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As filed with the Securities and Exchange Commission on October 15, 2009
Registration No. 333-161068

 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Pre-effective
AMENDMENT NO. 3
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 October 15, 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 $            . Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol “H,” subject to official notice of issuance.
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 Hyatt Hotels Corporation 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, Jay Pritzker and his brother Donald Pritzker, working together with other 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 properties are led by an experienced group of general managers. For example, the general managers at our full service owned and managed hotels have an 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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 	Ÿ 	 	Disputes among Pritzker family members and among Pritzker family members and the trustees of the Pritzker family trusts may result in significant distractions to our management, disrupt our business, have a negative effect on the trading price of our Class A common stock and/or generate negative publicity about Hyatt and the Pritzker family.	
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

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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.
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	  	

             shares	
		
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.	
		
New York Stock Exchange symbol	  	“H”	
The total number of shares of common stock to be outstanding after this offering is based on 168,039,995 shares of our common stock outstanding immediately prior to this offering. This number excludes 9,452,307 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 	 	reflects the one-for-two reverse split of our common stock effected on October 14, 2009;	
 
 	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 34,407 outstanding shares of our common stock into 34,407 shares of Class A common stock; and (3) the reclassification of 168,005,588 outstanding shares of our common stock into 168,005,588 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(3)	 	$	(0.29	) 	 	$	1.37	 	$	0.89	 	$	1.98	 	$	2.41	 	$	2.40	 	$	1.68	
Weighted average shares used in computing basic net income per share(3)	 	 	132,836,818	  	 	 	128,028,836	 	 	128,037,015	 	 	134,585,314	 	 	137,558,738	 	 	115,878,216	 	 	104,112,199	
Weighted average shares used in computing diluted net income per share(3)	 	 	132,836,818	  	 	 	128,028,836	 	 	128,061,147	 	 	134,634,020	 	 	137,558,738	 	 	115,878,216	 	 	104,112,199	
								
Other financial metric:	 				 			 			 			 			 			 			
Adjusted EBITDA(4)	 	$	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(5)	 	As Further
Adjusted(6)(7)	  	        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)	All share and per share amounts reflect a one-for-two reverse split of our common stock effected on October 14, 2009.	
(4)	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.	
(5)	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.”	
(6)	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.	
(7)	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, including our hospitality venture partners, 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 and our hospitality venture partners 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, our third-party property owners or our hospitality venture partners 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 or our hospitality venture partners 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%
 
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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 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.
Disputes among Pritzker family members and among Pritzker family members and the trustees of the Pritzker family trusts may result in significant distractions to our management, disrupt our business, have a negative effect on the trading price of our Class A common stock and/or generate negative publicity about Hyatt and the Pritzker family.
In the past, disputes have arisen between and among certain Pritzker family members, and between and among beneficiaries of the Pritzker family trusts and the trustees of such trusts, with respect to, among other things, the ownership, operation, governance, and management of certain Pritzker family business interests. In connection with certain of these disputes, claims were alleged, and in certain cases, proceedings were initiated, against certain Pritzker family members, including Thomas J. Pritzker, our executive chairman, and other Pritzker family members, some of whom have been or are our directors, and against the trustees, including Thomas J. Pritzker in his capacity as a co-trustee of the U.S. situs trusts. Such past allegations related to, among others, trust management and administration, and violations of certain trustee duties, including fiduciary duties. Some of these disputes led to significant negative publicity for the Pritzker family. These disputes have been resolved with no admissions or finding of any misconduct.
Recently, with respect to Hyatt, disputes arose between and among certain Pritzker family members and the trustees of trusts with respect to, among other things, our dual class structure, which will become effective prior to the completion of this offering. In particular, certain beneficiaries of Pritzker family trusts expressed concern that there could be a value differential between our Class A and Class B common stock based on the difference in voting rights between those two classes of stock. Additionally, certain beneficiaries of Pritzker family trusts noted that the dual class structure had the effect of extending the duration of the voting and lock-up restrictions under the Global Hyatt Agreement and Foreign Global Hyatt Agreement due to the fact that the duration of those restrictions, as originally drafted, was based, in part, on voting power of the outstanding shares of our stock owned by 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) rather than on the percentage of the outstanding shares of our stock owned by them.
In connection with these disputes, the Global Hyatt Agreement and the Foreign Global Hyatt Agreement were amended and restated in three important respects, as described under “Stockholder Agreements” and “Shares Eligible for Future Sale.” First, the agreements were amended and restated to measure the duration of the voting and lock-up restrictions under the Global Hyatt Agreement and Foreign Global Hyatt Agreement on the percentage of outstanding shares, not voting power of shares, of our stock owned by 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). Second, the agreements were amended and restated to permit 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) to sell up to 25% of their aggregate holdings of our common stock, measured as of the date of effectiveness of the registration statement of which this prospectus is a part, during each 12-month period following the date of effectiveness of the registration statement of which this prospectus is a part (without
 
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carry-overs), rather than 20% measured on a similar basis (though shares sold in this offering will count toward the first 12-month period’s limit). Additionally, the prohibition on selling shares to any aggregator (i.e., a person who is required to file a Schedule 13D under the Exchange Act, disclosing an intent other than for investment) was removed. Third, the amended and restated agreements provide for the distribution of Hyatt stock from 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 in consultation with the adult beneficiaries of such trusts as soon as practicable following the date of effectiveness of the registration statement of which this prospectus is a part, subject to the 180-day lock-up period agreed to with the underwriters, the Amended and Restated Global Hyatt Agreement and the Amended and Restated Foreign Global Hyatt Agreement. As a result of such changes to the agreements, 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), other than those who are party to the Agreement Relating to Stock, may now sell up to 100% of their common stock over a shorter period of time. See “Stockholder Agreements,” “Shares Eligible for Future Sale” and “—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.” As part of these discussions, we agreed to provide, in the 2009 Registration Rights Agreement, for a shelf registration in order to facilitate sales of common stock by domestic and foreign Pritzker stockholders. See “Description of Capital Stock—Registration Rights—Shelf Registration Rights.”
Disputes among Pritzker family members, and between and among beneficiaries of the Pritzker family trusts and the trustees of such trusts, including with respect to Hyatt, may arise or continue in the future. If such disputes occur, they may result in significant distractions to our management, disrupt our business, have a negative effect on the trading price of our Class A common stock and/or generate negative publicity about Hyatt and Pritzker family members, including Pritzker family members involved with Hyatt.
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 fully diluted shares of common stock is owned 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 (excluding for such purposes any Pritzker) 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.”
 
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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.
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
 
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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 Amended and Restated Global Hyatt Agreement, Amended and Restated 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 Amended and Restated Global Hyatt Agreement and the Amended and Restated Foreign Global Hyatt Agreement, the 25% limitation on sales of our common stock may, with respect to each 12 month period, be increased to a higher percentage or waived entirely by the unanimous affirmative vote of our independent directors (excluding for such purposes any Pritzker), 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 Amended and Restated Global Hyatt Agreement, Amended and Restated 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 Amended and Restated Global Hyatt Agreement, Amended and Restated 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) from the date of this prospectus.	
 
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Moreover, after this offering, holders of              shares of our common stock, including Pritzker family business interests and entities affiliated with Goldman Sachs and Madrone GHC, 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 the event such registration rights are exercised and a large number of shares are sold in the public market, such sales could reduce the trading price of our Class A common stock. Additionally we will bear all expenses in connection with any such registrations (other than underwriting discounts). In addition, 9,452,307 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.
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. Our Class A common stock has been approved for listing on the New York Stock Exchange, subject to official notice of issuance; however, 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
 
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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 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 (excluding for such purposes any Pritzker) 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 stockholders party to our 2007 Stockholders’ Agreement 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.	
 
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 	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.	
 
 	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.
 
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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, or approximately $             million if the underwriters’ option to purchase additional shares is exercised in full, 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, or approximately $             million if the underwriters’ option to purchase              additional shares is exercised in full, 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, or approximately $             million if the underwriters’ option to purchase              additional shares is exercised in full, 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 26,032 outstanding shares of common stock into 26,032 shares of Class A common stock; and (4) the reclassification of 168,005,588 outstanding shares of common stock into 168,005,588 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 168,031,891 shares issued and outstanding, actual and as adjusted; no shares authorized, issued and outstanding, as further adjusted	  	 	2	  	 	 	2	  	 			
Class A common stock; $0.01 par value; no shares authorized, issued and outstanding, actual and as adjusted; 1,000,000,000 shares authorized and              shares issued and outstanding, as further 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	  	 	3,591	  	 	 	3,591	  	 			
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 6,960,680 shares of common stock reserved for issuance under our LTIP and a restricted stock unit agreement as of June 30, 2009 or an additional 2,500,000 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 $26.80 per share, based on 168,031,891 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	  	$26.80	  			
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	% 	 			
	  	 	  	 	 	 	 	 	  	 	 	 			
If the underwriters exercise their over-allotment option in full, (1) the number of shares held by new investors will increase to approximately             % of the total number of shares our Class A common stock outstanding after this offering and (2) the as adjusted net tangible book value per share of Class A common stock would be approximately $             and the dilution to new investors in net tangible book value per share of Class A common stock would be $            .
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 168,031,891 shares of common stock outstanding as of June 30, 2009. This number excludes 6,960,680 shares of common stock reserved for issuance under the LTIP and a restricted stock unit agreement as of June 30, 2009 and an additional 2,500,000 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 (3)	  	$	(0.29	) 	 	$	1.37	  	$	0.89	  	$	1.98	  	$	2.41	  	$	2.40	  	$	1.68	
 
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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  	  	  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)	All per share amounts reflect a one-for-two reverse split of our common stock effected on October 14, 2009.	
(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 “Prospectus Summary—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 discounts 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 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. Our expertise and experience in each of these areas gives us the flexibility to evaluate growth opportunities
 
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across these lines of business. Growth in the number of management and franchise agreements and earnings therefrom typically results in higher overall returns on invested capital because very little capital is required to be invested under a typical management or franchise agreement. The capital required to build and maintain hotels that we manage for third-party owners, or franchise, is typically provided by the owner of the respective property with minimal capital required by us as the manager or franchisor. During periods of increasing demand we do not share fully in the incremental profits of hotel operations for hotels that we manage for third-party owners as our fee arrangements generally include a base amount calculated using the revenue from the subject hotel and an incentive fee that is, typically, a percentage of hotel profits that is usually less than 20%, with the actual level depending on the structure and terms of the management agreement. We do not share in the benefits of increases in profits from franchised properties because franchisees pay us an initial application fee and ongoing royalty fees that are calculated as a percentage of gross room revenues with no fees based on profits. Disputes or disruptions may arise with third-party owners of hotels we manage or franchise and these disputes can result in termination of the relevant agreement. With respect to property ownership, we believe that ownership of selected hotels in key markets enhances our ability to control our brand presence in these markets. Ownership of hotels allows us to capture the full benefit of increases in operating profits during periods of increasing demand and room rates. The cost structure of a typical hotel is more fixed than variable, so as demand and room rates increase over time, the pace of increase in operating profits typically is higher than the pace of increase of revenues. Hotel ownership is, however, more capital intensive than managing hotels for third-party owners, as we are responsible for the costs and all capital expenditures for our owned hotels. The profits realized in our owned and leased hotel segment are generally more significantly affected by economic downturns and declines in revenues than the results of our management and franchising segments. This is because we absorb the full impact of declining profits in our owned and leased hotels whereas our management and franchise fees do not have the same level of downside exposure to declining hotel profitability. See also “—Principal Factors Affecting our Results of Operations—Factors Affecting our Costs and Expenses—Fixed nature of expenses” and “Risk Factors—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.”
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.
 
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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;	
 
 	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.
 
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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.
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.
 
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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 operated hotels” is defined the same as “Comparable systemwide hotels” with the exception that it is limited to only those hotels we manage or operate and excludes hotels we franchise. “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.
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	
 
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 	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 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.
 
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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 expose more customers to our products and services and to attract guests. Internet distribution channels are online sites that sell hospitality related products and services of multiple brands. Major internet distribution channels used by Hyatt include Expedia.com, Hotels.com, Priceline.com, Orbitz.com, Hotwire.com and Travelocity.com. 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 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.
 
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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.
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
 
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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 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.
 
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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.
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. Included in consolidated management fees for the six months ended June 30, 2009 were $61 million, or a 19% decrease, in base management fees and $38 million, or a 49% decrease, in incentive management fees. This
 
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decrease in hotel revenue and management fees was primarily driven by a decline in demand which was reflected in lower ADR resulting from greater promotional pricing, and lower occupancy levels particularly from group business. While the decline in base management fees generally followed the decline in hotel revenues, the incentive management fees were more negatively affected due to the greater declines in hotel profitability levels. Hotel profitability levels declined due to the impact of significantly reduced revenue levels and the high fixed cost nature of hotel operations. 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.”

 	  	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 $104 million of cost reductions at comparable owned and leased hotels primarily attributable to reductions in compensation-related costs and other variable operating expenses, as we reduced our costs in response to declining hotel revenues. The reduced compensation-related costs largely arose from the reductions in hotel staffing levels. 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
 
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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 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.	
 
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(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, 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	)% 	
 
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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.
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.
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.
 
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 	  	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. Consolidated base management fees in 2008 were $141 million, or a 9% decrease, however 2007 included an additional $10 million of termination and settlement fees. Excluding the incremental termination and settlement fees, base management fees decreased 3% versus 2007. Consolidated incentive management fees were $126 million, or a 6% decrease. The decrease in base management fees were primarily the result of fees for Hyatt branded hotels acquired during 2007 that we continued to manage and were therefore eliminated as intercompany fee revenue during the entirety of 2008. The decrease in incentive fees was due to declines in hotel profitability during the later half of 2008 driven by the economic downturn. 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.”
 
