which the business of HCC is at the Effective Date or may in the future be conducted, and restaurants, bars, lounges, entertainment facilities and shopping venues and other facilities associated therewith.
“ HCC Change of Control Event ” means an Change of Control Event of HCC.
“ Hyatt Change of Control Event ” means a Change of Control Event of Hyatt or any Hyatt Parent.
“ Hyatt Parent ” means any Person of which Hyatt is a direct or indirect wholly-owned Subsidiary.
“ Insurance Proceeds ” means those moneys (i) received by an insured from an insurance carrier or (ii) paid by an insurance carrier on behalf of the insured, in either case net of any applicable premium adjustment, retrospectively-rated premium, deductible, retention, cost or reserve paid or held by or for the benefit of such insured.
 
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“ Management Agreement ” means that certain Amended and Restated Management Agreement dated as of February 1, 1997 between Hyatt Equities, L.L.C. and Hyatt Tahoe Casino Management, Inc.
“ Master Distribution Agreement ” means that certain Master Distribution Agreement, dated as of June 30, 2004, among H Group Holding, Inc., Hyatt, and CC-Development Group, Inc.
“ Person ” means an individual, a corporation, a partnership, a joint venture, a limited liability company or limited liability partnership, an association, a trust, estate or other fiduciary, any other legal entity, and any government or governmental entity.
“ Prime Rate ” means the prime interest rate as reported in The Wall Street Journal on a specified date.
“ PFBI ” includes (i) all lineal descendants of Nicholas J. Pritzker, deceased; (ii) all trusts for the benefit of any individual described in clause (i) and the trustees of such trusts; (iii) all legal representatives of any individual or trust described in clauses (i) or (ii); and (iv) all Persons controlling, controlled by or under common control with any Person described in clauses (i), (ii) or (iii).
“ Related Agreements ” means all of the agreements, instruments, assignments or other documents set forth in writing, which are entered into in connection with the transactions contemplated by the Master Distribution Agreement and, including, without limitation: the documents relating to the Preliminary Transactions (as defined in the Master Distribution Agreement), the Employee Benefits Allocation Agreement, the Tax Separation Agreement (as defined in the Master Distribution Agreement), and the Transition Services Agreements.
“ Subsidiary ” means, with respect to any Person, (a) any corporation of which at least a majority in interest of the outstanding voting stock (having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned or controlled by such Person, by one or more Subsidiaries of such Person, or by such Person and one or more of its Subsidiaries, or (b) any corporate or non- corporate entity in which such Person, one or more Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has an ownership interest and which is included in the consolidated financial reports of such Person consistent with generally accepted accounting principles.
“ Transition Services Agreements ” means (i) that certain Transition Services Agreement, dated as of June 30, 2004, between Hyatt and Hyatt Gaming Management, Inc., (ii) that certain Transition Services Agreement, dated as of June 30, 2004, between Hyatt and H Group Holding, Inc., and (iii) that certain Transition Services Agreement, dated as of June 30, 2004, between Hyatt and CC-Development Group, Inc.
 
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(b) Other Defined Terms . Capitalized terms used herein but not otherwise defined above have the meanings set forth in the sections referenced below:

Defined Term	  	Section Reference	
Agreement	  	Preamble	
Claim	  	9.1(b)	
Confidential Information	  	6.1	
Effective Date	  	Preamble	
HCC	  	Preamble	
HCC Indemnitees	  	8.2	
Hyatt	  	Preamble	
Hyatt Indemnitees	  	8.1	
Indemnifiable Loss	  	8.3	
Indemnifying Party	  	8.3	
Indemnitee	  	8.3	
Lease Agreement	  	Recitals	
Losses	  	8.1	
Party and Parties	  	Preamble	
Monthly Payment	  	3.3	
Monthly Payment Period	  	3.3	
Request for Arbitration	  	9.1(a)	
Services	  	2.1	
Third Party Claim	  	8.4	
ARTICLE II.
SERVICES
Section 2.1 Services . Subject to the provisions of Article IV and Section 2.4 hereof, during the term of this Agreement, Hyatt shall use reasonable efforts to provide, or cause to be provided, to HCC each of the services set forth on Exhibit A attached hereto (collectively, the “ Services ”) in respect of the Facilities.
Section 2.2 Independent Contractor . The relationship of Hyatt and/or any party providing services hereunder, on the one hand, to HCC, on the other hand, pursuant to this Agreement is that of an independent contractor. HCC acknowledges that Hyatt may be providing similar services, and/or services that involve the same resources as those used to provide the Services, to third parties. Hyatt may, at any time and in its sole discretion, determine the means and methods by which the Services are to be provided, including pursuant to subcontracting arrangements with third parties for the provision of any or all of the Services; provided , that Hyatt shall use reasonable efforts to provide notice to HCC in the event it (a) enters into a new subcontracting relationship for a material Service not subcontracted by Hyatt as of the Effective Date or (b) changes subcontractors with respect to a service subcontracted by Hyatt as of the date of this Agreement; provided , further , that failure by Hyatt to provide such notice shall not be a breach of this Agreement. Hyatt shall be responsible for providing all materials, tools and facilities used by Hyatt to provide the Services. This Agreement is not
 
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intended to create and shall not be construed as creating between Hyatt or any of its Affiliates, on the one hand, and HCC or any of its Affiliates, on the other hand, any relationship other than as an independent contractor and purchaser of contract services, it being specifically acknowledged that there is no relationship between the parties of affiliate, principal and agent, joint venture, partnership, or similar relationship any relationship that imposes or implies any fiduciary duty, including, without limitation, any duty of care or duty of loyalty.
Section 2.3 Service Levels . The Services shall be provided at commercially reasonable levels of quality, care and service.
Section 2.4 Termination of One or More Services . Notwithstanding Section 4.1 hereof, HCC shall have the right at any time during the term of this Agreement to terminate or reduce HCC’s use of any one or more of the Services, for any reason or no reason, upon no less than thirty (30) days’ prior written notice to Hyatt.
Section 2.5 Audit of Services . Upon reasonable request during normal business hours, each Party shall permit the other Party or its representatives to examine and make copies and abstracts from its books and records solely related to the Services for the purpose of auditing the charges under the terms of this Agreement and/or generally reviewing the Services provided and consumed hereunder. All costs and expenses of such inspection shall be borne by the inspecting Party.
Section 2.6 Record-Keeping . Each of Hyatt and HCC agrees to retain all books and records with respect to matters relating to the Services in accordance with Hyatt’s Records Retention Policy as in effect from time to time. Hyatt will provide HCC with a copy of its record retention policies in effect as of the date of this Agreement, and thereafter, shall use reasonable efforts to provide HCC with notice of material modifications to such policies in a timely manner. HCC may request that Hyatt make specific exceptions to its record retention policies, and Hyatt will use reasonable efforts to accommodate such requests. Notwithstanding the foregoing, each Party agrees to use reasonable efforts to give the other Party reasonable written notice prior to transferring (other than for storage purposes and in connection with the Services), destroying or discarding any books and records of the other, and, if the other Party so requests, Hyatt and HCC shall, and shall cause their Affiliates, as applicable, to allow the other Party to take possession of such books and records or copies thereof.
Section 2.7 Use of Services . HCC covenants and agrees that it will not resell any Service; provided , however , such Services may be resold or passed through by it in connection with the conduct of the Business and the Facilities consistent with past practice. HCC further covenants and agrees that it will not use any Service in any way other than in connection with the conduct of the Business, except as may otherwise be determined by mutual written agreement of the Parties.
Section 2.8 Priority of Lease Agreement . The Parties acknowledge and agree that (a) to the extent any provision of this Agreement conflicts with any provision of the Lease Agreement, the Lease Agreement shall govern to the extent necessary to resolve the conflict, and (b) in the event any Services are also services provided pursuant to the terms of the Lease Agreement, they shall be provided in accordance with such terms and conditions of the Lease Agreement and not pursuant to terms of this Agreement.
 
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Section 2.9 Priority of Employee Benefits Allocation Agreement . The Parties acknowledge and agree that (a) to the extent any provision of this Agreement conflicts with any provision of the Employee Benefits Allocation Agreement, the Employee Benefits Allocation Agreement shall govern to the extent necessary to resolve the conflict, and (b) in the event any Services are also services to be provided pursuant to the terms of the Employee Benefits Allocation Agreement, they shall be provided in accordance with such terms and conditions of the Employee Benefits Allocation Agreement and not pursuant to terms of this Agreement.
Section 2.10 Priority of Master Distribution Agreement . The Parties acknowledge and agree that (a) to the extent any provision of this Agreement conflicts with any provision of the Master Distribution Agreement, the Master Distribution Agreement shall govern to the extent necessary to resolve the conflict, and (b) in the event any Services are also services to be provided pursuant to the terms of the Master Distribution Agreement, they shall be provided in accordance with such terms and conditions of the Master Distribution Agreement and not pursuant to terms of this Agreement.
Section 2.11 Priority of Transition Services Agreements . The Parties acknowledge and agree that (a) to the extent any provision of this Agreement conflicts with any provision of any of the Transition Services Agreements, such Transition Services Agreement shall govern to the extent necessary to resolve the conflict, and (b) in the event any Services are also services to be provided pursuant to the terms of any of the Transition Services Agreements, they shall be provided in accordance with such terms and conditions of such Transition Services Agreement and not pursuant to terms of this Agreement.
Section 2.12 Names; Trademarks . This Agreement does not confer upon either Party the right to use any name, trademark, service mark, trade name, or assumed name of the other Party.
ARTICLE III.
FEES AND EXPENSES
Section 3.1 Fees and Expenses . HCC shall pay fees and expenses for the Services in the amounts set forth on Exhibit A attached hereto. The Parties agree to review the fees and expenses set forth on Exhibit A annually and, subject to the mutual agreement of the Parties, adjust such fees and expenses as the Parties deem necessary.
Section 3.2 Timing of Payment . Hyatt shall invoice HCC for fees and expenses incurred pursuant to Section 3.2 within thirty (30) days of the last day of each calendar month during the term of this Agreement (each, a “ Monthly Payment Period ” and with respect to each payment, a “ Monthly Payment ”), and HCC shall pay the amount reflected on the invoice within thirty (30) days of the receipt thereof. If this Agreement is terminated on a date other than the last day of a Monthly Payment Period, then within (30) days of such termination, Hyatt shall invoice HCC for any accrued but unpaid fees through the date of termination and HCC shall pay such fees within thirty (30) days of receipt of the invoice. Late payments shall bear interest at a rate of the Prime Rate, which shall be
 
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determined as of the date of invoice (or the next Business Day, if the invoice is dated as of a non-Business Day), plus two percent (2%). Interest on late payments shall accrue from the date of the invoice (or the next Business Day, if the invoice is dated as of a non-Business Day).
Section 3.3 No Offset . HCC shall pay all fees and expenses under this Agreement independently of any fees, expenses or other obligations existing under the Lease Agreement, and no offset or claim that HCC now has or may in the future have against Hyatt shall relieve HCC from making any Monthly Payment hereunder.
ARTICLE IV.
TERM; TERMINATION
Section 4.1 Term . The Services shall be provided during the period from and including the Effective Date until the earlier of (a) the termination of this Agreement pursuant to Section 4.2 , (b) the termination or expiration of the Lease Agreement in accordance with the provisions thereof, or (c) the termination or expiration of the Management Agreement with respect to the Resort in accordance with the provisions thereof.
Section 4.2 Termination .
(a) Notwithstanding Section 4.1 hereof, HCC shall have the right at any time during the term of this Agreement to terminate this Agreement upon no fewer than thirty (30) days prior written notice if it terminates all of the Services to be provided hereunder pursuant to Section 2.4 .
(b) Notwithstanding Section 4.1 hereof, Hyatt shall have the right at any time during the term of this Agreement to terminate this Agreement (i) if HCC fails to pay, or cause to be paid, any expense for which it has received an invoice pursuant to Section 3.1 or any Monthly Payment pursuant to Section 3.3 within thirty (30) days following HCC’s receipt of written notice of non-payment, or (ii) upon consummation of a HCC Change of Control Event; provided , however , that in each case Hyatt shall provide no fewer than forty-five (45) days prior written notice of such termination, and in the case of (ii) above, such longer period (not to exceed ninety (90) days) as may be necessary or appropriate for the orderly transfer of the Services.
Section 4.3 Effect of Termination . In the event of a termination of this Agreement pursuant to Section 4.2 hereof, all obligations of Hyatt and HCC under this Agreement shall terminate, except that the obligations set forth in Section 2.5 (Audit of Services), Section 2.6 (Record-Keeping), Article III (Fees and Expenses), Section 6.1 (Confidentiality), Article VII (Limitation on Damages; Liability), Article VIII (Indemnification), Article IX (Arbitration), Article X (Miscellaneous) and this Section 4.3 will survive such termination unimpaired.
ARTICLE V.
INTELLECTUAL PROPERTY
Section 5.1 Third Party Intellectual Property Licenses . Each Party, at its own expense, shall obtain all third party intellectual property licenses necessary for the operation of the Business or for the provision or receipt of the Services which are not otherwise included as part of the Services described on Exhibit A. The Parties shall cooperate in the necessary identification and specification of software, systems and other intellectual property required for the receipt of the Services by HCC.
 
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ARTICLE VI.
CONFIDENTIALITY
Section 6.1 Confidentiality . In consideration of the benefits of this Agreement to each of the Parties and in order to induce each Party to enter into this Agreement, each Party hereby individually covenants and agrees that such Party and its Affiliates shall keep confidential and not disclose to any other Person or use to the detriment of the other Party any Confidential Information of another Party. The term “ Confidential Information ” means proprietary and confidential information concerning the Business, business relationships (including prospective customers and business partners) and financial affairs of any of HCC, Hyatt, or such Parties’ respective Affiliates, whether or not in writing and whether or not labeled or identified as confidential or proprietary, and includes inventions, trade secrets, technical information, know-how, product and pricing information and plans, research and development activities, marketing plans and activities, customer, guest, resident, supplier and prospect information, employee and financial information, and information disclosed to HCC or Hyatt, respectively, by third parties of a proprietary or confidential nature or under an obligation of confidence. Notwithstanding the forgoing, Confidential Information shall not apply to information which: (a) is or becomes generally available to the public without breach of the commitment provided for in this Section 6.1 , (b) is developed by a Party independently without the use of Confidential Information, (c) is or becomes available on a non-confidential basis from a source other than the other Party or its advisors; provided that such source was not known to the disclosing Party to be bound by any agreement with the other Party to keep such information confidential or to be otherwise prohibited from transmitting the information, (d) is used in a manner contemplated by this Agreement or any of the Related Agreements, (e) is used by a Party to enforce this Agreement, or (f) is required to be disclosed by law, order or regulation of a court or tribunal or government authority; provided , however , that in the case of disclosure under clause (f), the disclosing Party shall notify the non-disclosing Party as early as reasonably practicable prior to disclosure to allow such non-disclosing Party to take appropriate measures to preserve the confidentiality of such information. Each Party agrees to safeguard the other Party’s Confidential Information with the same degree of care used by such Party to protect its own Confidential Information of this kind, but in no event less than a reasonable degree of care, and each Party shall comply with all applicable laws and regulations relating to privacy and protection of personal information.
ARTICLE VII.
LIMITATION ON DAMAGES; LIABILITY
Section 7.1 Limitation of Damages . No Party shall be liable to the other Party or any recipient of the Services, whether in contract, in tort (including negligence and strict liability), or otherwise, for consequential, special, incidental or punitive damages, which in any way arise out of, relate to, or are a consequence of, this Agreement, including, but not limited to loss of profits, business interruptions and claims of customers or employees of HCC or Hyatt and their respective Affiliates, as applicable.
 
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Section 7.2 Limitation of Liability .
(a) Hyatt shall not be liable for any action or failure to act in performing its obligations hereunder, unless such action or failure to act results from Hyatt’s gross negligence or willful misconduct.
(b) Notwithstanding anything to the contrary contained herein, the total liability of Hyatt with respect to this Agreement or anything done in connection herewith, including, but not limited to, the performance or breach hereof, or from the sale, delivery, provision or use of any of the Services provided under or pursuant to this Agreement, whether in contract, in tort (including negligence and strict liability) or otherwise, shall not exceed the amount Hyatt has received in payments pursuant to Section 3.1 and Section 3.2 of this Agreement for the provision of Services hereunder.
ARTICLE VIII.
INDEMNIFICATION
Section 8.1 Indemnification of Hyatt . HCC hereby agrees to indemnify and hold harmless Hyatt and its Affiliates, and their respective officers, directors, managers, employees, equityholders, agents and representatives (collectively, the “ Hyatt Indemnitees ”) from and against any and all claims, losses, damages, liabilities, deficiencies, obligations or out-of-pocket costs or expenses, including, without limitation, reasonable attorneys’ fees and expenses and costs and expenses of investigation that result directly from third party claims, actions or proceedings (collectively, “ Losses ”), arising out of or resulting from (a) any breach of this Agreement by HCC, or (b) such Hyatt Indemnitee’s provision of any Services hereunder, except to the extent such Losses result directly from the willful breach of this Agreement by Hyatt or the gross negligence or willful misconduct of such Hyatt Indemnitee in the performance of any obligations hereunder.
Section 8.2 Indemnification of HCC . Hyatt hereby agrees to indemnify and hold harmless HCC and its respective Affiliates, officers, directors, managers, employees, equityholders, agents and representatives (collectively, the “ HCC Indemnitees ”) from and against any and Losses, arising out of or resulting from (a) any willful breach of this Agreement by Hyatt, or (b) the gross negligence or willful misconduct of any Hyatt Indemnitee in the performance of any obligations hereunder.
Section 8.3 Insurance Proceeds . The amount which any Party (an “ Indemnifying Party ”) is or may be required to pay to any Hyatt Indemnitee or HCC Indemnitee (each, an “ Indemnitee ”) pursuant to this Article VIII shall be reduced (including, without limitation, retroactively) by any Insurance Proceeds or other amounts actually recovered by or on behalf of such Indemnitee in reduction of the related indemnifiable losses, liabilities and damages, whether under Section 8.1 or Section 8.2 (each, an “ Indemnifiable Loss ”). An Indemnitee shall use reasonable efforts to obtain such recoveries. An Indemnifying Party shall be subrogated, as appropriate, to the rights of any Indemnitee under such insurance policies held by the Indemnitee, it being understood and agreed that if an Indemnitee shall have received the payment required by this Agreement from an Indemnifying Party in respect of an Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds, or other amounts from third parties in respect of such Indemnifiable Loss as specified above, then such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount of such Insurance Proceeds or other amounts actually received.
 
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Section 8.4 Indemnification Procedure .
(a) Except as may be set forth in this Agreement, if an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including, without limitation, any governmental entity) who is not a Party to this Agreement of any claim or of the commencement by any such Person of any Action with respect to which an Indemnifying Party may be obligated to provide indemnification pursuant to this Agreement (a “ Third Party Claim ”), such Indemnitee shall give such Indemnifying Party written notice thereof promptly after becoming aware of such Third Party Claim; provided , that the failure of any Indemnitee to give notice as required by this Section 8.4 shall not relieve the Indemnifying Party of its obligations under this Article VIII , except to the extent that such Indemnifying Party is materially prejudiced by such failure to give notice. Such notice shall describe the Third Party Claim in reasonable detail, and shall indicate the amount (estimated if necessary) of the Indemnifiable Loss that has been or may be sustained by such Indemnitee.
Within thirty (30) days of the receipt of notice from an Indemnitee in accordance with Section 8.4(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall, if the Indemnitee is entitled to indemnification hereunder, notify the Indemnitee of the Indemnifying Party’s election whether to assume responsibility for such Third Party Claim (provided that if the Indemnifying Party does not so notify the Indemnitee of the Indemnifying Party’s election within thirty (30) days after receipt of such notice from the Indemnitee, the Indemnifying Party shall be deemed to have elected not to assume responsibility for such Third Party Claim). If the Indemnifying Party assumes such responsibility, the Indemnitee shall cooperate in the defense or settlement or compromise of such Third Party Claim. After notice from an Indemnifying Party to an Indemnitee of its election to assume responsibility for a Third Party Claim, such Indemnifying Party shall not be liable to such Indemnitee under this Article VIII for any legal or other expenses (except expenses approved in advance by the Indemnifying Party) subsequently incurred by such Indemnitee in connection with the defense thereof; provided, that if the defendants in any such claim include both the Indemnifying Party and one or more Indemnitees, and, in such Indemnitees’ reasonable judgment a conflict of interest between such Indemnitees and such Indemnifying Party exists in respect of such claim, such Indemnitees shall have the right to employ separate counsel and in that event the reasonable fees and expenses of such separate counsel (but not more than one separate counsel reasonably satisfactory to the Indemnifying Party) shall be paid by such Indemnifying Party. The Indemnifying Party shall not, without the written consent of the Indemnitee (which shall not be unreasonably withheld or delayed), (i) settle or compromise any Third Party Claim or consent to the entry of any judgment which (A) does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release from all liability in respect of such Third Party Claim or (B) includes an admission of fault, culpability or a failure to act by or on behalf of an Indemnitee or (ii) settle or compromise any Third Party Claim if the settlement imposes equitable remedies or material obligations on the Indemnitee other than financial obligations for which such Indemnitee will be indemnified hereunder. No Third Party Claim which is being defended in good faith by the Indemnifying Party in accordance with
 
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the terms of this Agreement shall be settled or compromised by the Indemnitee without the written consent of the Indemnifying Party (which shall not be unreasonably withheld or delayed) if such settlement or compromise would result in an obligation of the Indemnifying Party to indemnify such Indemnitee, or would otherwise result in Liability of, or have an adverse impact upon, such Indemnifying Party. If an Indemnifying Party fails to assume responsibility for a Third-Party Claim, such Indemnitee may defend or seek to compromise or settle such Third-Party Claim.
(b) If an Indemnifying Party is defending or seeking to compromise any Third Party Claim, the Indemnitee shall make available to such Indemnifying Party any personnel and any (non-privileged) books, records or other documents within its control or which it otherwise has the ability to make available that are necessary or appropriate for such defense.
(c) Any claim on account of an Indemnifiable Loss which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to the applicable Indemnifying Party. Such Indemnifying Party shall have a period of fifteen (15) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 15-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to it party under applicable law or under this Agreement.
(d) In addition to any adjustments required pursuant to Section 8.3 , if the amount of any Indemnifiable Loss shall, at any time subsequent to the payment required by this Agreement, be reduced by recovery, settlement or otherwise, the amount of such reduction, less any expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party.
(e) In the event of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.
Section 8.5 Remedies Cumulative . The remedies provided in this Article VIII shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.
Section 8.6 Survival of Indemnities . The obligations of each of Hyatt and HCC under this Article VIII shall survive the sale or other transfer by it of any assets or businesses or the assignment by it of any liabilities, with respect to any Indemnifiable Loss of any of the other of them related to such assets, businesses or liabilities.
 
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ARTICLE IX.
ARBITRATION
Section 9.1 Arbitration .
(a) Except as otherwise specifically provided in this Agreement, any and all disputes, controversies or claims arising out of, relating to or in connection with this Agreement, including, without limitation, any dispute regarding its arbitrability, validity or termination, or the performance or breach thereof, shall be exclusively and finally settled by arbitration administered by the AAA. Either Party may initiate arbitration by notice to the other Party (a “ Request for Arbitration ”). The arbitration shall be conducted in accordance with the AAA rules governing commercial arbitration in effect at the time of the arbitration, except as they may be modified by the provisions of this Agreement. The place of arbitration shall be Chicago, Illinois. The arbitration shall be conducted by a single arbitrator appointed by HCC from a list of at least five (5) individuals who are independent and qualified to serve as an arbitrator submitted by Hyatt to HCC within fifteen (15) days after delivery of the Request for Arbitration. HCC will make its appointment within ten (10) days after it receives the list of qualified individuals from Hyatt. In the event Hyatt fails to send a list of at least five (5) qualified individuals to serve as arbitrator to HCC within such fifteen-day time period, then HCC shall appoint such arbitrator within twenty-five (25) days from the Request for Arbitration. In the event HCC fails to appoint a person to serve as arbitrator from the list of at least five (5) qualified individuals within ten (10) days after its receipt of such list from Hyatt, Hyatt shall appoint one of the individuals from such list to serve as arbitrator within five (5) days after the expiration of such ten (10) day period. Any individual will be qualified to serve as an arbitrator if he or she shall be an individual who has no material business relationship, directly or indirectly, with either of the Parties and who has at least ten (10) years of experience in the practice of law with experience in corporate and/or commercial matters. The arbitration shall commence within thirty (30) days after the appointment of the arbitrator; the arbitration shall be completed within sixty (60) days of commencement; and the arbitrator’s award shall be made within thirty (30) days following such completion. The Parties may agree to extend the time limits specified in the foregoing sentence.
(b) The arbitrator will apply the substantive law (and the law of remedies, if applicable) of the State of Illinois without giving effect to the principles of conflicts of law, and will be without power to apply any different substantive law. The arbitrator will render an award and a written opinion in support thereof. Such award shall include the costs related to the arbitration and reasonable attorneys’ fees and expenses to the prevailing Party. The arbitrator also has the authority to grant provisional remedies, including injunctive relief, and to award specific performance. The arbitrator may entertain a motion to dismiss and/or a motion for summary judgment by any Party, applying the standards governing such motions under the Federal Rules of Civil Procedure, and may rule upon any claim or counterclaim, or any portion thereof (a “ Claim ”), without holding an evidentiary hearing, if, after affording the Parties an opportunity to present written submissions and documentary evidence, the arbitrator concludes that there is no material issue of fact and that the Claim may be determined as a matter of law. The Parties waive, to the fullest extent permitted by law, any rights to appeal, or to review of, any arbitrator’s award by any court. The arbitrator’s award shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction, including the courts of Cook County, Illinois. Each Party to this Agreement irrevocably submits to the non-exclusive jurisdiction of and venue in the courts of the State of Illinois and of the United
 
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States sitting in Chicago, Illinois in connection with any such proceeding, and waives any objection based on forum non conveniens. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES SUCH PARTY’S RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY ACTION TO ENFORCE AN ARBITRATOR’S DECISION OR AWARD PURSUANT TO SECTION 9.1(a) OF THIS AGREEMENT.
(c) The Parties agree to maintain confidentiality as to all aspects of the arbitration, except as may be required by applicable law, regulations or court order, or to maintain or satisfy any suitability requirements for any license by any state, federal or other regulatory authority or body, including professional societies and organizations; provided that nothing herein shall prevent a Party from disclosing information regarding the arbitration for purposes of enforcing the award. The Parties further agree to obtain the arbitrator’s agreement to preserve the confidentiality of the arbitration.
Section 9.2 Injunction . Nothing in this Agreement will prevent either Party from seeking injunctive relief against the other Party from any competent court or other authority pending the resolution of a controversy or claim through arbitration.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Force Majeure . Neither Hyatt nor HCC shall be considered in default in the performance of its obligations under this Agreement to the extent that its performance of such obligations is prevented or delayed by any cause beyond its control, including, but not limited to, strikes, labor disputes, civil disturbances, rebellion, invasion, epidemic, hostilities, war, acts of terrorism, embargo, natural disaster, acts of God, fire, sabotage, loss and destruction of property, other events or situations which such Party was unable to prevent or overcome despite its exercise of reasonable due diligence.
Section 10.2 Amendment and Modification . This Agreement may be amended, modified or supplemented, only by a written agreement signed by each of the Parties.
Section 10.3 Waiver of Compliance; Consents . Any failure of HCC, on the one hand, or Hyatt, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by Hyatt or HCC, respectively, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
Section 10.4 Notices . All notices and other communications hereunder shall be in writing and shall be duly given when delivered in person, by facsimile (with a confirmed receipt thereof) by messenger or courier service or registered or certified mail (postage prepaid, return receipt requested), at the following addresses (or at such other address for a party as shall be specified by like notice):
Prior to February 1, 2005 :
If to HCC, to:
c/o Hyatt Gaming Management, Inc.
HCC Corporation
200 West Madison, Suite 4200
Chicago, Illinois 60606
Attention: General Counsel
 
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If to Hyatt, to:
Hyatt Corporation
200 West Madison, Suite 4100
Chicago, Illinois 60606
Attention: General Counsel
On or after to February 1, 2005 :
If to HCC, to:
c/o Hyatt Gaming Management, Inc.
HCC Corporation
Hyatt Center
71 South Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
If to Hyatt:
Hyatt Corporation
Hyatt Center
71 South Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel
Section 10.5 Assignment . Neither this Agreement nor any rights or obligations hereunder are assignable; provided , however , that Hyatt may subcontract its duties and obligations under this Agreement.
Section 10.6 Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the state of Illinois applicable to agreements made and to be performed entirely within such state, without regard to the choice of law principles thereof; provided , however , that the provisions hereof that be subject, in all respects, to the gaming regulatory bodies in
 
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the respective jurisdictions in which the Business is or may be conducted. To the extent that the rulings or regulations of any one or more of such regulatory bodies is inconsistent in any material respect with the express provisions hereof, the Parties agree to negotiate in good faith to address the implications of all of such rulings and regulations, such that the intents and purposes of this Agreement are preserved, failing which this Agreement and the rights and obligations of the Parties shall terminate, in whole or in part, as the case may be.
Section 10.7 Further Assurances . The Parties shall use their commercially reasonable efforts to do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments or documents as any other Party may reasonably request in order to carry out the intent and purposes of this Agreement and the consummation of the transactions contemplated hereby.
Section 10.8 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 10.9 Interpretation . The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. The Parties are sophisticated, represented by counsel and jointly have participated in the negotiation and drafting of this Agreement and there shall be no presumption or burden of proof favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
Section 10.10 Entire Agreement . This Agreement (including the Schedules and Annexes referred to herein), embodies the entire agreement and understanding of the Parties hereto in respect of the subject matter hereof and thereof and, except as otherwise explicitly provided herein, supersedes all prior agreements and understandings, both written and oral, among the Parties, or between any of them, with respect to the subject matter hereof and thereof.
Section 10.11 No Third Party Beneficiary . Nothing in this Agreement, express or implied, is intended to confer upon any Person other than the Parties any rights or remedies of any nature whatsoever under or by reason of this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the Parties and their respective successors and permitted assigns.
Section 10.12 Severability . If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the remaining portion thereof) or the application of such provision to any other Persons or circumstances.
Signature page follows .
 