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 	  	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	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
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
 
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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.
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.
 
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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.
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	)% 	
 
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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.
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 attributable to an increase in ADR of 9.2% driven by strong industry demand with the balance of the increase in RevPAR driven by a modest increase in occupancy. 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. Consolidated base management fees in 2007 were $155 million, or a 1% increase, however 2006 included an additional $10 million of termination fees. Excluding these termination fees, base management fees increased 9% versus 2006. Consolidated incentive management fees were $134 million or a 10% increase. The increase in consolidated management fees was 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
 
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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.”

 	  	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 10.9 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 29.2 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 10.9 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(1)	  	$	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(1)	  	 	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	% 	

(1)	Excludes approximately $507 million of our share of unconsolidated hospitality venture indebtedness as of June 30, 2009, substantially all of which is non-recourse to us.	
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 17.9 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	  	2009	  	2010	  	2011	  	2012	  	2013	  	Thereafter	
Debt(1)(2)	  	$	1,244	  	$	73	  	$	101	  	$	347	  	$	42	  	$	630	  	$	51	
Capital lease obligations(1)	  	 	316	  	 	37	  	 	16	  	 	16	  	 	16	  	 	16	  	 	215	
Operating lease obligations	  	 	417	  	 	30	  	 	28	  	 	27	  	 	25	  	 	24	  	 	283	
Purchase obligations	  	 	117	  	 	98	  	 	19	  	 	—  	  	 	—  	  	 	—  	  	 	—  	
Other long-term liabilities(3)	  	 	258	  	 	14	  	 	6	  	 	11	  	 	10	  	 	8	  	 	209	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total contractual obligations	  	$	2,352	  	$	252	  	$	170	  	$	401	  	$	93	  	$	678	  	$	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)	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.	
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. The total amount of debt and capital lease obligations as of June 30, 2009 after giving effect to these 2009 transactions as if they had occurred at June 30, 2009 at foreign exchange rates in effect on that date would have been $928 million and $287 million, respectively, and the respective payments due by period would have been as follows:

 	  	Debt	  	Capital Lease Obligations	
(dollars in millions)	  	Principal	  	Interest	  	Total	  	Effective
Principal	  	Effective
Interest	  	Total	
Remainder of 2009	  	$	4	  	$	22	  	$	26	  	$	1	  	$	7	  	$	8	
2010	  	 	7	  	 	43	  	 	50	  	 	3	  	 	13	  	 	16	
2011	  	 	129	  	 	40	  	 	169	  	 	3	  	 	13	  	 	16	
2012	  	 	—  	  	 	32	  	 	32	  	 	3	  	 	13	  	 	16	
2013	  	 	—  	  	 	32	  	 	32	  	 	3	  	 	13	  	 	16	
2014	  	 	—  	  	 	32	  	 	32	  	 	191	  	 	5	  	 	196	
Thereafter	  	 	501	  	 	86	  	 	587	  	 	13	  	 	6	  	 	19	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Total	  	$	641	  	$	287	  	$	928	  	$	217	  	$	70	  	$	287	
	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
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.
 
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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 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
 
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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.
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	
 
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 	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.	
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	
 
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 	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 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.
 
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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 6,875,000 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 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	  	$	58.18	(1) 	
September 11, 2008	  	 	58.18	(2) 	
June 9, 2009	  	 	26.00	(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 $58.18 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 $26.00 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 $26.00 per share value as the basis for our June 9, 2009 grant. The difference between the $26.00 per share value at June 9, 2009 and the $58.18 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.	
 
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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	  	284,637	  	$	26.00	
May 2, 2008	  	RSUs	  	206,008	  	 	58.18	
September 11, 2008	  	RSUs	  	20,335	  	 	58.18	
June 9, 2009	  	SARs	  	492,209	  	 	14.40	
June 9, 2009	  	RSUs	  	276,722	  	 	26.00	
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.
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
 
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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.
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, Jay Pritzker and his brother Donald Pritzker, working together with other 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 properties are led by an experienced group of general managers. For example, the general managers at our full service owned and managed hotels have an 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, outsourcing of certain services, renegotiation of contracts to improve pricing and modification of certain product standards to lower costs without significantly impacting quality). Some of the primary changes we implemented to product standards included changing the brands, suppliers or the quantities of various supplies or services, including food and other amenities. For example, we changed the brand of our coffee served in certain areas of our operations and reduced the selection of some guest room amenities. We believe we have been able to implement these changes without impacting overall service and product 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, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates 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	
 
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 	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 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. In order to maximize long-term shareholder value we intend to selectively dispose of hotel properties and use the proceeds to expand our presence in markets as described above under “—Increase Market Presence” and “—Expand our Select Service Presence.” 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(2)	 	Branded and unbranded luxury residential accommodations	 	Dubai, Fukuoka, Mumbai	

(1)	As of June 30, 2009, there were two Andaz properties in operation.	
(2)	Units at Hyatt-branded residential properties can be sold on a daily, weekly or monthly basis.	
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 as of June 30, 2009:

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.	
Below is a summary of our Hyatt managed, franchised and owned and leased hotels and residential and vacation ownership properties by segment for all periods presented.

 	 	June 30, 2009	 	June 30, 2008	 	December 31, 2008	 	December 31, 2007	 	December 31, 2006	
 	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	
North America Management and Franchising	 		 		 		 		 		 		 		 		 		 		
Full Service Hotels	 		 		 		 		 		 		 		 		 		 		
Managed	 	105	 	57,723	 	105	 	57,780	 	104	 	57,567	 	104	 	55,709	 	109	 	56,995	
Franchised	 	10	 	3,210	 	9	 	2,966	 	10	 	3,212	 	7	 	2,425	 	3	 	1,013	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Full Service Managed and Franchised	 	115	 	60,933	 	114	 	60,746	 	114	 	60,779	 	111	 	58,134	 	112	 	58,008	
Select Service Hotels	 		 		 		 		 		 		 		 		 		 		
Managed	 	80	 	10,285	 	96	 	12,325	 	94	 	12,064	 	99	 	12,651	 	107	 	13,773	
Franchised	 	88	 	11,124	 	56	 	6,810	 	65	 	8,014	 	48	 	5,885	 	49	 	6,186	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Select Service Managed and Franchised	 	168	 	21,409	 	151	 	19,135	 	159	 	20,078	 	147	 	18,536	 	156	 	19,959	
											
International Management and Franchising	 		 		 		 		 		 		 		 		 		 		
Managed	 	103	 	33,924	 	101	 	33,984	 	102	 	33,985	 	100	 	33,458	 	99	 	32,434	
Franchised	 	2	 	988	 	2	 	992	 	2	 	992	 	2	 	992	 	2	 	992	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Managed and Franchised	 	105	 	34,912	 	103	 	34,976	 	104	 	34,977	 	102	 	34,450	 	101	 	33,426	
											
Total Managed and Franchised	 	388	 	117,254	 	368	 	114,857	 	377	 	115,834	 	360	 	112,120	 	369	 	111,393	
Vacation Ownership Properties	 	15	 	933	 	13	 	885	 	14	 	918	 	13	 	885	 	13	 	885	
Residences	 	10	 	1,322	 	8	 	1,225	 	8	 	1,225	 	8	 	1,225	 	7	 	1,140	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Grand Total Portfolio	 	413	 	119,509	 	389	 	116,967	 	399	 	117,977	 	381	 	113,230	 	389	 	113,418	
 
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Included in the summary above, are the following owned and leased properties:

 	 	June 30, 2009	 	June 30, 2008	 	December 31, 2008	 	December 31, 2007	 	December 31, 2006	
 	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	 	Properties	 	Rooms	
Owned and Leased	 		 		 		 		 		 		 		 		 		 		
Full Service Owned and Leased	 	47	 	21,468	 	45	 	20,964	 	46	 	20,967	 	45	 	20,724	 	45	 	19,865	
Select Service Owned and Leased	 	55	 	7,169	 	56	 	7,319	 	55	 	7,169	 	55	 	7,169	 	64	 	7,358	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Owned and Leased	 	102	 	28,637	 	101	 	28,283	 	101	 	28,136	 	100	 	27,893	 	109	 	27,223	
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.
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 September 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	  	79	  	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. Our directors are divided among the three classes as follows:
 
 	Ÿ 	 	The Class I directors are Messrs. Aronson, Rocca and Hoplamazian and Ms. Pritzker;	
 
 	Ÿ 	 	The Class II directors are Messrs. Nichols, Pritzker, Trott and Tuttle; and	
 
 	Ÿ 	 	The Class III directors are Messrs. McDonald, Friedman and Penner and Ms. Kronick.	
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
 
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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 finance committee and a nominating and corporate governance committee, each of which will 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 .
Finance Committee
Our finance committee consists of Messrs. Pritzker, Hoplamazian and Penner and Ms. Pritzker, with Mr. Pritzker serving as Chairman. The finance committee is authorized to discharge the board’s responsibilities relating to:
 
 	Ÿ 	 	long and short-term financings, including, without limitation, (i) borrowing of funds from, or issuance of debt securities to, one or more lenders in amounts, in each case, in excess of $50,000,000, (ii) designation and issuance of our equity securities and matters related to the	
 
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 	sale and marketing thereof, (iii) financial guarantees in excess of $50,000,000, and (iv) credit support in excess of $50,000,000;	
 
 	Ÿ 	 	changes in our capital structure, including, but not limited to, (i) cash and stock dividend policies, (ii) programs to repurchase our stock, (iii) issues relating to the redemption and/or issuance of our preferred stock, and (iv) stock splits;	
 
 	Ÿ 	 	investments (including the making of loans), divestitures and acquisitions, in each case in excess of $50,000,000;	
 
 	Ÿ 	 	capital expenditures and leasing arrangements, in each case in excess of $50,000,000; and	
 
 	Ÿ 	 	oversight of administration and asset management of our unfunded and funded plans and amounts held for operating needs.	
Our board of directors has adopted a written charter for our finance 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;	
 
 	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
 
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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 .
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
 
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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 at the end of each quarter, provided the director served for the full fiscal quarter. 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. Committee retainers are paid within 30 days after our annual meeting and are pro rated based on the number of full fiscal quarters served or expected to be served in that capacity. In addition, each non-employee committee member receives cash compensation of $1,200 for each full 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 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
 
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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	  	1,838	
John D. Nichols	  	2,268	
Richard C. Tuttle	  	2,268	
 
(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 $26.00 per share valuation, resulting in 1,923 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	
 
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 	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 comparable operated chain revenues, comparable operated chain gross operating profit and segment Performance EBITDA, with the greatest weighting on segment Performance EBITDA. Comparable chain revenues and comparable chain gross operating profit represent the total revenues and gross operating profits for our comparable operated hotels within the chain. We consider our full service Hyatt hotels a chain of hotels which we further categorize based on our business segments – North America and international. Our select service hotels are also a chain. Mr. Floyd’s responsibilities include managing the operations of both the full service and select service chains of Hyatt hotels in North America while Mr. Sarna’s responsibilities include managing the operations of the full service chain of Hyatt hotels internationally.
Mr. Sarna’s financial goals also included management fee growth and RevPAR growth. We measure this RevPAR growth based on the period over period change in the aggregate RevPAR of the comparable operated hotels in the chain. Mr. Floyd’s financial goals also included relative market performance as measured by RevPAR Index. RevPAR Index is a commonly used industry metric which measures a hotel’s RevPAR performance relative to a group of other comparable competitive hotels. It is used as an indicator of relative market performance. We compute comparable operated hotel chain RevPAR Index by averaging the individual RevPAR indices of each of our comparable operated hotels within the chain.
The targets were set according to our business plans and were intended to be achievable, but not without effort. The hotel revenue and gross operating profit targets represent the results of hotel operations managed on behalf of third party hotel owners in addition to our wholly owned hotels. As such, our consolidated results of operations do not include these revenues and operating profits and, accordingly, the indicated growth targets below do not correspond to results reported in our consolidated results of operations.
 
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Due to a decline in operating results in 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. Sarna’s financial goals for the international hotels for 2008 were:

Goal	  	Target	  	Weighting	 	
Comparable Operated Full Service RevPAR Growth	  	11%	  	5	% 	
Comparable Operated Full Service Chain Revenue Growth	  	10.4%	  	5	% 	
Comparable Operated Full Service Chain Gross Operating Profit Growth	  	12.9%	  	5	% 	
Comparable Operated Full Service Management Fee Growth	  	12.2%	  	5	% 	
Segment Performance EBITDA	  	$131,343,000	  	10	% 	
Mr. Floyd’s financial goals for our North American full service hotels and select service brands for 2008 were as follows:

Goal	  	Target	  	Weighting	 	
Comparable Operated Full Service RevPAR Index	  	>0% growth	  	3.33	% 	
Comparable Operated Full Service Chain Revenue Growth	  	5.7%	  	3.33	% 	
Comparable Operated Full Service Chain Gross Operating Profit Growth	  	7.6%	  	3.33	% 	
Comparable Operated Select RevPAR Index	  	>0% growth	  	3.33	% 	
Comparable Operated Select Chain Revenues Growth	  	30.3%	  	3.33	% 	
Comparable Operated Select Chain Gross Operating Profit Growth	  	75.4%	  	3.33	% 	
Segment Performance EBITDA	  	$195,612,000	  	10	% 	
Mr. Floyd met or exceeded his RevPar Index targets for both full service hotels and our select service brands, but did not achieve any of the other segment financial goals. Accordingly, he received a 6.67% payout under his segment financial goals out 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 achieved most of such goals, including his integration of our select service brands into our North American operations and coordination of our sub-brand project, although not in the time horizon anticipated. As a result, he was determined to have earned a payout of 38% of the 40% available for his non-financial goals.
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 market share 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.
 
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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 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
 
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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 105,000 RSUs in 2006 (which were granted outside of our LTIP) and 425,000 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 12,500 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 7,835 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 12,500 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 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.
 
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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.
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 (51,562 SARs) and 25% of the SARs granted in 2007 (6,375 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 425,000 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 105,000 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 	 	12,500 RSU grant (as described under “—Long-Term Incentive”);	
 
 	Ÿ 	 	7,835 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 12,500 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	 			 			 			 	8,500	 		 			 	$	494,530	
									
Harmit J. Singh	 		 			 			 			 		 		 			 			
	 		 	200,000	(3) 	 	 	440,000	 	 	660,000	 		 		 			 			
Restricted Stock Units	 	9/10/2008	 			 			 			 	7,835	 		 			 	 	455,840	
Special Restricted Stock Units	 	9/10/2008	 			 			 			 	12,500	 		 			 	 	727,250	
									
Rakesh K. Sarna	 		 			 			 			 		 		 			 			
	 		 			 	 	464,800	 	 	697,200	 		 		 			 			
Stock Appreciation Rights	 	5/2/2008	 			 			 			 		 	24,925	 	$	58.18	 	 	648,050	
Restricted Stock Units	 	5/2/2008	 			 			 			 	4,750	 		 			 	 	276,355	
Special Restricted Stock Units	 	5/2/2008	 			 			 			 	50,000	 		 			 	 	2,909,000	
									
H. Charles Floyd	 		 			 			 			 		 		 			 			
	 		 			 	 	464,800	 	 	697,200	 		 		 			 			
Stock Appreciation Rights	 	5/2/2008	 			 			 			 		 	21,675	 	$	58.18	 	 	563,550	
Restricted Stock Units	 	5/2/2008	 			 			 			 	4,125	 		 			 	 	239,993	
Special Restricted Stock Units	 	5/2/2008	 			 			 			 	50,000	 		 			 	 	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	 		 		 			 		 	8,500	 	$	494,530	
	 	7/1/2007	 	212,500	 	212,500	 	$	62.80	 	7/1/2017	 		 			
	 	12/18/2006	 		 		 			 		 	35,000	 	 	2,036,300	
								
Harmit J. Singh	 	9/10/2008	 		 		 			 		 	20,335	 	 	1,183,090	
								
Rakesh K. Sarna	 	5/2/2008	 		 		 			 		 	54,750	 	 	3,185,355	
	 	5/2/2008	 		 	24,925	 	 	58.18	 	5/2/2018	 		 			
	 	7/1/2007	 	7,778	 	23,336	 	 	62.80	 	7/1/2017	 		 			
								
H. Charles Floyd	 	5/2/2008	 		 		 			 		 	54,125	 	 	3,148,993	
	 	5/2/2008	 		 	21,675	 	 	58.18	 	5/2/2018	 		 			
	 	7/1/2007	 	7,500	 	22,500	 	 	62.80	 	7/1/2017	 		 			
	 	10/6/2006	 	34,375	 	34,375	 	 	49.90	 	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	  	35,000	  	100% on December 18, 2009 but the shares underlying the RSUs will not be issued until December 21, 2009.	
	  	8,500	  	10/25/25/40% on each anniversary of April 1, commencing April 1, 2009.	
Harmit J. Singh	  	12,500	  	10/25/25/40% on each anniversary of July 31, commencing July 31, 2009.	
	  	7,835	  	10% per year commencing on July 31, 2009.	
Rakesh K. Sarna	  	4,750	  	25% per year on each April 1, commencing April 1, 2009.	
	  	50,000	  	10/25/25/40% on each April 1, commencing April 1, 2009.	
H. Charles Floyd	  	4,125	  	25% per year on each April 1, commencing April 1, 2009.	
	  	50,000	  	10/25/25/40% on each April 1, commencing April 1, 2009.	
 
(3)	Based on a share value of $58.18, 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	  	35,000	  	$	2,036,300	

(1)	Based on a share value of $58.18. 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 $58.18.	
(4)	Represents the value of 70,000 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 $58.18.	
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 $58.18; 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 9,375,000 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
On July 28, 2009, we adopted the 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 6,118,276 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 written consent of
 
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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 25,112,086 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, H Group, Hyatt Corporation, Classic Residence and their respective direct and indirect subsidiaries entered into a tax separation agreement, as amended. 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.
Under the tax separation agreement, as amended, H Group generally controls tax audits and proceedings for periods prior to and including the June 2004 Transaction, other than certain specified tax audits and proceedings that impact Hyatt Corporation and Classic Residence. The party controlling the tax audit or proceeding must consult with the affected parties and may not enter into any settlement agreement that gives rise to an indemnification obligation under the tax separation agreement without the consent of the indemnifying party.
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.
In addition, after this offering, the Pritzker family U.S. situs trusts and entities owned directly and indirectly by such trusts, entities owned by the Pritzker family non-U.S. situs trusts, and their respective transferees will be entitled to certain “long-form” (Form S-1) demand, “short-form” (Form S-3) demand, “shelf” and “piggyback” registration rights, subject to applicable 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. In October 2009, the deferred tax liability of the other Pritzker family business interests became due, and they paid their known tax liability in full. As a result, unless there is a tax reassessment, Hyatt Equities’ guarantee of their liability would have no further effect.
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
 
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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 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.
Marshall E. Eisenberg, a co-trustee of the Pritzker family U.S. situs trusts, is a partner in the law firm of Neal, Gerber & Eisenberg LLP. In 2008, 2007 and 2006, we made aggregate payments of $824,656, $421,767 and $722,557, respectively, to Neal, Gerber & Eisenberg LLP for legal services.
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 12,135,904 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 12,135,904 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 4,145,437 shares of our common stock from all common stockholders of record on August 27, 2007 at a price per share of $61.42. On September 14, 2007, we purchased a total of 4,145,437 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 1,628,134 shares of our common stock from all common stockholders of record on October 2, 2007 at a price per share of $61.42. On October 17, 2007, we purchased a total of 1,628,134 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
 
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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.
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
 
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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.
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
 
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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.
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 8,140,670 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
 
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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 7,687,642 shares of common stock for a purchase price of $425,000,000 and the Goldman Sachs Funds purchased an aggregate of 1,356,642 shares of common stock for an aggregate purchase price of $75,000,000.
Issuance of Common Stock
In May 2009, we issued and sold an aggregate of 29,195,199 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 $26.00 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	  	19,233,325	  	$	500,066,463	
IHE, INC. and Subsidiaries	  	3,836,883	  	$	99,758,971	
GS Sunray Holdings Subco I, L.L.C.	  	1,375,770	  	$	35,770,020	
GS Sunray Holdings Subco II, L.L.C.	  	1,375,770	  	$	35,770,020	
GS Sunray Holdings Parallel Subco, L.L.C.	  	405,197	  	$	10,535,122	
Madrone GHC, LLC	  	1,323,500	  	$	34,411,000	
Lake GHC, LLC	  	941,250	  	$	24,472,500	
Shimoda GHC, LLC	  	235,250	  	$	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”
 
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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 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.
 
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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.
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 233,037 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	
 
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 	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.	
 
 	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
Amended and Restated 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 Amended and Restated 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, 119,127,970 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 company’s fully diluted shares of common stock 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 (excluding for such purposes any Pritzker) or, in the case of transactions involving us and an affiliate, assuming agreement of all of such minimum of three independent directors (excluding for such purposes any Pritzker). All Pritzkers have agreed to cast and submit by proxy to us their votes in a manner consistent with the foregoing voting agreement at least five business days prior to the scheduled date of the Annual or Special Meeting of stockholders, as applicable.
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 company’s fully diluted shares of common stock 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 25% of their aggregate holdings of our common stock, measured as of the date of effectiveness of the registration statement of which this prospectus is a part, in each 12-month period following the date of effectiveness of the registration statement of which this prospectus is a part (without carry-overs), and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors (excluding for such purposes any Pritzker), such 25% limitation may, with respect to each such 12 month period, be increased to a higher percentage or waived entirely. Sales of our common stock, including Class A common stock and Class B common stock, between and among Pritzkers is permitted without regard to the sale restrictions described above and such sales are not counted against the 25% sale limitation. 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. Pursuant to the terms of the Amended and Restated Global Hyatt Agreement, the co-trustees of the Pritzker family U.S. situs trusts have agreed that it is in the best interests of the adult beneficiaries of such trusts to distribute Hyatt stock from such trusts in consultation with the adult beneficiaries as soon as practicable following the date of effectiveness of the registration statement of which this prospectus is a part, subject to the 180-day
 
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lock-up period agreed to with the underwriters. After the co-trustees have notified the adult beneficiaries named below of their intention to distribute Hyatt common stock and have commenced consultation with them as to the structure of such distribution, none of such adult beneficiaries shall, until the earlier of (i) six months from the date of such notification and (ii) the date of distribution of such Hyatt common stock, acquire either directly or indirectly for his or her exclusive benefit, any “derivative securities” (as defined in Rule 16a-1(c) of the Exchange Act) with respect to such Hyatt common stock.
The Amended and Restated 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 Amended and Restated Global Hyatt Agreement are subject to arbitration pursuant to the terms of the agreement. The exclusive requirement to arbitrate under the Amended and Restated Global Hyatt Agreement shall not apply with respect to the manner in which Hyatt’s operations are conducted to the extent the parties (in their capacities as stockholders) and non-Pritzker public stockholders are affected comparably; provided, however, that a party may participate in and benefit from any shareholder litigation initiated by a non-party to the agreement. A party to the agreement may not solicit others to initiate or be a named plaintiff in such litigation (i) unless two thirds of the independent directors (excluding for such purposes any Pritzker) on our board of directors (consisting of at least three independent directors) do not vote in favor of the matter that is the subject of the litigation or (ii) in the case of affiliated transactions reviewed by our board of directors, unless at least one independent director (excluding for such purposes any Pritzker) did not approve the transaction.
Amended and Restated 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 into the Amended and Restated 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 Amended and Restated Foreign Global Hyatt Agreement. IHE, INC. and its Subsidiaries beneficially own 23,765,141 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 company’s fully diluted shares of common stock 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 (excluding for such purposes any Pritzker) or, in the case of transactions involving us and an affiliate, assuming agreement of all of such minimum of three independent directors (excluding for such purposes any Pritzker). All Pritzkers have agreed to
 
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cast and submit by proxy to us their votes in a manner consistent with the foregoing voting agreement at least five business days prior to the scheduled date of the Annual or Special Meeting of stockholders, as applicable.
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 company’s fully diluted shares of common stock 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 25% of their aggregate holdings of our common stock, measured as of the date of effectiveness of the registration statement of which this prospectus is a part, in each 12-month period following the date of effectiveness of the registration statement of which this prospectus is a part, (without carry-overs), and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors (excluding for such purposes any Pritzker), such 25% limitation may, with respect to each such 12 month period, be increased to a higher percentage or waived entirely. Sales of our common stock, including Class A common stock and Class B common stock, between and among Pritzkers is permitted without regard to the sale restrictions described above and such sales are not counted against the 25% sale limitation. 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. Pursuant to the terms of the Foreign Amended and Restated Global Hyatt Agreement, the adult beneficiaries have agreed that it is in their best interests for, and have informed CIBC Trust Company (Bahamas) Limited, as trustee of the Pritzker family non-U.S. situs trusts, and the directors if IHE, INC. and its subsidiaries that it is the adult beneficiaries’ desire that CIBC and the directors of IHE, INC. and its subsidiaries distribute Hyatt stock from IHE, INC. and such non-U.S. situs trusts in consultation with the adult beneficiaries as soon as practicable following the date of effectiveness of the registration statement of which this prospectus is a part, subject to the 180-day lock-up period agreed to with the underwriters. After the trustee has notified the adult beneficiaries named below of its intention to distribute Hyatt common stock and has commenced consultation with them as to the structure of such distribution, none of such adult beneficiaries shall, until the earlier of (i) six months from the date of such notification and (ii) the date of distribution of such Hyatt common stock, acquire either directly or indirectly for his or her exclusive benefit, any “derivative securities” (as defined in Rule 16a-1(c) of the Exchange Act) with respect to such Hyatt common stock.
The Amended and Restated 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 Amended and Restated Foreign Global Hyatt Agreement are subject to arbitration pursuant to the terms of the agreement. The exclusive requirement to arbitrate under the Amended and Restated Foreign Global Hyatt Agreement shall not apply with respect to the manner in which Hyatt’s operations are conducted to the extent the parties (in their capacities as stockholders) and non-Pritzker public stockholders are affected comparably; provided, however, that a party may participate in and benefit from any shareholder litigation initiated by a non-party to the agreement. A party to the agreement may not solicit others to initiate or be a
 
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named plaintiff in such litigation (i) unless two thirds of the independent directors (excluding for such purposes any Pritzker) on our board of directors (consisting of at least three independent directors) do not vote in favor of the matter that is the subject of the litigation or (ii) in the case of affiliated transactions reviewed by our board of directors, unless at least one independent director (excluding for such purposes any Pritzker) did not approve the transaction.
Amended and Restated Agreement Relating to Stock
In addition to the Amended and Restated 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 Amended and Restated Agreement Relating to Stock whereby they have agreed to further restrict their ability to transfer shares of our common stock (other than with respect to an aggregate of 6,946,436 shares of common stock purchased from us in May 2009). Pritzker family business interests for the benefit of the parties to this agreement own, directly or indirectly, 36,695,552 shares, or 21.8%, 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 Amended and Restated Global Hyatt Agreement and Amended and Restated 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
 