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf by its officer thereunto duly authorized, as of the day and year first above written.

HYATT CORPORATION	
		
By:	 	/s/ Kirk Rose	
Name: 	 	Kirk Rose	
Title:	 	Senior Vice President Finance and Treasurer	
	
HCC CORPORATION	
		
By:	 	/s/ Peter Liguori	
Name:	 	Peter Liguori	
Title:	 	Vice President Finance	

Exhibit A
Services & Fees

Service	  	Methodology Summary	  	Current Fee	
			
Hotel Rooms	  	Annually agreed to rate schedule and provision for no shows and early departure	  	Rates for 2004 set forth on Annex A attached hereto	
			
Transportation from Resort to Common Locations	  	Agreed to flat fee per type of trip	  	$45 per airport trip
$15 per Incline Village trip	
			
Valet Parking	  	No charge	  	No charge	
			
Housekeeping	  	Actual usage of staff (including a percentage of payroll, taxes and employee benefits (“ PTEB ”) and operating supplies	  	100% of salary of 2 full-time supervisors and 4 full-time porters, plus 50% PTEB and operating supplies	
			
Food & Beverage	  	Agreed to price points for banquets and all outlets, including a provision for no-shows	  	Banquets – retail prices less 25%
All outlets – retail prices
No-shows – billed based upon daily average check	
			
Security	  	Portion of supervision of function and actual number of staff assigned to casino	  	50% of security director’s salary and salary of 10 full-time officers, plus 50% of PTEB	
			
Accounting/ Human Resources/MIS (back of house support for casino)	  	HCC employees as a percentage of total Resort employees (including the HCC employees). This percentage to be applied against costs for back of house support areas that HCC agrees provides support. Costs to include PTEB costs.	  	25% of FTE percentage for payroll, accounts payable, general ledger staff (non-supervision), MIS and HR payroll, plus 50% PTEB and any ancillary fees related to the services provided	
			
Advertising	  	Casino specific advertising approved in advance by HCC will be direct charged to HCC. Any shared or proportional sharing of costs will be agreed to ahead of time and approved by both parties.	  	Actual invoices from pre-approved casino-specific advertising or, in the case of any shared advertising, a percentage of such invoices as approved in advance by HCC.	
			
Repairs & Maintenance	  	Based on approved work orders which will include labor, benefits and parts.	  	Based on signed work orders	
			
PBX	  	Agreed to percentage based on the total number of phones in the casino compared to the total number of phones in the Resort (including the casino). This percentage is to be applied to total PBX expenses.	  	6% of total PBX expenses	
			
Employee Meals	  	Agreed to cost per meal multiplied by the estimated number of annualized shifts	  	$5 per meal multiplied by the estimated number of annualized shifts	
			
Spa Services	  	Retail prices	  	Retail prices	

Annex A
2004 Hotel Room Rates

 	  	 	  	Non-Peak	  	Peak	
 	  	 	  	1/4/04-5/27/04 & 9/12/04-12/16/04	  	5/28/04-9/11/04 & 12/17/04-1/5/05	
#	  	Room Type	  	Casino
<93%	  	Casino
>93%	  	Var	  	Casino
<93%	  	Casino
>93%	
							
119	  	Mountain View Room – Tower	  	130	  	185	  	55	  	195	  	260	
117	  	Spa Terrace Room	  	130	  	185	  	55	  	195	  	260	
22	  	Lakeside Dbl/Dbl Bedroom	  	165	  	220	  	55	  	230	  	295	
18	  	Tahoe Room – Spa Exec. King	  	165	  	220	  	55	  	230	  	295	
27	  	Exec. King – Tower Floors	  	165	  	220	  	55	  	230	  	295	
43	  	Regency Club Room	  	165	  	220	  	55	  	230	  	295	
40	  	Lake View Room – Tower	  	165	  	220	  	55	  	230	  	295	
3	  	Stillwater Suite	  	230	  	330	  	100	  	340	  	460	
8	  	1-Bedroom VIP Suite/Parlor	  	230	  	330	  	100	  	340	  	460	
22	  	1-Bedroom Lakeside Cottage	  	250	  	400	  	150	  	370	  	700	
2	  	1-Bedroom RC Presidential	  	360	  	510	  	150	  	540	  	720	
22	  	2-Bedroom Lakeside Cottage	  	400	  	600	  	200	  	600	  	1000	
 
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Exhibit 10.34
MASTER (PERMANENT) NON-GAMING SERVICES AGREEMENT
by and between
FALLS MANAGEMENT COMPANY
AND
HYATT CORPORATION
For a Casino Located in
NIAGARA FALLS, ONTARIO

MASTER (PERMANENT) NON-GAMING SERVICES AGREEMENT
MASTER (PERMANENT) NON-GAMING SERVICES AGREEMENT (this “Agreement”) dated as of July 19, 2002, by and between FALLS MANAGEMENT COMPANY, a Nova Scotia unlimited liability company (“FMC”), whose office is at 2300 Yonge Street, Suite 409, Toronto, Ontario, M4P IE4, Canada, and HYATT CORPORATION, a Delaware corporation (“HC”), whose office is at 200 West Madison Street, 39th Floor, Chicago, Illinois 60606, USA, (capitalized and other terms used herein and not otherwise defined shall have the meanings set forth in Section 1 hereof).
WITNESSETH:
WHEREAS OLGC has the right under the OLGC Act to conduct and manage commercial casino gaming in the Province of Ontario and to provide for the operation of such casinos in the Province of Ontario;
WHEREAS OLGC and FMC are parties to the Permanent Agreement relating to the operation of the Casino Complex currently under construction in the City of Niagara Falls, Ontario to be owned, and, from and after the Opening Date, managed by OLGC;
WHEREAS FMC and HC desire to enter into the agreement contained herein whereby HC, pursuant to the terms and conditions hereof, will provide certain Complex Services, Ancillary Support Services and Other Ancillary Support Services to FMC in order to assist FMC in carrying out its duties and responsibilities under the Permanent Agreement with respect to the Casino Complex in accordance with the terms and conditions of this Agreement; and
WHEREAS the parties acknowledge that this Agreement is being entered into in connection with the Master/Development Agreement.
NOW THEREFORE , in consideration of the foregoing, of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, hereby agree as follows:
 
1.	DEFINITIONS	
For purposes of this Agreement (including the above Recitals), the following terms shall have the meanings set forth below:
 
 	(a)	“Adjusted Gross Receipts” means, with respect to any Operating Year, the Gross Revenues of the Casino Complex as an entirety without distinction among its several parts (excluding any Gross Revenues relating to Complex operations for which HC, HGM or any Affiliate of either of them does not provide services) for such Operating Year less any applicable Ontario “win tax” remitted by FMC for such Operating Year.	
 
 	(b)	“Affiliate” has the meaning set forth in the Permanent Agreement.	

 	(c)	“Ancillary Support Fee” has the meaning set forth in Section 5.1(b).	
 
 	(d)	“Ancillary Support Services” has the meaning set forth in Section 3.2(b).	
 
 	(e)	“Approved Operating Budget” has the meaning set forth in the Permanent Agreement.	
 
 	(f)	“Auditors” has the meaning set forth in the Permanent Agreement.	
 
 	(g)	“Bank Accounts” has the meaning set forth in the Permanent Agreement.	
 
 	(h)	“Base Fee” has the meaning set forth in Section 5.1(a).	
 
 	(i)	“Casino” has the meaning set forth in the Permanent Agreement.	
 
 	(j)	“Casino Complex” has the meaning set forth in the Permanent Agreement.	
 
 	(k)	“Casino Complex Employee” means any person engaged by FMC as an employee of FMC or a subsidiary thereof to work in the Casino Complex from time to time.	
 
 	(l)	“Compensation” means the entire entitlement of cash remuneration and non-cash fringe benefits of any Casino Complex Employee, including benefits in-kind and any social benefits, social security or other contributions paid to or in respect of any Casino Complex Employee.	
 
 	(m)	“Complex Services” has the meaning set forth in Section 3.2(a).	
 
 	(n)	“Dispute” has the meaning set forth in Section 9.1.	
 
 	(o)	“Event of Insolvency” has the meaning set forth in the Permanent Agreement.	
 
 	(p)	“Executive Staff’ has the meaning set forth in the Permanent Agreement.	
 
 	(q)	“Expert” has the meaning set forth in Section 9.1.	
 
 	(r)	“Fees” has the meaning set forth in Section 5.1.	
 
 	(s)	“Force Majeure” has the meaning set forth in the Permanent Agreement.	
 
 	(t)	“Games of Chance” has the meaning set forth in the Permanent Agreement.	
 
 	(u)	“Governmental Authority” has the meaning set forth in the Permanent Agreement.	
 
 	(v)	“Governmental Consent” has the meaning set forth in the Permanent Agreement.	
 
 	(w)	“Gross Revenues” has the meaning set forth in the Permanent Agreement.	
 
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 	(x)	“HGM” means Hyatt Gaming Management, Inc., a Nevada corporation and currently an Affiliate of HC.	
 
 	(y)	“Intellectual Property” has the meaning set forth in the Permanent Agreement.	
 
 	(z)	“Mater/Development Agreement” means the Amended and Restated Master Development Agreement dated as of January 29, 2002 between OLGC and FMC and all Schedules thereto.	
 
 	(aa)	“Mediation Period” has the meaning set forth in Section 9.1.	
 
 	(bb)	“Niagara” means Niagara Casino Group, L.P , a Delaware limited partnership, and a Shareholder of FMC and a party to the Shareholders Agreement.	
 
 	(cc)	“OLGC” means Ontario Lottery and Gaming Corporation, a corporation established pursuant to the OLGC Act.	
 
 	(dd)	“ OLGC Act ” means the Ontario Lottery and Gaming Corporation Act, 1999 .	
 
 	(ee)	“Opening Date” has the meaning set forth in the Permanent Agreement.	
 
 	(ff)	“Operating Term” has the meaning set forth in Section 2.1.	
 
 	(gg)	“Operating Year” has the meaning set forth in the Permanent Agreement.	
 
 	(hh)	“Other Ancillary Support Fee” has the meaning set forth in Section 5.1(c).	
 
 	(ii)	“Other Ancillary Support Services” has the meaning set forth in Section 3.2(c).	
 
 	(jj)	“Participants Support Agreement” means the Participants’ and Shareholders’ Support Agreement, dated as of January 29, 2002, by and among OLGC, FMC, the shareholders of FMC and certain Affiliates of the respective shareholders of FMC.	
 
 	(kk)	“Permanent Agreement” means the Permanent Casino Operating Agreement dated as of July 19, 2002 between OLGC and FMC and all Schedules thereto.	
 
 	(ll)	“Person” has the meaning set forth in the Permanent Agreement.	
 
 	(mm)	“Regulatory Legislation” means the Gaming Control Act , 1992 and the Alcohol and Gaming Regulation and Public Protection Act , 1996 (Ontario), and all regulations made thereunder and all mandatory directives and orders issued thereunder or pursuant thereto, all as amended from time to time.	
 
 	(nn)	“Shareholders Agreement” means the Shareholders Agreement made as of November 1, 1998 among Niagara, Highland Gaming, Inc., Shiplake Gaming Corporation, Olympic V Inc. and FMC, as assumed and amended by Assumption/Amending Agreement made as of May 22, 2001 among each of the aforesaid parties and 3048505 Nova Scotia Company, as the same may hereafter be further amended.	
 
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2.	OPERATING TERM	
2.1 General . The term of this Agreement (the “Operating Term”) shall commence upon the date hereof and expire upon the termination of the Permanent Agreement (following any renewals) for any reason, unless terminated sooner pursuant to Sections 2.2, 2.3, 7.2 or 7.4 or other provision of this Agreement expressly providing therefor. Except as set forth in Sections 2.2, 2.3, 7.2 and 7.4 or any other provision of this Agreement expressly providing therefor, no party shall have the right to terminate this Agreement.
2.2 HC’s Right to Terminate . In addition to its rights under Section 7.2 but subject to Section 2.4, HC shall have the right to terminate this Agreement at any time by giving at least 60 days’ written notice of its intention to terminate, if FMC and/or HC cannot obtain any Governmental Consent necessary to enable FMC or HC (as the case may be) to fulfill its obligations under this Agreement. HC shall (i) use its reasonable best efforts to obtain and maintain any such Governmental Consent required to be obtained by HC and (ii) advise and assist FMC in connection with any Governmental Consent required to be obtained by FMC.
2.3 FMC’s Right to Terminate . In addition to its rights under Section 7.2 but subject to Section 2.4, FMC shall have the right to terminate this Agreement at any time by giving at least 60 days’ written notice of its intention to terminate if FMC and/or HC cannot obtain any Governmental Consent necessary to enable FMC or HC (as the case may be) to fulfill its obligations under this Agreement. FMC shall use its reasonable best efforts to obtain and maintain any such Governmental Consent required to be obtained by FMC.
2.4 Effect of Termination . In the event that HC or FMC elects to terminate this Agreement pursuant to Section 1(nn) or Section 2.3, as applicable, its sole remedy hereunder shall be such right of termination and no party shall have any right of action or claim pursuant to this Agreement against the other party for any damages of any nature whatsoever suffered as a result of such termination.
 
3.	OPERATION OF THE COMPLEX	
3.1 Standard of Operation . HC shall provide such Complex Services as FMC shall reasonably request in order to enable FMC to discharge its obligations as respects Complex Services under the Permanent Agreement, and HC shall provide the services described herein in such manner as to enable FMC to perform its duties and obligations in accordance with the laws of Canada and Ontario, including the Criminal Code (Canada), the OLGC Act and the Regulatory Legislation. Without limitation of the foregoing, HC covenants to initiate the provision of such Complex Services, Ancillary Support Services and Other Ancillary Support Services hereunder so as to enable FMC to fully discharge its obligations under the Permanent Agreement.
 
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3.2 Services .
 
 	(a)	Complex Services . Without limiting the generality of the foregoing, and subject always to the laws of Canada and Ontario, the OLGC Act , the terms of the Regulatory Legislation, the terms of the Permanent Agreement and the OLGC’s exclusive right to conduct and manage the Complex, HC shall provide non-gaming services in the form of consultation and advice to FMC with respect to the following matters (the “Complex Services”), with the intent and purpose of enabling FMC to perform its obligations under the Permanent Agreement:	
 
 	(i)	the number, grade, level of compensation and job description of Casino Complex Employees, labor policies and wage rates;	
 
 	(ii)	the development of programs, materials and criteria for recruiting, interviewing, training, compensating, hiring, discharging and evaluating Casino Complex Employees;	
 
 	(iii)	the purchase of necessary support services such as utilities, cleaning, garbage removal and maintenance services and other such services necessary for the operation of the Casino Complex;	
 
 	(iv)	the charges for commercial space, entertainment and amusement, food and beverages;	
 
 	(v)	the creation of databases (for this purpose HC shall draw on its experience respecting its own databases, and their subject matter, and its experience respecting its own database systems, in providing its services to FMC); and	
 
 	(vi)	the development of programs, materials and strategies for marketing, promotion and publicity relating to the Complex and evaluation of such programs.	
HC shall fulfill its obligations under this Section 3.2(a), by (x) giving oral advice, (y) making its representatives available to consult with representatives of FMC, and (z) embodying its advice in written policy manuals, written guidelines and in similar formats for use and implementation by FMC. All advice, materials, manuals, and information produced by HC hereunder shall be owned, as between HC and FMC, by FMC.
 
 	(b)	Ancillary Support Services . In addition to the Complex Services described above and subject to the limitations of Section 3.2(a) hereof, HC shall provide to FMC on an as needed basis as requested from time to time, services in connection with the direct implementation by FMC of policies, procedures, systems, guidelines and the like relating to the full scope of Complex non-gaming operations as contemplated by the Permanent Agreement (the “Ancillary Support Services”). It is the intention of the parties that operation of the Casino Complex shall be the responsibility	
 
6

 	of FMC, through its employees, and that HC shall provide its Ancillary Support Services only on an “as needed” basis and not in the form of regular, frequent or continuing performance of specific operating responsibilities or functions. It is expected, therefore, that Ancillary Support Services will be incidental to the Complex Services. To this end, it is understood that HC will not be required to maintain an office at or near the Complex, or anywhere in Canada, and that its provision of Ancillary Support Services will be subject to HC’s reasonable requirements of scheduling and the availability of personnel. Consistent with, and subject to the foregoing, Ancillary Support Services will include the following:	
 
 	(i)	the implementation of employee training systems, benefit administration and other employee related matters, as well as consultation and advice in connection with collective barGaming matters; and	
 
 	(ii)	the matters set forth on Schedules “A” and “B” hereto which are performed in Canada, if any,	
FMC is not required to provide office space to HC employees who may be at the Complex on a temporary basis.
 
 	(c)	Other Ancillary Support Services . In addition to the Complex Services and the Ancillary Support Services described above and subject to the limitations of Section 3.2(a) hereof, HC shall provide to FMC on an as needed basis as requested from time to time, certain other services with respect to the matters set forth on Schedules A and B hereto which will not be performed in Canada (the “Other Ancillary Support Services”). It is the intention of the parties that operation of the Casino Complex shall be the responsibility of FMC, through its employees, and that HC shall provide its Other Ancillary Support Services only on an as needed” basis and not in the form of regular, frequent or continuing performance of specific responsibilities or functions. It is expected, therefore, that Other Ancillary Support Services will be incidental to the Complex Services. It is understood that HC’s provision of Other Ancillary Support Services will be subject to HC’s reasonable requirements of scheduling and the availability of personnel.	
 
 	(d)	Scope of Services . Subject to the terms and conditions of Sections 3.2(a), 3.2(b) and 3.2(c) hereof, FMC will request, and HC will provide to FMC, Complex Services, Ancillary Support Services and Other Ancillary Support Services to the full extent required in order to enable FMC to perform its non-gaming obligations under and in accordance with the provisions of the Permanent Agreement, it being the intention of the parties that the quantity and quality of the services to be performed hereunder shall not be limited or restricted, but shall be defined by that	
 
7

 	which is required, consistent with the nature of the services herein contemplated, to enable FMC to perform, with respect to non-gaming related matters, as Operator to the full extent contemplated by the Permanent Agreement.	
3.3 HC Employees . In performing the Complex Services, the Ancillary Support Services and the Other Ancillary Support Services hereunder HC will have no obligation and will not be expected to cause any of its employees to visit Ontario. Further, it is understood and agreed to by FMC that HC will perform its Complex Services hereunder from and out of its offices in Chicago, Illinois, and nothing herein contained shall be applied or construed in such a manner as to create or impose an obligation on the part of HC to have any office or permanent place of business in Canada in order to properly discharge its obligations hereunder. Each Casino Complex Employee shall be the employee of FMC or a subsidiary thereof, and FMC or such subsidiary shall be liable to such employees for the amount of their Compensation.
3.4 Working Capital, Funding of Casino Complex Operations . It shall be the obligation of FMC to arrange for funds for the initial and ongoing operations of the Casino Complex, including house cash funds, in an amount sufficient for the smooth and efficient operation of the Casino Complex.
3.5 Limitation of Liability . All debts and liabilities to third arties incurred by FMC in the course of the operation of the Complex shall be the debts and liabilities of FMC only and HC shall not be liable for any such obligation by reason of this Agreement.
3.6 Certain Intellectual Property Matters . Each of the parties acknowledges that it has reviewed the provisions of Article 6 of the Permanent Agreement and agrees to conduct its activities under this Agreement in a manner consistent with Article 6 of the Permanent Agreement.
 
4.	COVENANTS OF FMC	
4.1 General . FMC shall do nothing (whether by act or omission and whether related to the Casino Complex or otherwise) which might prejudice its ability or right to operate the Casino Complex in accordance with the standards contemplated by the Permanent Agreement. Without limiting the generality of the foregoing, FMC shall (a) cooperate with all gaming authorities who may investigate or are investigating FMC, HC or any of their Affiliates, and (b) take no action to form any associations that would either jeopardize the maintenance and existence of, or preclude, interfere with, threaten or delay the issuance of any gaming license to FMC, HC or any of their Affiliates or result in the imposition of burdensome terms or conditions on any such gaming license.
4.2 Licenses and Permits . FMC hereby represents and warrants that it has acquired or will acquire, and throughout the Operating Term, will maintain in full force and effect all required registrations and permits under the Regulatory Legislation or otherwise, including liquor, tobacco and sign licenses, as are required to operate the Casino Complex as contemplated hereby. FMC further agrees to apply promptly for the renewal, replacement or extension of each such permit or license prior to its expiration or other termination, such application to be for the longest available period. FMC shall comply fully with the terms and conditions contained in such licenses and permits.
 
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4.3 Amendment of Permanent Agreement . FMC will not amend, modify or supplement the Permanent Agreement in any manner which would cause the duties of HC hereunder to expand in scope without the written consent of HC.
4.4 Enforcement of Permanent Agreement . FMC will diligently enforce its rights under the Permanent Agreement.
 
5.	FEES AND RELATED MATTERS	
5.1 HC Fees and Reimbursements . During each Operating Year, HC shall be entitled to receive from FMC (and not from OLGC or from the Gross Revenues of the Complex) the following fees (herein, collectively, the “Fees”):
 
 	(a)	For the provision of Complex Services, a fee (the “Base Fee”) equal to 0.3% of Adjusted Gross Receipts, up to Cdn. $300 million; provided however , that in the case of the first and last Operating Year, the Cdn. $300 million number shall, if such Operating Year is not comprised of 365 days, be prorated based on the number of days in such Operating Year. Notwithstanding the foregoing, if a portion of the Operator Fee payable to FMC under the Permanent Agreement is deferred in payment pursuant to Section 5.3(b)(vii) of the Permanent Agreement such that the amount thereof actually paid is less than the sum of the amount of the Fees hereunder plus the amount of the Fees payable under a certain Master (Permanent) Gaming Services Agreement between HGM and FMC (the “Deficiency”), then the amount of the Deficiency shall likewise be deferred in payment and paid (with interest at the rate provided for deferred Operator Fees in the Permanent Agreement) at such time and in such amounts as deferred Operator Fees, together with all accrued and unpaid interest, are paid under the Permanent Agreement, until such time as the Deficiency is paid in full, all such payments with respect to the Deficiency (and interest) to be made on a proportionate basis between amounts required hereunder and those required under said Master (Permanent) Gaming Services Agreement.	
 
 	(b)	For the provision of Ancillary Support Services, a fee (the “Ancillary Support Fee”) equal to HC’s cost (with no profit component and exclusive of any overhead charge or allocation) of rendering such services, not to exceed a total of $200 (Cdn.) per hour, per HC employee providing Ancillary Support Services (it being understood that such services which do not require man-hours to provide shall be charged at HC’s cost as aforesaid without regard to a dollar per hour limitation). Ancillary Support Fees shall accrue only during such period of time as HC employees are actually on-site at the Casino Complex and performing Ancillary Support Services. Without limiting the generality of the foregoing, no such charges shall accrue during any travel time, or time spent prior to the actual	
 
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 	rendition of Ancillary Support Services in preparation therefor. All HC employees performing Ancillary Support Services shall keep an individual log detailing the amount of time spent in providing Ancillary Support Services, the dates thereof, and a brief description of the nature of such services. A copy of all such logs shall accompany each invoice rendered by HC for its Ancillary Support Fee.	
 
 	(c)	For the provision of the Other Ancillary Support Services, a fee (the “Other Ancillary Support Fee”) equal to HC’s cost (with no profit component and exclusive of any overhead charge or allocation) of rendering such services, not to exceed a total of $200 (Cdn.) per hour, per HC employee providing Other Ancillary Support Services (it being understood that such services which do not require man-hours to provide shall be charged at HC’s cost as aforesaid without regard to a dollar per hour limitation). Without limiting the generality of the foregoing, no such charges shall accrue during any travel time, or time spent prior to the actual rendition of Other Ancillary Support Services in preparation therefor. All HC employees performing Other Ancillary Support Services shall keep an individual log detailing the amount of time spent in providing Other Ancillary Support Services, the dates thereof, and a brief description of the nature of such services. A copy of all such logs shall accompany each invoice rendered by HC for its Other Ancillary Support Fee.	
 
 	(d)	All Fees, computed as above provided, shall be net of any taxes (including, without limitation, all applicable sales, use, value added and goods or services taxes), duties and fees imposed by any Governmental Authority (other than federal, state, provincial or other income taxes imposed on HC’s income). HC shall be responsible for all federal, state, provincial or other income taxes imposed on HC’s income and FMC, except as required by Section 105 of the Regulations under the Income Tax Act (Canada) in connection with the payment of Ancillary Support Fees, shall not withhold any amounts in respect thereof.	
 
 	(e)	For its services as contemplated by Schedules A and B, HC shall be reimbursed for its costs (i.e., no profit component and exclusive of any overhead charge or allocation) less amounts, if any, directly reimbursed to HC by OLGC.	
5.2 Payment of Fees . The Base Fee shall each be payable in monthly instalments on the 20th day of the month succeeding the month for which the same are being calculated. Ancillary Support Fees and Other Ancillary Support Fees shall be paid on a monthly basis and shall be due ten (10) days following delivery by HC of an invoice therefor to FMC, accompanied by copies of the employee logs referred to above. Reimbursements shall be made within five (5) days of billing therefor. All Fees and reimbursements shall be payable to HC by check delivered to HC at its offices in Chicago, Illinois, or, at the request of HC, by wire transfer to an account, as designated in writing by HC, maintained in Chicago, Illinois.
 
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5.3 Year-end Adjustments . If, for any Operating Year, HC’s Fees due in accordance with FMC’s financial statements certified by the Auditors required pursuant to Section 5.7(c) of the Permanent Agreement shall be less or more than the preliminary instalments paid in accordance with Sections 5.1 and 5.2 hereof, FMC or HC shall repay, as appropriate, the difference within thirty (30) days after receipt by FMC of said financial statements and the delivery of such financial statements to HC. In addition, if FMC shall dispute the amount of Ancillary Support Fees or Other Ancillary Support Fees for which it has been invoiced, FMC shall have the right to audit the books and records of HC with respect thereto, and to object to the amount thereof following any such audit. If the parties are unable to resolve any differences between them regarding the amount of Ancillary Support Fees or Other Ancillary Support Fees, such dispute shall be settled by arbitration, conducted in Chicago, Illinois, in accordance with applicable rules of the American Arbitration Association. Disputes for the amount of Ancillary Support Fees or Other Ancillary Support Fees shall be settled only on an annual basis.
5.4 Operating Years . The first Operating Year shall be the period beginning on the Opening Date and ending on the following March 31. Subsequent Operating Years shall commence on April 1 of each year and end on March 31 of the following year.
5.5 Payment of Taxes . FMC shall be liable for and remit to the appropriate governmental authority, all taxes (including but not limited to all applicable sales, use, value added and goods and services taxes), duties and fees imposed by any governmental authority with respect to this Agreement, other than federal, state, provincial or other income taxes (including withholding taxes generally but excluding withholding taxes imposed under Section 105 of the Regulations under the Income Tax Act (Canada) in respect of the Ancillary Support Fee) imposed on HC’s income, which income taxes (including withholding taxes) shall be HC’s responsibility. FMC agrees that any taxes which are FMC’s responsibility shall not be offset against or reduce the Fees paid to HC hereunder (other than those withholding taxes imposed under Section 105 of the Regulations under the Income Tax Act (Canada) in respect of the Ancillary Support Fee). HC agrees to pay and to indemnify and hold FMC harmless from all taxes payable by FMC as a result of the failure of FMC to deduct or withhold any amount on account of taxes that FMC is required by law to deduct or withhold from any payment made by FMC to HC.
5.6 Acknowledgments . FMC acknowledges that FMC is solely responsible out of its own monies and resources to pay the Fees and reimbursements and other amounts owing to HC hereunder including all taxes, duties and fees associated therewith and that, except as set forth in the Permanent Agreement, FMC is not entitled under any circumstances to recover the same from OLGC, the Bank Accounts or the Casino Complex assets. HC acknowledges that its sole recourse for any amounts owed to it hereunder including the Fees is limited to its rights to recover the same from FMC.
 