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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 25,112,086 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 October 15, 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 168,039,995 shares of common stock outstanding as of October 15, 2009. Upon the filing of our amended and restated certificate of incorporation, which will occur prior to the consummation of this offering, 34,407 outstanding shares of our common stock will be reclassified into 34,407 shares of Class A common stock and 168,005,588 outstanding shares of our common stock will be reclassified into 168,005,588 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 168,039,995 shares of common stock outstanding as of October 15, 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)	 	119,127,970	 	70.9	% 	 		 	—  	 	—  	  	 		 	  	% 	 	  	% 	
IHE, INC. and Subsidiaries(2)	 	23,765,141	 	14.1	% 	 	—  	 	—  	 	—  	  	 	23,765,141	 	  	% 	 	  	% 	
Investment funds affiliated with The Goldman Sachs Group, Inc.(3)	 	12,661,146	 	7.5	% 	 	—  	 	7,096	 	  	% 	 	12,654,050	 	  	% 	 	  	% 	
Madrone GHC, LLC and Affiliates(4)	 	10,187,641	 	6.1	% 	 	—  	 	—  	 	—  	  	 	10,187,641	 	  	% 	 	  	% 	
									
Named Executive Officers and Directors:	 		 			 		 		 			 		 			 			
Thomas J. Pritzker(5)	 	119,128,361	 	70.9	% 	 		 	—  	 	—  	  	 		 	  	% 	 	  	% 	
Mark S. Hoplamazian	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Harmit J. Singh	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Rakesh Sarna	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
H. Charles Floyd	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Kirk A. Rose(6)	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Bernard W. Aronson(7)	 	785	 	*	  	 	—  	 	785	 	*	  	 	—  	 	—  	  	 	*	  	
Richard A. Friedman(8)	 	12,661,146	 	7.5	% 	 	—  	 	7,096	 	  	% 	 	12,654,050	 	  	% 	 	  	% 	
Susan D. Kronick	 	1,073	 	*	  	 	—  	 	1,073	 	*	  	 	—  	 	—  	  	 	—  	  	
Mackey J. McDonald	 	429	 	*	  	 	—  	 	429	 	*	  	 	—  	 	—  	  	 	—  	  	
John D. Nichols(9)	 	1,176	 	*	  	 	—  	 	1,176	 	*	  	 	—  	 	—  	  	 	*	  	
Gregory B. Penner(10)	 	10,198,519	 	6.1	% 	 	—  	 	10,878	 	  	% 	 	10,187,641	 	  	% 	 	  	% 	
Penny Pritzker(11)	 	—  	 	—  	  	 	—  	 	—  	 	—  	  	 	—  	 	—  	  	 	—  	  	
Michael A. Rocca	 	574	 	*	  	 	—  	 	574	 	*	  	 	—  	 	—  	  	 	*	  	
Byron D. Trott	 	644	 	*	  	 	—  	 	644	 	*	  	 	—  	 	—  	  	 	—  	  	
Richard C. Tuttle	 	1,176	 	*	  	 	—  	 	1,176	 	*	  	 	—  	 	—  	  	 	*	  	
All directors and current executive officers as a group (19 persons)	 	141,993,883	 	84.5	% 	 	—  	 	23,831	 	  	% 	 		 	  	% 	 	  	% 	

*	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 terms of the Amended and Restated Global Hyatt Agreement, the co-trustees of the U.S. situs trusts have agreed that it is in the best interests of the adult beneficiaries of such trusts to distribute Hyatt stock (that is not sold in the offering) from such trusts in consultation with the adult beneficiaries as soon as practicable following the date of effectiveness of the registration statement of which this prospectus is a part, subject to the 180-day lock-up period agreed to with the underwriters. It is currently anticipated that the stock will be distributed to trusts for the benefit of the beneficiaries and that the trustee(s) of such trusts will be designated by the trustees of the current trusts in consultation with the beneficiaries. In addition, 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. Following the distribution of the stock to trusts for the benefit of	
 
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 	the beneficiaries as described above, the stock will remain subject to the contractual voting and lock-up restrictions contained in the Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement, and, with respect to stock owned by or for the benefit of Thomas J. Pritzker, Penny Pritzker, Gigi Pritzker Pucker and their respective lineal descendants, the Amended and Restated Agreement Relating to Stock, and may not be sold other than in accordance with such agreements. See “Stockholder Agreements,” “Shares Eligible For Future Sale—Lock-Up Agreements” and “Risk Factors—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” 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) 5,882,470 shares of Class B common stock held of record by IHE, INC., (ii) 5,960,890 shares of Class B common stock held of record by WW HOTELS, INC., (iii) 5,960,890 shares of Class B common stock held of record by Luxury Lodging, Inc. and (iv) 5,960,891 shares of Class B common stock held of record by Hospitality Hotels, Inc. Each of WW HOTELS, INC., Luxury Lodging, Inc. and Hospitality 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 Trust Company (Bahamas) Limited (CIBC) is the sole trustee of such trusts. Pursuant to the terms of the Foreign Amended and Restated Global Hyatt Agreement, the adult beneficiaries have agreed that it is in their best interests for, and have informed CIBC, as trustee of the Pritzker family non-U.S. situs trusts, and the directors if IHE, INC. and its subsidiaries that it is the adult beneficiaries’ desire that CIBC and the directors of IHE, INC. and its subsidiaries distribute Hyatt stock from IHE, INC. and such non-U.S. situs trusts in consultation with the adult beneficiaries as soon as practicable following the date of effectiveness of the registration statement of which this prospectus is a part, subject to the 180-day lock-up period agreed to with the underwriters. It is currently anticipated that the stock will be distributed to trusts for the benefit of the beneficiaries and that the trustee(s) of such trusts will be designated by the trustees of the current trusts in consultation with the beneficiaries. 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. Following the distribution of the stock to trusts for the benefit of the beneficiaries as described above, the stock will remain subject to the contractual voting and lock-up restrictions contained in the Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement, and, with respect to stock owned by or for the benefit of Thomas J. Pritzker, Penny Pritzker, Gigi Pritzker Pucker and their respective lineal descendants, the Amended and Restated Agreement Relating to Stock, and may not be sold other than in accordance with such agreements. See “Stockholder Agreements,” “Shares Eligible For Future Sale—Lock-Up Agreements” and “Risk Factors—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” for additional information. The address of IHE, INC. and its subsidiaries is c/o CIBC, Goodman’s Bay Corporate Centre, West Bay Street, P.O. N-3933, Nassau, Bahamas.	
(3)	Represents (i) 1,624,272 shares of Class B common stock owned by GS Sunray Holdings Parallel Subco, L.L.C., (ii) 5,514,889 shares of Class B common stock owned by GS Sunray Holdings Subco I, L.L.C., (iii) 5,514,889 shares of Class B common stock owned by GS Sunray Holdings Subco II, L.L.C. (collectively, the Goldman Sachs Sunray Entities) and (iv) 7,096 shares of Class A common stock held of record by The Goldman Sachs Group, Inc. The	
 
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 	Goldman Sachs Group, Inc. and certain affiliates, including Goldman, Sachs & Co., may be deemed to directly or indirectly own the 12,654,050 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 12,654,050 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 9,497,313 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) 5,393,337 shares of Class B common stock held of record by Madrone GHC, LLC (Madrone GHC), (ii) 3,835,647 shares of Class B common stock held of record by Lake GHC, LLC (Lake GHC) and (iii) 958,657 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 the board of directors with respect to all matters. With respect to 7,687,641 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) 119,127,970 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) 391 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.	
 
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(7)	Represents 785 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) 12,654,050 shares of Class B common stock held of record collectively by the Goldman Sachs Sunray Entities and (ii) 7,096 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 1,176 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) 9,787 shares of Class A common stock received by Mr. Penner as compensation for his services as a director under the LTIP, (ii) 5,393,337 shares of Class B common stock owned of record by Madrone GHC, (iii) 3,835,647 shares of Class B common stock held of record by Lake GHC, (iv) 958,657 shares of Class B common stock held of record by Shimoda GHC and (v) 1,091 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.	
(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 September 30, 2009, we had issued and outstanding 168,040,266 shares of common stock held by 208 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 34,408 shares of our outstanding common stock into 34,408 shares of Class A common stock and the reclassification of 168,005,858 shares of our outstanding common stock into 168,005,858 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 9,452,305 shares of common stock reserved for issuance under our LTIP and a restricted stock unit agreement. The share numbers listed above reflect the one-for-two reverse stock split effected on October 14, 2009, but do not reflect the elimination of 272 shares of common stock as a result of fractional shares being cashed out in connection with such reverse stock split.
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 Amended and Restated Global Hyatt Agreement, the Amended and Restated 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. If a successor trustee or trustees for a holder of shares of Class B common stock that is a trust and party to such agreements do not execute a joinder to such agreements, each share of Class B common stock will convert automatically into one share of Class A common stock.
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 directors and the issuance of shares of our common stock in a public offering), then each stockholder
 
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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 (a) 25,112,086 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), and (b)                      shares of our common stock pursuant to the terms of a Registration Rights Agreement, dated as of October 12, 2009, among us and the domestic and foreign Pritzker stockholders party thereto (2009 Registration Rights Agreement). The following description of the terms of these registration rights agreements is intended as a summary only and is qualified in its entirety by reference to the 2007 Registration Rights Agreement and the 2009 Registration Rights Agreement filed as exhibits to the registration statement of which this prospectus is a part.
Demand Registration Rights
Following this offering, the holders of approximately                      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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At any time at least 180 days following the consummation of this offering, the stockholders party to the 2009 Registration Rights Agreement may, on not more than one occasion, request that we register all or a portion of such stockholders’ 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 stockholders making the request are, at the anticipated time of effectiveness of the applicable registration statement, permitted to sell shares of their common stock under the applicable lock-up provisions contained in the Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement and the Amended and Restated Agreement Related to Stock, and we are not otherwise prohibited from filing such registration statement under the 2007 Registration Rights Agreement. See “Shares Eligible For Future Sale—Lock-Up Agreements—Pritzker Family Lock-Up Agreements” for additional information with respect to these lock-up provisions.
Form S-3 Registration Rights
Following this offering, the holders of approximately                      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.
Commencing on the date that we become eligible to register securities issued by us on Form S-3, stockholders party to the 2009 Registration Rights Agreement may, on not more than one occasion 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 stockholders making the request are, at the anticipated time of effectiveness of the applicable registration statement, permitted to sell shares of their common stock under the applicable lock-up provisions contained in the Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement and the Amended and Restated Agreement Related to Stock, and we are not otherwise prohibited from filing such registration statement under the 2007 Registration Rights Agreement.
Under each of the 2007 Registration Rights Agreement and the 2009 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.
Shelf Registration Rights
Following this offering, the holders of approximately                      shares of our common stock will be entitled to certain “shelf” registration rights under the 2009 Registration Rights Agreement.
 
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Commencing on the date that we become eligible to register securities issued by us on Form S-3, stockholders party to the 2009 Registration Rights Agreement may, in addition to the demand registration rights described above, request registration of their shares of common stock on a shelf registration statement on Form S-3 pursuant to Rule 415 of the Securities Act, provided that the stockholders making the request are, at the anticipated time of effectiveness of the applicable registration statement, permitted to sell such shares of their common stock under the applicable lock-up provisions contained in the Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement and the Amended and Restated Agreement Related to Stock. We have agreed to use our reasonable best efforts to keep any such shelf registration statement effective and updated for a period of three years (or, if earlier, such time as all the shares covered thereby have been sold). We have also agreed that, at the end of such three year period, we will refile a new shelf registration upon the request of stockholders party to the 2009 Registration Rights Agreement holding at least 1% of our outstanding common stock at such time.
Piggyback Registration Rights
Following this offering, the holders of approximately                      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 and the 2009 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 the Amended and Restated Global Hyatt Agreement, the Amended and Restated Foreign Global Hyatt Agreement and the Amended and Restated Agreement Relating to Stock 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 and one counsel for all holders under the 2009 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 and the 2009 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.
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-
 
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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.
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;	
 
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 	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.”
The 2007 Stockholders’ Agreement further restricts the ability of stockholders party to the agreement to transfer their 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
 
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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
Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol “H,” subject to official notice  of issuance.
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 168,039,995 shares of common stock outstanding immediately prior to this offering. This number excludes 9,452,307 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 Amended and Restated Global Hyatt Agreement, Amended and Restated 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 Amended and Restated Global Hyatt Agreement and the Amended and Restated Foreign Global Hyatt Agreement, the 25% limitations on sales of our common stock may, with respect to each such 12 months period, be increased to a higher percentage or waived entirely by the unanimous affirmative vote of our independent directors (excluding for such purpose any Pritzker), 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 Amended and Restated Global Hyatt Agreement, Amended and Restated 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 Amended and Restated Global Hyatt Agreement, Amended and Restated Foreign Global Hyatt Agreement, Amended and Restated
 
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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 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) from the date of this prospectus.	
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.
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
 
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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
Amended and Restated Global Hyatt Agreement
Under the Amended and Restated 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, 119,127,970 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 company’s fully diluted shares of common stock 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 25% of their aggregate holdings of our common stock, measured as of the date of effectiveness of the registration statement of which this prospectus is a part, in each 12-month period following the date of effectiveness of the registration statement of which this prospectus is a part (without carry-overs), and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors (excluding for such purpose any Pritzker), such 25% limitation may, with respect to each such 12 month period, be increased to a higher percentage or waived entirely. Sales of our common stock, including Class A common stock and Class B common stock, between and among Pritzkers is permitted without regard to the sale restrictions described above and such sales are not counted against the 25% sale limitation. The Amended and Restated 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
 
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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.”
Amended and Restated Foreign Global Hyatt Agreement
Under the Amended and Restated 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, 23,765,141 shares, or 14.1%, 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 company’s fully diluted shares of common stock 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 25% of their aggregate holdings of our common stock, measured as of the date of effectiveness of the registration statement of which this prospectus is a part, in each 12-month period following the date of effectiveness of the registration statement of which this prospectus is a part (without carry-overs), and shall not sell more than such amount during any such period. Upon the unanimous affirmative vote of our independent directors (excluding for such purposes any Pritzker), such 25% limitation may, with respect to each such 12 month period, be increased to a higher percentage or waived entirely. Sales of our common stock, including Class A common stock and Class B common stock, between and among Pritzkers is permitted without regard to the sale restrictions described above and such sales are not counted against the 25% sale limitation. The Amended and Restated 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 36,695,552 shares, or 21.8%, 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 (other than with respect to an aggregate of 6,946,436 shares of common stock purchased from us in May 2009). Subject to limited permitted transfers described in the agreement, and subject to the terms of the Amended and Restated Global Hyatt Agreement and Amended and Restated Foreign Global Hyatt Agreement described above, each
 
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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 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 18,993,810 shares, or 11.3%, of our common stock (and 18,993,810 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
 
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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 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 6,118,276 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.”
 