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6.	CANCELLATION OR NON-RENEWAL OF RIGHT TO OPERATE COMIPLEX	
6.1 If at any time during the Operating Term, FMC’s rights under the Regulatory Legislation or the Permanent Agreement to operate the Casino Complex are cancelled, or FMC’s renewal as operator is refused by the competent Governmental Authorities for any reason whatsoever, this Agreement shall terminate on the date on which FMC ceases to have the right to operate the Casino Complex, pursuant to a non-appealable order or decision. If, within one year of such cancellation or non-renewal, FMC shall be granted the right to resume operation of a casino in Niagara Falls, Ontario, either party shall notify the other promptly and either party shall have the right to reinstate this Agreement as of the effective date of such grant.
 
7.	DEFAULTS AND TERMINATION RIGHTS	
7.1 Events of Default . Subject to Section 7.3, the following shall constitute “events of default” hereunder:
 
 	(a)	The failure of FMC or HC to make any payment to any other party hereto which is provided for herein and such failure shall continue for a period of fifteen (15) days after such payment is due;	
 
 	(b)	an Event of Insolvency with respect to FMC or HC;	
 
 	(c)	any representation or warranty made by FMC or HC in this Agreement shall have been proven to have been incorrect in any material respect when made;	
 
 	(d)	FMC or HC fails to perform or observe any other term, covenant or agreement contained in this Agreement in any material respect and any such failure remains unremedied for 30 days after the other party receives written notice of such failure or such longer period as may be reasonably regarded as necessary to remedy such failure, provided that the failing party has commenced within a reasonable time and in good faith the remedying of such failure within such 30 day period and thereafter prosecutes to completion with diligence and continuity the remedying thereof; or	
 
 	(e)	the occurrence of a Major Hyatt Default under the Participants Support Agreement and, in connection therewith, the appointment and approval by OLGC of a “replacement operator” as provided in the Participants Support Agreement.	
7.2 Right to Terminate Upon Default . Subject to Section 9, upon the occurrence and continuance of an event of default, the non-defaulting party (which, in the case of Section 7.1(e), shall mean FMC) may give to the defaulting party notice of its intention to terminate in which event this Agreement shall so terminate upon the delivery of such notice. Except for (i) the right to terminate this Agreement in accordance with the terms hereof; (ii) the rights of HC under Sections 5.1, 5.2 and 5.5 to be paid its accrued Fees through the date of termination in accordance with the terms of that Section and to institute appropriate legal action and proceedings for the collection thereof; (iii) the rights of HC under Section 6; and (iv) the right of FMC to seek equitable remedies to enjoin HC’s breach of Section 10, termination of this Agreement shall constitute the sole remedy available to each party hereunder (it being
 
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understood that each of Sections 5.1, 5.2, 5.5, 6 and 10 shall survive termination of this Agreement). EXCEPT AS SET FORTH IN THIS SECTION 7.2, NO PARTY OR ITS AFFILIATE MAY COMMENCE ANY CLAIM OR ACTION AGAINST OR RECEIVE DAMAGES FROM ANY PARTY HERETO OR ANY OF ITS RESPECTIVE AFFILIATES WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT OTHER THAN A CLAIM OR ACTION WHICH SEEKS TO ENFORCE THE PROVISIONS HEREOF.
7.3 Force Majeure . Except as otherwise expressly provided in this Agreement, any party that is delayed in or prevented, whether in whole or in part, from performing any obligation or condition hereunder as a result of Force Majeure, shall be excused from performing such obligations or conditions while such party is so delayed or prevented. Any party so affected shall use all reasonable commercial efforts to otherwise comply with its obligations hereunder.
7.4 Right to Terminate Upon Loss of License . In the event the “Total Interest” (as defined in the Shareholders Agreement) of Niagara is repurchased by FMC pursuant to Section 7.1(b) of the Shareholders Agreement by reason of a “Loss of License” pursuant to Section 7.1(a) of the Shareholders Agreement, FMC shall, concurrently therewith or at any time thereafter, have the right to terminate this Agreement by delivery of written notice thereof to HC effective upon receipt by HC of such notice; provided, however, if Niagara, or any Affiliate of Niagara, shall have, pursuant to Section 7.1(f) of the Shareholders Agreement, rescinded such repurchase and paid the consideration required to be paid by said Section 7.1(f), then, effective upon such rescission, this Agreement and the rights and obligations of the parties hereto, shall be reinstated, and continued in full force and effect, for all the rest and remainder of the term hereof.
 
8.	SUCCESSORS AND ASSIGNS	
8.1 All terms, provisions, covenants, undertakings, agreements, obligations and conditions of this Agreement shall be binding upon and inure to the benefit of the successors in interest and the permitted assigns of the parties hereto (it being understood that no assignment, transfer, pledge, mortgage or lease by or through any party hereto shall be permitted without the prior written consent of the other parties; provided, however, subject to compliance with any applicable Regulatory Legislation and to the consent and approval of OLGC, if required, HC shall have the right to transfer and assign its rights and obligations hereunder to an Affiliate of HC except that no such transfer or assignment shall relieve HC of its liability or its obligations hereunder).
 
9.	MEDIATION	
9.1 The parties agree to use their reasonable good faith efforts to settle any claim, controversy or dispute contemplated by or arising out of or in connection with this Agreement (a “Dispute”). Where there is a Dispute, the Dispute shall be the subject of non-binding and without prejudice mediation by recourse to an independent Person or Persons generally recognized as having familiarity with and expertise in the matter which is the subject of the Dispute (an “Expert”). Either party may initiate such mediation by giving notice (an “Initiation Notice”) to the other party to that effect. Within five Business Days after the delivery of such notice, the
 
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parties shall meet and attempt to appoint a single Expert for non-binding and without prejudice mediation of such Dispute. If the parties are unable to agree on the Expert to be appointed within such five Business Day period, then, upon notice given by either of them and within five Business Days of such Initiation Notice, either party may apply to a judge of the Ontario Superior Court of Justice for the appointment of such Expert. In consultation with the Expert, the parties shall promptly designate a mutually convenient time and place in Toronto, Ontario for the mediation as well as a timetable for the delivery of copies of relevant documents to each other and to the Expert and for the delivery to the Expert of a written summary of each party’s position with respect to the Dispute and as to such matters as may be requested by the Expert. Each party shall use its reasonable efforts to conclude the mediation within 30 days of the appointment of the Expert (the “Mediation Period”). The costs related to such mediation shall, in the absence of agreement between the parties to the contrary, be shared equally by FMC and HC. Each of the parties agrees that it will give substantial weight and due regard for the recommendation of the Expert. Notwithstanding the foregoing, following the earlier of the delivery of the recommendation of the Expert and 30 days following the appointment of the Expert, each of the parties shall be entitled to seek resolution of such Dispute in accordance with its normal remedies and recourses available at law.
 
10.	NON-COMPETITION	
 
 	(a)	HC hereby agrees that it will not any time during the Term, directly or indirectly, either individually or in partnership or jointly or in conjunction with any Person as principal, agent, shareholder or in any other manner whatsoever, carry on or be engaged in or advise, lend money to, guarantee the debts or obligations of or permit its name or any part thereof to be used or employed by any Person for the purpose of engaging in any business involving the conduct, management or operation of Games of Chance similar to or competitive with the business being carried on in and at the Complex within 200 kilometres of the Complex (other than a casino in Ontario operated by FMC pursuant to an agreement between any governmental authority or agency and FMC).	
 
 	(b)	Notwithstanding Section 10(a), nothing shall prohibit:	
 
 	(i)	HC from holding an interest in a publicly-traded corporation provided HC holds less than 10% of the issued and outstanding shares of such corporation, provided further that if a publicly traded corporation in which HC holds 10% or more of said shares acquires an interest in a casino within the 200 kilometre radius, HC shall not be in breach of this provision if within 12 months after the acquisition of such competing casino either (i) HC reduces its interest in such corporation to less than 10%; or (ii) such corporation divests itself of its interest in the competing casino; or	
 
 	(ii)	HC from acquiring an interest in a casino within the 200 kilometre radius provided (A) it is part of an acquisition or merger where the value of the interest in the casino being acquired is less than 25% of the value of all of the assets being acquired in the acquisition or merger and (B) HC divests itself of the interest within a reasonable period of time thereafter and, in any event, within 12 months of the acquisition or merger.	
 
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 	(c)	HC acknowledges that a violation of this Section 10 will result in immediate and irreparable damage to OLGC and agrees that in the event of such violation OLGC shall, in addition to any other rights to relief, be entitled to equitable relief by way of temporary or permanent injunction and to such other relief as any court of competent jurisdiction may deem just and proper. If HC is in breach of any such restrictions, the running of the period of prescription shall be stayed and shall commence upon the date HC ceases to be in breach thereof, whether voluntarily or by injunction.	
 
11.	REPRESENTATIONS AND WARRANTIES	
11.1 Representations and Warranties of FMC . FMC hereby represents and warrants as of the date hereof as follows:
 
 	(a)	FMC is a corporation duly formed under the laws of the Province of Nova Scotia.	
 
 	(b)	FMC has all necessary capacity, power and authority to execute and deliver, and perform its obligations under, this Agreement. This Agreement has been duly authorized by FMC and constitutes a valid and binding obligation of FMC enforceable against FMC in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors” rights generally.	
 
 	(c)	Neither the execution and delivery of this Agreement by FMC nor the fulfillment of or compliance with the terms and conditions hereof by FMC:	
 
 	(i)	conflicts with or results in a breach of any of the terms, conditions or provisions of or constitutes a default under the constating documentation of FMC; or	
 
 	(ii)	conflicts with or will conflict with or result in a material breach of any of the terms, conditions or provisions of or constitutes a material default under any material agreement, license or other instrument to which FMC is a party or by which it is otherwise bound.	
11.2 Representations and Warranties of HC . HC represents and warrants as of the date hereof as follows:
 
 	(a)	HC is a corporation duly incorporated and organized under the laws of the State of Delaware.	
 
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 	(b)	HC has all necessary capacity, power and authority to execute and deliver, and perform its obligations under, this Agreement. This Agreement has been duly authorized by HC and constitutes a valid and binding obligation of HC enforceable against HC in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.	
 
 	(c)	Neither the execution and delivery of this Agreement by HC nor the fulfillment of or compliance with the terms and conditions hereof by HC:	
 
 	(i)	conflicts with or results in a breach of any of the terms, conditions or provisions of or constitutes a default under the constating documentation of HC; or	
 
 	(ii)	conflicts with or will conflict with or result in a material breach of any of the terms, conditions or provisions of or constitutes a material default under any material agreement, license or other instrument to which HC is a party or by which it is otherwise bound.	
 
12.	COVENANTS OF HC	
12.1 Corporate Existence . In addition to the other covenants and obligations to be performed by HC hereunder, HC agrees to maintain and keep in full force and effect its corporate existence and power. For purposes hereof, HC shall be deemed in compliance with the provision so long as (i) the surviving corporation of any merger of or consolidation with HC (or any corporate successor) maintains its corporate existence, or (ii) the entity acquiring substantially all of the assets of HC (or any corporate successor) maintains its existence and, in either event, the successor corporation, by contract or operation of law, assumes and agrees to perform and discharge the liabilities and obligations of HC hereunder.
12.2 Negative Covenants of HC . In addition to the other covenants and obligations to be performed by HC hereunder, during the Operating Term HC, directly or indirectly, shall not:
 
 	(a)	solicit or hire any of the Executive Staff, or	
 
 	(b)	take any action which would adversely affect FMC’s ability to comply with its obligations under the Permanent Agreement, or otherwise cause FMC to be in breach of the Permanent Agreement.	
12.3 HC-FMC Contracts . Other than as specifically contemplated hereunder or under any Approved Operating Budget, HC will not enter into any contract with FMC in respect of the operation of the Casino Complex.
 
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13.	MISCELLANEOUS	
13.1 Entire Agreement . This Agreement (together with the documents referred to herein) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes any previous agreement between the parties in relation to such transactions.
13.2 Amendments . No amendment to any of the terms of this Agreement shall be effective unless it is in writing and signed by or on behalf of each of the parties hereto or thereto.
13.3 Notices . Any notice or other communication which may be or is required to be given hereunder shall either be delivered personally or sent by first-class mail, overnight air freight delivery, telex or facsimile transmission and shall be delivered or sent to each of the other parties hereto. The address for service of each of the parties shall be the address stated at the beginning of this Agreement or such other address as the party to be served may have previously notified to the others. All notices shall be deemed to have been served upon actual receipt thereof by the addressee. In the case of communications by personal delivery, telex or facsimile transmission, if such delivery or transmission occurs after 6 p.m. on a business day (being a business day in the city where the address for service of the party on whom the notice is served is situated) or on a day which is not a business day, service shall be deemed to occur at 9 a.m. on the next following business day. In proving such service it shall be sufficient to prove that personal delivery was made, or that the envelope containing such notice was properly addressed and delivered into the custody of the postal authorities as a prepaid first class letter, or that the telex transmission was made and the recipient’s “answer back” received or that the facsimile transmission was made after obtaining in person, by telephone or electronically appropriate evidence of the delivery of the same.
13.4 Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND TAKE EFFECT IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION.
13.5 Consents and Approvals . Wherever in this Agreement the consent or approval of any party is required, such consent or approval shall not be unreasonably withheld, shall be in writing and shall be executed by a duly authorized officer or agent of the party granting such consent or approval; provided, however, that, if any party fails to respond within thirty (30) days to a request by the other party for a consent or a approval required by this Agreement, such consent or approval shall be deemed to have been given.
13.6 Survival and Continuation . Notwithstanding the termination of this Agreement for any reason, all obligations of any party provided for herein that, in order to give effect to the intent of the parties, need to survive such termination (including, among other things, the payment of any monies due by any party hereto to any other party) shall survive and continue until they have been fully satisfied or performed.
13.7 Waiver . The waiver of any of the terms and conditions of this Agreement on any occasion or occasions by any party hereto shall not be deemed to be a waiver of such terms and conditions on any future occasion.
 
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13.8 Further Instruments . Each party shall execute and deliver all other appropriate supplemental agreements and other instruments, and take any other action, including obtaining any Government Approval, necessary to make this Agreement fully and legally effective, binding, and enforceable as between the parties and as against third parties and any fees or expenses incurred in connection therewith shall be borne by FMC.
13.9 No Partnership or Franchise . Nothing herein shall constitute, or be construed as or deemed to create a partnership, joint venture, agency, franchisor/franchisee, principal/agent or similar relationship among or between any of the parties hereto.
13.10 Attorneys’ Fees . In the event of any proceeding to interpret or enforce this Agreement, the prevailing party shall be entitled to collect from the non-prevailing party the reasonable attorneys’ fees and costs and expenses of the prevailing party incurred in such proceeding.
13.11 Execution and Counterparts . This Agreement is being executed and delivered in several counterparts by FMC and HC in the United States and shall be deemed to have been duly executed upon exchange among the parties of identical executed counterparts thereof. Each counterpart Agreement shall constitute an original.
13.12 Interpretation . The interpretation of this Agreement shall not permit a revenue, expense, liability, recovery, receipt, payment, reserve or reimbursement to be duplicated.
13.13 No Third Party Beneficiaries . No person or entity shall be an express or implied third party beneficiary of the rights or obligations of any party to this Agreement.
IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first above written.

FALLS MANAGEMENT COMPANY , a Nova Scotia unlimited liability company	
		
By:	 	/s/ James F. Dougan	
Name:	 	James F. Dougan	
Title:	 	President and Chief Operating Officer	
	
HYATT CORPORATION , a Delaware corporation	
		
By:	 	/s/ Harold Handelsman	
Name:	 	Harold Handelsman	
Title:	 	Vice President	
 
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SCHEDULE “A” 
Ancillary Support Services
 
1.	Operations/Consulting Services	
Description : Those operations/consulting services provided by HC and its Affiliates from time to time to all casinos owned or operated by HC or its Affiliates consisting of:
 
 	(a)	business and sales promotion consulting/services;	
 
 	(b)	advertising, publicity and public relations/consulting services;	
 
 	(c)	food and beverage, personnel and other operational departmental supervision/consulting services; and	
 
 	(d)	access to HC’s U.S. based employee training program, including making qualified personnel available to FMC.	
 
2.	Co-ordinated Marketing Services	
Description : Those joint marketing programs managed by HC or its Affiliates.
 
3.	Computer and Software Consulting Services	
Description : Access to HC’s outsourced technology services, including software support, maintenance, training, installation and related systems for automated management systems, including point-of-sale, human resources and catering.
 
4.	Proprietary Systems	
Description: License or facilitate obtaining licenses for proprietary computer software systems owned by or licensed to HC or an Affiliate of HC for use in connection with the Complex.
 
5.	Intellectual Property	
Description : HC or one of its Affiliates is or will become the owner or licensee of certain intellectual property, including (a) software for use at one or more other HC facilities and all source and object code versions thereof and all related documentation, flow charts, user manuals, listing, and service/operator manuals and any enhancements, modifications or substitutions thereof (“Operator Software”), and (b) trade secrets, trade names, trademarks, know-how and other proprietary information relating to the operating methods, procedures and policies (herein collectively called the Intellectual Property in connection with the performance of these services to the. extent that it deems appropriate for the purpose of carrying out its agreements and obligations hereunder, but such use shall be strictly on a non-exclusive basis, and such use shall not confer any proprietary or other rights in the Intellectual Property upon FMC or any third parties.

6.	Human Resources Consulting Services	
Description: Access to human resource and employee relations consulting services, including specialized training, preparation and revision of manuals, employee surveys and employee newsletters, and monitoring compliance with affirmative action policies and other employment policies.
 
7.	Other Corporate Consulting Services	
HC also provides a number of other corporate consulting services, including in-house merchandising services, property evaluations, preparation of quality assurance manuals, college recruiting programs, other training programs and other various services.
 
8.	Mailings	
Description : Send to those persons retained in the HC world-wide database (within the parameters indicated by FMC) mailings, solicitations and other promotional marketing materials relating to the Complex provided to HC by FMC. HC shall, within 30 days of sending of such mailings, solicitations or other promotional materials, provide to FMC a certificate of a senior officer of HC confirming that such mailings have been made.

SCHEDULE “B”
Hyatt Hotel System Services
Hyatt and its Affiliates currently provide certain additional centralized services to Hyatt Hotels including the following:
 
1.	Chain Services . These services consist of centralized reservation services through Hyatt’s centralized reservation center currently located in Omaha, Nebraska, national sales force and national sales offices and national advertising and promotions.	
 
2.	Gold Passport . Currently, Hyatt maintains a frequent guest incentive program known as Gold Passport, the cost of which is paid by assessing each Hyatt Hotel four percent (4%) of all qualifying charges attributable to a Gold Passport member’s stay at that hotel excluding applicable taxes. The amount of this assessment including the cost of amenities provided to Gold Passport members, typically approximates one percent (1%) of total annual room revenue, depending on program usage in a given hotel.	
 
3.	Technology Services . Computer Sciences Corporation Outsourcing, Inc. (“CSCO”) (an unaffiliated party) renders technology services to Hyatt Hotels through Hyatt Corporation pursuant to a technology outsourcing agreement. In particular, CSCO provides software support, maintenance, training, installation and related services for automated management systems including, but not limited to, property management, point-of-sale, sales and marketing, catering and convention services, local and wide area networks, electronic mail, central databases and reporting, reservations, group business services and transient room monitoring.	
 
4.	Other Reservations Services . In addition to the central reservations center currently located in Omaha, Nebraska, other global distribution systems (principally airline reservations systems) accept reservations for Hyatt Hotels and confirm the reservations with Hyatt through Hyatt’s central reservations center. In addition, Pegasus Systems, Inc., a publicly traded company (in which Hyatt currently owns less than 1% of the outstanding common shares) provides connections to the airline reservations systems, internet related reservations services and consolidated travel agent commission payment processing services for which hotels using such services pay on a per transaction basis at rates set by the service provider.	
 
5.	Wide Area Network (WAN) . The WAN is a private communication network among Hyatt Hotels, the central reservations center, Hyatt’s corporate office, divisional offices and other important points of contact within the Hyatt chain. Among other things, the WAN permits the central reservations center to transmit reservations to the applicable Hyatt Hotel, provides each Hyatt Hotel access to Hyatt’s applications and databases, and allows Hyatt to gather, process and use information from each Hyatt Hotel and the central reservations center for, among other things, sales purposes and various financial and other analyses. The WAN also is the delivery mechanism utilized for Hyatt’s electronic mail system. Each Hyatt Hotel has, or is required to purchase, specific hardware necessary to connect to the WAN at an estimated one-time cost which currently approximates	

 	$12,000 to $15,000, exclusive of initial circuit costs which typically range from $5,000 to $10,000 (exact costs are determined upon completion of a systems proposal). The current standard for the WAN circuit is 256K.	
 
6.	Mandatory Contracts . Hyatt from time to time, negotiates contracts with vendors or providers of services which, under their terms, provide for mandatory participation by all Hyatt Hotels, or by certain Hyatt Hotels (e.g., hotels in a certain business segment).	
 
7.	Other Corporate Services . Hyatt also provides a number of other corporate services and programs for the benefit of Hyatt Hotels for which reimbursement is made on a cost recovery basis. These services and programs include in-house merchandising services, group sales promotional programs and events sponsored by two or more Hyatt Hotels, property evaluations, quality assurance manuals, college recruiting programs, other training programs and other various services.	
 
8.	FFE Purchasing Services . Rosemont Project Management, LLC, offers purchasing services to Hyatt Hotels for the purchase of furniture, fixtures and equipment, which, together with renovation related services, are typically subject to a separate contract and fee structure (which includes a profit component). Each Hyatt Hotel may determine whether, and the extent to which, to use the foregoing purchasing services.	
 
9.	Purchasing Services . Hyatt makes various goods and services available to Hyatt Hotels through a centralized purchasing program (“Purchasing Company”) currently administered by Avendra, LLC, a procurement services company in which an Affiliate of Hyatt has a minority ownership interest. Each Hyatt Hotel determines whether, and the extent to which, to use the services of the Purchasing Company (other than as stated under Mandatory Contracts above). Hyatt corporate personnel provide on-going oversight of Hyatt’s customer relationship with the Purchasing Company. The cost of providing this function will be allocated among those hotels utilizing the purchasing services of Purchasing Company on a fair and equitable basis without premium, profit or mark up to Hyatt.	
 
10.	Remote Call Forwarding . Hyatt currently offers Hyatt Hotels the option of forwarding reservations calls received at a hotel to Hyatt’s centralized reservations center currently located in Omaha, Nebraska, when on-site personnel are unavailable to process potential reservations.	

OFFICER’S CERTIFICATE
The undersigned hereby certifies for and on behalf of Falls Management Company (the “Corporation”) and without personal liability that the document attached is a true copy of the Master (Permanent) Non-Gaming Services Agreement between the Corporation and Hyatt Gaming Management, Inc. made as of July 19, 2002.
Dated as of the 19th day of July, 2002

FALLS MANAGEMENT COMPANY	
		
Per:	 	/s/ David B. Strom	
Name:	 	David B. Strom	
Title:	 	Vice President and Chief Financial Officer	

Exhibit 10.35
CONSULTING AGREEMENT
This Consulting Agreement (this “Agreement”) is made as of the 1st day of September, 1997, by and between International Gaming Services L.L.C., a Nevada limited liability company (the “Company”), and Hyatt Aruba NV, a corporation organized under the laws of Aruba (the “Manager”).
RECITALS
A. The Company is in the business of providing consulting services and advice to casino license holders and to developers, owners, operators and managers of gaming casinos.
B. The Manager is a gaming casino manager providing casino management services with respect to a casino located in Palm Beach, Aruba (the “Casino”).
C. The Manager is desirous of engaging the consulting services of the Company, and the Company is desirous of providing such services to the Manager.
TERMS OF AGREEMENT
Now, therefore, in consideration of the foregoing recitals and the mutual covenants contained herein, the parties hereto agree as follows:
 
 	1.	Provision of Services	
(a) The Manager hereby appoints, hires and employs the Company to provide development, marketing and management consulting services and such other services as requested by the Manager during the term of this Agreement. The Company shall also provide gaming compliance services to the Manager in order to maintain the highest standards of compliance with the regulatory requirements imposed upon the Manager due to its involvement in gaming, so as to protect the integrity and reputation of the Manager. Such gaming compliance services shall include, without limitation, those services identified and described in the attached Exhibit A, which is hereby incorporated herein and made a part hereof.
(b) The Company hereby accepts such appointment upon and subject to the terms, conditions and provisions set forth herein and agrees to satisfy its obligations created hereunder in the best interests of the Manager, subject to any limitations imposed upon the Company by this Agreement and any applicable laws or governmental requirements or regulations.
 
 	2.	Term and Termination	
(a) The initial term of this Agreement shall commence on September 1, 1997, and shall continue for a period of four months. Such term shall be automatically extended, for 12 month periods, each January 1, unless either party hereto has given notice, on or before the preceding December 1, of its desire not to extend.
 
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(b) Notwithstanding anything contained herein to the contrary, this Agreement may be terminated at the will of either party hereto at any time during the term of this Agreement upon 30 days written notice to the other party.
 
 	3.	Compensation and Expenses	
(a) As consideration for the performance of its services pursuant to this Agreement, the Manager shall pay to the Company a fee of $36,000 per annum, payable every three months in advance commencing on October 1, 1997. In addition to the foregoing, upon the execution of this Agreement by both parties hereto, the Manager shall pay to the Company a one-time fee in the amount of $3,000, representing payment in consideration of services to be performed by the Company during the month of September, 1997. Upon the termination of this Agreement, any and all paid but unearned fees shall be returned to the Manager by the Company. For purposes hereof; fees paid to the Company by the Manager shall be deemed to be earned in any given three month pay period for that portion of such period (measured in calendar days) during which this Agreement remained in effect.
(b) In the event the term of this Agreement is extended in accordance with Section 2 hereof, the fee referenced in Section 3(a) hereof shall be reviewed by both the Company and the Manager on the date of such extension and shall be subject to change at that time by the mutual agreement of the Company and the Manager.
(c) All out-of-pocket expenses (including professional fees) incurred by the Company on the Manager’s behalf shall be reimbursed by the Company at cost, upon substantiation of such expenses to the reasonable satisfaction of the Manager.
 
 	4.	Solicitation of Employees	
During the term of this Agreement and for the six month period thereafter, neither the Company nor the Manager shall solicit or offer employment to the employees of the other without the express written consent of the other.
 
 	5.	Confidentiality and Nondisclosure	
(a) The relationship between the Manager and the Company is one of confidence and trust with respect to any information applicable to the business of the Manager or applicable to the business of any client of the Manager, which may be made known to the Company by the Manager or by any client of the Manager, or which may be learned by the Company during the term of this Agreement.
(b) The Manager possesses and will continue to acquire information that has been created or developed by or otherwise become known to the Manager (including, without limitation, information created or developed by or otherwise made known to the Manager by the Company during the term of this Agreement), which information has commercial value in the business in which the Manager is engaged. All of such information is hereinafter called “Proprietary Information” and shall include, by way of illustration, but not limitation, names and financial and personal information concerning employees and clients of the Manager, client and prospective client lists, or other written records used in the Manager’s business, operating practices and related data, advertising materials, advertising campaigns, advertising strategies, financial information, marketing plans, business strategies, sources, forecasts and budget information.
 
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(c) Unless otherwise agreed to in writing by the Manager, during the term of this Agreement and at all times thereafter, the Company shall regard and preserve as confidential, and shall not disclose without the prior written consent of the Manager, the Proprietary Information.
(d) The Company acknowledges and agrees that this Section 5 prohibits and precludes any use of Proprietary Information by it or by any person obtaining any Proprietary Information directly or indirectly from it in competition with the Manager. The Company acknowledges and understands that, absent the prior written agreement to the contrary by the Manager, sending announcements of any business affiliation other than that with the Manager to the Manager’s clients, client prospects and employees constitutes an impermissible act hereunder.
(e) Upon the termination of this Agreement, the Company shall deliver to the Manager, and shall not keep or deliver to anyone else, all materials in the Company’s possession relating to the Manager’s business and operations.
(f) The Company understands that in the event it is uncertain as to whether a document(s), list(s), or other information, whether oral or written, constitutes Proprietary Information under this Section 5, the Company shall notify the Manager of such uncertainty and ask the Manager for clarification. In such cases of uncertainty, the Company shall treat the subject material or information as Proprietary Information unless and until it obtains a written statement from an authorized representative of the Manager that it is not Proprietary Information.
(g) The Company agrees and understands that violation of any portion of this Section 5 may result in the immediate termination of this Agreement by the Company, in addition to any other remedies which may be available to the Manager at law or in equity.
(h) If, pursuant to subpoena (or otherwise) during the term of this Agreement or thereafter, a demand is made upon the Company to disclose the Manager’s or its clients’ Proprietary Information by compulsion of law, the Company shall promptly notify the Manager in advance of such proposed disclosure to enable the Manager to be heard with respect to any such disclosure or to otherwise respond to any such compulsion if it desires to do so; provided, however, that any disclosure of Proprietary Information pursuant to a court order shall not be considered breach of this Agreement.
(i) In the event that the Company violates or threatens to violate the terms of this Section 5, the Manager shall be entitled to an order enjoining the Company for such violation or threatened violation for the reason that any damages caused to the Manager would be irreparable and incapable of measure in monetary terms.
 