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Registration Rights
Beginning 180 days following the consummation of this offering, and subject to the lock-up restrictions described above, the holders of                      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 under the 2007 Registration Rights Agreement and the 2009 Registration Rights Agreement. 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 us. 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 12,661,146 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. 9,472,313 shares of the 12,661,146 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.
Our Class A common stock has been approved for listing on the New York Stock Exchange under the symbol “H,” subject to official notice of issuance. 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. Family members of a partner of Latham & Watkins LLP are beneficiaries of trusts that directly and indirectly own shares of our common stock.
 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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 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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 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. October 14, 2009 to reflect the retrospective effect of the reverse stock split as disclosed in Note 21.)
 
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 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	  	$	0.89	  	 	$	1.98	  	 	$	2.41	  	
Net income attributable to Hyatt Hotels Corporation	  	$	1.31	  	 	$	2.01	  	 	$	2.29	  	
EARNINGS PER SHARE – Diluted	  				 				 				
Income from continuing operations	  	$	0.89	  	 	$	1.98	  	 	$	2.41	  	
Net income attributable to Hyatt Hotels Corporation	  	$	1.31	  	 	$	2.01	  	 	$	2.29	  	
See accompanying notes to consolidated financial statements.
 
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 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, 119,830,381 issued and outstanding at December 31, 2008, and 137,733,037 issued and 119,823,561 outstanding at December 31, 2007	  	 	1	  	 	 	1	  	
Additional paid-in capital	  	 	2,242	  	 	 	3,325	  	
Retained earnings	  	 	1,381	  	 	 	1,213	  	
Treasury stock (17,909,476 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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 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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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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 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)

   	 	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	  	 	$	1	 	$	2,788	  	 	$	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	  	 	 	1	 	 	2,801	  	 	 	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	  	 	 	1	 	 	3,325	  	 	 	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	 	 	—  	  	 	 	—  	 	 	(1,101	) 	 	 	—  	  	 	 	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	  	 	$	1	 	$	2,242	  	 	$	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 12,135,904 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 4,145,437 and 1,628,134 shares, respectively, of HHC Common Stock were acquired from other stockholders for $254.6 million and $100.0 million in cash, respectively. The aggregate 17,909,476 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 8,140,671 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 1,998.9 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 119,830,381 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 584,375 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 515,625 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 68,750 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 740,000 and 16,500 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 425,000 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 315,000 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 284,637 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 $26.00, $24.38, and $19.04, 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	  	$	49.90	  	 	$	49.90	  	 	$	62.80	  	 	$	62.80	  	 	$	61.42	  	 	$	58.18	  	
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:	  	1,340,875	  	 	$	57.16	  	9.19	
Granted	  	284,638	  	 	 	58.18	  	9.34	
Exercised	  	—  	  	 	 	—  	  	—  	
Forfeited or canceled	  	(244,771	) 	 	 	53.70	  	8.08	
	  	 	 	 	 	 	  	 	
Outstanding at December 31, 2008:	  	1,380,742	  	 	 	57.98	  	8.44	
Exercisable as of December 31, 2008:	  	518,167	  	 	$	57.08	  	8.18	
Expected to vest as of December 31, 2008:	  	862,576	  	 	$	58.54	  	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	  	105,000	  	$	62.80	  	$	6.6	  	3 years	
May 2008	  	206,007	  	$	58.18	  	$	12.0	  	4 years	
September 2008	  	20,335	  	$	58.18	  	$	1.2	  	4 years & 10 years	
In December 2008, 14,147 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:	  	70,000	  	 	$	62.80	
Granted	  	226,342	  	 	 	58.18	
Vested	  	(36,250	) 	 	 	62.64	
Forfeited or canceled	  	(14,147	) 	 	 	58.18	
	  	 	 	 	 	 	
Nonvested at December 31, 2008:	  	245,945	  	 	$	58.84	
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 EVENTS	
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.
On October 14, 2009, a one-for-two reverse stock split of the Company’s common stock became effective. All shares and per share information referenced throughout the consolidated financial statements have been retroactively adjusted to reflect this stock split.
 
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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:	  	 	128,037,015	  	 	 	134,585,314	  	 	 	137,558,738	  	
Share-based compensation	  	 	24,132	  	 				 				
Shares pursuant to a subscription agreement	  				 	 	48,705	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	  	 	128,061,147	  	 	 	134,634,019	  	 	 	137,558,738	  	

Basic Earnings Per Share:	  				 				 				
Income from Continuing Operations	  	$	0.89	  	 	$	1.98	  	 	$	2.41	  	
Income from discontinued operations	  	 	0.01	  	 	 	0.02	  	 	 	0.03	  	
Gain (loss) on sale of discontinued operations	  	 	0.43	  	 	 	0.01	  	 	 	(0.01	) 	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	 	(0.03	) 	
Net (income) attributable to noncontrolling interests	  	 	(0.02	) 	 	 	—  	  	 	 	(0.11	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	1.31	  	 	$	2.01	  	 	$	2.29	  	

Diluted Earnings Per Share:	  				 				 				
Income from Continuing Operations	  	$	0.89	  	 	$	1.98	  	 	$	2.41	  	
Income from discontinued operations	  	 	0.01	  	 	 	0.02	  	 	 	0.03	  	
Gain (loss) on sale of discontinued operations	  	 	0.43	  	 	 	0.01	  	 	 	(0.01	) 	
Cumulative effect of change in accounting principle	  	 	—  	  	 	 	—  	  	 	 	(0.03	) 	
Net (income) attributable to noncontrolling interests	  	 	(0.02	)  	 	 	—  	  	 	 	(0.11	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net Income Attributable to Hyatt Hotels Corporation	  	$	1.31	  	 	$	2.01	  	 	$	2.29	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
The computations of diluted net income per share for the years ended December 31, 2008, 2007, and 2006 do not include approximately 27,500, 90,000, and 1,500 of shares of stock assumed to be issued as stock-settled stock appreciation rights and approximately 246,000, 70,000, and 105,000 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	  	$	(0.29	) 	 	$	1.37	  	
Net income (loss) attributable to Hyatt Hotels Corporation	  	$	(0.27	) 	 	$	1.35	  	
EARNINGS PER SHARE—Diluted	  				 				
Income (loss) from continuing operations	  	$	(0.29	) 	 	$	1.37	  	
Net income (loss) attributable to Hyatt Hotels Corporation	  	$	(0.27	) 	 	$	1.35	  	
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, 168,031,891 and 119,830,381 issued and outstanding at June 30, 2009 and December 31, 2008, respectively	  	 	2	  	 	 	1	  	
Additional paid-in capital	  	 	3,591	  	 	 	2,242	  	
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	  	 	$	1	 	$	3,325	  	 	$	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	  	 	$	1	 	$	3,330	  	 	$	1,386	  	 	$	(1,101	) 	 	$	(15	) 	 	$	28	  	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
BALANCE—January 1, 2009	 	$	3,592	  	 	$	1	 	$	2,242	  	 	$	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	  	 	$	2	 	$	3,591	  	 	$	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 $55.28, the purchasers would be obligated to purchase shares of Common Stock from the Company at a price of $55.28 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 10,853,142 shares of Common Stock for $600 million, for a purchase price per share of $55.28. 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 8,140,671 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 8,140,671 shares of HHC Common Stock.
Common Stock —On May 14, 2009, the Company sold 29,195,198 shares of HHC Common Stock at $26 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 584,375 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 515,625 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 68,750 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 740,000 and 16,500 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 425,000 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 315,000 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 284,637 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 492,210 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 $14.40, $26.00, $24.38 and $19.04, 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	 	$	49.90	  	 	$	49.90	  	 	$	62.80	  	 	$	62.80	  	 	$	61.42	  	 	$	58.18	  	 	$	26.00	  	
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:	  	1,380,742	  	$	57.98	  	8.44	
Granted	  	492,210	  	 	26.00	  	9.95	
Exercised	  	—  	  	 	—  	  	—  	
Forfeited or cancelled	  	—  	  	 	—  	  	—  	
	  	 	  	 	 	  	 	
Outstanding at June 30, 2009:	  	1,872,952	  	$	49.58	  	8.47	
Exercisable as of June 30, 2009:	  	645,196	  	$	57.74	  	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	  	105,000	  	$	62.80	  	$	7	  	3 years	
May 2008	  	206,007	  	$	58.18	  	$	12	  	4 years	
September 2008	  	20,335	  	$	58.18	  	$	1	  	4 years & 10 years	
May 2009	  	116,346	  	$	26.00	  	$	3	  	4 years	
May 2009	  	160,378	  	$	26.00	  	$	4	  	Immediately to 11 years	
In December 2008, 14,147 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:	  	245,945	  	 	$	58.84	
Granted	  	276,725	  	 	 	26.00	
Vested	  	(39,405	) 	 	 	44.28	
Forfeited or cancelled	  	—  	  	 	 	—  	
	  	 	 	 	 	 	
Nonvested at June 30, 2009:	  	483,265	  	 	$	41.22	
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:	  	 	132,836,818	  	 	 	128,028,835	  	
Share-based compensation and subscription receivable	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	  	 	132,836,818	  	 	 	128,028,835	  	
	  	 	 	 	 	 	 	 	
Basic Earnings Per Share: 	  				 				
(Loss) Income from Continuing Operations	  	$	(0.29	) 	 	$	1.37	  	
Income from discontinued operations	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income	  	$	(0.29	) 	 	$	1.37	  	
Net Loss (Income) Attributable to Noncontrolling Interests	  	 	0.02	  	 	 	(0.02	) 	
	  	 	 	 	 	 	 	 	
Net (Loss) Income Attributable to Hyatt Hotels Corporation	  	$	(0.27	) 	 	$	1.35	  	
	  	 	 	 	 	 	 	 	
Diluted Earnings Per Share:	  				 				
(Loss) Income from Continuing Operations	  	$	(0.29	) 	 	$	1.37	  	
Income from discontinued operations	  	 	—  	  	 	 	—  	  	
Gain (loss) on sale of discontinued operations	  	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net (Loss) Income	  	$	(0.29	) 	 	$	1.37	  	
Net Loss (Income) Attributable to Noncontrolling Interests	  	 	0.02	  	 	 	(0.02	) 	
	  	 	 	 	 	 	 	 	
Net (Loss) Income Attributable to Hyatt Hotels Corporation	  	$	(0.27	) 	 	$	1.35	  	
	  	 	 	 	 	 	 	 	
The computations of diluted net income (loss) per share for the six months ended June 30, 2009 and 2008 do not include approximately 181,000 and 54,000 of shares of stock assumed to be issued as stock-settled stock appreciation rights and approximately 483,500 and 276,000 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.
On October 14, 2009, a one-for-two reverse stock split of the Company’s common stock became effective. All shares and per share information referenced throughout the consolidated financial statements have been retroactively adjusted to reflect this stock split.
* * * * * *
 
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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	 	46	
Use of Proceeds	 	47	
Dividend Policy	 	47	
Capitalization	 	48	
Dilution	 	50	
Selected Consolidated Financial Data	 	52	
Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	54	
The Lodging Industry	 	95	
Business	 	98	
Management	 	120	
Compensation Discussion and Analysis	 	131	
Certain Relationships and Related Party Transactions	 	159	
Stockholder Agreements	 	181	
Principal and Selling Stockholders	 	186	
Description of Principal Indebtedness	 	191	
Description of Capital Stock	 	195	
Shares Eligible for Future Sale	 	204	
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders of Our Class A Common Stock	 	211	
Underwriting	 	215	
Legal Matters	 	219	
Experts	 	219	
Where You Can Find More Information	 	219	
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

 

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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	  	 	750,000	
Legal fees and expenses	  	 	4,900,000	
Accounting fees and expenses	  	 	1,400,000	
Transfer agent and registrar fees	  	 	25,000	
Miscellaneous fees and expenses	  	 	191,000	
	  	 	 	
Total	  	$	7,655,670	

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 233,037 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 2,337,332 stock appreciation rights to certain employees under our LTIP.
On December 18, 2006, the registrant issued an aggregate of 105,000 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 8,140,670.791293 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 525,396 restricted stock units to certain employees under our LTIP.
From May 2, 2008 through June 30, 2009, the registrant issued an aggregate of 18,070 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 10,853,142 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 $55.28 per share for aggregate proceeds of $600,000,000.
 