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 	6.	Indemnification	
To the fullest extent permitted by applicable law, the Manager shall indemnify, defend and hold the Company harmless from and against any and all claims, demands, expenses (including, without limitation, reasonable attorneys’ fees), liabilities, losses, costs, damages and deficiencies, whether direct, indirect or consequential, that the Company may reasonably incur or suffer or that may arise out of, result from or relate to any action under this Agreement other than actions which have been finally determined by a court of competent jurisdiction to be the direct result of the negligence or willful misconduct of the Company. The provisions of this Section 6 shall survive the termination of this Agreement.
 
 	7.	Waiver	
No delay on the part of either party hereto in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any waiver of any right, power or privilege operate as a waiver of any other right, power or privilege, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or of any other right, power or privilege. The rights and remedies contained herein are cumulative and are not exclusive of any rights or remedies which the parties otherwise may have at law or in equity.
 
 	8.	Entire Agreement	
This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous negotiations and written or oral agreements between the parties hereto.
 
 	9.	Severability	
If any provision of this Agreement is found invalid or unenforceable by a court of competent jurisdiction, such finding shall not affect the remaining portions of this Agreement, which shall remain in full force and effect. Should any provision of this Agreement be found invalid or unenforceable by a court of competent jurisdiction as being too broad with respect to the duration, scope or subject matter thereof, such obligations shall be deemed and construed to be reduced to the maximum duration, scope or subject matter allowable by law.
 
 	10.	Assignability	
Neither party shall assign, transfer or sell its rights under this Agreement or delegate its duties hereunder without the prior written consent of the other party, and any such attempted assignment or delegation shall be void and without effect.
 
 	11.	Governing Law	
This Agreement shall be deemed to have been made at Reno, Nevada, and shall be interpreted, and the rights and liabilities of the parties hereto determined, in accordance with the internal laws (as opposed to conflicts of laws provisions) and decisions of the State of Nevada. The parties hereto consent to the jurisdiction of the state and federal courts located in the State of Nevada. In the event any dispute arises out of or in connection with this Agreement or the performance of either party’s obligations hereunder, the party bringing suit shall do so in a state or federal court located in the State of Nevada.
 
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 	12.	Modification	
No modification or amendment of this Agreement shall be effective unless it is in writing and executed by both parties hereto.
 
 	13.	Independent Contractor	
The services of the Company are those of an independent contractor. The Company shall not be deemed an employee of the Manager. The Company shall not act as, or represent itself to any third party as being, an agent of the Manager for any purpose whatsoever, except as may be approved or directed by the Manager in writing.
IN WITNESS WHEREOF , the parties have entered into this Agreement as of the date and year first and above written.

INTERNATIONAL GAMING SERVICES L.L.C.	
		
By:	 	/s/ Larry L. Lewin	
Name:	 	Larry L. Lewin	
Its:	 	Chairman and Chief Executive Officer	
	
HYATT ARUBA NV	
		
By:	 	/s/ Harold S. Handelsman	
Name:	 	Harold S. Handelsman	
Its:	 	Vice President	
 
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EXHIBIT A
DESCRIPTION OF DUTIES OF
GAMING COMPLIANCE OFFICER
OF
INTERNATIONAL GAMING SERVICES
I.
INTRODUCTION
Individuals and businesses in the gaming industry must avoid impropriety, or even the appearance of impropriety, and be sensitive to the potential dangers of unsuitable associations and non-compliance with regulatory requirements. For that reason, the position of Gaming Compliance Officer has been established by the Company. It is the duty of the Gaming Compliance Officer to assist he Company’s clients in maintaining the highest standards of compliance with gaming regulatory requirements and to protect the integrity and reputation of the Company’s clients.
II.
PURPOSE
The position of GCO of the Company is created for the purpose of (i) ensuring compliance with gaming laws applicable to the business operations of each Casino; (ii) advising the management of each Casino of any gaming law compliance problems or situations which may adversely affect the objectives of gaming control in any jurisdiction, (iii) performing due diligence in respect of proposed Casino transactions and associations; and (iv) receiving appropriate input from the management of each Casino in order to assist the Casino in maintaining and enhancing its compliance with respect to gaming laws.
The GCO is intended to assist each Casino in obtaining information necessary to make decisions in hiring, regulatory compliance and associations requiring due diligence.
III.
DEFINITIONS
Affiliate means a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, any Casino. The term does not include Franchised operations or unrelated persons who are associated with the Casino or its Affiliates in a business venture.

CEO means the President of any Casino.
CFO means the Chief Financial Officer of any Casino.
Casino or Casinos means business organizations which have consulting agreements with the Company.
Company means International Gaming Services L.L.C.
Controlling Person means a person who possesses the power to direct or cause the direction of the management and policies of a Person.
Executive means a corporate officer or division head of any Casino or its Affiliates.
Formal allegations means a notice received in writing from a regulatory body or other governmental agency concerning wrongdoing on the part of any Casino or an Affiliate, which adversely affects the objectives of gaming control.
Formal criminal charges means criminal charges (other than for minor offenses) duly filed in a court of law.
Gaming activities means gaming activities conducted in any jurisdiction.
Gaming Affiliate means any Affiliate which owns or operates, in whole or in part, all or any part of a business which derives any of its revenues from legalized gaming.
Gaming Authority or Authorities means any regulatory agency that has jurisdiction over any Casino or its Affiliates’ businesses.
GCO shall mean the Gaming Compliance Officer, or any person named by the Company to fulfill the responsibilities of the GCO.
Material Financing means a financing by any Casino or an Affiliate involving a sum greater than $3,000,000 .
Material Litigation means litigation against any Casino or an Affiliate which must be disclosed to Gaming Authorities.
Material Transaction means any agreement which would legally bind the parties to proceed with a gaming operation in any jurisdiction.
Person means any association, corporation; firm, partnership, trust or other form of business association as well as a natural person.
Program means the Gaming Compliance Program of IICC Corporation.
 
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Substantial Owner means any Person who has beneficial ownership of the equity securities of interests of a Person.
Unsuitable Person means a Person who (i) has been determined to be unsuitable to be associated with a gaming enterprise by a Gaming Authority or whose unsuitability has been reliably reported to any Casino or its Affiliates; (ii) is included in Nevada’s List of Excluded Persons; (iii) is included in New Jersey’s Exclusion List; or (iv) is commonly and publicly considered to be notorious and unsavory by virtue of his conduct or his affairs or associations.
IV.
DUTIES OF THE GAMING COMPLIANCE OFFICER
Required areas of review and information to be provided.
The GCO shall be responsible for providing information to each Casino or appropriate Executives covering the following activities by any Casino or its Affiliates:
a . Material Transactions – Prior to the consummation of any Material Transaction by any Casino or any of its Affiliates, the following information must be obtained, documented and provided to that Casino or its Affiliate:
 
 	(1)	Name and address of entity.	
 	(2)	Legal form of entity (corporation, partnership, etc.)	
 	(3)	Date of formation and jurisdiction in which formed.	
 	(4)	Nature of business conducted.	
 	(5)	Geographical area where business conducted.	
 	(6)	Principal officers, Owners and all directors, members or partners, including:	
 	(a)	Name and address of each (business and residence).	
 	(b)	Known general background and known reputation of each Controlling Person.	
 	(c)	Known financial background of each Controlling Person.	
 	(d)	Date of birth.	
 	(e)	Social Security number or passport number and issuing country.	
 	(f)	Examination of recent financial statements and regulatory filings of entity.	
 	(g)	Description of all known material litigation to which the person is a party (including administrative matters).	
 	(7)	Specific laws under which business operation is permitted, if relevant.	
 	(8)	Identification of any broker, finder, or other person who suggested or proposed the transaction and disclosure of any arrangements whereby such person is to receive any compensation for such services.	
 
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 	(9)	Other significant and material information relating to the entity or individuals associated therewith.	
 	(10)	In the event that the transaction involves a lease of real estate, a review of the background of the lessor or lessee, as the case may be, shall be made and, if deemed to be advisable by the Company, an independent appraisal of the fair market value of the lease shall be obtained.	
b . Affiliates, Executives, Key Employees and Lobbyists – The GCO shall conduct an investigation of each Casino’s Affiliates, Executives, Key Employees and lobbyists in order to protect each Casino from becoming associated with an Unsuitable Person. The investigation shall contain the following information, if available:
 
 	(1)	Past employment history.	
 	(2)	General reputation.	
 	(3)	Law enforcement agency checks.	
 	(4)	Credit information.	
 	(5)	Immediate family background.	
 	(6)	Litigation.	
c. Material Financings – Due to the complexities of financing and capital needs of gaming operations such as the Casinos, the source of funds is of interest to the Casinos and to the Gaming Authorities having jurisdiction over the Casinos. Therefore, investigation and review of any proposed Material Financing by any Casino or by any of its Affiliates with respect to a gaming operation should occur prior to commitment by the Casino or by its Affiliates. The following information shall be obtained and documented:
 
 	(1)	Disclosure of any material relationship between any Casino or its Affiliates and other parties to the proposed Material financing.	
 	(2)	Disclosure of any middleman, finder, broker or other person who is to receive compensation in connection with securing, arranging, negotiating or otherwise dealing with the proposed Material Financing.	
Material Financings involving (i) the registration and sales by the Casino or one of its Affiliates of Securities which are registered under the United States securities laws; (ii) banks chartered by the United States government or by any member of the European community; or (iii) which have been approved by the Indiana, Illinois, New Jersey or Nevada gaming authorities shall not be subject to the provisions of this section.
d. Material Litigation – The GCO shall receive and review a copy of the written report from outside counsel with respect to Material Litigation against any Casino or any of its Affiliates received in connection with the casino’s annual audit.
 
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e. Acts of Wrongdoing – The GCO shall make reasonable efforts to obtain and report to each Casino information concerning any prosecutions or administrative actions taken against any employee or director of that Casino or its Affiliates, consultants or lobbyists which involve any of the following circumstances:
 
 	(1)	Any criminal action involving (i) a felony; (ii) any material crime against the Casino or one of its subsidiaries or involving embezzlement or larceny; or (iii) violation of any law relating to gambling.	
 	(2)	Material administrative actions by a gaming regulatory authority relating to a gaming license or gaming approval held by such person.	
f. Gaming Conducted Legally – The GCO shall conduct a review of all jurisdictions where any Casino or its Affiliates contemplate gaming operations to ensure that gaming is legal and will be conducted in accordance with all applicable laws and regulations.
g. Review Audit Reports – The GCO shall review all reports of internal and external auditors to determine the extent of any material weaknesses in internal or security controls and if there is possible cheating or skimming in any gaming operation. A summary of that review shall be furnished to the Casino.
h. Purchase and Lease of Gaming Devices – The GCO shall review the purchase and lease of all gaming devices by any Casino and its Affiliates to ensure that the manufacturers, distributors and lessors of all gaming devices are properly licensed in the jurisdiction where the devices are delivered. The GCO shall also ensure that any payments of brokers or finder’s fees are in compliance with all applicable laws.
i. Regulatory Filings – The GCO shall conduct a review on a quarterly basis to determine if all required filings with Gaming Authorities have been made. A report shall be prepared detailing any violations of filing requirements and the corrective action taken to reduce the occurrence of future violations.
 
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HYATT GAMING SERVICES, L.L.C.
200 West Madison, Suite 3900, Chicago, Illinois 60606
312.750.8212 - Phone
312.920.2342 - FAX
December 14, 1998
Hyatt Aruba NV
J.E. Irausquin Blvd. #85
Palm Beach, Aruba
To Whom It May Concern:
Reference is made to that certain Consulting Agreement by and between International Gaming Services L.L.C. and Hyatt Aruba NV dated September 1, 1997. This letter is intended to notify you that the name of International Gaming Services L.L.C. has been changed to Hyatt Gaming Services, L.L.C. All future correspondence relating to the foregoing agreement should be addressed accordingly.
Please evidence your acknowledgement of the foregoing name change by signing the enclosed copy of this letter in the space provided below and returning it to me at your earliest convenience. Thank you for you cooperation.

Very truly yours,	
	
/s/ Larry L. Lewin	
Larry L. Lewin
President and Chief Executive Officer	
ACKNOWLEDGED AND AGREED
THIS 20 th DAY OF January, 1999:

Hyatt Aruba NV	
		
By:	 	/s/ Kenneth Posner	
Name:	 	Kenneth Posner	
Its:	 	Vice President	

FIRST AMENDMENT TO CONSULTING AGREEMENT
This First Amendment to Consulting Agreement is made as of the 1st day of January, 1999, by and between Hyatt Gaming Services, L.L.C., a Nevada limited liability company formerly known as International Gaming Services, L.L.C. (the “Company”), and Hyatt Aruba NV, a corporation organized under the laws of Aruba (the “Manager”).
RECITALS
A. The parties hereto have entered into that certain Consulting Agreement dated as of September 1, 1997 (the “Consulting Agreement”).
B. The parties hereto desire to amend the Consulting Agreement as set forth herein.
TERMS OF AGREEMENT
Now, therefore, in consideration of the foregoing recitals and the covenants and agreements contained herein, the parties hereto agree as follows:
1.0 Effective as of January 1, 1999, the annual fee to be paid by the Manager to the Company pursuant to Section 3(a) of the Agreement as consideration for the Company’s performance of services shall be $72,000 per annum.
2.0 Except as otherwise specifically modified herein, the terms and provisions of the Consulting Agreement are hereby ratified and affirmed to be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Consulting Agreement as of the day and year first above written.

Hyatt Gaming Services, L.L.C.	
		
By:	 	/s/ Larry Lewin	
Name:	 	Larry Lewin	
Its:	 	President	
	
Hyatt Aruba NV	
		
By	 	/s/ Harold S. Handelsman	
Name:	 	Harold S. Handelsman	
Its:	 	Vice President	

SECOND AMENDMENT TO CONSULTING AGREEMENT
This Second Amendment to Consulting Agreement is made as of the 1st day of February, 2000, by and between Hyatt Gaming Services, L.L.C., a Nevada limited liability company (the “Company”), and Hyatt Aruba NV, a corporation organized under the laws of Aruba (the “Manager”).
RECITALS
A. The parties hereto have entered into that certain Consulting Agreement, dated as of September 1, 1997, relating to consulting services to be provided in connection with a gaming casino located in Palm Beach, Aruba (the “Consulting Agreement”).
B. The parties hereto desire to amend the Consulting Agreement as set forth herein.
TERMS OF AGREEMENT
Now, therefore, in consideration of the foregoing recitals and the covenants and agreements contained herein, the parties hereto agree as follows:
1. During the period commencing on February 1, 2000 and concluding on January 31, 2001, the annual fee to be paid by the Manager to the Company pursuant to Section 3(a) of the Consulting Agreement as consideration for the Company’s performance of services during such period shall be $60,000 per annum, payable every three months in advance commencing on the date hereof.
2. The second sentence of Section 2(a) of the Consulting Agreement is hereby amended to provide that the term of the Consulting Agreement shall hereafter be automatically extended, for 12 month periods, each February 1, unless either party hereto has given notice on or before the preceding January 1, of its desire not to extend.
3. Except as otherwise specifically modified herein, the terms and provisions of the Consulting Agreement are hereby ratified and affirmed to be in full force and effect.
[Signature Page Follows]

IN WITNESS WHEREOF , the parties hereto have executed this Second Amendment to Consulting Agreement as of the day and year first above written.

Hyatt Gaming Services, L.L.C.		
			
By:	 	/s/ Larry Lewin		
Name:	 	Larry Lewin		
Its:	 	President		
		
Hyatt Aruba NV		

By:	 	/s/ Harold S. Handelsman		
Name:	 	Harold S. Handelsman		
Its:	 	Vice President		

THIRD AMENDMENT TO CONSULTING AGREEMENT AND ASSIGNMENT
THIS THIRD AMENDMENT TO CONSULTING AGREEMENT AND ASSIGNMENT (this “Agreement”) is made as of June 30, 2004 by and between HYATT GAMING SERVICES, L.L.C. , a Nevada limited liability company (the “Company”), HYATT GAMING MANAGEMENT, INC. , a Nevada corporation (the “HGMI”), and HYATT ARUBA NV, a corporation organized under the laws of Aruba (the “Manager”).
RECITALS
WHEREAS , the Company and Manager are parties to that certain Consulting Agreement dated as of September 1, 1997, as amended by that certain First Amendment to Consulting Agreement dated as of January 1, 1999 and that certain Second Amendment to Consulting Agreement dated as of February 1, 2000, relating to consulting services to be provided in connection with the gaming casino located in Palm Beach, Aruba (the “Consulting Agreement”); and
WHEREAS , the parties hereto desire to amend and assign the Consulting Agreement as set forth herein.
NOW THEREFORE , in consideration of the foregoing recitals and the covenants and agreements contained herein, the parties hereto agree as follows:
1. The annual fee to be paid by the Manager pursuant to Section 3(a) of the Consulting Agreement as consideration for the Company’s performance of services shall be Two Hundred Thousand Dollars ($200,000) per annum, payable in equal installments every three (3) months in advance commencing on the date hereof.
2. The Company hereby transfers, assigns, sells, sets over, delivers and conveys to HGMI all of Company’s right, title and interest in, to and under the Consulting Agreement. HGMI hereby accepts the foregoing assignment, and assumes and agrees to pay, perform and discharge, when and as due, any and all obligations and liabilities of the Company under the Consulting Agreement. Manager hereby consents to the foregoing assignment effective as of the date hereof.
3. Except as otherwise specifically modified herein, the terms and provisions of the Consulting Agreement are hereby ratified and affirmed to be in full force and effect.
4. This Agreement shall be construed in accordance with and governed by the laws of the State of Nevada, without regard to the conflicts of law principles thereof.
5. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute one instrument.
 
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IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the day and year first above written.

	
HYATT GAMING SERVICES, L.L.C., a Nevada limited liability company	
		
By:	 	Hyatt Gaming Management, Inc., a Nevada corporation, its sole member	
		
By:	 	/s/ Peter M. Liguori	
Name:	 	Peter M. Liguori	
Its:	 	Vice President and Treasurer	
	
HYATT GAMING MANAGEMENT, INC., a Nevada corporation	
		
By:	 	/s/ Peter M. Liguori	
Name:	 	Peter M. Liguori	
Its:	 	Vice President and Treasurer	
	
HYATT ARUBA, N.V., a corporation organized under the laws of Aruba	
		
By:	 	/s/ Kirk A. Rose	
Name:	 	Kirk A. Rose	
Its:	 	Vice President and Treasurer	
 
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FOURTH AMENDMENT TO CONSULTING AGREEMENT
THIS FOURTH AMENDMENT TO CONSULTING AGREEMENT (this “Agreement”) is made as of February 1 , 2005 by and between HYATT GAMING MANAGEMENT, INC. , a Nevada corporation (the “Company”) and HYATT ARUBA N.V, a corporation organized under the laws of Aruba (the “Manager”).
RECITALS
WHEREAS , Aruba Beachfront Resorts Limited Partnership, an Illinois limited partnership, and Manager entered into that certain Amended and Restated Management Agreement dated as of August 1, 1989 (the “Management Agreement”), pursuant to which Manager manages the gaming casino located in Palm Beach Aruba (the “Casino”);
WHEREAS , Manager and Hyatt Gaming Services, L.L.C., predecessor-in-interest to Company, entered into that certain Consulting Agreement dated as of September 1, 1997, as amended by that certain First Amendment to Consulting Agreement dated as of January 1, 1999, that certain Second Amendment to Consulting Agreement dated as of February 1, 2000, and that certain Third Amendment to Consulting Agreement and Assignment dated as of June 30, 2004, relating to consulting services to be provided in connection with the Casino (as amended and assigned, the “Consulting Agreement”); and
WHEREAS , the parties hereto desire to amend the Consulting Agreement as set forth herein.
NOW THEREFORE , in consideration of the foregoing recitals and the covenants and agreements contained herein, the parties hereto agree as follows:
1. Section 1(a) of the Consulting Agreement is hereby modified to include the following:
Company shall, subject to the limitations set forth herein, have discretion in the operation of the Casino including, without limitation, the right and power to negotiate and enter into such reasonable contracts as may be reasonably necessary or advisable in connection with the operation of the Casino (subject, however, to Manager’s right to approve contracts with a corporation or a person or persons controlling, controlled by or under common control or affiliated with Manager) and the right to determine the terms of admittance, charges for entertainment, food and beverages, labor policies, the nature of the games and gaming devices to be played in the Casino, the house rules of operation, credit policies, and all phases of promotion and publicity relating to the Casino, provided such actions comply with the Casino regulations attached hereto as Exhibit A . Notwithstanding the foregoing, Company shall not, without the approval of Manager, arrange leases or concessions for commercial operations in the Casino or take any action that would cause Manager to be in default under the terms of the Management Agreement.
2. Except as otherwise specifically modified herein, the terms and provisions of the Consulting Agreement are hereby ratified and affirmed to be in full force and effect.
 
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3. This Agreement shall be construed in accordance with and governed by the laws of the State of Nevada, without regard to the conflicts of law principles thereof.
4. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which taken together shall constitute one instrument.
 
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IN WITNESS WHEREOF , the parties hereto have executed this Fourth Amendment to Consulting Agreement as of the day and year first above written.

	
MANAGER:	
	
HYATT ARUBA, N.V. , a corporation organized under the laws of Aruba	
		
By:	 	/s/ Kirk A. Rose	
Name:	 	Kirk A. Rose	
Its:	 	Vice President, Treasurer	
	
COMPANY:	
	
HYATT GAMING MANAGEMENT, INC. , a Nevada corporation	
		
By:	 	/s/ Peter M. Liguori	
Name:	 	Peter M. Liguori	
Its:	 	President	
 
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Exhibit A
Casino Regulations
(attach regulations from Casino Management Agreement)
 
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CASINO REGULATIONS
The following Casino regulations shall be adopted by Hyatt:
1. The Casino shall operate strictly in accordance with applicable provisions of law, and in accordance with provisions of the gaming licenses issued from time to time with respect to the Casino.
2. Gaming operations shall be conducted only in the Casino, and not in any other portion of the Building. Employees are prohibited from conducting any gaming operations in any portion of the Building other than the Casino.
3. Employees shall be neatly and cleanly attired and shall conduct themselves in a manner which shall not bring discredit upon the Hotel or the Casino. Employees willfully or repeatedly violating this regulation shall be subject to discharge or to maximum disciplinary measures allowed by law.
4. In employing dealers and croupiers as well as other Casino employees having direct contact with the public, good faith reasonable efforts shall be made, whenever possible, without compromising the quality or efficiency of the Casino operations, to employ Aruban residents and persons speaking more than one language.
5. No person shall be eligible for employment in the Casino who shall have a criminal felony record or who shall have been convicted of a crime of moral turpitude in Aruba or in any other country.
6. Only games of hazard permitted under the laws of Aruba shall be conducted or permitted in the Casino. Aruban law Currently permits the games of “21” (Blackjack), “Craps”, “Roulette”, “Chemin de Fer”, “Wheel of Fortune”, “Poker”, “Big Six”, “Baccarat”, “Slot Machines”, and “Bingo”.
7. No slot machines shall be configured or tampered with in a manner which will prevent them from paying off or paying off at rates less than required by applicable law or the provisions of the Casino gaming license, or less than rates adopted by Hyatt from time to time.
8. The following persons shall not be eligible to enter or remain in the Casino: (i) persons under the minimum age established by applicable law; (ii) intoxicated or disorderly persons; (iii) such other persons as may be forbidden to patronize the Casino in accordance with applicable laws of Aruba; or (iv) any persons who, in the judgment of Hyatt, would or might damage the reputation or business of the Hotel or of Owner. In addition, employees of the Hotel or of the Casino shall not be eligible to play any of the games of hazard conducted in the Casino.
9. Free food or beverage service shall be permitted in the Casino but shall be reserved to patrons of the Casino who are in fact participating in gambling and are regarded as favored patrons by reason of past experience, reputation or previous gambling record.

Exhibit 10.36
HOTEL MANAGEMENT AGREEMENT
(Santa Barbara, California)
between
PRITZKER REALTY GROUP, L.P.,
an Illinois limited partnership
and
HDG ASSOCIATES,
an Illinois general partnership
DATED: July 1, 2000

TABLE OF CONTENTS

 	    	 	 	Page	
ARTICLE I Definitions	 	1	
        1.1	    	Definitions	 	1	
        1.2	    	References	 	5	
        1.3	    	Pronouns	 	5	
		
ARTICLE II Appointment of Manager and Term	 	5	
        2.1	    	Appointment of Manager	 	5	
        2.2	    	Term	 	5	
		
ARTICLE III Operating	 	6	
        3.1	    	Operating Authority in General	 	6	
        3.2	    	Specific Covenants. Duties and Obligations of PRG	 	6	
        3.3	    	Hotel Employees	 	8	
        3.4	    	Limitations on PRG’s Authority	 	8	
        3.5	    	Force Majeure	 	9	
        3.6	    	Purchasing	 	9	
        3.7	    	Legal Requirements	 	9	
        3.8	    	Operating Accounts	 	9	
        3.9	    	Annual Plan	 	10	
        3.10	    	Legal Proceedings	 	11	
        3.11	    	Reserve Fund	 	11	
        3.12	    	Distributions to Owner	 	12	
        3.13	    	License Agreement	 	12	
		
ARTICLE IV Management Fees and Reimbursements	 	12	
        4.1	    	Management Fees	 	12	
        4.2	    	Time and Manner of Payment	 	12	
        4.3	    	Reimbursements	 	13	
        4.4	    	Tax on Reimbursements	 	13	
		
ARTICLE V Books and Records and Reporting	 	13	
        5.1	    	Books and Records	 	13	
        5.2	    	Audits	 	14	
        5.3	    	Reports	 	14	
        5.4	    	Meetings	 	15	
		
ARTICLE VI Indemnification	 	15	
        6.1	    	Indemnification of PRG	 	15	
        6.2	    	Indemnification of Owner	 	15	
        6.3	    	Survival	 	16	
		
ARTICLE VII Specific Owner Covenants	 	16	
        7.1	    	General Covenant of Owner	 	16	

					
        7.2	    	Working Capital	 	16	
        7.3	    	Title	 	16	
		
ARTICLE VIII Insurance	 	17	
        8.1	    	Insurance to be Maintained by Owner	 	17	
        8.2	    	Coverage	 	18	
        8.3	    	Policies and Endorsements	 	18	
        8.4	    	Waiver of Subrogation	 	19	
        8.5	    	Insurance Claims	 	19	
		
ARTICLE IX Damage and Condemnation	 	19	
        9.1	    	Damage to or Destruction of the Hotel	 	19	
        9.2	    	Condemnation	 	20	
		
ARTICLE X Assignment	 	21	
        10.1	    	Assignment by PRG	 	21	
        10.2	    	Assignment by Owner	 	22	
		
ARTICLE XI Default	 	22	
        11.1	    	PRG Defaults	 	22	
        11.2	    	Owner Defaults	 	23	
        11.3	    	Curing Defaults	 	23	
        11.4	    	Remedies	 	23	
		
ARTICLE XII Notices	 	24	
		
ARTICLE XIII General	 	25	
        13.1	    	Third Party Beneficiaries	 	25	
        13.2	    	Counterparts	 	25	
        13.3	    	Entire Agreement	 	25	
        13.4	    	Amendments	 	25	
        13.5	    	Brokers	 	25	
        13.6	    	Successors and Assigns	 	25	
        13.7	    	Headings	 	25	
        13.8	    	Governing Law	 	26	
        13.9	    	Interest on Overdue Sums	 	26	
        13.10	    	Approvals	 	26	
        13.11	    	Agency and Agency Waivers	 	26	
        13.12	    	Survival and Continuation	 	27	
        13.13	    	PRG Approvals	 	27	
        13.14	    	Confidentiality	 	27	
        13.15	    	Irrevocability of Contract	 	27	
        13.16	    	Non-Recourse	 	28	
        13.17	    	No Representation Regarding Projections	 	28	
 
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HOTEL MANAGEMENT AGREEMENT
(Santa Barbara, California)
THIS HOTEL MANAGEMENT AGREEMENT , is made and entered into as of July 1, 2000 by and between HDG Associates, an Illinois general partnership (“ Owner ”), and PRITZKER REALTY GROUP, L.P. , an Illinois limited partnership (“ PRG ”).
PRELIMINARY STATEMENT
Owner is the owner of certain real property located at 111 East Cabrillo Boulevard, Santa Barbara, California 93103 (the “ Site ”). Owner desires to retain PRG, as the agent for Owner, to manage and operate the Hotel, and to perform the related services herein described, upon the terms and conditions herein set forth. PRG desires to manage and operate the Hotel on behalf of Owner as herein provided.
NOW, THEREFORE , Owner and PRG hereby agree as follows:
ARTICLE I
Definitions
 
 	1.1	Definitions.	
Except as herein expressly provided, and in addition to any other definitions herein contained, the following terms shall have the respective meanings as indicated below:
“ Accountants ” shall have the meaning set forth in Section 5.2.
“ Affiliate ” shall mean, with respect to any person or entity, any other person, firm, corporation, limited liability company, partnership, association, trust or other entity which, directly or indirectly, controls, is controlled by, or is under common control with, the subject entity. For purposes hereof, the term “ control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, either alone or in combination with any one or more persons or entities. Accordingly (and without limiting the generality of the preceding provisions), a corporation shall be deemed under the “control” of another corporation, if a majority of the board of directors of said corporation also comprise a majority of the board of directors of the other corporation.
“ Agreement ” shall mean this Hotel Management Agreement and any amendments hereafter entered into between the parties.
“ Annual Plan ” shall have the meaning set forth in Section 3.9.
“ Building(s) ” shall mean all buildings and other permanent improvements constructed on the Site which shall include, without limitation, all buildings and other improvements in which are located guest rooms and suites, restaurants, lounges, and health and recreational facilities, and shall also include those hotel amenities and facilities which are permanent improvements to the Site such as swimming pools, tennis courts, and the like.

“ Building Systems ” shall mean any mechanical, electrical, plumbing, heating, ventilating, air conditioning and life safety equipment and systems; major laundry appliances; major kitchen appliances; elevators and escalators; pumps, filters and other pool equipment; water features and other similar systems and items of equipment installed in or upon, and affixed to, the Building, whether or not the same may be movable and whether or not removal thereof would cause damage to the Building or the Site, excluding, however, any items of FFE.
“ Capital Budget ” shall have the meaning set forth in Section 3.9.
“ Capital Expenditures ” shall mean any cost or expense incurred after the date hereof for any alterations, additions or improvements to the Building or to the Building Systems of a permanent or non-recurring nature which are incurred for the purpose of extending the useful life of the Building or the Building System in question, or to improve the efficiency or operation thereof, or to alter the appearance of the Building, or which are necessary in order to comply with applicable Legal Requirements, to maintain the structural integrity of the Building or its protection from the elements; provided, however, the term “ Capital Expenditures ” for purposes of this Agreement shall not include expenditures for (i) additions to or replacements of FFE except pursuant to a Refurbishing Program, or (ii) any cost or expenditure properly classified as Repair and Maintenance under generally accepted accounting principles and deducted in computing Net Income in accordance with the Uniform System (or similar line item howsoever designated in future editions of the Uniform System), or (iii) items properly categorized under generally accepted accounting principles as capital in nature but which are routine items of replacement or addition in the ordinary course of business.
“ CPI ” shall mean the Consumer Price Index for United States City Averages for All Urban Consumers, All Items, published from time to time by the United States Bureau of Labor Statistics (1982-84 - 100). If the CPI is discontinued or is unavailable or is substantially revised, a comparable index agreeable to Owner and PRG reflecting the changes in the cost of living or the purchasing power of the consumer dollar, published by any governmental agency or recognized authority shall be used in place thereof. Unless otherwise provided, any CPI adjustment shall reflect CPI changes from the end of the CPI reporting period next preceding the date hereof to the end of the CPI reporting period next preceding the effective date of any such adjustment.
“ Default ,” “ Event of Default ” and “ Defaulting Party ” shall all have the meanings set forth in Sections 13.1 and 13.2.
“ Employee Costs ” shall mean the aggregate compensation, including, without limitation, salary, fringe benefits, incentive compensation, bonuses, employee performance and service awards, and other such amounts paid or payable to Hotel employees, and other employee related costs such as payroll taxes. The term “ fringe benefits ” shall, without limitation, include the cost of pension or profit sharing plans, workers’ compensation benefits, group life and accident and health insurance or equivalent benefits, and similar benefits available to Hotel employees by virtue of their employment.
 
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“ FFE ” shall mean all fixtures, furniture, furnishings and equipment, other than Building Systems, located at the Hotel, together with all replacements therefor and additions thereto, but shall not include Operating Equipment.
“ Financial Statements ” shall have the meaning set forth in Section 5.3.
“ Fiscal Year ” shall mean the calendar year except that the first Fiscal Year hereunder shall commence on the date hereof and shall continue until the following December 31, and the last Fiscal Year hereunder shall end on the date of the expiration or earlier termination of this Agreement.
“ Fiscal Year Reporting ” shall mean the calendar year except that the first Fiscal Year hereunder shall commence on January 1 of the calendar year within which this Agreement is dated and shall continue until the following December 31, and the last Fiscal Year hereunder shall end on the date of the expiration or earlier termination of this Agreement.
“ Force Majeure ” or “ Force Majeure Cause ” shall mean any one or more causes beyond the reasonable control of the party whose performance is affected thereby, including casualties, war, insurrection, strikes, lock outs and governmental actions (but excluding causes which can be controlled by the expenditure of money in accordance with usual business practices).
“ Gross Receipts ” shall mean all revenues and income of any kind derived, directly or indirectly, from the operation of the Hotel during such period, including all revenues derived from the sale during such period of rooms, food and beverages, and rents or fees payable by tenants or concessionaires in respect of such period (but not the gross receipts of such sub-tenants or concessionaires). Without limiting the generality of the foregoing, it is the intention of the parties that the term “ Gross Receipts ” shall mean all amounts properly accounted for as Revenues or Total Revenues from all Operated Departments in accordance with the Uniform System. Notwithstanding the foregoing, there shall be excluded in determining Gross Receipts for any period the sum of (i) any sales, excise or occupancy taxes actually collected during such period in accordance with applicable law from guests or patrons of the Hotel and either remitted, or required to be remitted, to appropriate taxing authorities; (ii) amounts collected from guests or patrons of the Hotel on behalf of Hotel tenants; (iii) interest earned on funds held in Operating Accounts (if any); and (iv) insurance proceeds, condemnation proceeds, financing or refinancing proceeds and the proceeds of sale of any real or personal property comprising part of the Hotel (as distinguished from the sale of merchandise, food and beverage and other consumer goods or services). Gross Receipts shall in all events include only amounts actually paid or payable to the Hotel (in cash or services), and shall not include, except as otherwise herein expressly provided, the value of any Hotel goods or services, in excess of actual amounts paid (in cash or services), provided by the Hotel on a complimentary or discounted basis.
 
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“ Hotel ” shall mean the Site, the Building, the Building Systems, the FFE and the Operating Equipment, together with all other items of real and personal property at any time used in connection with the operation of the foregoing, collectively.
“ Legal Requirements ” shall mean any provision of law, including, without limitation, any statute, ordinance, regulation, rule, award or order of any governmental agency or tribunal having jurisdiction over the Hotel or its operations.
“ Lender(s) ” shall mean any person or entity providing financing for the development, construction, furnishing, equipping or operation of the Hotel, or to refinance any financing obtained for any of the foregoing purposes, and any of its successors or assigns.
“ License Agreement ” shall mean that certain License Agreement dated May 26, 1993 between Radisson Hotels International, Inc. and Owner relating to Radisson’s licensing of certain property to Owner in connection with the Hotel’s operations, or any substitutions or replacements thereof.
“ Management Fees ” shall have the meaning set forth in Section 4.1, and shall include the proceeds of any business interruption insurance required to be paid to PRG with respect to lost Management Fees.
“ Operating Accounts ” shall mean the bank accounts (including the Reserve Fund, except where the context otherwise requires) into which all funds received from the management and operation of the Hotel, and all Owner contributions to Hotel working capital, shall be deposited, and from which PRG shall pay Hotel costs and expenses.
“ Operating Equipment ” shall mean linens, china, glassware, silverware, uniforms and the like, excluding FFE.
“ Operating Forecast ” shall have the meaning set forth in Section 3.9.
“ Operating Period ” shall mean the period from the date hereof to the expiration or earlier termination of this Agreement.
“ Operating Standard ” shall mean at any given time, the standard of construction, furnishing and equipping and operation of upscale hotels, including operation of the Hotel on a seven-day-a-week, twenty-four-hour-a-day basis, and also including compliance with all standards, specifications, operating procedures and other requirements promulgated by PRG, and by the franchisor or licensor for the operation and marketing of the Hotel, from time to time, as contained in the License Agreement.
“ Refurbishing Program ” shall mean (i) any program for replacement of or additions to a major portion of Hotel FFE as part of a program to renovate a block of not less than forty (40) guest rooms and suites; (ii) any program of replacement of carpeting, furnishings, fixtures or wall coverings in twenty-five percent (25%) or more of the Hotel public space, such as lobbies, guest room corridors, restaurants, banquet and meeting rooms and pre-function areas; or (iii) any material change in theme of any Hotel restaurant.
 
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“ Reserve Fund ” shall have the meaning set forth in Section 3.11.
“ Successor Manager ” shall mean any person, firm, corporation, company or other entity (including Owner or any Affiliate of Owner) designated by Owner as the manager and operator of the Hotel to succeed PRG upon expiration or earlier termination of this Agreement.
“ Term ” shall have the meaning set forth in Section 2.2.
“ Uniform System ” shall mean the “Uniform System of Accounts for the Lodging Industry,” ninth revised edition, as adopted by the Hotel Association of New York City, Inc. and the American Hotel & Motel Association, as the same may be modified, amended, supplemented or superseded by any subsequent editions or revisions thereto.
 
 	1.2	References.	
All references in this Agreement to particular sections or articles shall, unless expressly otherwise provided or unless the context otherwise requires, be deemed to refer to the specific sections or articles in this Agreement. In addition, the words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular section or article.
 
 	1.3	Pronouns.	
All pronouns and variations thereof used herein shall, regardless of the pronoun actually used, be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the person, persons or entity may, in the context in which such pronoun is used, require.
ARTICLE II
Appointment of Manager and Term
 
 	2.1	Appointment of Manager.	
Owner hereby appoints PRG as the sole and exclusive agent for Owner to supervise, direct, control, manage and operate the Hotel for the Term, subject to, and in accordance with, the terms and provisions of this Agreement. PRG hereby accepts said appointment and agrees to supervise, direct, control, manage and operate the Hotel during the Term strictly in accordance with the terms and conditions herein set forth. In the performance of its duties and obligations hereunder, PRG agrees that it shall at all times manage and operate the Hotel for the account and benefit of Owner in a business-like and efficient manner, and in accordance with all terms and provisions of this Agreement, offering the level of quality of guest amenities and services consistent with the Operating Standard subject in all respects to the terms and provisions of this Agreement.
 
 	2.2	Term.	
The Term of this Agreement shall commence on the date hereof and shall continue until 11:59 p.m. (local time at the Hotel) on December 31 of the year in which the tenth (10th) anniversary of the date hereof shall occur, unless this Agreement shall be sooner terminated as herein provided (the “ Initial Term ”).
 
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Thereafter, the Term automatically shall be extended for terms of one (1) year (such term resulting from the extensions being herein referred to as a “ Renewal Term ”) which shall commence upon the expiration of the Initial Term and each Renewal Term thereafter; provided that the Term shall not be extended if either party hereto shall provide written notice of its election not to extend the Term, at least ninety (90) days prior to the expiration of the Term. The terms and provisions of this Agreement shall be applicable to the management and operation of the Hotel by PRG during the Initial Term and each Renewal Term.
For purposes hereof, the “ Term ” of this Agreement shall mean the Initial Term together with each Renewal Term, if, as and when in effect.
ARTICLE III
Operating
 
 	3.1	Operating Authority in General.	
PRG shall permit the use of the Hotel only for its intended purpose as a hotel meeting the Operating Standard and for those other activities which are customary and usual in connection with such an operation, and shall not use the Hotel for any other purpose. In the performance of its duties and responsibilities hereunder, PRG shall have the sole right and authority, as agent for Owner, to direct, manage and control all aspects of the management and operation of the Hotel, in the discretion of PRG, consistent with its duties and responsibilities hereunder and the standards of operations herein set forth, including, without limitation, the right and power to negotiate and enter into such reasonable contracts (including, without limitation, collective bargaining agreements and other labor or employment contracts) as may be reasonably necessary or advisable in connection with the operation of the Hotel, the right to determine the terms of admittance, charges for rooms, charges for entertainment, food and beverage, labor policies (including wage rates and fringe benefits and other items comprising Employee Costs) and all phases of promotion and publicity relating to the Hotel, and otherwise to do and perform all such acts and things as may be reasonably necessary or desirable to fulfill its express duties and obligations hereunder, all subject to, in accordance with, and as may be limited by, the express terms and provisions of this Agreement. It is the intention of the parties that PRG shall have full operating discretion and authority except as expressly limited or restricted by the terms of this Agreement.
 
 	3.2	Specific Covenants. Duties and Obligations of PRG.	
In addition to each of the other covenants, duties and obligations of PRG hereunder, and in addition to its general obligations regarding the management and operation of the Hotel as set forth in Section 3.1, PRG hereby agrees, throughout the Term, that it shall (and shall have full right and authority to), subject in all events to the availability of adequate funds in the Operating Accounts and subject to the overall standard of skill, care and diligence set forth in Section 2.1:
(a) Establish rates for Hotel usage including room rates for individuals and groups, charges for room service, food and beverage and for use of recreational or other guest facilities or amenities at the Hotel. The Hotel general manager shall have the right,
 
6

in his/her discretion, to grant discounted or complimentary rooms, food, beverage or other hotel services when he/she reasonably deems the same to be in the best business interests of the Hotel and generally in accordance with industry standards regarding the same.
(b) Establish and maintain a sound system of accounting and record keeping, with adequate systems of internal accounting controls. In addition to the foregoing, PRG shall develop and implement an appropriate records management and retention system providing for the maintenance and storage of records as required by applicable provisions of law, and as are reasonably consistent with prudent business practices.
(c) Take good care of the Hotel and use reasonable efforts to maintain the same in good condition and repair throughout the Term including all portions of the Building, Building Systems, FFE and Operating Equipment, all in accordance with maintenance programs established by PRG from time to time, subject, in all respects, to ordinary wear and tear, to the limitations on Capital Expenditures herein set forth, and to Force Majeure Causes. In connection with the foregoing, PRG shall arrange for all maintenance and service contracts reasonably necessary for the maintenance and protection of the Hotel, and its various parts, including, without limitation, elevator maintenance, extermination services, trash removal, fuel supply and utility services.
(d) Upon request of Owner from time to time, deliver to Owner copies of all employee policies and procedures, including, without limitation, copies of employee manuals and handbooks, in effect at the Hotel.
(e) Pay all bills and invoices for the Hotel other than debt service, real estate taxes and insurance premiums. Notwithstanding the foregoing, both PRG and Owner shall have the right, upon prior written notice to the other, to contest any real estate taxes or other impositions relating to the Hotel by appropriate proceedings conducted in good faith and with due diligence, the cost of which shall be a Hotel expense and paid from the Operating Accounts.
(f) As agent for Owner, enforce the rights of Owner under any leases, licenses or concession agreements with respect to the Hotel, and provide for the benefit of all tenants, licensees or concessionaires those Hotel services required to be provided by Owner as landlord thereunder. Without limiting the generality of the foregoing, PRG shall use commercially reasonable efforts to collect all rents from tenants, licensees and concessionaires, and shall deposit the same in the Operating Accounts.
(g) Adopt and implement appropriate credit policies and procedures, including policies regarding the acceptance of credit cards, but PRG shall in no event be deemed a guarantor of the credit of any guest, patron, travel agent or credit card company.
(h) On behalf of Owner, collect, account for and remit promptly to proper governmental authorities all applicable excise, sales and use taxes or similar governmental charges collected by the Hotel directly from patrons or guests such as gross receipts, admission, cabaret, use or occupancy taxes, or similar or equivalent taxes, subject to the collectibility thereof from such patrons or guests.
 
7

(i) Keep the Hotel fully stocked and equipped with all necessary inventories of food, beverages and other consumables, and Operating Equipment.
(j) In all matters relating to the management and operation of the Hotel, perform Owner’s duties and obligations under the License Agreement and perform all duties and obligations imposed on the Hotel manager under the License Agreement.
 
 	3.3	Hotel Employees.	
As agent for Owner, PRG shall select, appoint and supervise all personnel for the proper operation, maintenance and security of the Hotel and in order to enable PRG to perform its duties and obligations under this Agreement. All employees of the Hotel shall be the employees of Owner and PRG may reimburse itself out of the Operating Accounts for all Employee Costs it may incur on behalf of Owner. PRG shall have the sole and exclusive right and authority to direct Owner’s Hotel employees, and to hire, promote, demote, transfer in or transfer out, discipline, suspend or terminate any and all Owner’s Hotel employees.
 
 	3.4	Limitations on PRG’s Authority.	
Notwithstanding anything herein contained to the contrary and in addition to any other limitations and restrictions herein contained, the following provisions shall constitute limitations and restrictions on the rights or authority of PRG hereunder:
(a) Except for an “Excluded Transaction,” and subject to the provisions of this Agreement regarding contracts with PRG Affiliates, PRG shall not, without the consent of Owner, enter into any contract or other arrangement (or series of related contracts or arrangements) if the expenditures thereunder would, or are reasonably anticipated to, exceed One Hundred Thousand Dollars ($100,000) (subject to CPI adjustment) in the aggregate, or if the non-cancelable term of such contract is in excess of one (1) year. For purposes hereof, the term “ Excluded Transaction ” shall mean (i) collective bargaining agreements; (ii) individual employment or compensation arrangements so long as the same (other than fringe benefit programs) do not involve a non-cancelable term in excess of one (1) year; (iii) expenditures from the Reserve Fund to the extent the same may be made by PRG without Owner approval in accordance with Section 3.13; (iv) expenditures incident to the booking of rooms, food and beverage and other Hotel business entered into in the ordinary course of business; and (v) contracts or expenditures reasonably required in order to protect life, health, safety or property in cases of emergency or casualty. Any and all contracts or other arrangements with Owner or the predecessor manager in effect on the date hereof are hereby approved by Owner for purposes of the consent required under this paragraph.
(b) PRG shall not take any action which, under the terms of this Agreement, is prohibited or requires the approval of Owner except with the express written approval of Owner.
(c) PRG shall not lease or grant any concessions for any Hotel operations, any restaurant or food service operations, or for any other commercial operation in or about the Hotel, except with the prior written approval of Owner.
 
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(d) PRG shall not take any action, or fail to take any action, that would cause, or with the passage of time cause, Owner to be in default under the License Agreement.
 
 	3.5	Force Majeure.	
Anything in this Agreement to the contrary notwithstanding, PRG shall be excused from its obligations to operate the Hotel in conformity with the Operating Standard, and in conformity with its obligations hereunder (1) to the extent and whenever PRG shall be prevented from compliance with such standard by reason of the occurrence of a Force Majeure Cause; (ii) to the extent of any breach by Owner of any provision hereof; or (iii) to the extent and wherever there is herein provided a limitation on PRG’s abilities to expend fund in respect of the Hotel when failure to expend such funds shall reasonably prevent PRG from meeting the Operating Standard or its obligations hereunder.
 
 	3.6	Purchasing.	
During the Operating Period, PRG shall arrange for the purchase of all Operating Equipment, consumables and inventories, and replacements of and additions to FFE, subject to and in compliance with all of the provisions of this Agreement. All such purchases shall be made at competitive prices and terms, and in arm’s length transactions.
 
 	3.7	Legal Requirements.	
Throughout the Term, PRG shall operate the Hotel in compliance with all applicable laws and all governmental regulations, orders, standards and requirements, and in accordance with the rules, regulations or orders of any agency or instrumentality establishing life safety or fire safety standards applicable to the Hotel, subject in all respects to the standard of care, skill and diligence herein set forth. In addition, Owner shall apply for and obtain, in Owner’s name or, if required by applicable law, in PRG’s name, or both, and shall keep in force any and all licenses or permits required for the operation of the Hotel and its related facilities exclusive of permits (such as certificates of occupancy) relating to the Hotel’s structure which shall be the responsibility of Owner. To the extent required in order to obtain licenses or permits, PRG agrees to cooperate in all reasonable respects including, without limitation, preparation and execution of permit applications required to be applied for by Owner, execution of necessary consents, providing necessary information regarding PRG, and submitting to requirements of local police and governmental officials regarding specialized licenses such as liquor licenses.
 
 	3.8	Operating Accounts.	
PRG shall establish one or more Operating Accounts in a bank or banks designated by Owner (which may include any banks acting as a Lender), and shall also maintain reasonable sums on hand at the Hotel in house banks and petty cash funds to meet cash needs of Hotel operations. All such Operating Accounts shall be maintained in the name of PRG as agent for Owner, and all funds deposited therein shall be the sole property of Owner. All monies advanced to PRG as working capital by Owner, shall be deposited in the Operating Accounts, together with all monies received by PRG from the operations of the Hotel. PRG shall pay out of the Operating Accounts, to the extent of available funds therein from time to time, all costs and expenses incurred in connection with the operation of the Hotel, and all other amounts required or permitted to be paid by PRG in the performance of its duties and obligations
 
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hereunder. Checks or other documents of withdrawal drawn upon the Operating Accounts shall be signed exclusively by representatives of PRG or Hotel employees designated by PRG, as agent for Owner. All persons drawing on such accounts shall be bonded. Although Owner may grant security interests in the Operating Accounts to secure the obligations of Owner to Lenders, all such security interests shall be subject to the rights and authority of PRG hereunder so as to ensure the uninterrupted operation of the Hotel and the payment of all costs and expenses of its operation whenever arising.
PRG shall have the right to maintain advance bookings deposits, for both individual and group business, in one or more segregated, interest-bearing bank accounts (which shall constitute one of the Operating Accounts) maintained solely for the receipt of such advance deposits. Funds, with interest earned, if any, shall be removed from the segregated bank account and deposited in the regular Operating Accounts of the Hotel at such time as the deposit is earned by the Hotel, or, if appropriate, for the purpose of making refunds to persons or entities entitled thereto. Until advance deposits are transferred to the ordinary Operating Accounts, amounts in the segregated account shall not be deemed part of the working capital of the Hotel nor shall the receipt thereof constitute Gross Receipts.
 
 	3.9	Annual Plan.	
(a) As soon as the same are available, but in any event prior to December 1 of each calendar year during the Term, PRG will prepare and submit to Owner (i) PRG’s forecast of Hotel operations for the ensuing calendar year including estimates of revenues and operating expenses and the assumptions underlying the same; (ii) a budget of Capital Expenditures for the ensuing calendar year, and, shall be supplemented with such additional detailed information as Owner may reasonably request. The materials described in clause (i) above are herein collectively referred to as the “ Operating Forecast, ” the budgets referred to in clause (ii) above are herein referred to as the “ Capital Budget ” and the Operating Forecast and Capital Budget are collectively referred to as the “ Annual Plan. ”
(b) All items of expenditure contained in the Operating Forecast and the Capital Budget shall be subject to approval of Owner; provided, however, Owner shall not withhold its approval for any expenditures which are reasonably necessary, in nature or amount, to enable the Hotel to continue operation in accordance with the Operating Standard.
(c) Owner agrees that it shall promptly review all Operating Forecasts and Capital Budgets submitted to it, and PRG agrees that it shall provide Owner with such additional and supplemental information with respect thereto as shall be reasonably available to PRG and which may be prepared or compiled without unreasonable delay, expense or interruption of normal operations.
(d) From time to time (but not more frequently than quarterly) during any Fiscal Year Reporting, if PRG anticipates that revenues shall be lesser or expenditures shall be greater than those forecasted or budgeted, PRG shall advise Owner thereof and shall, if PRG deems it appropriate, submit revisions to the then applicable Capital Budget for Owner approval and an updated Operating Forecast for review and discussion with Owner, but no such updated Operating Forecast shall be subject to the approval process described above. The necessity for an amendment to a Capital Budget, or a revision to an Operating Forecast, shall not be deemed an Event of Default by PRG hereunder.
 
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 	3.10	Legal Proceedings.	
Legal proceedings arising in the ordinary course of business of the Hotel, such as collections, enforcement of contracts and proceedings against Hotel guests or commercial tenants for amounts due, may be instituted by PRG in its name, as agent hereunder, using counsel designated by PRG. In addition, PRG shall have the right to defend, through counsel designated by it, legal proceedings brought against PRG resulting from the operation of the Hotel, or legal proceedings arising in the ordinary course of business against the Hotel such as guest claims for loss of property or injury to persons and claims relating to employment or application for employment at the Hotel. No actions shall be brought or defended in Owner’s name without Owner’s consent and without the use of counsel designated or approved by Owner. All claims against Owner or PRG arising out of the management or operation of the Hotel which are covered in whole or in part by insurance shall be forwarded by PRG to the appropriate insurer. Legal proceedings relating to the operation of the Hotel of other types or of a non-recurring nature not in the usual and ordinary course of business, and the defense of any such actions against the Hotel, shall require Owner’s approval of the proceedings and of counsel designated for the prosecution or defense thereof. If requested by Owner, PRG shall supervise such legal proceedings and furnish Owner from time to time, upon request, with status reports with respect thereto. Owner and PRG shall cooperate with each other in such legal proceedings. The costs of all legal proceedings relating to the Hotel, whether incurred by Owner or PRG, inclusive of damages, awards, fines and penalties, if any, shall be expenses of the Hotel.
 
 	3.11	Reserve Fund.	
PRG shall establish and maintain an interest-bearing account of a type and with an institution approved by Owner (the “ Reserve Fund ”) to cover the cost of (i) additions to and replacements of FFE and other items properly categorized under generally accepted accounting principles as capital in nature but not constituting Capital Expenditures as herein defined (other than in connection with a Refurbishing Program); (ii) lease payments for FFE replacements after the date hereof pursuant to equipment leases approved by Owner; and (iii) Capital Expenditures approved by Owner in connection with approval of a Capital Budget including Refurbishing Programs. PRG shall have the right to withdraw funds from the Reserve Fund for the payment of any of the aforesaid amounts; provided, however, no such amounts shall be withdrawn with respect to Capital Expenditures referred to in clause (iii) above, except pursuant to and in accordance with an approved Capital Budget as provided in Section 3.9 above. During the Term, PRG shall transfer into the Reserve Fund from the Operating Accounts, on a monthly basis, an amount equal to a percentage of the Gross Receipts for each calendar month for each Fiscal Year hereunder, such percentage to be determined annually by agreement between Owner and PRG and in the absence of such agreement the percentage shall be five percent (5%) per annum. All interest earned on funds on deposit from time to time in the Reserve Fund shall remain in, and become part of, the Reserve Fund. In the event of the occurrence of any casualty or other event resulting in the receipt by Owner or the Hotel of business interruption insurance proceeds, a portion of such proceeds which represents the amounts which would otherwise have been deposited to the Reserve Fund had such
 
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casualty or other event not occurred, shall, upon receipt of such proceeds, be deposited therein by Owner (or by PRG on behalf of Owner). All funds at any time on deposit in the Reserve Fund shall be the property of Owner, and shall be returned to the full control of Owner on expiration or earlier termination of this Agreement, it being understood and agreed, however, that during the Term the Reserve Fund shall constitute one of the Operating Accounts and be subject to all of the terms and provisions applicable thereto as set forth in Section 3.8 above.
 
 	3.12	Distributions to Owner.	
Contemporaneously with furnishing the monthly statement for each calendar month pursuant to Section 5.3 hereof, PRG shall remit to Owner out of the Operating Accounts the amount (“ Owner’s Remittance Amount ”) as set forth in the Annual Plan or, in the absence of the Owner’s Remittance Amount being set forth in the Annual Plan, such amount as PRG shall deem advisable with consideration being given to the amount then reasonably required to be maintained in the Operating Accounts (after withdrawal of the Management Fee and other amounts due to PRG hereunder and the amounts required to be deposited to the Reserve Fund) in order to carry on the uninterrupted operation of the Hotel in accordance with the Operating Standard and in order to enable PRG to perform its obligations hereunder. Each remittance shall be paid to Owner at Owner’s address then in effect for receipt of notices hereunder, or at such other place as Owner may, from time to time, designate in a notice to PRG.
 
 	3.13	License Agreement.	
In the event any terms or conditions in this Agreement are inconsistent with or conflict with the terms or conditions of the License Agreement, the terms of the License Agreement shall control. In the event any reporting obligations imposed on PRG hereunder are comparable to those required under the License Agreement, PRG shall be deemed to have satisfied the reporting obligation hereunder by preparing the reports required under the License Agreement.
ARTICLE IV
Management Fees and Reimbursements
 
 	4.1	Management Fees.	
For the services to be rendered by PRG hereunder, Owner agrees to pay to PRG a management fee (the “ Management Fee ”) equal to four percent (4%) of the annual Gross Receipts for each Fiscal Year.
 
 	4.2	Time and Manner of Payment.	
With respect to any Fiscal Year and each calendar month included therein, the Management Fee shall be payable in monthly installments of the respective amounts hereinafter provided, which monthly installments shall be paid by PRG withdrawing the same from the Operating Accounts at any time after PRG shall furnish to Owner the unaudited financial statement for such calendar month pursuant to Section 5.3 hereof.
 
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If for any Fiscal Year, the aggregate amount of the monthly installments paid to PRG on account of the Management Fee shall be more or less than the Management Fee payable for such Fiscal Year based upon the final determination of Gross Receipts for such Fiscal Year as reflected in the financial statement for such Fiscal Year then, by way of year end adjustment, within ninety (90) days after the delivery of such financial statement to Owner, PRG shall pay into the Operating Accounts the amount of such overpayment or withdraw from the Operating Accounts the amount of any such underpayment.
 
 	4.3	Reimbursements.	
In addition to the Management Fees, and any other amounts required to be paid to PRG in accordance with the express provisions of this Agreement, Owner shall reimburse PRG as follows: (i) for all Employee Costs with respect to any employees of the Hotel, if any; (ii) out-of-pocket expenses incurred by PRG in managing the Hotel or managing or supervising any Refurbishing Program; and (iii) travel and other reasonable out-of-pocket expenses of PRG’s staff when assigned to full-time duty at the Hotel (for the period of such assignment) or when traveling for the benefit of the Hotel. Reimbursements for the aforesaid shall be made on a periodic basis as costs are incurred, and may be paid by withdrawal by PRG of the required amounts from the Operating Accounts. The reimbursements provided for in this Section 4.3 shall include only direct out-of-pocket expenses and not any general overhead, and shall be allocated to the Hotel on a direct pass through basis, without mark up or profit.
 