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In May 2009, the registrant issued and sold an aggregate of 29,195,199 shares of its common stock to its existing stockholders and certain of their affiliates, as well as certain non-employee directors, at $26.00 per share, for aggregate proceeds of $759,075,161.
On September 30, 2009, the registrant issued an aggregate of 10,952 restricted stock units to four non-employee directors under our LTIP and pursuant to our non-employee Director Compensation Program.
On September 30, 2009, the registrant issued an aggregate of 8,373 fully vested shares of common stock to three non-employee directors and one former non-employee director under our LTIP and pursuant to our non-employee Director Compensation Program.
On October 1, 2009, the registrant issued 28,565 restricted stock units and 61,121 stock appreciation rights to our chief executive officer under our LTIP.
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.
 
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(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.
 
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 15th day of October, 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 15th day of October, 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 Class A 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.	
		
  4.5	  	Registration Rights Agreement, dated as of October 12, 2009, by and among Hyatt Hotels Corporation and Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, solely in their capacity as co-trustees.	
		
  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	
 
E-1

Table of Contents

Exhibit
Number	  	Exhibit Description	
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	
		
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	
 
E-2

Table of Contents

Exhibit
Number	  	Exhibit Description	
10.34**	  	Master (Permanent) Non-Gaming Services Agreement, dated as of July 19, 2002, between Hyatt Corporation and Falls Management Company	
		
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	  	Second Amended and Restated Limited Liability Company Agreement of W2007 Waikiki Holdings, L.L.C., dated as of October 9, 2009	
		
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** 	  	Amended and Restated Global Hyatt Agreement, dated as of October 1, 2009 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** 	  	Amended and Restated Foreign Global Hyatt Agreement, dated as of October 1, 2009 by and among each signatory thereto	
		
99.3*	  	Amended and Restated Agreement Relating to Stock, dated as of October     , 2009	

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

Exhibit 3.1
AMENDED & RESTATED
CERTIFICATE OF INCORPORATION
OF
HYATT HOTELS CORPORATION

(Under Sections 242 and 245 of the
Delaware General Corporation Law)
It is hereby certified that:
1. The name of the corporation (hereinafter called the “ Corporation ”) is HYATT HOTELS CORPORATION.
2. The Certificate of Incorporation of the Corporation was originally filed under the name “Global Hyatt, Inc.” with the Secretary of State of the State of Delaware on August 4, 2004.
3. This Amended and Restated Certificate of Incorporation of the Corporation has been duly adopted by the Board of Directors and stockholders of the Corporation in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware and by the written consent of its stockholders in accordance with Section 228 of the General Corporation Law of the State of Delaware.
4. The Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
NAME
The name of this corporation (the “ Corporation ”) is: Hyatt Hotels Corporation.

ARTICLE II
ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT
The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of the Corporation’s registered agent at such address is Corporation Service Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as amended (the “ DGCL ”).
ARTICLE IV
CAPITAL STOCK
Section 1. Authorized Shares . The total number of shares of stock which the Corporation is authorized to issue is 1,510,000,000 shares, of which 1,000,000,000 shares shall be shares of Class A Common Stock, par value $0.01 per share (the “ Class A Common Stock ”), 500,000,000 shares shall be shares of Class B Common Stock, par value $0.01 per share (the “ Class B Common Stock ”, and together with the Class A Common Stock, the “ Common Stock ”), and 10,000,000 shares shall be shares of Preferred Stock, par value $0.01 per share (“ Preferred Stock ”).
Upon this Amended and Restated Certificate of Incorporation becoming effective pursuant to the DGCL (the “ Effective Time ”), each share of the Corporation’s Common Stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time (the “ Old Common Stock ”) (a) that is then held of record by any holder specified in the resolutions duly adopted by the Board of Directors on July 29, 2009 (the “ Specified Holders ”) will automatically be reclassified into one share of Class A Common Stock and (b) that is then held of record by any holder other than a Specified Holder will automatically be reclassified into one share of Class B Common Stock. Each certificate that theretofore represented shares of Old Common Stock shall thereafter represent such number of shares of Class A Common Stock or Class B Common Stock, as applicable, into which the shares of Old Common Stock represented by such certificate have been reclassified.
 
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Section 2. Common Stock . The Class A Common Stock and the Class B Common Stock shall have the following powers, designations, preferences and rights and qualifications, limitations and restrictions:
(a) Voting Rights .
(i) Except as otherwise provided herein or by applicable law, the holders of Class A Common Stock and Class B Common Stock shall at all times vote together as a single class on all matters (including election of directors) submitted to a vote of the stockholders of the Corporation.
(ii) Each holder of Class A Common Stock shall be entitled to one vote for each share of Class A Common Stock held of record by such holder as of the applicable record date on any matter that is submitted to a vote of the stockholders of the Corporation.
(iii) Each holder of Class B Common Stock shall be entitled to ten votes for each share of Class B Common Stock held of record by such holder as of the applicable record date on any matter that is submitted to a vote of the stockholders of the Corporation.
Notwithstanding the foregoing, except as otherwise required by applicable law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any certificate filed with the Secretary of State establishing the terms of a series of Preferred Stock in accordance with Section 3 of this Article IV) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to applicable law or this Amended and Restated Certificate of Incorporation (including any certificate filed with the Secretary of State establishing the terms of a series of Preferred Stock in accordance with Section 3 of this Article IV).
 
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(b) Dividends and Distributions . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock outstanding at any time, the holders of Class A Common Stock and the holders of Class B Common Stock shall be entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property or shares of stock of the Corporation as may be declared by the Board of Directors from time to time with respect to the Common Stock out of assets or funds of the Corporation legally available therefor; provided , however , that in the event that such dividend is paid in the form of Common Stock or rights to acquire Common Stock, the holders of Class A Common Stock shall receive shares of Class A Common Stock or rights to acquire shares of Class A Common Stock, as the case may be, and the holders of shares of Class B Common Stock shall receive shares of Class B Common Stock or rights to acquire shares of Class B Common Stock, as the case may be.
(c) Liquidation, etc . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock outstanding at any time, in the event of a voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, the holders of Class A Common Stock and the holders of Class B Common Stock shall be entitled to share equally, on a per share basis, in all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock.
(d) Subdivision or Combination . If the Corporation in any manner subdivides or combines the outstanding shares of one class of Common Stock, the outstanding shares of the other class of Common Stock will be subdivided or combined in the same manner.
(e) Equal Status . Except as expressly provided in this Article IV, shares of Class A Common Stock and Class B Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical in all respect as to all matters. In any merger, consolidation, reorganization or other business combination, the consideration received per share by the holders of the
 
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Class A Common Stock and the holders of the Class B Common Stock in such merger, consolidation, reorganization or other business combination shall be identical; provided , however , that if such consideration consists, in whole or in part, of shares of capital stock of, or other equity interests in, the Corporation or any other corporation, partnership, limited liability company or other entity, then the powers, designations, preferences and relative, common, participating, optional or other special rights and qualifications, limitations and restrictions of such shares of capital stock or other equity interests may differ to the extent that the powers, designations, preferences and relative, common, participating, optional or other special rights and qualifications, limitations and restrictions of the Class A Common Stock and Class B Common Stock differ as provided herein (including, without limitation, with respect to the voting rights and conversion provisions hereof); and provided further , that, if the holders of the Class A Common Stock or the holders of the Class B Common Stock are granted the right to elect to receive one of two or more alternative forms of consideration, the foregoing provision shall be deemed satisfied if holders of the other class are granted identical election rights. Any consideration to be paid to or received by holders of Class A Common Stock or holders of Class B Common Stock pursuant to any employment, consulting, severance, non-competition or other similar arrangement approved by the Board of Directors, or any duly authorized committee thereof, shall not be considered to be “consideration received per share” for purposes of the foregoing provision, regardless of whether such consideration is paid in connection with, or conditioned upon the completion of, such merger, consolidation, reorganization or other business combination.
(f) Conversion .
(i) As used in this Section 2(f), the following terms shall have the following meanings:
(1) “ 2007 Investors ” shall mean Madrone Capital, LLC, The Goldman Sachs Group, Inc. and Mori Building Capital Investment LLC, and their respective “Affiliates” (as defined in the 2007 Stockholders’ Agreement).
 
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(2) “ 2007 Stockholders’ Agreement ” shall mean that certain Global Hyatt Corporation 2007 Stockholders’ Agreement, dated as of August 28, 2007, by and among the Corporation and the 2007 Investors signatory thereto, as amended from time to time.
(3) “ Agreement Relating to Stock ” shall mean that certain Agreement Relating to Stock, dated as of August 28, 2007, between and among each of Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, not individually but in their capacity as trustees, and the other parties signatory thereto, as amended from time to time.
(4) “ Foreign Global Hyatt Agreement ” shall mean that certain Amended and Restated Foreign Global Hyatt Agreement, dated as of October 1, 2009, between and among the parties signatory thereto, as amended from time to time.
(5) “ Global Hyatt Agreement ” shall mean that certain Amended and Restated Global Hyatt Agreement, dated as of October 1, 2009, between and among each of Thomas J. Pritzker, Marshall E. Eisenberg and Karl J. Breyer, not individually but in their capacity as trustees, and the other parties signatory thereto, as amended from time to time.
(6) “ Permitted Transfer ” shall mean:
(a) the Transfer of any share or shares of Class B Common Stock to one or more Permitted Transferees of the Registered Holder of such share or shares of Class B Common Stock, or to one or more other Registered Holders and/or Permitted Transferees of such other Registered Holders, or the subsequent Transfer of any share or shares of Class B Common Stock by any such transferee to the Registered Holder and/or one or more other Permitted Transferees of the Registered Holder; provided , however , that for so long as the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, as applicable, remains in effect, any such Transfer of any share or shares of Class B Common Stock held by (i) any Person that is party to, or any other Person directly or indirectly controlled by any one or more Persons that are party to, or otherwise bound by (including Persons who execute a joinder to, and thereby become subject to the provisions of) the 2007
 
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Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, as applicable, or (ii) with respect to the Foreign Global Hyatt Agreement, any Person directly or indirectly controlled by any one or more non-United States situs trusts which are for the benefit of one or more Pritzkers (even though such Person is not party to the Foreign Global Hyatt Agreement), shall not be a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6)(a) unless, in connection with such Transfer, the transferee (and, in the case of a transferee that is a trust, the requisite number of trustees necessary to bind the trust) (to the extent not already party thereto) executes a joinder to, and thereby becomes subject to the provisions of, as applicable, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock;
(b) the grant of a revocable proxy to an officer or officers or a director or directors of the Corporation at the request of the Board of Directors in connection with actions to be taken at an annual or special meeting of stockholders;
(c) the pledge of a share or shares of Class B Common Stock that creates a security interest in such pledged share or shares pursuant to a bona fide loan or indebtedness transaction, in each case with a third party lender that makes such loan in the ordinary course of its business, so long as the Registered Holder of such pledged share or shares or one or more Permitted Transferees of the Registered Holder continue to exercise exclusive Voting Control over such pledged share or shares; provided , however , that a foreclosure on such pledged share or shares or other action that would result in a Transfer of such pledged share or shares to the pledgee shall not be a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6)(c);
(d) the Transfer of any share or shares of Class B Common Stock held by any Registered Holder that is a 2007 Investor, to any Affiliate of such Registered Holder to the extent that a Transfer to such Affiliate is permitted by, and completed solely in accordance with the terms and conditions of, the 2007 Stockholders’ Agreement; provided , however , that such Transfer by a
 
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2007 Investor shall not be a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6)(d) unless, in connection with such Transfer, the transferee (to the extent not already party thereto) executes a joinder to, and thereby becomes subject to the provisions of, the 2007 Stockholders’ Agreement;
(e) the existence or creation of a power of appointment or authority that may be exercised with respect to a share or shares of Class B Common Stock held by a trust; provided , however , that the Transfer of such share or shares of Class B Common Stock upon the exercise of such power of appointment or authority shall not be a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6)(e); and
(f) any Transfer approved in advance by the Board of Directors, or a majority of the independent directors serving thereon, upon a determination that such Transfer is consistent with the purposes of the foregoing provisions of this definition of “Permitted Transfer”, so long as such Transfer otherwise complies with the provisions of Sections 2(f)(i)(6)(a) or 2(f)(i)(6)(d) of this Article IV, as applicable, requiring transferees (to the extent not already party thereto) to execute joinders to, and thereby become subject to the provisions of, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, as applicable.
For the avoidance of doubt, the direct Transfer of any share or shares of Class B Common Stock by a Registered Holder to any other Person shall qualify as a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6), if such Transfer could have been completed indirectly through one or more transactions involving more than one Transfer, so long as each Transfer in such transaction or transactions would otherwise have qualified as a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6). For the further avoidance of doubt, a Transfer may qualify as a “Permitted Transfer” within the meaning of this Section 2(f)(i)(6) under any one or more than one of the clauses of this Section 2(f)(i)(6) as may be applicable to such Transfer, without regard to any proviso in, or requirement of, any other clause(s) of this Section 2(f)(i)(6).
 