 	4.4	Tax on Reimbursements.	
In the event and whenever PRG shall be subject to any tax, irrespective of its designation (including a fee, charge or other imposition for the issuance of a license, permit or the privilege to conduct a business or occupation), imposed, levied or assessed by any governmental agency or instrumentality (other than income and corporate franchise taxes) measured, in whole or in part, by reference to reimbursements to PRG for compensation, employment taxes, fringe benefits paid or payable hereunder, then, and in any such event, Owner will indemnify and hold PRG harmless from and against any and all liability for such tax or taxes to the extent so measured. Any payments made by Owner in this connection shall be paid from the Operating Accounts. At Owner’s request, PRG will resist, by appropriate proceedings, any liability for any tax which is the subject of the foregoing indemnification, in which case all costs and expenses (including, without limitation, attorneys’ fees) incurred by PRG in resisting or defending itself against such liability shall be deemed a Hotel expense payable from the Operating Accounts.
ARTICLE V
Books and Records and Reporting
 
 	5.1	Books and Records.	
PRG shall keep full and adequate books of account and other records reflecting the results of the operation of the Hotel. Such books and records shall, at all times, be kept in all material respects in accordance with the Uniform System, the requirements of the License Agreement and shall be retained at all times at the Hotel. The financial records of the Hotel shall be and remain the property of Owner, shall be available for inspection and copying by Owner and by representatives of Owner at all reasonable times upon
 
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reasonable advance notice to PRG, provided such inspections shall be carried out in a manner which will minimize disruption to Hotel operations. Hotel books and records shall not be destroyed or otherwise disposed of without the prior written consent of Owner except pursuant to PRG’s records retention programs and policies.
 
 	5.2	Audits.	
On an annual basis, and as soon as reasonably practicable after the end of each Fiscal Year (but in no event later than ninety (90) days after the end of such Fiscal Year), at Owner’s request, PRG shall cause an audit of the books and records of the Hotel to be performed by a firm of independent certified public accountants of recognized standing in the hotel industry (“ Accountants ”) selected by PRG and reasonably satisfactory to Owner. In connection therewith, PRG shall make available to the Accountants all books and records of the Hotel which may be requested by the Accountants and shall otherwise cooperate in all reasonable respects in connection with the performance of the audit. The audit shall be conducted in accordance with generally accepted auditing standards, and shall include such tests of the accounting systems and books and records of the Hotel as the Accountants shall deem necessary in order to render an unqualified opinion on the financial statements of the Hotel on the basis of accounting as required by this Agreement. Preliminary work in preparation for the annual audit shall be performed by PRG, and all closing entries and adjustments shall be made and the books and records otherwise made available to the Accountants for inspection and auditing, not later than one hundred twenty (120) days following the end of each Fiscal Year.
 
 	5.3	Reports.	
Throughout the Term (and also after expiration or earlier termination of the Term as to any period ending prior to the expiration or earlier termination thereof), PRG shall deliver or cause to be delivered to Owner the following financial statements and reports (all of which shall conform to the books and records of the Hotel):
(a) Monthly, within forty-five (45) days following the end of each calendar month, (i) a report on the results of operations of the Hotel showing, in reasonable detail, Gross Receipts for such month and for the fiscal period then ended by department, and the amount of Management Fee earned and accrued for the fiscal period then ended, (ii) an accounting with respect to the Reserve Fund showing the amount deposited therein during the fiscal period then ended, the amounts withdrawn therefrom during such period and a statement, in reasonable detail, showing the purpose or purposes for which such withdrawals were made, (iii) a comparison of the results of operations for the Hotel for the fiscal period then ended with the Operating Forecast and with the comparable period in the prior Fiscal Year (if available), and (iv) a statement of all Capital Expenditures made for such fiscal period and a comparison thereof with the approved Capital Budget.
(b) Annually, (i) complete financial statements (the “ Financial Statements ”) for the Hotel for the preceding Fiscal Year, and, if requested by Owner, the opinion of the Accountants thereon based on an audit conducted by said Accountants as may be applicable pursuant to Section 5.2 above, to be delivered by PRG to Owner as soon as the same is available from the Accountants, and (ii) disclosure, in the Financial Statements, in reasonable detail of all Management Fees, and any other material amounts paid or payable to PRG with respect to the preceding Fiscal Year.
 
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(c) From time to time, as requested by Owner (but not more frequently than quarterly), a report of advance bookings for all future periods for which advance bookings have been accepted.
The Financial Statements delivered pursuant to subsection (b) above, and all information contained therein, shall be binding and conclusive on the parties hereto unless, within sixty (60) days following the delivery thereof, either party shall deliver to the other party written notice of its objection thereto setting forth in reasonable detail the nature of such objection.
 
 	5.4	Meetings.	
PRG agrees that it shall meet with Owner, and representatives of Owner, from time to time at the request of Owner to discuss any of the matters set forth in any of the financial or other reports delivered pursuant to Section 5.3, or otherwise to discuss matters pertaining to the operation of the Hotel.
ARTICLE VI
Indemnification
 
 	6.1	Indemnification of PRG.	
To the extent PRG shall not be fully recompensed by insurance, Owner hereby agrees that it will indemnify and hold PRG (and its officers, directors, shareholders, agents, employees and Affiliates) free and harmless of and from any and all damages, liability, cost, claim or expense, including, without limitation, reasonable attorneys’ fees and expenses arising out of or in any way related to the Hotel or to the performance by PRG of its duties hereunder, other than any such damages, liabilities, costs, claims or expenses which arise out of or are attributable to PRG’s gross negligence, willful or intentional misconduct or recklessness, or breach of any provision of this Agreement (other than Section 3.7 as to which the standard shall be PRG’s gross negligence, willful or intentional misconduct or recklessness); provided, however, Owner shall have no liability hereunder to the extent PRG is reimbursed for its loss from the proceeds of insurance maintained in accordance with the provisions of Article IX, and, with respect to such coverage, PRG agrees that it will, in good faith, pursue its available insurance recoveries prior to making demand on Owner for indemnity. Amounts paid by Owner in fulfillment of its indemnification obligations under this Section 6.1 shall constitute Hotel expenses.
 
 	6.2	Indemnification of Owner.	
To the extent Owner shall not be fully recompensed by insurance, PRG hereby agrees that it will indemnify, defend and hold Owner (its partners, and their respective partners, shareholders, officers, directors, agents, employees and Affiliates) free and harmless of and from any and all damages, liabilities, costs, claims or expenses, including, without limitation, attorneys’ fees and expenses arising out of or in any way relating to (i) PRG’s operations, business or conduct other than in connection with the performance of its duties hereunder; (ii) the gross negligence, willful or intentional misconduct or recklessness of PRG; or (iii) the
 
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breach of this Agreement by PRG (other than Section 3.7 as to which the standard shall be PRG’s gross negligence, willful or intentional misconduct or recklessness); provided, however, PRG shall have no liability hereunder to the extent Owner is reimbursed for its loss from the proceeds of insurance, and, with respect to such coverage, Owner agrees that it will, in good faith, pursue its available insurance recoveries prior to making demand on PRG for indemnity. Amounts paid by PRG in fulfillment of its indemnification obligations under this Section 6.2, shall not be deemed an expense of the operation of the Hotel, it being understood and agreed that such amounts shall be borne and paid for solely by PRG.
 
 	6.3	Survival.	
The indemnification provisions of this Agreement as herein set forth shall survive the expiration or earlier termination of this Agreement, but shall relate solely to events occurring or matters arising during the Term.
ARTICLE VII
Specific Owner Covenants
 
 	7.1	General Covenant of Owner.	
In addition to each of the other covenants and obligations of Owner herein contained, Owner hereby agrees to the following additional covenants and agreements as set forth in this Article VIII.
 
 	7.2	Working Capital.	
Except as otherwise in this Agreement specifically provided, Owner shall, at all times during the Term, cause sufficient working capital funds to be on hand in the Operating Accounts to ensure (i) the timely payment of all current liabilities of the Hotel (including, without limitation, Management Fees, and each installment thereof, and all other amounts at any time payable to PRG hereunder), (ii) the uninterrupted and efficient operation of the Hotel at all times during the Term, and (iii) the performance by PRG of its other obligations hereunder. On the date hereof, Owner shall have adequate funds in the Operating Accounts, as reasonably approved by PRG, and there shall be on hand all necessary inventories of food, beverages and operating supplies. Further, Owner shall have met all applicable Legal Requirements, including, without limitation, the procurement of all liquor and other licenses required to meet such Legal Requirements.
 
 	7.3	Title.	
Owner covenants throughout the Term that either Owner, or the successor or successors in interest to Owner, shall own the Hotel or have a valid and subsisting leasehold interest therein sufficient at all times to enable PRG to perform its duties and obligations hereunder in accordance with the provisions of this Agreement. Without limiting the generality of the foregoing, Owner covenants and agrees, for the benefit of PRG, as follows:
(a) So long as PRG shall not be in default hereunder, PRG shall be entitled to operate the Hotel for the Term, and Owner shall, at no expense to PRG, undertake and prosecute all appropriate actions, judicial or otherwise, to protect the title of Owner in the Hotel so as to enable PRG to operate the Hotel in accordance with the provisions of this Agreement on an uninterrupted basis.
 
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(b) Keep and maintain, or cause to be kept and maintained, any leases covering real or personal property or other agreements necessary to the ownership or control of the Hotel, or any part thereof, in full force and effect and free from default, and, in this connection, Owner shall pay and discharge, or cause to be paid and discharged, any ground rents or other rental payments or other charges payable by Owner in respect of the ownership of the Hotel.
(c) Maintain, or cause to be maintained, in good standing and free from default any and all mortgages affecting the Hotel.
(d) Observe, or cause to be observed, and comply with, or cause to be complied with, any and all liens, encumbrances, covenants, charges, burdens or restrictions pertaining to the Hotel or any part thereof.
(e) Grant no rights or interests in the Hotel, or any part thereof or interest therein, which could adversely affect the ability of PRG to operate and manage the Hotel as herein contemplated.
ARTICLE VIII
Insurance
 
 	8.1	Insurance to be Maintained by Owner.	
Owner shall procure and maintain the following insurance with respect to the Hotel throughout the Term, issued by financially responsible insurance companies selected by Owner and duly licensed and authorized to do business in the jurisdiction in which the Hotel shall be located:
(a) Business interruption insurance utilizing an “All Risk” or comparable coverage including flood and earthquake in an amount necessary to provide for not less than one (1) year’s loss of an amount equal to the preceding Fiscal Year’s Gross Receipts less Hotel operating expenses (excluding Management Fees and amounts required to be deposited to the Reserve Fund) for interruptions caused by any covered occurrences which coverage may be maintained by Owner either in separate policies of insurance or as part of Owner’s property, and boiler and machinery coverage;
(b) Comprehensive public liability insurance against claims for bodily injury, death or property damage, including insurance on vehicles operated in conjunction with the operation of the Hotel (whether owned, rented or leased), innkeeper’s legal liability, safe deposit legal liability, sprinkler leakage legal liability, water damage legal liability, fire damage legal liability, garage liability and garage keeper’s liability, personal injury liability, advertising liability, contractual liability, liquor liability, completed operations liability and product liability; and
 
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(c) Such other insurance in amounts as Owner considers advisable for protection against claims, liabilities and losses arising out of or in connection with the operation of the Hotel.
(d) Worker’s compensation insurance in the name of Owner covering all of Owner’s employees at the Hotel, to include employer’s liability, in the amount of Five Hundred Thousand Dollars ($500,000), but in no event less than the statutory amount as required under applicable provisions of law; and
(e) Comprehensive crime insurance in the name of Owner including (i) employee dishonesty coverage, covering Owner’s employees in job classifications normally bonded in other hotels or as otherwise required by law, (ii) loss inside the premises coverage, (iii) loss outside the premises coverage, (iv) money orders and counterfeit paper currency coverage, and (v) depositor’s forgery coverage, covering computer fraud.
Any insurance obtained by Owner, both insurance described above or any other policies or coverages in addition thereto maintained by Owner, shall provide that its coverage shall be primary to any similar insurance maintained by PRG.
 
 	8.2	Coverage.	
All insurance coverage maintained by Owner shall be in amounts, and with coverages, reasonably satisfactory to PRG, and all insurance maintained by PRG shall, subject to other applicable provisions hereof, be in amounts, and with coverages reasonably satisfactory to Owner, but in all events consistent with amounts and coverages in effect from time to time at other PRG managed hotels. Owner and PRG, by notice to the other party, shall have the right to increase or, with the prior approval of the other party, reduce, the minimum amounts of insurance to be maintained pursuant to this Article VIII.
 
 	8.3	Policies and Endorsements.	
Where permitted, all insurance provided under this Article IX shall name PRG, Owner, each member or partner of Owner, and each Lender as additional insureds as their interests may appear. Specifically, without limitation, any policies providing for business interruption insurance shall name PRG as additional insured with respect to its Management Fees. If either PRG or Owner shall ever retain contractors to perform work at or with respect to the Hotel under contracts requiring the contractor to provide insurance coverage for the benefit of the contracting party, all such insurance shall name both PRG and Owner as additional insureds, and any contractor indemnification provisions in any such contracts shall be provided for the benefit of both PRG and Owner. The party procuring such insurance shall deliver to the other party original policies or copies thereof certified as true and accurate by an officer of the party procuring the same, including existing, additional and renewal policies, and, in the case of insurance about to expire, shall deliver evidence of renewal in binder form with respect to renewal policies not later than thirty (30) days prior to the respective date of expiration, and thereafter shall deliver policies or copies thereof as soon as the same are reasonably available. To the extent
 
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reasonably obtainable, all policies of insurance required to be obtained under this Article VIII shall have attached thereto an endorsement that such policy shall not be cancelled or materially changed without at least sixty (60) days’ prior written notice to Owner, PRG, the Lenders or any additional insureds. Any insurance procured by Owner, or any third party contractor, which names PRG as an additional insured shall be endorsed to provide that its coverage shall be primary to any other valid and collectible insurance available to PRG.
 
 	8.4	Waiver of Subrogation.	
Whether Owner or PRG shall provide the insurance required by this Article VIII, any such policies, together with any additional policies or coverages (such as, for example, property insurance and machinery and boiler insurance) will provide that the insurer’s right of subrogation shall be waived in favor of the party not providing the insurance, and, in the case of property and boiler and machinery coverage, in favor of PRG.
 
 	8.5	Insurance Claims.	
PRG shall, on behalf of Owner, promptly investigate all accidents made known to PRG, report the same promptly to the relevant insurance carrier, upon request from time to time by Owner, make a full report to Owner as to all material claims for damages relating to the ownership, operation and maintenance of the Hotel, as such claims become known to PRG, and as to any damage or destruction to the Hotel and the estimated cost thereof, as such matters become known to PRG, and prepare any and all reports and furnish any and all information required by any insurance company in connection therewith to the extent such information is within the control of PRG.
ARTICLE IX
Damage and Condemnation
 
 	9.1	Damage to or Destruction of the Hotel.	
If the Hotel or any material portion thereof shall be damaged or destroyed at any time during the Term by fire, casualty or any other cause to an extent which would interfere with the income producing capacity of the Hotel, Owner shall, with due diligence, repair, rebuild or replace the same substantially to its condition prior to such damage or destruction; provided, however, the obligations of Owner hereunder are subject to receipt of adequate insurance proceeds available to Owner sufficient therefor and receipt of the consent of any Lender for such repair or rebuilding, and the application of insurance proceeds to such purpose. If sufficient proceeds of insurance are available for such purposes and the Lenders have so consented, and if Owner fails to undertake such work within one hundred eighty (180) days after the fire or other casualty (or such later date on which such insurance proceeds shall have been received), or shall fail to complete such work diligently, within the time period agreed to therefor between Owner and PRG, PRG may, at its option, terminate this Agreement immediately upon delivery of written notice to Owner to that effect without, however, any liability to Owner for damages by reason of any such termination.
 
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Notwithstanding the foregoing, if:
(i) the Hotel is damaged or destroyed to such an extent that the cost of repairs or restoration as reasonably estimated by Owner exceeds thirty percent (30%) of the full replacement cost (excluding land, excavations, footings and foundations) of the Hotel; or
(ii) the Hotel is damaged or destroyed to such an extent that the estimated time for repair or restoration thereof, in the reasonable opinion of Owner, shall exceed eighteen (18) months from the commencement of such repair or restoration; or
(iii) the damage or destruction shall occur at any time within the last three (3) years of the then applicable Term (unless PRG shall have any remaining Renewal Options, in which event this provision shall apply only to an occurrence in the last three (3) years of the last Renewal Term, or during the last year of the Initial Term or the then applicable Renewal Term if PRG has failed theretofore to have exercised its Renewal Option);
and if in connection with any of the foregoing, Owner elects not to rebuild or restore the Hotel, then Owner shall be entitled to elect by notice in writing to PRG given at any time within one hundred eighty (180) days after the occurrence of such damage or destruction to terminate this Agreement without liability to PRG or Owner by reason of such termination; provided, however, if Owner shall seek to terminate this Agreement by reason of any of the foregoing provisions, and if Owner thereafter shall nevertheless proceed with repair or restoration or rebuilding of a hotel on the Site at any time within two (2) years following any such termination, PRG shall have the right (but not the obligation) exercisable at any time within ninety (90) days after PRG has actual knowledge of Owner’s intention to rebuild or restore the Hotel, to elect to manage and operate the rebuilt or restored Hotel in accordance with the provisions of this Agreement from the opening date of the rebuilt or restored Hotel and for the unexpired Term (including available Renewal Terms) remaining as of the date of Owner’s termination hereof.
 
 	9.2	Condemnation.	
(a) If the whole of the Hotel, or such portion thereof as shall, in the reasonable opinion of Owner, render the remaining portion of the Hotel unsuitable for use as a hotel meeting the Operating Standard, shall be taken or condemned in any eminent domain, condemnation, compulsory acquisition, expropriation or like proceeding (including conveyances or transfers in lieu thereof) by any competent authority for any public or quasi-public use or purpose, Owner or PRG may terminate this Agreement upon ninety (90) days’ notice to the other party. PRG shall not be entitled to participate in any award or compensation received for such taking or condemnation, but nothing herein shall preclude PRG from seeking an award or compensation from the condemning authority wholly apart from any award or compensation sought by Owner in respect of such taking or condemnation for its loss of business or profits provided no such award to PRG shall have the effect of reducing amounts to which Owner would otherwise be entitled.
(b) If, however, the portion of the Hotel remaining after any taking or condemnation described above is, in the reasonable opinion of both Owner and PRG suitable for use as a hotel meeting the Operating Standard, this Agreement shall not terminate, but
 
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Owner shall make available out of the award to Owner so much thereof as shall be reasonably necessary to repair any damage to the Hotel, or any part thereof, so as to render the Hotel a complete and satisfactory architectural and operational unit meeting the Operating Standard. Subject to the interests of the Lenders, Owner shall retain the balance of the award, after deduction of the sum necessary for repair or restoration. If Lenders do not make available the proceeds of the award to Owner for repairs and restoration, then Owner shall, not later than one hundred eighty (180) days after the date of such taking, be entitled to terminate this Agreement upon ninety (90) days’ written notice to PRG.
(c) If there is a taking or condemnation of all or part of the Hotel for temporary use not in excess of two (2) years, this Agreement shall remain in full force and effect. Owner shall commence restoration, repairs and alterations promptly after the termination or the taking or condemnation for temporary use and shall complete the same with diligence. An awards or other proceeds on account of the taking shall be the property of Owner. This Agreement shall then continue in effect for the balance of the Term (including Renewal Terms) remaining after the date of such taking.
ARTICLE X
Assignment
 
 	10.1	Assignment by PRG.	
Except as herein expressly provided, PRG shall not sell, assign, hypothecate, transfer or otherwise dispose of, in whole or in part, any of its rights or interests hereunder (but may, without Owner’s consent, assign or grant security interests in or to its right to receive Management Fees hereunder as security for any monetary obligations of PRG). It is understood and agreed that any consent granted by Owner to any such transfer or assignment shall not be deemed a waiver of the covenant against assignment or transfer herein contained, nor shall it create any obligation on the part of Owner to grant further consents. Notwithstanding the foregoing, PRG may, without the consent of Owner, transfer or assign its rights under this Agreement in whole, but not in part, to any then Affiliate of PRG, or to any entity which may become an Affiliate as a result of a related and substantially concurrent transaction, or to any successor or assign of PRG which may result from any merger, consolidation or reorganization, or to a corporation or other entity which shall acquire all or substantially all of the business and assets of PRG, subject, in each such case, to compliance by PRG with each of the following terms and conditions:
(a) The transferee, whether an Affiliate or a third party, shall, no later than the effective date of the proposed transfer, have the full right, power and authority to enter into this Agreement and to fulfill the obligations of PRG hereunder.
(b) The transferee shall have executed a written instrument, an executed copy of which shall be delivered to Owner not later than twenty (20) days following the effective date of any such transfer, expressly assuming and agreeing to pay, perform and discharge all of the liabilities and obligations of PRG hereunder, including, without limitation, any such liabilities or obligations arising or accruing prior to, on or after the effective date of any such transfer.
 
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After any such transfer or assignment, upon request of Owner, PRG shall furnish to Owner such written instruments, documents or certificates as Owner may reasonably request in order to verify or document the satisfaction by PRG of each of the conditions set forth above.
It is understood and agreed that any disposition by PRG of its controlling interest in any Affiliate to which it has previously assigned this Agreement, shall be deemed a transfer requiring the prior written consent of Owner as herein required unless all conditions hereinabove set forth to such transfer shall have been complied with and satisfied in connection with such disposition (other than an express assumption agreement).
 
 	10.2	Assignment by Owner.	
In addition to any permitted collateral assignments to Lenders, Owner shall have the right to assign its rights and interests in this Agreement to any person or entity in connection with a sale or transfer of the Hotel (including, without limitation, any lease of the Hotel substantially as an entirety), without the prior written consent of PRG; provided, however, Owner shall not sell, assign or transfer the Hotel, or interest therein, to any person or entity (i) who has a generally unfavorable business reputation as to honesty and compliance with criminal laws; or (ii) who refuses to execute the assumption document referred to in the next succeeding sentence. Upon any such assignment hereof, Owner shall be relieved of its duties, obligations and liabilities hereunder arising after such assignment so long as the assignee thereof shall expressly assume in writing all such duties, obligations and liabilities (including, without limitation, those arising or relating to events occurring prior to any such assignment) and shall agree to be bound by this Agreement as evidenced by a written instrument executed by such assignee in favor of PRG in form and substance reasonably satisfactory to PRG.
ARTICLE XI
Default
 
 	11.1	PRG Defaults.	
The occurrence of any one or more of the following events which continues for more than the period of grace (if any) provided below, shall constitute an “ Event of Default ” by PRG hereunder, and PRG shall be deemed a “ Defaulting Party ” with respect thereto and in “ Default ” hereunder:
(a) If PRG shall fail to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by PRG, and such default shall continue for a period of thirty (30) days after notice thereof by Owner to PRG.
(b) If PRG shall apply for or consent to the appointment of a receiver, trustee or liquidator for PRG, or for all or a substantial part of its assets, file a voluntary petition in bankruptcy, or admit in writing its inability to pay its debts as they come due, make a general assignment for the benefit of creditors, file a petition or answer seeking reorganization or arrangement with creditors or liquidators or to take advantage of any insolvency proceeding, or if any order, judgment or decree shall be entered by any court of competent jurisdiction on the application of a creditor adjudicating PRG a bankrupt or insolvent or approving a petition seeking reorganization or liquidation of PRG or appointing a receiver, trustee or liquidator for PRG or for all or a substantial portion of its assets, and such judgment, order or decree shall continue unstayed and in effect for any period of ninety (90) consecutive days.
 
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(c) If any required licenses for the sale of alcoholic beverages are at any time suspended, terminated or revoked by reason of the unlicensability of PRG (as opposed to any general legislation or governmental act prohibiting the sale of alcoholic beverages in general or by the class of businesses of which the Hotel is a part) and such suspension, termination or revocation shall continue for a period of sixty (60) consecutive days.
 
 	11.2 	Owner Defaults.	
The occurrence of any one or more of the following events which continues for more than the period of grace (if any) provided below, shall constitute an “ Event of Default ” by Owner hereunder, and Owner shall be deemed a “ Defaulting Party ” with respect thereto and in “ Default ” hereunder:
(a) If Owner shall fail to provide funds to be deposited in the Operating Accounts in accordance with the provisions of Section 7.2, and such failure shall continue for a period twenty (20) days following written notice from PRG that such funds are required and have not been provided within the time period herein set forth; or
(b) If Owner shall fail to keep, observe or perform any other material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Owner, and such default shall continue for a period of thirty (30) days after notice thereof by PRG to Owner; or
(c) Any required licenses for the sale of alcoholic beverages are at any time suspended, terminated or revoked by reason of the unlicensability of Owner (as opposed to any general legislation or governmental act prohibiting the sale of alcoholic beverages in general or by the class of businesses of which the Hotel is a part) and such suspension, termination or revocation shall continue for a period of sixty (60) consecutive days.
 
 	11.3	Curing Defaults.	
Any Event of Default by PRG or Owner under the provisions of this Article XI which is susceptible of being cured shall be deemed cured if the nature of such default will not permit it to be cured within the grace period allotted, provided that such party shall have commenced to cure such default within such grace period and shall thereafter proceed with reasonable diligence to cure the same. In no event shall additional time to cure apply in cases where the Event of Default in question may be cured on a timely basis by the payment of money.
 
 	11.4	Remedies.	
In the event of the occurrence of an Event of Default by either party, the “ Non-Defaulting Party ” (that is, the party not in Default hereunder with respect to the event in question) shall have and may exercise against the Defaulting Party such rights and remedies as may be available to said Non-Defaulting Party at law or in equity; provided, however, neither party shall have the right to terminate this Agreement by reason of the occurrence of an Event of Default hereunder unless (x) the Event of Default in question
 
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(i) shall be material in amount or in its adverse affect on the Hotel; and (ii) represents intentional misconduct, reckless behavior or repeated Events of Default of a similar nature by the Defaulting Party, or (y) remedies at law are inadequate to redress such Event of Default; or (z) termination is provided for under any of the express provisions of this Agreement. Whenever termination is an available remedy, the same may be exercised by irrevocable and unconditional written notice to the Defaulting Party and this Agreement shall terminate on the date set forth in such notice, which date shall in no event be sooner than ten (10) days nor later than thirty (30) days, after the delivery thereof. The right of termination set forth in the preceding sentence, if available, shall be in addition to, and not in lieu of, any other rights or remedies provided hereunder or at law or in equity by reason of the occurrence of any such Event of Default, it being understood and agreed that the exercise of the remedy of termination shall not constitute an election of remedies and shall be without prejudice to any such other rights or remedies otherwise available to the Non-Defaulting Party.
ARTICLE XII
Notices
All notices or other communications hereunder shall be in writing and shall be deemed duly delivered (i) upon personal delivery thereof to the other party; (ii) upon electronic facsimile transmission to the other party, at its telecopy number as set forth below, provided such delivery is followed by an original of the notice delivered to the other party by overnight delivery or United States postal service delivery and provided the facsimile copy sent by the sender provides an automatic notation confirming the delivery thereof; (iii) on the next business day following delivery by the sender to a recognized and reliable air freight delivery service; or (iv) three (3) business days following deposit in the United States mails. Selection of the method of delivery shall be at the election and risk of the party sending the notice. All notices delivered hereunder shall be pre-paid by the sending party and shall be addressed to the parties as follows:

If to Owner:	  	HDG Associates	
	  	200 West Madison Street, 39th Floor	
	  	Chicago, Illinois 60606	
		
	  	Telecopy No.: 312-750-8581	
		
If to PRG:	  	200 West Madison Street	
	  	37th Floor	
	  	Chicago, Illinois 60606	
		
	  	Attention: John Kevin Poorman	
		
	  	Telecopy No.: 312-750-8597	
Either party hereto shall have the right to change its address for notice or its telecopy number by delivery in the manner hereinabove provided of an appropriate written notice to the other party setting forth the new address or the new telecopy number, or both.
 
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ARTICLE XIII
General
 
 	13.1	Third Party Beneficiaries.	
Except for those provisions herein which are for the express benefit of Lenders, none of the obligations hereunder of either party shall run to or be enforceable by any party other than the parties to this Agreement and their respective successors and assigns in accordance with the provisions of this Agreement.
 
 	13.2	Counterparts.	
This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which when taken together shall constitute a single instrument.
 
 	13.3	Entire Agreement.	
This Agreement and the exhibits hereto constitute the entire understanding and agreement of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and writings between the parties.
 
 	13.4	Amendments.	
This Agreement may be changed or modified only by an agreement in writing signed by the parties hereto, and no oral understandings shall be binding as between the parties.
 
 	13.5	Brokers.	
Owner and PRG each warrants and represents to the other that no broker or finder was retained by such party to render services in connection with any of the transactions contemplated hereby, and that no fees are due to any third party with respect hereto.
 