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(7) “ Permitted Transferee ” shall mean:
(a) with respect to any Pritzker:
(i) one or more other Pritzkers; and
(ii) the Pritzker Foundation, and/or any of the eleven private charitable foundations to which the Pritzker Foundation transferred a portion of its assets in September 2002, so long as a majority of the board of directors or similar governing body of such private charitable foundation is comprised of Pritzkers;
(b) with respect to any natural person:
(i) his or her lineal descendants who are Pritzkers (such persons are referred to as a person’s “ Related Persons ”);
(ii) a trust or trusts for the sole current benefit of such natural person and/or one or more of such natural person’s Related Persons; provided , however , that a trust shall qualify as a “Permitted Transferee” notwithstanding that a remainder interest in such trust is for the benefit of any Person other than such natural person and/or one or more of such natural person’s Related Persons, until such time as such trust is for the current benefit of such Person;
(iii) one or more corporations, partnerships, limited liability companies or other entities so long as all of the equity interests in such entities are owned, directly or indirectly, by such natural person and/or one or more of such natural person’s Related Persons, and such natural person and/or one or more of such natural person’s Related Persons have sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation, partnership, limited liability company or other entity; and
 
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(iv) the guardian or conservator of any such natural person who has been adjudged disabled, incapacitated, incompetent or otherwise unable to manage his or her own affairs by a court of competent jurisdiction, in such guardian’s or conservator’s capacity as such, and/or the executor, administrator or personal representative of the estate of any such Registered Holder who is deceased, in such executor’s, administrator’s or personal representative’s capacity as such;
(c) with respect to any trust:
(i) one or more current beneficiaries of such trust who are Pritzkers, any Permitted Transferee of any such current beneficiary and/or any appointee of a power of appointment exercised with respect to such trust, if such appointee is a Pritzker; provided , however , that any Person holding a remainder interest in such trust shall not be a “Permitted Transferee” of such trust unless such Person is a Pritzker or a Permitted Transferee of any current beneficiary who is a Pritzker;
(ii) any other trust so long as the current beneficiaries of such other trust are Pritzkers, and/or any other trust for the benefit of an appointee of a power of appointment exercised with respect to such trust, if such appointee is a Pritzker; provided , however , that such other trust shall qualify as a “Permitted Transferee” notwithstanding that a remainder interest in such other trust is for the benefit of any Person other than a Pritzker until such time as such other trust is for the current benefit of such Person;
(iii) any current trustee or trustees of such trust in the capacity as trustee of such trust, and any successor trustee or trustees in the capacity as trustee of such trust; and
(iv) one or more corporations, partnerships, limited liability companies or other entities so long as all of the equity interests in such entities are owned, directly or indirectly, by such trust and/or one or more Permitted Transferees of such trust, and such trust and/or one or more Permitted Transferees of such trust have sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation, partnership, limited liability company or other entity;
 
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(d) with respect to any corporation, partnership, limited liability company or other entity (a “ Corporate Person ”), other than the 2007 Investors:
(i) the shareholders, partners, members or other equity holders of such Corporate Person, as applicable, who are Pritzkers, in accordance with their respective rights and interests therein, and/or any Permitted Transferee of any such shareholders, partners, members or other equity holders;
(ii) any other corporation, partnership, limited liability company or other entity so long as all of the equity interests in such other corporation, partnership, limited liability company or other entity are owned, directly or indirectly, by such Corporate Person and/or one or more Permitted Transferees of such Corporate Person, and such Corporate Person and/or one or more Permitted Transferees of such Corporate Person has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such other corporation, partnership, limited liability company or other entity; and
(iii) any other corporation, partnership, limited liability company or other entity so long as such other corporation, partnership, limited liability company or other entity owns, directly or indirectly, all of the equity interests of such Corporate Person, and such other corporation, partnership, limited liability company or other entity has sole dispositive power and exclusive Voting Control with respect to the equity interests of such Corporate Person;
(e) with respect to any bankrupt or insolvent Person, the trustee or receiver of the estate of such bankrupt or insolvent Person, in such trustee’s or receiver’s capacity as such; and
(f) with respect to any Person that holds Class B Common Stock as the guardian or conservator of any Person who has been adjudged disabled, incapacitated, incompetent or otherwise unable to manage his or her own affairs, or as the executor, administrator or personal representative of the estate of any deceased Person, or as the trustee or receiver of the estate of a
 
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bankrupt or insolvent Person, (i) any Permitted Transferee of such disabled, incapacitated, incompetent, deceased, bankrupt or insolvent Person or (ii) in the event that such disabled, incapacitated, incompetent, deceased, bankrupt or insolvent Person is a 2007 Investor, an Affiliate of such 2007 Investor.
For the avoidance of doubt, the “Permitted Transferees” of any Person within the meaning of this Section 2(f)(i)(7) may be determined under any one or more than one of the clauses of this Section 2(f)(i)(7), if such clauses are applicable to such Person. For the further avoidance of doubt, references to a “trust” shall mean the trust or the trustee or trustees of such trust acting in such capacity, as the context may require.
With respect to a share or shares of Class B Common Stock held by a 2007 Investor, following the “Restriction Expiration Date” (as defined in the 2007 Stockholders’ Agreement), the “Permitted Transferee” of any 2007 Investor shall be determined for purposes of Sections 2(f)(i)(7)(b) and 2(f)(i)(7)(c) of this Article IV without regard to any references to Pritzkers contained therein.
(8) “ Person ” shall mean any natural person, trust, corporation, partnership, limited liability company or other entity.
(9) “ Pritzker ” shall mean the Pritzker family members, who are the lineal descendants of Nicholas J. Pritzker, deceased, and spouses or surviving spouses of such descendants, any trust that is a Permitted Transferee of any of the foregoing, and any other Person that is a Permitted Transferee of any of the foregoing.
(10) “ Registered Holder ” shall mean (a) the registered holder of any share or shares of Class B Common Stock immediately prior to the consummation of the initial public offering of shares of Class A Common Stock (the “ IPO ”), (b) the initial registered holder of any share or shares of Class B Common Stock that are originally issued by the Corporation after the consummation of the IPO, and (c) any Person that becomes the registered holder of any share or shares of Class B Common Stock as a result of a Permitted Transfer in accordance with this Section 2(f).
 
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(11) “ Transfer ” of a share or shares of Class B Common Stock shall mean any direct or indirect sale, exchange, assignment, transfer, conveyance, gift, hypothecation or other transfer or disposition (including, without limitation, the granting or exercise of a power of appointment or a proxy, attorney in fact, power of attorney or otherwise) of such share or shares or any legal or beneficial interest in such share or shares, whether or not for value and whether voluntary or involuntary or by operation of law. A “Transfer” shall include, without limitation, a transfer of a share or shares of Class B Common Stock to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership), and the transfer of, or entering into any agreement, arrangement or understanding with respect to, Voting Control over a share or shares of Class B Common Stock. Any sale, exchange, assignment, transfer, conveyance, gift, hypothecation or other transfer or disposition by any Person that is not a Pritzker (other than a 2007 Investor) of less than 5% of the equity interests of any other Person that holds shares of Class B Common Stock, shall not be deemed to result in a “Transfer” of such shares of Class B Common Stock within the meaning of this Section (2)(f)(i)(11). In addition, the existence of, the joinder of any Person to and agreement to become subject to the provisions of, or the voting of shares of Class B Common Stock in accordance with, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, shall not be deemed to result in a “Transfer” of shares of Class B Common Stock within the meaning of this Section (2)(f)(i)(11).
(12) “ Voting Control ” shall mean, with respect to a share or shares of Class B Common Stock, the power, whether exclusive or shared, revocable or irrevocable, to vote or direct the voting of such share or shares of Class B Common Stock, by proxy, voting agreement or otherwise.
(ii) Each share of Class B Common Stock shall be convertible into one fully paid and non-assessable share of Class A Common Stock at the option of the holder thereof at any time, and from time to time, upon written notice to the transfer agent of the Corporation.
 
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(iii) Subject to Section 2(f)(vii) of this Article IV, a share of Class B Common Stock shall automatically, without any further action on the part of the Corporation, any holder of Class B Common Stock or any other party, convert into one fully paid and non-assessable share of Class A Common Stock upon a Transfer of such share, other than a Permitted Transfer; provided , however , that each share of Class B Common Stock transferred to a Permitted Transferee or an Affiliate of a 2007 Investor pursuant to a Permitted Transfer shall automatically convert into one fully paid and non-assessable share of Class A Common Stock if any event occurs, or any state of facts arises or exists, that causes such Person to no longer qualify, as applicable, as a “Permitted Transferee” within the meaning of Section 2(f)(i)(7) of this Article IV or as an “Affiliate” of such 2007 Investor as defined in Section 2(f)(i)(1) of this Article IV.
(iv) For so long as the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, as applicable, remains in effect, each share of Class B Common Stock held by (a) any trust that is party to, or any other Person directly or indirectly controlled by any one or more trusts that are party to, or otherwise bound by (including any trust who executes, or whose trustees execute, a joinder to, and thereby become subject to the provisions of) the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, as applicable, or (b) with respect to the Foreign Global Hyatt Agreement, any Person directly or indirectly controlled by any one or more non-United States situs trusts which are for the benefit of one or more Pritzkers (even though such Person is not party to the Foreign Global Hyatt Agreement), shall automatically, without any further action on the part of the Corporation, any holder of Class B Common Stock or any other party, convert into one fully paid and non-assessable share of Class A Common Stock upon any change in the trustees of any such trust that is a Pritzker (in the case of clause (a)) or any such non-United States situs trusts that are Pritzkers (in the case of clause (b)) unless, in connection therewith, the requisite number of trustees necessary to bind such trust (to the extent not already party thereto) execute a joinder to, and thereby become subject to the provisions of, as applicable, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock.
 
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(v) Each share of Class B Common Stock shall automatically, without any further action on the part of the Corporation, any holder of Class B Common Stock or any other party, convert into one fully paid and non-assessable share of Class A Common Stock if, as of the record date for determining the stockholders entitled to vote at any annual or special meeting of the stockholders of the Corporation, the aggregate number of shares of Common Stock owned, directly or indirectly, by the Registered Holders is less than fifteen percent of the aggregate number of outstanding shares of Common Stock.
(vi) The Board of Directors, or any duly authorized committee thereof, may, from time to time, establish such policies and procedures relating to the conversion of a share or shares of Class B Common Stock into a share or shares of Class A Common Stock and the general administration of this dual class common stock structure, including the issuance of stock certificates with respect thereto, as it may deem necessary or advisable, and may request or require that holders of a share or shares of Class B Common Stock furnish affidavits or other proof to the Corporation as it may deem necessary or advisable to verify the ownership of such share or shares of Class B Common Stock and to confirm that an automatic conversion into a share or shares of Class A Common Stock has not occurred. If the Board of Directors, or a duly authorized committee thereof, determines that a share or shares of Class B Common Stock have been inadvertently Transferred in a Transfer that is not a Permitted Transfer, or any other event shall have occurred, or any state of facts arisen or come into existence, that would inadvertently cause the automatic conversion of such shares into Class A Common Stock pursuant to Section 2(f)(iii) of this Article IV, and the Registered Holder shall have cured or shall promptly cure such inadvertent Transfer or the event or state of facts that would inadvertently cause such automatic conversion, then the Board of Directors, or a duly authorized committee thereof, may determine that such share or shares of Class B Common Stock shall not have been automatically converted into Class A Common Stock pursuant to Section 2(f)(iii) of this Article IV.
 
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(vii) In the event of a conversion of a share or shares of Class B Common Stock into a share or shares of Class A Common Stock pursuant to this Section 2, such conversion shall be deemed to have been made (a) in the event of a voluntary conversion pursuant to Section 2(f)(ii) of this Article IV, at the close of business on the business day on which written notice of such voluntary conversion is received by the transfer agent of the Corporation, (b) in the event of an automatic conversion upon a Transfer or if any other event occurs, or any state of facts arises or exists, that would cause an automatic conversion pursuant to Section 2(f)(iii) of this Article IV, at the time that the Transfer of such share or shares occurred or at the time that such other event occurred, or state of facts arose, as applicable, (c) in the event of an automatic conversion of shares upon the failure of the new trustee or trustees to assume the obligations under, as applicable, the 2007 Stockholders’ Agreement, the Global Hyatt Agreement, the Foreign Global Hyatt Agreement or the Agreement Relating to Stock, at the time such new trustee or trustees become such, and (d) in the event of an automatic conversion of all shares of Class B Common Stock pursuant to Section 2(f)(v) of this Article IV, at the close of business on the record date on which the Registered Holders own less than the requisite percentage of outstanding shares of Common Stock. Upon any conversion of a share or shares of Class B Common Stock to a share or shares of Class A Common Stock, subject only to rights to receive any dividends or other distributions payable in respect of such share or shares of Class B Common Stock with a record date prior to the date of such conversion, all rights of the holder of a share or shares of Class B Common Stock shall cease and such Person shall be treated for all purposes as having become the registered holder of such share or shares of Class A Common Stock. Shares of Class B Common Stock that are converted into shares of Class A Common Stock as provided in this Section 2 shall be retired and may not be reissued.
(g) Reservation of Stock . The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.
 