 	13.6	Successors and Assigns.	
Subject to the express provisions of Article X above, this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto, and their respective successors and assigns, it being understood that PRG may, without the consent of Owner, delegate and/or subcontract all or any part of PRG’s obligations hereunder to a related or unrelated third party pursuant to a submanagement or similar arrangement
 
 	13.7	Headings.	
The Article and Section headings contained herein are for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement.
 
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 	13.8	Governing Law.	
This Agreement is made pursuant to and shall be construed and interpreted in accordance with, the laws of Illinois.
 
 	13.9	Interest on Overdue Sums.	
If either party shall fail to pay, when due, any sum payable to the other party hereunder, then the Defaulting Party shall, without notice to or demand upon it, be liable to the other party for the payment of such sum together with interest thereon at the rate of (i) “Prime” plus 1% per annum or (ii) the maximum rate of interest allowed by law, whichever shall be less, from the date when such sum shall become due to the date of actual payment. For the purposes hereof, “ Prime ” shall mean the rate per annum published from time to time in the Wall Street Journal as the prevailing prime rate of interest.
 
 	13.10 	Approvals.	
If a party shall desire the approval of the other party hereto to any matter, such party may give notice to such other party that it requests such approval, specifying in reasonable detail the matter as to which such approval is requested. If such other party shall not disapprove such matter in writing within twenty (20) days after receipt of such notice, such other party shall be deemed to have approved the matter referred to in such notice.
 
 	13.11 	Agency and Agency Waivers.	
The relationship between the parties hereto shall be that of principal, in the case of Owner, and agent, in the case of PRG. Nothing herein contained shall be deemed or construed to render the parties hereto partners, joint venturers, landlord/tenant or any relationship other than that of principal and agent. To the extent there is any inconsistency between the common law fiduciary duties and responsibilities of principals and agents, and the provisions of this Agreement, the provisions of this Agreement shall prevail, it being the intention of the parties that this Agreement shall be deemed a waiver by Owner of any fiduciary duties owed by an agent to its principal, and a waiver by PRG of any obligations of a principal to its agent, to the extent the same are inconsistent with, or would have the effect of modifying, limiting or restricting, the express provisions of this Agreement, the intention of the parties being that this Agreement shall be interpreted in accordance with general principles of contract interpretation without regard to the common law of agency except as expressly incorporated in the provisions of this Agreement. In no event shall PRG be deemed in breach of its duties hereunder solely by reason of (i) the failure of the financial performance of the Hotel to meet Owner expectations or income projections or other matters included in the Annual Plan, (ii) the acts of Hotel employees, (iii) the institution of litigation or the entry of judgments against Owner or the Hotel with respect to Hotel operations, or (iv) any other acts or omissions not otherwise constituting a breach of this Agreement, it being the intention and agreement of the parties that PRG’s sole obligation hereunder shall be to act in conformity with the standard of skill, care and diligence referred to in Section 2.1, in conformity with the Operating Standard, and otherwise in conformity with the express terms and provisions of this Agreement.
 
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 	13.12 	Survival and Continuation.	
Notwithstanding the termination of the Term or PRG’s management of the Hotel in accordance with this Agreement, all terms, provisions and obligations of either party contained herein which, in order to give them effect and accomplish their intent and purpose, need to survive such termination shall survive and continue until they have been fully satisfied or performed.
 
 	13.13 	PRG Approvals.	
Owner and PRG agree that in each instance in this Agreement, the Pre-Opening Agreement or elsewhere where PRG is required to approve plans, specifications, budgets and/or financing, no such approval shall imply or be deemed to constitute an opinion by PRG, nor impose upon PRG any responsibility for the design or construction of Building elements, including but not limited to structural integrity, life/safety requirements, adequacy of budgets and/or financing or the compliance with environmental laws.
All reviews and approvals by PRG under the terms of the Management Agreement are for the sole and exclusive benefit of PRG and no other person or party shall have the right to rely on any such reviews or approvals by PRG. PRG shall have the absolute right, in its sole discretion, to waive any such reviews or approvals as a condition to its performance under the Management Agreement.
 
 	13.14 	Confidentiality.	
All information regarding the Hotel not otherwise in the public domain by publication or otherwise shall be received and maintained by PRG in a confidential manner and shall not be disclosed to any third party without the prior written consent of Owner. Owner agrees that it will hold confidential all information relating to PRG and its operating procedures and policies. Further, Owner agrees that it will not, without the prior written consent of PRG, disclose any of the terms or provisions of this Agreement, except pursuant to court order or to potential Lenders or equity investors with whom Owner is engaged in serious negotiations, or to Owner’s lawyers, accountants or other similar consultants or professionals on an “as needed” basis. The foregoing obligations shall survive the termination of the Term of this Agreement by expiration or otherwise. Notwithstanding the foregoing, nothing contained herein shall be deemed to prohibit PRG from disclosing any such information to reputable statistical computation firms who agree not to disclose the identity of the Hotel with respect to such confidential information or to other persons when such disclosure is necessary in order to perform PRG’s obligations hereunder.
 
 	13.15 	Irrevocability of Contract.	
Owner and PRG each acknowledge that they are entering into this Agreement in reliance on the long term nature of the Management Agreement, and further acknowledge that the rights, duties, powers and authority of each of the parties hereto, are intended to be non-terminable throughout the Term, except in accordance with the express provisions of this Agreement or, where appropriate, as a remedy for the occurrence of any Event of Default. It is agreed that neither party will achieve the benefits intended to be achieved if either party has any continuing right or power to terminate this Agreement, or the agency hereby created, except in accordance with the express provisions of this Agreement. Accordingly, both Owner and PRG hereby, as a substantial inducement to
 
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the other to enter into this Agreement, as an inducement to PRG to invest the skill, time, expertise and customer relationships necessary to achieve the long term benefits herein contemplated, and as an inducement to Owner to ensure the full and unrestrained best efforts of PRG in the management and operation of the Hotel in accordance with the provisions of this Agreement, hereby irrevocably waive and relinquish any right, power or authority existing at law or in equity, including, without limitation, any such right, power or authority referred to in Robert E. Woolley v. Embassy Suites, Inc. , 227 Cal. App. 3d 1520 (1990), Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc. et al. , 19 Cal. App. 4th 615 (1993) and their progeny, except in accordance with the express provisions of this Agreement. The parties further hereby acknowledge that any breach of the provisions of this Section 13.16, by either party will cause irreparable and permanent damage to the other party, not fully or substantially compensable by money damages.
 
 	13.16 	Non-Recourse.	
PRG shall look solely and only to the Hotel and revenues therefrom for the payment of any amount and the performance and observance of any representation, warranty, covenant, undertaking, obligation or provision to be paid, performed, discharged or observed by Owner under this Agreement. No partner, shareholder, employee or agent of Owner, nor any disclosed or undisclosed principal for whom Owner may be acting, nor any of their respective heirs, administrators, executors, personal representatives, successors or assigns, shall have any personal liability or other personal obligation for or with respect to any payment, performance or observance of any obligations, provisions, representations, warranties, covenants, indemnification or other undertakings to be paid, performed, discharged or observed by Owner under this Agreement, and, except as otherwise provided herein, PRG agrees not to seek or obtain any deficiency or money judgment against any of the foregoing parties.
 
 	13.17 	No Representation Regarding Projections.	
In entering into this Agreement, PRG and Owner acknowledge that neither Owner nor PRG has made any representation to the other regarding projected earnings, the probability of future success or any other similar matter respecting the Hotel and that PRG and Owner understand that no guarantee is made to the other as to any amount of income to be received by PRG or Owner or as to the future financial success of the Hotel.
 
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IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the day and year first above written.

Owner :	
	
HDG ASSOCIATES, an Illinois general partnership	
		
By:	 	HT-Santa Barbara Motel, Inc., its	
	 	general partner	
		
By:	 	/s/ Harold S. Handelsman	
	 	Harold S. Handelsman
Vice President and Secretary	
	
PRG :	
	
PRITZKER REALTY GROUP, L.P., an Illinois limited partnership	
		
By:	 	PDA Corp., a Delaware corporation,	
	 	the general partner	
		
By:	 	/s/ John Kevin Poorman	
Its:	 	Executive Vice President	
 
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Exhibit 10.47

 

HYATT HOTELS CORPORATION
 
EXECUTIVE OFFICER
 
CHANGE IN CONTROL PLAN
 
AND
 
SUMMARY PLAN DESCRIPTION

 

 

Effective July 28, 2009

 

 

 

HYATT HOTELS CORPORATION EXECUTIVE OFFICER
CHANGE IN CONTROL PLAN
AND
SUMMARY PLAN DESCRIPTION
Hyatt Hotels Corporation Executive Officer Change in Control Plan (the “ Plan ”) provides severance benefits to Executive Officers of Hyatt Hotels Corporation or its subsidiaries and Affiliates (the “ Company ”) in the event of a Change in Control.
This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”). This Plan is governed by ERISA and, to the extent applicable, the laws of the State of Delaware, without reference to the conflict of law provisions thereof.
This document constitutes the official plan document and the required summary plan description under ERISA.
 
I.	ELIGIBILITY	
You will become entitled to benefits under the Plan if you are an Executive Officer and you are permanently laid off or terminated without Cause or you terminate your employment with the Company for Good Reason either (i) within twenty-four months following a Change in Control or (ii) within three months prior to a Change in Control. You will not be eligible for benefits under the Plan if the Plan Administrator determines that you are not an Executive Officer or your employment with the Company was terminated by reason of: (a) resignation other than for Good Reason, (b) death, (c) disability, or (d) discharge for Cause.
In addition, you will not be eligible for benefits under the Plan, if the Plan Administrator determines that you have been offered employment by a Successor Employer at an annual base rate of pay or salary and total compensation opportunity substantially similar to your salary and total compensation opportunity with the Company prior to the Change in Control, to commence promptly following termination of employment with the Company, whether or not you actually become an employee of such Successor Employer.
 
II.	DEFINITIONS	
“ Affiliate ” means as to any Person any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. “Control” for these purposes shall mean the ability to influence, direct or otherwise significantly affect the major policies, activities or action of any person or entity, and the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“ Cause ” shall mean, whether or not such events are discovered or known by the Company at the time of your termination: engaging in illegal or unethical conduct which is or could reasonably be expected to be injurious to the business reputation of the Company; misconduct in the performance of your duties, including your refusal to carry out any proper direction by the Company or your superior officers; fraud, theft, embezzlement or comparable dishonest conduct; or any act that has or threatens to have a substantial adverse effect on the

Company’s reputation, revenue or profitability. The Plan Administrator shall have full and final authority, which shall be exercised in its reasonable discretion, to determine conclusively whether Cause exists pursuant to the above definition.
“ Change in Control ” shall mean (a) prior to the consummation of a public offering in which the Company offers for sale shares of its common stock or other equity interests pursuant to an effective registration statement on Form S-1 or otherwise under the Securities Act of 1933, as amended (an “ IPO ”), Pritzker Affiliates shall fail to own more than 50% of the combined voting power of all Voting Stock of the Company and (b) following an IPO, any Person or two or more Persons acting in concert (other than (i) any Pritzker Affiliate or (ii) any Pritzker Affiliate along with any other stockholder which, together with its Affiliates, owns more than 5% of the combined voting power or the Voting Stock as of June 30, 2009 (a “ Non-Pritzker Affiliate Existing Shareholder ”) so long as Pritzker Affiliates continue to own more Voting Stock than such Non-Pritzker Affiliate Existing Shareholder) shall have acquired “beneficial ownership,” directly or indirectly, of, or shall have acquired by contract or otherwise, Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 50% or more of the combined voting power of all Voting Stock of the Company. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d 3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The Plan Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred and the date of the occurrence of such Change in Control and any incidental matters relating thereto.
“ Compensation ” shall mean the amount equal to (1) your gross base annual salary at the time of termination or if greater on the date of the Change in Control, plus (2) your target annual incentive for the year of termination.
“ Employment Agreement ” shall mean a written agreement setting forth the terms and conditions of your employment with the Company, including an offer letter.
“ Executive Officer ” shall mean executive officers of the Company within the meaning of Rule 3b-7 of the Securities Exchange Act of 1934, as amended (as determined from time to time by the Board of Directors of the Company).
“ Good Reason ” shall mean without your written consent, (a) any material adverse change in the nature or status of your duties, authority or responsibilities, including lines of reporting responsibility, (b) a material reduction in your base salary (c) a material relocation of the Executive’s office as assigned to him by the Company prior to the Change in Control or (d) any other action or inaction of the Company that would constitute a material breach of your material terms of employment by the Company. Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist unless notice of termination on account thereof (specifying a termination date no later than 30 days from the date of such notice) is given no later than 30 days after the time at which the event or condition purportedly giving rise to Good Reason first occurs or arises and (ii) if there exists (without regard to this clause (ii)) an event or condition that constitutes Good Reason, the Company shall have 30 days from the date notice of such a termination is given to cure such event or condition and, if the Company does so, such event or condition shall not constitute Good Reason hereunder.
 
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“ Person ” means an individual, a company, a partnership, a joint venture, a limited liability company or limited liability partnership, an association, a trust, estate or other fiduciary, any other legal entity, and any governmental authority.
“ Plan Administrator ” shall be (i) prior to a Change in Control, the Board of Directors of the Company (the “ Board ”) or such other individual(s) or committee as the Board may designate in writing from time to time, in the Board’s discretion; and (ii) following a Change in Control, such individual(s) as the Plan Administrator in effect immediately prior to the Change in Control shall designate (the “ Successor Administrator ”), or such other individual(s) as the Successor Administrator shall designate in writing from time to time in the Successor Administrator’s discretion. The Plan Administrator designating a Successor Administrator will use its reasonable best efforts to secure its designated Successor Administrator’s services for 24 months following a Change in Control.
“ Pritzker Affiliate ” means (i) all lineal descendants of Nicholas J. Pritzker, deceased, and all spouses and adopted children of such descendants; (ii) all trusts for the benefit of any person described in clause (i) and trustees of such trusts; (iii) all legal representatives of any person or trust described in clauses (i) or (ii); and (iv) all partnerships, corporations, limited liability companies or other entities controlling, controlled by or under common control with any person, trust or other entity described in clauses (i), (ii) or (iii). “Control” for these purposes shall mean the ability to influence, direct or otherwise significantly affect the major policies, activities or action of any person or entity, and the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“ Successor Employer ” shall mean: (1) any entity that acquires or assumes facilities, operations or functions formerly carried out by the Company (such as the buyer of a facility or any entity to which a Company operation or function has been outsourced); (2) any Affiliate of the Company; or (3) any entity making the employment offer at the request of the Company (such as a joint venture of which the Company or an Affiliate is a member).
“ Voting Stock ” means each class of securities the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of the Company, even though the right so to vote has been suspended by the happening of such a contingency.
 
III.	BENEFITS	
If you become entitled to benefits under the Plan, subject to the requirements of Section VI below, you will receive severance benefits (the “ Severance Benefits ”) payable as provided in Section IV determined by the classification category under the following schedule applicable to your position:

Position	 	Severance Benefits	
Executive Chairman and Chief Executive Officer	 	Two Times Compensation	
All Other Executive Officers	 	One Times Compensation	
In addition, you will receive as part of your Severance Benefits an amount equal to your target annual incentive for the year of your termination pro rated based on the number of days elapsed in the year of termination out of 365.
 
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IV.	Payment	
Form of Payment . Your Severance Benefits will be paid in a lump sum; provided that the Change in Control constitutes a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5). Otherwise, your Severance Benefits will be paid in installments on what would have been your regularly scheduled paydays over a period of twenty-four months for the Chief Executive Officer and twelve months for all other Executive Officers. If you die prior to receipt of your full Severance Benefits, any remaining Severance Benefits will be paid to your estate.
Time of Payment . Your Severance Benefits will be paid or otherwise commence as of the next regularly scheduled payroll of the Company after your Release noted in Section VI below has become irrevocable and enforceable. Notwithstanding the foregoing, if you become entitled to the Severance Benefits by reason of your termination prior to a Change in Control, and you are a “specified employee” within the meaning of Section 409A of the Internal Revenue Code, then your Severance Benefits will be paid or otherwise commence as of the next regularly scheduled payroll of the Company following the six month anniversary of your termination.
 
V.	Additional Benefits	
You may elect to buy COBRA continuation coverage for yourself, your spouse, and your covered dependents while eligible to do so. The regular COBRA procedures and rules will apply, except that if you are eligible to receive Severance Benefits, then subject to Section VI, for the duration of your COBRA continuation coverage as an addition to the Severance Benefits payable under Section III, you will receive an amount equal to the difference between the premiums charged for such COBRA continuation coverage and the amount you would have had to pay for similar coverage had your employment with the Company continued (the “Additional Benefits”). You do not need to elect COBRA to receive the Additional Benefits. The Additional Benefits shall be paid in monthly installments over the COBRA continuation period.
 
VI.	Release of Claims	
You will not receive Severance Benefits or the Additional Benefits under the Plan, unless and until you execute and deliver to the Company, following your termination, a confidential separation agreement and general release (the “ Release ”) of any and all claims relating to your employment with the Company and the termination of your employment with the Company and the Release becomes irrevocable and enforceable. The Release shall be substantially in the form attached as Exhibit A as modified from time to time by the Company to reflect any changes in applicable law. You must deliver the executed Release to the Company within 50 days following your termination and in the manner prescribed by the Company, or your Severance Benefits and Additional Benefits will be forfeited.
 
VII.	Integration With Other Payments	
Severance Benefits and Additional Benefits under the Plan are not intended to duplicate any other benefits such as workers’ compensation or unemployment benefits, severance under any Employment Agreement or the Company’s Severance Plan, or pay-in-lieu-of-notice under any applicable laws, such as the WARN Act or similar state law. Should such other benefits, severance or pay-in-lieu-of-notice be payable, your benefits under this Plan will be reduced accordingly or, alternatively, benefits previously paid under this Plan will be treated as having been paid to satisfy such other benefit obligations. In either case, the Plan Administrator, in its reasonable discretion, will determine how to apply this provision and may override other provisions in this Plan in doing so.
 
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VIII.	Taxes and Other Withholdings and Offsets.	
Severance Benefits and Additional Benefits will be taxable to you, and will be subject to all required income, employment and other legally required withholdings. In addition, the Company may offset the Severance Benefits and Additional Benefits by any amounts that you may owe the Company at the time the Severance Benefits or Additional Benefits are payable, including any premiums payable for health or other welfare benefits for the month in which your employment is terminated; provided the Company may not offset any Severance Benefits or Additional Benefits if such offset would cause a violation of Section 409A of the Internal Revenue Code.
 
IX.	OTHER IMPORTANT INFORMATION	
Plan Administration . As the Plan Administrator, the Board has full and sole discretionary authority to administer and interpret the Plan, including discretionary authority to determine eligibility for participation in and for benefits under the Plan, to determine the amount of benefits (if any) payable per participant, and to any terms of this document. The Plan shall be interpreted in accordance with its terms and their intended meanings. However, the Plan Administrator and all Plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion they deem to be appropriate in their reasonable discretion, and to make any findings of fact needed in the administration of the Plan. The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious. All determinations by the Plan Administrator will be final and conclusive upon all persons and be given the maximum possible deference allowed by law. The Plan Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity. The Board may delegate in writing to any other person all or a portion of its authority or responsibility with respect to the Plan. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Plan Administrator in its reasonable discretion, the provision shall be considered ambiguous and shall be interpreted by the Plan Administrator and all Plan fiduciaries in a fashion consistent with its intent, as determined in the reasonable discretion of the Plan Administrator. The Plan Administrator shall amend the Plan retroactively to cure any such ambiguity.
Source of Benefits . The Plan is unfunded, and all severance benefits will be paid from the general assets of the Company or its successor. No contributions are required under the Plan.
Claims Procedure . If you believe you are incorrectly denied a benefit or are entitled to a greater benefit than the benefit you received under the Plan you may submit a signed, written application to the Plan Administrator. You will be notified in writing of the approval or denial of this claim within ninety (90) days of the date that the Plan Administrator, receives the claim, unless special circumstances require an extension of time for processing the claim. In the event an extension is necessary, you will be provided written notice prior to the end of the initial ninety (90) day period indicating the special circumstances requiring the extension and the date by
 
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which the Plan Administrator, expects to notify you of approval or denial of the claim. In no event will an extension extend beyond ninety (90) days after the end of the initial ninety (90) day period. If your claim is denied, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based, and provide a description of any material or information necessary for you to perfect the claim and why such material or information is necessary. The written notification will also provide a description of the Plan’s review procedures and the applicable time limits, including a statement of your right to bring a civil suit under section 502(a) of ERISA following denial of your claim on review.
You will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a full and fair review of the denial by a review panel which will be a named fiduciary of the Plan for purposes of such review. This request should include the reasons you are requesting a review and may include facts supporting your request and any other relevant comments, documents, records and other information relating to your claim. Upon request and free of charge, you will be provided with reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. A final, written determination of your eligibility for benefits shall be made within sixty (60) days of receipt of your request for review, unless special circumstances require an extension of time for processing the claim, in which case you will be provided written notice of the reasons for the delay within the initial sixty (60) day period and the date by which you should expect notification of approval or denial of your claim. This review will take into account all comments, documents, records and other information submitted by you relating to your claim, whether or not submitted or considered in the initial review of your claim. In no event will an extension extend beyond sixty (60) days after the end of the initial sixty (60) day period. If an extension is required because you fail to submit information that is necessary to decide your claim, the period for making the benefit determination on review will be tolled from the date the notice of extension is sent to you until the date on which you respond to the request for additional information. If your claim is denied on review, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based and state that you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. The written notification will also include a statement of your right to bring an action under section 502(a) of ERISA.
If your claim is initially denied or is denied upon review, you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, any document, record or other information that demonstrates that (1) your claim was denied in accordance with the terms of the Plan, and (2) the provisions of the Plan have been consistently applied to similarly situated Plan participants, if any. In pursuing any of your rights set forth in this section, your authorized representative may act on your behalf.
If you do not receive notice within the time periods described above, whether on initial determination or review, you may initiate a lawsuit under Section 502(a) of ERISA.
Plan Amendment or Termination . The Board reserves the right to terminate or amend the Plan at any time, in whole or in part, and in any manner, and for any reason; provided, however, that no such amendment will be effective for three months prior to a Change in Control or for twenty-four months following a Change in Control.
 
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At-Will Employment . No provision of the Plan is intended to provide you with any right to continue as an employee with the Company or its subsidiaries, or in any other capacity, for any specific period of time, or otherwise affect the right of the Company or its subsidiaries to terminate the employment or service of any individual at any time for any reason, with or without cause.
Section 409A of the Internal Revenue Code . This Plan is intended to provide severance benefits under ERISA. Notwithstanding anything to the contrary contained in this Plan, to the maximum extent permitted by applicable law, Severance Benefits payable under this Plan shall be paid in reliance upon Treas. Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals) or Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans). However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Internal Revenue Code, then no Severance Benefits or Additional Benefits shall be payable pursuant to this Plan unless your termination of employment constitutes a “separation from service” within the meaning of Treas. Reg. Section 1.409A-1(h). In addition, to the extent required to comply with Section 409A Severance Benefits and Additional Benefits shall not be payable to any “specified employee” within the meaning of Section 409A until the date six months and one day following separation from service, without interest thereon. In the event this Plan or any benefit paid under this Plan to a participant is deemed to be subject to Section 409A of the Internal Revenue Code, each participant consents to the Company’s adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion, to comply with Section 409A of the Internal Revenue Code, without reducing the amounts of any benefits due to a participant hereunder (excluding for this purpose any decrease in the present value of the benefits).
Indemnification . The Company agrees to indemnify its officers and employees and the members of the Board from all liabilities from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law.
Legal Fees . The Company shall reimburse you for reasonable legal fees and expenses you incur in connection with a claim for Severance Benefits or Additional Benefits under the Plan, but only if and to the extent that you are ultimately determined to be entitled to such Severance Benefits or Additional Benefits either by the Plan Administrator under the claims procedure described above, or by a court of competent jurisdiction upon adjudication of any lawsuit under Section 502(a) of ERISA.
Severability . If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.
Headings . Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.
Defined Terms . Defined Terms contained herein are intended for use in this Plan only and should not be utilized or relied upon for any other purpose.
 
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X.	STATEMENT OF ERISA RIGHTS	
As a participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all plan participants shall be entitled to:
Receive Information About Your Plan and Benefits
Examine, without charge, at the plan administrator’s office and at other specified locations, such as work sites, all documents governing the plan.
Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan. The administrator may make a reasonable charge for the copies.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents and do not receive it within thirty (30) days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110.00 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If you are discriminated against for asserting your rights, you may seek assistance form the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
Assistance With Your Questions
If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
 
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ADDITIONAL PLAN INFORMATION

Name of Plan:	  	Hyatt Hotels Corporation Executive Officer Change in Control Plan	
Sponsor:	  	Hyatt Hotels Corporation	
Employer Identification Number:	  	20-1480589	
Plan Number:	  		
Plan Year:	  	Calendar year	
Plan Administrator:	  	Board of Directors
c/o Hyatt Hotels Corporation
71 S. Wacker Drive
Chicago, Illinois 60606
Attention: General Counsel	
Agent for Service of Legal Process:	  	Plan Administrator, at the above address	
Type of Plan:	  	Employee welfare benefit plan providing for severance benefits	
Plan Costs:	  	The cost of the Plan is paid by the Company	
Type of Administration:	  	Self-administration by the Plan Administrator	
 
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EXHIBIT A
FORM
GENERAL RELEASE OF CLAIMS
This General Release of Claims (the “Release”) is required to be delivered by EMPLOYEE NAME (“Employee”) as a condition of Employee’s receipt of severance and other benefits under the Hyatt Hotels Corporation Executive Officer Change in Control Plan (the “CiC Plan”).
1. Employee agrees that, in consideration of the severance and other benefits to which he/she is eligible under the terms of the CiC Plan, he/she will, and hereby does knowingly and voluntarily, forever and irrevocably release and discharge Hyatt Hotels Corporation, a Delaware corporation (together with its parent, subsidiaries and affiliates, “Employer”), and each of its and their respective officers, directors, employees, shareholders, members, agents, predecessors, successors, purchasers, assigns, representatives and benefit plans (collectively with the Employer, the “Releasees”) of any and all actions, causes of action, grievances, demands, rights, claims for damages, indemnity, costs, interest, loss or injury whatsoever which he/she now has, has had, or may have, whether the same be at law, in equity, or mixed, in any way arising from or relating to Employee’s employment with Employer or the termination of that employment. THIS IS A GENERAL RELEASE. Employee expressly acknowledges that this release specifically includes, but is not limited to, Employee’s intent to release Employer from any claim of age, race, sex, religion, national origin, parental status, sexual orientation, ancestry, harassment, veteran status, retaliation or any other claim of employment discrimination or harassment under Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.), the Age Discrimination in Employment Act (29 U.S.C. § 621, et seq.), the Americans with Disabilities Act (42 U.S.C. § 12101, et seq.), the Family and Medical Leave Act (29 U.S.C. § 2601 et seq.), Worker Adjustment and Retraining Notification Act, Employee Retirement Income Security Act, the Rehabilitation Act of 1973 (29 U.S.C. § 701, et seq.), Illinois Human Rights Act, City of Chicago Human Rights Ordinance [OTHER APPLICABLE STATE OR LOCAL DISCRIMINATION STATUTES/ORDINANCES], and any other similar federal, state or local law regarding employment. Employee is not waiving rights or claims (i) that may arise after the date of this Release, (ii) for indemnification and/or advanced expenses under applicable law, any directors and officers liability insurance, applicable articles of incorporation or by-laws, (iii) to enforce the CiC Plan, (iv) to exercise vested equity awards determined as of the date hereof, (v) to employee benefits which have accrued and are payable pursuant to the Employer’s employee benefit plans, or (vi) which otherwise cannot be waived by law.
2. Employee agrees not to sue any Releasee or participate in any lawsuit against a Releasee concerning any claim released under Section 1 above, or to challenge the enforceability of this Release or the release given thereby.
3. Employee hereby waives all right to any monetary recovery should any federal, state or local administrative agency pursue any claims on Employee’s behalf arising out of or related to employment with and/or separation from employment with any of the Releasees.
 
A-1

4. Employee agrees to treat this Release as confidential and will not discuss or disclose, the terms of this Release, other than his/her immediate family members, attorneys and financial advisors, or as required by law.
5. Employee has read and fully reviewed the terms of this Release. Employee acknowledges that he/she has been advised to consult with an attorney if he/she chooses before signing this Release. Employee also expressly acknowledges that she has been given at least [21 or 45] days to consider this Release and has 60 days from his/her Severance Date to return and not revoke an executed version of this Release before severance or other benefits under the CiC Plan are payable. For a period of 7 days following the execution of this Release, Employee may revoke the Release. The Release shall not become effective or be in force until the revocation period has expired. If Employee signs prior to completion of the [21 or 45] day consideration period, he/she acknowledges that he/she knowingly and voluntarily signed this Release on an earlier date.
6. EMPLOYEE FURTHER UNDERSTANDS THAT THIS RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS TO DATE. In giving this Release, it is further understood and agreed that he/she specifically waives the provisions of Section 1542 of the California Civil Code (and any similar provision of other applicable law) which section reads as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
7. In the event the Employee breaches any terms of this Release, the Employee shall forfeit all rights to benefits under the CiC Plan, and in addition to any and all other remedies available under law or equity to the Employer, the Employee shall be obligated to repay to the COMPANY, all amounts previously paid under the CiC Plan, as well as all reasonable attorneys’ fees, expenses and costs incurred by Releasees incurred in connection with enforcing this Release.
8. Employee expressly acknowledges and understands that this Release is not an admission of liability under any statute or otherwise by Employer, and it does not admit any violation of Employee’s legal rights.
9. The parties agree that this Release shall be binding upon and inure to the benefit of Employee’s assigns, heirs, executors and administrators as well as all Releasees.
10. This Release shall in all respects be interpreted, enforced and governed in accordance with the laws of the State of Illinois and furthermore, any dispute regarding this Release shall be subject to the exclusive jurisdiction of any court of competent jurisdiction located in Chicago, Illinois.
11. The language of all parts of this Release shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. In the event that one or more provisions of this Release shall for any reason be held to be illegal or unenforceable, this Release shall be revised only to the extent necessary to make the Release or such provision(s) legal and enforceable.
 
A-2

12. [Employee acknowledges that he/she has received a list of the ages and job descriptions of the individuals who are eligible to receive severance benefits under the CiC Plan as a condition of signing a similar Severance Release and Release.] [INCLUDED ONLY IF PART OF GROUP TERMINATION UNDER ADEA]

EMPLOYEE	

Print Name:	 	 	

			
 	
Date	 		

A-3

Exhibit 10.48
HYATT HOTELS CORPORATION
CORPORATE OFFICE SEVERANCE PLAN
AND
SUMMARY PLAN DESCRIPTION

 
Effective July 28, 2009

HYATT HOTELS CORPORATION’S CORPORATE OFFICE SEVERANCE PLAN
AND
SUMMARY PLAN DESCRIPTION
Hyatt Hotels Corporation’s Corporate Office Severance Plan (the “ Plan ”) provides severance benefits to United States based corporate employees of Hyatt Hotels Corporation or its subsidiaries and affiliates (the “ Company ”) in the event of involuntary termination of employment. This Plan does not apply to employees working for a Hyatt hotel or at an office based outside the United States.
This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”). This Plan is governed by ERISA and, to the extent applicable, the laws of the State of Delaware, without reference to the conflict of law provisions thereof.
This document constitutes the official plan document and the required summary plan description under ERISA.
I. ELIGIBILITY
You will become entitled to benefits under the Plan if you are employed by the Company at the Corporate Office or designated Divisional Office as defined by the Company and are permanently laid off or terminated without Cause from employment with the Company. You will not be eligible for benefits under the Plan if the Plan Administrator determines that your employment with the Company was terminated by reason of: (i) resignation, (ii) death, (iii) disability, or (iv) discharge for Cause.
In addition, you will not be eligible for benefits under the Plan, if the Plan Administrator determines that you have been offered employment by an Affiliated Employer at an annual base rate of pay or salary of no more than a 10% difference from your current salary with the Company to commence no more than 60 days following termination of employment with the Company, whether or not you actually become an employee of such Affiliated Employer.
II. DEFINITIONS
“ Affiliated Employer ” shall mean any entity licensed by the Company to utilize the Hyatt Hotels & Resorts brand and which is otherwise engaged in the hotel business, not including a franchisee of Hyatt where the owner and operator of the franchised hotel are unaffiliated with the Company.
“ Cause ” shall mean, whether or not such events are discovered or known by the Company at the time of your termination: engaging in illegal or unethical conduct which is or could reasonably be expected to be injurious to the business reputation of the Company; misconduct in the performance of an employee’s duties, including, without limitation, an employee’s refusal to carry out any proper direction by the Company or his or her superior officers; neglect of duties, including but not limited to submission of inferior work product; fraud, theft, embezzlement or comparable dishonest conduct; or any act that has or threatens to have a substantial adverse effect on the Company’s reputation, revenue or profitability. The Plan

Administrator shall have full and final authority, which shall be exercised in its reasonable discretion, to determine conclusively whether Cause exists pursuant to the above definition.
“ Plan Administrator ” shall be the Board of Directors of the Company (the “ Board ”) or such other individual(s) or committee as the Board may designate in writing from time to time, in the Board’s discretion.
“ Week of Pay ” shall mean the amount equal to (1) your gross base weekly rate of pay or salary (excluding overtime, bonuses, premium pay, shift differentials, auto allowance, employee benefits, expense reimbursements, and similar amounts) at the time of termination, plus (2) the sum of all commissions paid during the year prior to the year of termination, divided by 52. If you are paid by the hour, your gross base weekly rate of pay is your regular hourly rate multiplied by your scheduled hours per week. If you are a salaried employee your gross base weekly rate of pay is your annual salary divided by 52.
“ Years of Service ” shall mean your full years of employment with the Company in your most recent period of employment; employment with an entity prior to its acquisition by the Company will not be taken into account except to the extent, if any, that the Company elects to do so in its sole discretion. Prorated benefits will not be paid for any fractional Year of Service. You will be given credit for prior Years of Service if your break in service between periods of employment is less than one year. The period of the break in service will be deducted from your Years of Service total.
III. BENEFITS
Unless otherwise set forth in an Agreement, if you become entitled to benefits under the Plan, subject to your execution of an effective release of claims against the Company, as provided in Section VI below, you will receive severance benefits (the “ Severance Benefits ”) payable as provided in Section IV determined by the classification category under the following schedule applicable to your position:

Position	  	Weeks of Pay/Severance Period	
		
Chairman and Chief Executive Officer of Hyatt Hotels Corporation	  	Seventy-eight (78) Weeks of Pay	
		
Executive Officers of Hyatt Hotels Corporation as defined by the Chief Executive Officer	  	Fifty-two (52) Weeks of Pay	
		
Vice President Level and Above	  	Two Weeks of Pay for each Year of Service with a minimum of twenty-six (26) Weeks of Pay and a maximum of fifty-two (52) Weeks of Pay	
		
Director or Manager Level	  	One Week of Pay for each Year of Service, with a minimum of twelve (12) Weeks of Pay and a maximum of twenty-six (26) Weeks of Pay	
		
Below Manager Level	  	One Week of Pay for each Year of Service, with a minimum of six (6) Weeks of Pay and a maximum of twelve (12) Weeks of Pay	
 
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Your position, “Years of Service” and “Week of Pay” amount will be determined as of the effective date of your termination as maintained in the corporate human resources files. Your Severance Benefit will be paid over the same number of weeks as the number of Weeks of Pay which equal your Severance Benefit (the “ Severance Period ”).
IV. Payment
Form of Payment . Your Severance Benefits will be paid in the form of weekly or biweekly payments, in a weekly rate equal to the amount of your Week of Pay (without interest), payable on what would have been your regularly scheduled paydays for the Severance Period. If you die during the applicable period determined under Section III, your Severance Benefits will be paid to your estate. The Company may choose to pay your Severance Benefits in a lump sum at its sole discretion; provided that the Company may not pay your Severance Benefits in a lump sum if it would violate Section 409A of the Internal Revenue Code. You will not be an employee of the Company during the Severance Period.
Time of Payment . Your Severance Benefits will commence as of the next regularly scheduled payroll of the Company after your Release noted in Section VI below has become irrevocable and enforceable.
V. Additional Benefits
You may elect to buy COBRA continuation coverage for yourself, your spouse, and your covered dependents while eligible to do so. The regular COBRA procedures and rules will apply, except that if you are eligible to receive Severance Benefits, then subject to Section VI, for the applicable Severance Period as an addition to the Severance Benefits payable under Section III, you will receive as Severance Benefits an amount equal to the difference between the premiums charged for such COBRA continuation coverage and the amount you would have had to pay for similar coverage had your employment with the Company continued (the “Additional Benefits”) for the Severance Period. You do not need to elect COBRA to receive the Additional Benefits.
VI. Release of Claims
You will not receive Severance Benefits or the Additional Benefits under the Plan, unless and until you execute and deliver to the Company, following your termination, a confidential separation agreement and general release (the “ Release ”) of any and all claims relating to your employment with the Company and the termination of your employment with the Company and the Release becomes irrevocable and enforceable. The Release must be satisfactory to the Company in form and substance, and you must deliver the executed Release to the Company within 50 days following your termination in the manner prescribed by the Company in writing.
VII. Integration With Other Payments
Severance Benefits and Additional Benefits under the Plan are not intended to duplicate any other benefits such as workers’ compensation wage replacement benefits, disability benefits, pay-in-lieu-of-notice, severance pay, or similar benefits under other benefit plans, severance programs, employment contracts, or applicable laws, such as the WARN Act. Should such other benefits be payable, your benefits under this Plan will be reduced accordingly or, alternatively, benefits previously paid under this Plan will be treated as having been paid to satisfy such other
 
3

benefit obligations. In either case, the Plan Administrator, in its reasonable discretion, will determine how to apply this provision and may override other provisions in this Plan in doing so.
VIII. Reemployment
If you are reemployed by the Company or an Affiliated Employer while benefits are still payable under the Plan, all such benefits will cease, except as otherwise specified by the Plan Administrator, in its reasonable discretion.
IX. Taxes and Other Withholdings and Offsets.
Severance Benefits and Additional Benefits will be taxable to you, and will be subject to all required income, employment and other legally required withholdings. In addition, the Company may offset the Severance Benefits and Additional Benefits by any amounts that you may owe the Company at the time the Severance Benefits and Additional Benefits are payable, including any premiums payable for health or other welfare benefits for the month in which your employment is terminated; provided the Company may not offset any Severance Benefits or Additional Benefits if such offset would cause a violation of Code Section 409A.
X. OTHER IMPORTANT INFORMATION
Plan Administration . As the Plan Administrator, the Board has full and sole discretionary authority to administer and interpret the Plan, including discretionary authority to determine eligibility for participation in and for benefits under the Plan, to determine the amount of benefits (if any) payable per participant, and to any terms of this document. The Plan shall be interpreted in accordance with its terms and their intended meanings. However, the Plan Administrator and all Plan fiduciaries shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion they deem to be appropriate in their reasonable discretion, and to make any findings of fact needed in the administration of the Plan. The validity of any such interpretation, construction, decision, or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly arbitrary or capricious. All determinations by the Plan Administrator will be final and conclusive upon all persons and be given the maximum possible deference allowed by law. The Plan Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity. The Board may delegate in writing to any other person all or a portion of its authority or responsibility with respect to the Plan. If, due to errors in drafting, any Plan provision does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, or as determined by the Plan Administrator in its reasonable discretion, the provision shall be considered ambiguous and shall be interpreted by the Plan Administrator and all Plan fiduciaries in a fashion consistent with its intent, as determined in the reasonable discretion of the Plan Administrator. The Plan Administrator shall amend the Plan retroactively to cure any such ambiguity.
Source of Benefits . The Plan is unfunded, and all severance benefits will be paid from the general assets of the Company or its successor. No contributions are required under the Plan.
Claims Procedure . If you believe you are incorrectly denied a benefit or are entitled to a greater benefit than the benefit you received under the Plan you may submit a signed, written application to the Plan Administrator. You will be notified in writing of the approval or denial of
 
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this claim within ninety (90) days of the date that the Plan Administrator, receives the claim, unless special circumstances require an extension of time for processing the claim. In the event an extension is necessary, you will be provided written notice prior to the end of the initial ninety (90) day period indicating the special circumstances requiring the extension and the date by which the Plan Administrator, expects to notify you of approval or denial of the claim. In no event will an extension extend beyond ninety (90) days after the end of the initial ninety (90) day period. If your claim is denied, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based, and provide a description of any material or information necessary for you to perfect the claim and why such material or information is necessary. The written notification will also provide a description of the Plan’s review procedures and the applicable time limits, including a statement of your right to bring a civil suit under section 502(a) of ERISA following denial of your claim on review.
You will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a full and fair review of the denial by a review panel which will be a named fiduciary of the Plan for purposes of such review. This request should include the reasons you are requesting a review and may include facts supporting your request and any other relevant comments, documents, records and other information relating to your claim. Upon request and free of charge, you will be provided with reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. A final, written determination of your eligibility for benefits shall be made within sixty (60) days of receipt of your request for review, unless special circumstances require an extension of time for processing the claim, in which case you will be provided written notice of the reasons for the delay within the initial sixty (60) day period and the date by which you should expect notification of approval or denial of your claim. This review will take into account all comments, documents, records and other information submitted by you relating to your claim, whether or not submitted or considered in the initial review of your claim. In no event will an extension extend beyond sixty (60) days after the end of the initial sixty (60) day period. If an extension is required because you fail to submit information that is necessary to decide your claim, the period for making the benefit determination on review will be tolled from the date the notice of extension is sent to you until the date on which you respond to the request for additional information. If your claim is denied on review, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based and state that you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. The written notification will also include a statement of your right to bring an action under section 502(a) of ERISA.
If your claim is initially denied or is denied upon review, you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, any document, record or other information that demonstrates that (1) your claim was denied in accordance with the terms of the Plan, and (2) the provisions of the Plan have been consistently applied to similarly situated Plan participants, if any. In pursuing any of your rights set forth in this section, your authorized representative may act on your behalf.
 
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If you do not receive notice within the time periods described above, whether on initial determination or review, you may initiate a lawsuit under Section 502(a) of ERISA.
Plan Amendment or Termination . The Board reserves the right to terminate or amend the Plan at any time, in whole or in part, and in any manner, and for any reason. Any termination or amendment of the Plan will be effective only after 60 days advance written notice to participants if such amendment or termination would result in a reduction of benefits that participants would have otherwise been able to receive under the pre-amended Plan.
At-Will Employment . No provision of the Plan is intended to provide you with any right to continue as an employee with the Company or its subsidiaries, or in any other capacity, for any specific period of time, or otherwise affect the right of the Company or its subsidiaries to terminate the employment or service of any individual at any time for any reason, with or without cause.
Section 409A of the Internal Revenue Code . This Plan is intended to provide severance benefits under ERISA. Notwithstanding anything to the contrary contained in this Plan, to the maximum extent permitted by applicable law, Severance Benefits payable under this Plan shall be paid in reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or Treas. Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals). For this purpose each installment payment shall be considered a separate and distinct installment payment. However, to the extent any such payments are treated as non-qualified deferred compensation subject to Section 409A of the Internal Revenue Code, then no Severance Benefits shall be payable pursuant to this Plan unless your termination of employment constitutes a “separation from service” within the meaning of Treas. Reg. Section 1.409A-1(h). In addition, to the extent required to comply with Section 409A Severance Benefits and Additional Benefits shall not be payable to any “specified employee” within the meaning of Section 409A until the date six months and one day following separation from service, without interest thereon. In the event this Plan or any benefit paid under this Plan to a participant is deemed to be subject to Section 409A of the Internal Revenue Code, each participant consents to the Company’s adoption of such conforming amendments as the Company deems advisable or necessary, in its sole discretion, to comply with Section 409A of the Internal Revenue Code, without reducing the amounts of any benefits due to a participant hereunder (excluding for this purpose any decrease in the present value of the benefits).
Indemnification . The Company agrees to indemnify its officers and employees and the members of the Board from all liabilities from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law.
Severability . If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.
Headings . Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.
Defined Terms . Defined Terms contained herein are intended for use in this Plan only and should not be utilized or relied upon for any other purpose.
 
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XI. STATEMENT OF ERISA RIGHTS
As a participant in the Plan you are entitled to certain rights and protections under ERISA. ERISA provides that all plan participants shall be entitled to:
Receive Information About Your Plan and Benefits
Examine, without charge, at the plan administrator’s office and at other specified locations, such as work sites, all documents governing the plan.
Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan. The administrator may make a reasonable charge for the copies.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents and do not receive it within thirty (30) days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110.00 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If you are discriminated against for asserting your rights, you may seek assistance form the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
Assistance With Your Questions
If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
 
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ADDITIONAL PLAN INFORMATION

Name of Plan:	  	Hyatt Hotels Corporation Corporate Office Severance Plan	
		
Sponsor:	  	Hyatt Hotels Corporation	
		
Employer Identification Number:	  	20-1480589	
		
Plan Number:	  		
		
Plan Year:	  	Calendar year	
		
Plan Administrator:	  	Board of Directors
c/o Hyatt Hotels Corporation
71 S. Wacker Drive
Chicago, Illinois 60606	
		
Agent for Service of Legal Process:	  	Plan Administrator, at the above address	
		
Type of Plan:	  	Employee Welfare Benefit Plan providing for severance benefits	
		
Plan Costs:	  	The cost of the Plan is paid by the Company	
		
Type of Administration:	  	Self-administration by the Plan Administrator	
 
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Exhibit 10.49
HYATT HOTELS CORPORATION
EXECUTIVE INCENTIVE PLAN
I. ESTABLISHMENT AND PURPOSE
Hyatt Hotels Corporation (the “ Company ”) hereby establishes the Hyatt Hotels Corporation Executive Incentive Plan (as amended from time to time, the “ Plan ”). The purpose of the Plan is to (i) attract and retain highly qualified individuals; (ii) obtain from each the best possible performance; (iii) establish a performance goal based on objective criteria; (iv) further underscore the importance of achieving business objectives for the short and long term; and (v) include in such individual’s compensation package an annual incentive component which is tied directly to the achievement of those objectives. 
II. EFFECTIVE DATE; TERM
A. The Plan will be effective as of July 28, 2009. Once effective, the Plan shall remain in effect until such time as it shall be terminated by the Committee (as defined below). The Committee may terminate the Plan at any time; provided, however that except in the event of a Change in Control, the Committee may not terminate the Plan during any performance period without payment of a pro rata portion of any bonus based on the period of time elapsed during the performance period and a determination of the Committee as to satisfaction of pro rata Performance Goals for such period.
B. For this purpose, a “Change in Control” shall mean (a) prior to the consummation of a public offering in which the Company offers for sale shares of its common stock or other equity interests pursuant to an effective registration statement on Form S-1 or otherwise under the Securities Act of 1933, as amended (an “ IPO ”), Pritzker Affiliates shall fail to own more than 50% of the combined voting power of all Voting Stock of the Company and (b) following an IPO, any Person or two or more Persons acting in concert (other than (i) any Pritzker Affiliate or (ii) any Pritzker Affiliate along with any other stockholder which, together with its Affiliates, owns more than 5% of the combined voting power or the Voting Stock as of June 30, 2009 (a “ Non-Pritzker Affiliate Existing Shareholder ”) so long as Pritzker Affiliates continue to own more Voting Stock than such Non-Pritzker Affiliate Existing Shareholder) shall have acquired “beneficial ownership,” directly or indirectly, of, or shall have acquired by contract or otherwise, Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 50% or more of the combined voting power of all Voting Stock of the Company. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d 3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The Plan Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred and the date of the occurrence of such Change in Control and any incidental matters relating thereto. In addition, if a Change in Control constitutes a payment event with respect to any Award which provides for the deferral of compensation and is subject to Section 409A of the Code, then such transaction or event triggering clause (a) or (b) with respect to such award must also constitute a “change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5) to the extent required by Section 409A. The Committee may make such modifications to the

definition of “Change in Control” as it determines appropriate following an initial public offering or such other business condition as the Committee deems necessary and appropriate. The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred and the date of the occurrence of such Change in Control and any incidental matters relating thereto. For purposes hereof the defined terms used in this definition shall have the following meanings:
“ Affiliate ” means as to any Person any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. “ Control ” for these purposes shall mean the ability to influence, direct or otherwise significantly affect the major policies, activities or action of any person or entity, and the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“ Person ” means an individual, a company, a partnership, a joint venture, a limited liability company or limited liability partnership, an association, a trust, estate or other fiduciary, any other legal entity, and any governmental authority.
“ Pritzker Affiliate ” means (i) all lineal descendants of Nicholas J. Pritzker, deceased, and all spouses and adopted children of such descendants; (ii) all trusts for the benefit of any person described in clause (i) and trustees of such trusts; (iii) all legal representatives of any person or trust described in clauses (i) or (ii); and (iv) all partnerships, corporations, limited liability companies or other entities controlling, controlled by or under common control with any person, trust or other entity described in clauses (i), (ii) or (iii). “Control” for these purposes shall mean the ability to influence, direct or otherwise significantly affect the major policies, activities or action of any person or entity, and the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“ Voting Stock ” means each class of securities the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of the Company, even though the right so to vote has been suspended by the happening of such a contingency.
III. ADMINISTRATION
A. Committee . The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the “ Committee ”); the Committee shall consist solely of two or more members who shall qualify as “independent,” as defined in New York Stock Exchange rules, and “non-employee directors” as defined under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”).
B. Committee Authority . The Committee shall have full power to construe and interpret the Plan, establish and amend rules and regulations for its administration, and perform all other acts relating to the Plan, including the delegation of administrative responsibilities, that it believes reasonable and proper and in conformity with the purposes of the Plan.
C. Committee Determinations . Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and/or administration of the Plan shall be final, conclusive and binding on all persons affected thereby. All powers of the
 
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Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals.
D. Delegation of Authority . Notwithstanding the foregoing, the Committee may delegate to the Chief Executive Officer of the Company the authority to make awards under the Plan to employees of the Company who are not subject to the restrictions of Section 16(b) of the Exchange Act. The delegation of authority under this subsection (D) shall be subject to such conditions and limitations as may be determined by the Committee, subject to ratification and approval by the Board if the Board retains such right pursuant to subsection (A) above. If the Chief Executive Officer makes awards pursuant to the delegated authority under this subsection (D), references in the Plan to the “Committee,” as they relate to making such awards (but not to the subsequent administration of such awards), shall be deemed to refer to the Chief Executive Officer.
IV. ELIGIBILITY AND PARTICIPATION
Eligibility to participate in the Plan is limited to senior executives of the Company as determined and selected by the Committee (each a “ Participant ”).
V. BUSINESS CRITERIA
A Participant may receive a bonus payment under the Plan based upon the attainment of performance objectives which are established by the Committee and relate to one or more of the following corporate business criteria with respect to the Company, any of its subsidiaries, divisions, business units, segments or regions or any individual (the “ Performance Goals ”): (i) earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization), (ii) economic value-added (as determined by the Committee), (iii) sales or revenue, (iv) net income (either before or after taxes), (v) cash flow (including, but not limited to, operating cash flow and free cash flow), (vi) return on capital, (vii) return on invested capital, (viii) return on stockholders’ equity, (ix) return on assets, (x) stockholder return, (xi) return on sales, (xii) gross or net profit, (xiii) productivity, (xiv) expense, (xv) operating margin, (xvi) operating efficiency, (xvii) customer satisfaction, (xviii) working capital, (xix) earnings per share, (xx) price per share of common stock, (xxi) market share, (xxii) costs, (xxiii) expenses, (xxiv) chain results, (xxv) gross operating profit, (xxvi) capital deployment, (xxvii) implementation or completion of critical projects, (xxviii) funds from operations, (xxix) branding, (xxx) organizational or succession planning, (xxxi) management or licensing fee growth; each as determined in accordance with generally accepted accounting principles or subject to such adjustments as may be specified by the Committee.
The Committee may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include one or more of the following items relating to: (i) a change in accounting principle, (ii) financing activities, (iii) expenses for restructuring or productivity initiatives, (iv) other non-operating items, (v) acquisitions or dispositions, (vi) the business operations of an entity acquired by the Company during the performance period,
 
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(vii) discontinued operations, (viii) stock dividend, split, combination or exchange of stock, (ix) unusual or extraordinary events, transactions or developments, (x) amortization of intangible assets, other significant income or expense outside the Company’s core on-going business activities, (xi) other nonrecurring items, (xii) changes in applicable law.
VI. BONUS DETERMINATIONS
Any bonuses paid to Participants under the Plan shall be based upon objectively determinable bonus formulas that tie such bonuses to one or more performance objectives relating to the Performance Goals. Bonus formulas may be set for performance periods of one, two or three fiscal years of the Company. A performance period may be concurrent or consecutive. Participants need not be employed on the first day of a performance period. If a Participant becomes eligible to participate in the Plan during a performance period, the Committee shall determine if such Participant shall be eligible to participate in an award for such performance period and whether or not such award may be prorated for such period.
Although the Committee may in its sole discretion reduce a bonus payable to a Participant pursuant to the applicable bonus formula, the Committee shall have no discretion to increase the amount of a Participant’s bonus as determined under the applicable bonus formula.
Unless otherwise provided in a written employment agreement between a Participant and the Company, the payment of a bonus to a Participant with respect to a performance period shall be conditioned upon the Participant’s employment by the Company on the last day of the performance period; provided, however , that in the discretion of the Committee, bonuses may be paid to Participants who have retired or whose employment has terminated after the beginning of the period for which a bonus is made, or to the designee or estate of a Participant who died during such period.
VII. ADDITIONAL CONDITIONS
Once a bonus formula is established under Section VI based on one or more of the Performance Goals, the Committee may with the consent of the Participant establish (and once established, rescind, waive or amend) additional conditions and terms of payment of awards (including but not limited to the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it deems desirable in carrying out the purposes of the Plan and may take into account such other factors as it deems appropriate in administering any aspect of the Plan. However, the Committee shall have no authority to increase the amount of a targeted award granted to any Participant or to pay an award under the Plan if the Performance Goal has not been satisfied.
VIII. PAYMENT OF AWARDS
All awards shall be paid in (i) cash or (ii) with the consent of the Participant and the Committee, the equivalent value of common stock of the Company (“ Common Stock ”) based on the fair market value of the Common Stock on the date the bonus is awarded, as determined by the Committee. The Committee may impose vesting and other similar conditions upon any payment of awards made in Common Stock. Awards paid in Common Stock shall be paid under the Global Hyatt Amended and Restated Long-Term Incentive Plan or any successor equity incentive plan thereto.
 
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Awards shall be paid as soon as practicable following the end of the performance period, but in no event shall payment be made later than two and one half months following the end of the performance period.
IX. SPECIAL AWARDS AND OTHER PLANS
Nothing contained in the Plan shall prohibit the Company from granting awards or authorizing other compensation to any person under any other plan or authority or limit the authority of the Company to establish other special awards or incentive compensation plans providing for the payment of incentive compensation to employees (including those employees who are eligible to participate in the Plan).
X. AMENDMENT OF THE PLAN
The Compensation Committee shall have the right to amend the Plan from time to time or to repeal it entirely or to direct the discontinuance of awards either temporarily or permanently.
XI. RIGHTS OF PLAN PARTICIPANTS
Neither the Plan, nor the adoption or operation of the Plan, nor any documents describing or referring to the Plan (or any part hereof) shall confer upon any Participant any right to continue in the employ of the Company or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge any Participant at any time for any reason whatsoever, with or without cause.
No individual to whom an award has been made or any other party shall have any interest in the cash or any other asset of the Company prior to such amount being paid.
No right or interest of any Participant shall be assignable or transferable, or subject to any claims of any creditor or subject to any lien.
In no event shall the Company be obligated to pay to any Participant an award for any period by reason of the Company’s payment of an award to such Participant in any other period, or by reason of the Company’s payment of an award to any other Participant or Participants in such period or in any other period. Nothing contained in this Plan shall confer upon any person any claim or right to any payments hereunder. Such payments shall be made at the sole discretion of the Committee.
XII. SECTION 409A
Awards under this Plan shall either be exempt from or be designed to comply with Section 409A of the Code. Notwithstanding anything to the contrary in the Plan or any award, if and to the extent the Committee shall determine that the terms of any award may result in the failure of such award to be exempt from or comply with the requirements of Section 409A of the Code, or any applicable regulations or guidance promulgated by the Secretary of the Treasury in
 
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connection therewith, the Committee shall have authority to take such action to amend, modify, cancel or terminate the Plan or any award as it deems necessary or advisable, including without limitation:
1. amendment or modification of the Plan or any award to conform the Plan or such award to the requirements of Section 409A of the Code or any regulations or other guidance thereunder (including, without limitation, any amendment or modification of the terms of any award regarding vesting, exercise, or the timing or form of payment).
2. cancellation or termination of any unvested award, or portion thereof, without any payment to the Participant holding such award.
Any such amendment, modification, cancellation, or termination of the Plan or any award may adversely affect the rights of an Participant with respect to such award without the Participant’s consent.
XIII. MISCELLANEOUS
The Company shall deduct all federal, state and local taxes required by law or Company policy from any award paid hereunder.
The Plan shall be unfunded and is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any award under the Plan. Any accounts under the Plan are for bookkeeping purposes only and do not represent a claim against the specific assets of the Company.
Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Plan.
The Plan and the rights and obligations of the parties to the Plan shall be governed by, and construed and interpreted in accordance with, the law of the State of Illinois (without regard to principles of conflicts of law).

Adopted by Hyatt Hotels Corporation on July 28, 2009.
 
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Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Amendment No. 1 to Registration Statement No. 333-161068 on Form S-1 of our report dated February 27, 2009 (August 5, 2009 as to the effects of the retrospective adoption of SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51, as disclosed in Note 2, for the inclusion of Earnings Per Share information on the consolidated statements of income and in Note 22, and for the inclusion of the financial statement schedule listed in the Index at page F-1) relating to the consolidated financial statements and financial statement schedule of Hyatt Hotels Corporation (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of new accounting standards) appearing in the Prospectus, which is part of this Registration Statement, and to the references to us under the heading “Experts” in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
September 9, 2009