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(h) Limitation on Future Issuance . Except as otherwise provided in or contemplated by Sections 2(b), 2(d) or 2(e) of this Article IV, the Corporation shall not issue additional shares of Class B Common Stock after the Effective Time.
Section 3. Preferred Stock . The Board of Directors is authorized, subject to limitations prescribed by law, to provide by resolution or resolutions for the issuance of a share or shares of Preferred Stock in one or more series and, by filing a certificate of designation pursuant to the DGCL setting forth a copy of such resolution or resolutions, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each such series and the qualifications, limitations, and restrictions thereof. The authority of the Board of Directors with respect to the Preferred Stock and any series shall include, but not be limited to, determination of the following:
(a) the number of shares constituting any series and the distinctive designation of that series;
(b) the dividend rate on the shares of any series, whether dividends shall be cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series;
(c) whether any series shall have voting rights, in addition to the voting rights provided by applicable law, and, if so, the number of votes per share and the terms and conditions of such voting rights;
(d) whether any series shall have conversion privileges and, if so, the terms and conditions of conversion, including provision for adjustment of the conversion rate upon such events as the Board of Directors shall determine;
(e) whether the shares of any series shall be redeemable and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;
 
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(f) whether any series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;
(g) the rights of the shares of any series in the event of voluntary or involuntary dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that series; and
(h) any other powers, preferences, rights, qualifications, limitations, and restrictions of any series.
Notwithstanding the provisions of Section 242(b)(2) of the DGCL, the number of authorized shares of Preferred Stock and Common Stock may, without a class or series vote, be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by the affirmative vote of the holders of at least a majority of the voting power of the Corporation’s then outstanding capital stock, voting together as a single class.
ARTICLE V
BOARD OF DIRECTORS
Section 1. Powers of the Board . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by applicable law or by this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
Section 2. Classification of the Board . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, effective upon the Effective Time, the directors of the Corporation shall be divided into three classes as nearly equal in size as is
 
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practicable, hereby designated Class I, Class II and Class III. The Board of Directors may assign members of the Board of Directors already in office to such classes as of the Effective Time. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of the stockholders following the Effective Time; the term of office of the initial Class II directors shall expire at the second annual meeting of the stockholders following the Effective Time; and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders following the Effective Time. Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, at each annual meeting of stockholders, commencing with the first regularly-scheduled annual meeting of stockholders following the Effective Time, each of the successors elected to replace the directors of a class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified.
Section 3. Number of Directors . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, (a) the total number of directors constituting the entire Board of Directors shall consist of not less than five nor more than fifteen members, with the precise number of directors to be determined from time to time exclusively by a vote of a majority of the entire Board of Directors, and (b) if the number of directors is changed, any increase or decrease shall be apportioned among such classes of directors in such manner as the Board of Directors shall determine so as to maintain the number of directors in each class as nearly equal as possible, but in no case will a decrease in the number of directors shorten the term of any incumbent director.
Section 4. Removal of Directors . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock with respect to any directors elected by the holders of such series and except as otherwise required by applicable law, any or all of the directors of the Corporation may be removed from office only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the Corporation’s then outstanding capital stock entitled to vote generally in the election of directors, voting together as a single class.
 
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Section 5. Vacancies . Except as may be provided in a resolution or resolutions providing for any series of Preferred Stock with respect to any directors elected (or to be elected) by the holders of such series, any vacancies in the Board of Directors for any reason and any newly created directorships resulting by reason of any increase in the number of directors may be filled only by the Board of Directors (and not by the stockholders), acting by majority of the remaining directors then in office, although less than a quorum, or by a sole remaining director, and any directors so appointed shall hold office until the next election of the class of directors to which such directors have been appointed and until their successors are elected and qualified.
Section 6. Bylaws . The Board of Directors shall have the power to adopt, amend, alter, change or repeal any and all Bylaws of the Corporation. In addition, the stockholders of the Corporation may adopt, amend, alter, change or repeal any and all Bylaws of the Corporation by the affirmative vote of the holders of at least eighty percent of the voting power of the Corporation’s then outstanding capital stock entitled to vote, voting together as a single class (notwithstanding the fact that a lesser percentage may be specified by applicable law).
Section 7. Elections of Directors . Elections of directors need not be by ballot unless the Bylaws of the Corporation shall so provide.
Section 8. Officers . Except as otherwise expressly delegated by resolution of the Board of Directors, the Board of Directors shall have the exclusive power and authority to appoint and remove officers of the Corporation.
 
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ARTICLE VI
STOCKHOLDERS
Section 1. Actions by Consent . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any written consent in lieu of a meeting by such stockholders.
Section 2. Special Meetings of Stockholders . Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock, special meetings of stockholders of the Corporation may be called only by the Chairman of the Board of Directors or by the Secretary upon direction of the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors.
ARTICLE VII
DIRECTOR LIABILITY
A director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as it presently exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right arising prior to the time of such amendment, modification or repeal.
ARTICLE VIII
INDEMNIFICATION
Section 1. Right of Indemnification . The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “ Covered Person ”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the
 
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Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 3 of this Article VIII, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors.
Section 2. Prepayment of Expenses . The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by a Covered Person in defending any Proceeding in advance of its final disposition, provided , however , that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article VIII or otherwise.
Section 3. Claims . If a claim for indemnification (following the final disposition of the Proceeding with respect to which indemnification is sought, including any settlement of such Proceeding) or advancement of expenses under this Article VIII is not paid in full within thirty days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by applicable law. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under this Article VIII and applicable law.
Section 4. Non-exclusivity of Rights . The rights conferred on any Covered Person by this Article VIII shall not be exclusive of any other rights which such Covered Person may have or hereafter acquire under any statute, any other provision of this Amended and Restated Certificate of Incorporation, the Bylaws of the Corporation, or any agreement, vote of stockholders or disinterested directors or otherwise.
 
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Section 5. Amendment or Repeal . Any right to indemnification or to advancement of expenses of any Covered Person arising hereunder shall not be eliminated or impaired by an amendment to or repeal of this Article VIII after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought.
Section 6. Other Indemnification and Advancement of Expenses . This Article VIII shall not limit the right of the Corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action.
ARTICLE IX
SECTION 203
The Corporation elects not to be governed by Section 203 of the DGCL.
 
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ARTICLE X
AMENDMENT
The Corporation hereby reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in any manner permitted by the DGCL and all rights and powers conferred upon stockholders and/or directors herein are granted subject to this reservation. Except as may be provided in a resolution or resolutions of the Board of Directors providing for any series of Preferred Stock, any such amendment, alteration, change or repeal shall require the affirmative vote of both (a) sixty-six and 2/3rds percent of the entire Board of Directors and (b) eighty percent of the voting power of the Corporation’s then outstanding capital stock entitled to vote, voting together as a single class (notwithstanding the fact that a lesser percentage may be specified by applicable law). Any vote of stockholders required by this Article X shall be in addition to any other vote that may be required by applicable law, the Bylaws of the Corporation or any agreement with a national securities exchange or otherwise.
IN WITNESS WHEREOF, Hyatt Hotels Corporation has caused this Amended and Restated Certificate of Incorporation to be executed by its duly authorized officer this      day of              , 2009

HYATT HOTELS CORPORATION	
		
BY	 	 	
Name:	 		
Title:	 		
 
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Exhibit 4.5
HYATT HOTELS CORPORATION
REGISTRATION RIGHTS AGREEMENT
(Pritzker Stockholders)
THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of October 12, 2009, but effective as of the Effective Date (as defined below), is by and among HYATT HOTELS CORPORATION, a Delaware corporation formerly known as Global Hyatt Corporation (the “ Company ”), and the Persons listed on Schedule 1 attached hereto (collectively, the “ Stockholders ” and each, individually, a “ Stockholder ”).
R E C I T A L S
WHEREAS, the Company has agreed to grant the Stockholders the registration rights and other rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the recitals and the mutual premises, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions . In addition to capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the following meanings when used in this Agreement:
“ 2007 Registration Rights Agreement ” means that certain Registration Rights Agreement, dated as of August 28, 2007, among the Company and certain non-Pritzker stockholders of the Company party thereto, as amended from time to time.
“ Affiliate ” means as to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “ control ,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “ controlling ,” “ controlled by ” and “ under common control with ” have correlative meanings.
“ Agreement ” as defined in the Preamble.
“ Agreement Relating to Stock ” means that certain Agreement Relating to Stock, dated as of August 28, 2007, among certain of the Stockholders and the other Persons signatory thereto, as amended from time to time.
“ Arbitrator ” as defined in Section 12.3(a) .
“ Board ” means the Board of Directors of the Company.
“ Business Day ” means any day other than a Saturday, Sunday or other day in Chicago, Illinois on which banking institutions are authorized by law or regulations to close.

“ Commission ” means the Securities and Exchange Commission and any successor agency performing comparable functions.
“ Common Stock ” means the (i) Class A common stock, par value $0.01 per share, of the Company and/or (ii) Class B common stock, par value $0.01 per share, of the Company.
“ Company ” as defined in the Preamble.
“ Demand Registrations ” as defined in Section 2.2(a) .
“ Effective Date ” the date on which the Company consummates its initial Public Offering of Common Stock.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rule and regulations of the Commission thereunder, as the same shall be in effect from time to time.
“ Foreign Global Hyatt Agreement ” means that certain Amended and Restated Foreign Global Hyatt Agreement, dated as of October 1, 2009, as amended from time to time, among adult beneficiaries of non-US situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, which non-US situs trusts are the indirect owners of Common Stock through their direct and indirect ownership of certain of the Stockholders.
“ Global Hyatt Agreement ” means that certain Amended and Restated Global Hyatt Agreement, dated as of October 1, 2009, as amended from time to time, among adult beneficiaries of US situs trusts for the benefit of certain lineal descendants of Nicholas J. Pritzker, deceased, and the co-trustees of such US situs trusts, which US situs trusts are the direct and indirect owners of Common Stock.
“ Governmental Authority ” means any regional, federal, state or local legislative, executive or judicial body or agency, any court of competent jurisdiction, any department, political subdivision or other governmental authority or instrumentality, or any arbitral authority, in each case, whether domestic or foreign.
“ Indemnified Party ” as defined in Section 8.3 .
“ Indemnifying Party ” as defined in Section 8.3 .
“ Independent ” means, with respect to an individual, an individual who (i) has no direct material business relationship with any party to this Agreement, and (ii) satisfies the criteria set forth in Section 303A.02 of the New York Stock Exchange Listed Company Manual as in effect at the Effective Time.
“ Initiating Stockholders ” as defined in Section 2.4 .
“ Long-Form Demand Registration ” as defined in Section 2.1(b) .
 
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“ Other Agreement(s) ” means the Agreement Relating to Stock, the Foreign Global Hyatt Agreement and the Global Hyatt Agreement, either individually or collectively, as applicable.
“ Other Registrable Securities ” as defined in Section 2.1(b) .
“ 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 Government Authority.
“ Piggyback Registration ” as defined in Section 3.1 .
“ Public Offering ” means any offering by the Company of its equity securities to the public pursuant to an effective registration statement under the Securities Act or any comparable statement under any comparable federal statute then in effect (other than any registration statement on Form S-8 or Form S-4 or any successor forms thereto).
“ Registrable Securities ” means, any of the following owned by any Stockholder: (i) any Common Stock or other equity securities of the Company into which the Common Stock then outstanding shall be reclassified or changed, including by reason of a merger, consolidation, reorganization, recapitalization or statutory conversion; and (ii) any equity securities of the Company then outstanding which were issued as, or were issued directly or indirectly upon the conversion, exchange or exercise of other equity securities issued or issuable as a dividend, stock split or other distribution with respect to or in replacement of any equity securities referred to in clause (i) of this definition; provided, however , that Registrable Securities shall not include any equity securities that (a) have been registered or sold in a registered offering pursuant to the Securities Act; (b) have been sold pursuant to Rule 144; or (c) are eligible for resale by the Stockholder under Rule 144 without volume or manner-of-sale restrictions, as determined by the Company in its discretion after consultation with Company counsel.
“ Registration Expense ” as defined in Section 7.1 .
“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto.
“ Securities Act ” means the Securities Act of 1933, as amended, or any successor federal statute, and the rule and regulations of the Commission thereunder, as the same shall be in effect from time to time.
“ Shelf Registration Statement ” as defined in Section 3.1 .
“ Short-Form Demand Registrations ” as defined in Section 2.2(a) .
“ Stockholder(s) ” as defined in the Preamble.
 
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2. Demand Registration .
2.1 Long-Form Registrations .
(a) Subject to the terms of this Agreement, at any time at least one year following the consummation of the initial Public Offering of the Common Stock, the Stockholders shall be entitled to request registration under the Securities Act of all or part of their Registrable Securities on Form S-1 or any similar long-form registration statement; provided, however , that with respect to any request under this Section 2.1(a) : (i) the anticipated aggregate offering amount of the Registrable Securities covered by such registration shall exceed $750,000,000 (net of underwriting discounts and commissions); (ii) the Company shall not otherwise be eligible at the time of the request to file a registration statement on Form S-3 or any similar short form registration statement for the re-sale of Registrable Securities by the requesting Stockholders; (iii) the requesting Stockholders shall, at the anticipated time of effectiveness of such registration statement, be permitted under the applicable Other Agreements to sell the Common Stock to be registered pursuant to the applicable registration statement; and (iv) the Company shall not be prohibited under the 2007 Registration Rights Agreement from filing such registration statement.
(b) Within ten (10) days after receipt of any written request pursuant to this Section 2.1 , the Company will give written notice of such request to all other holders of Registrable Securities and holders of securities registrable under the 2007 Registration Rights Agreement (to the extent such agreement remains in effect) (the “ Other Registrable Securities ”) and will use its reasonable best efforts to include in such registration all Registrable Securities (and Other Registrable Securities properly requested by the holders thereof to be included in such registration) with respect to which the Company has received written requests for inclusion within twenty (20) days after delivery of the Company’s notice, and, thereupon the Company will use its reasonable best efforts to effect, at the earliest possible date, the registration under the Securities Act. A registration requested pursuant to this Section 2.1 is referred to herein as a “ Long-Form Demand Registration .” The Company shall not be obligated to effect more than one (1) Long-Form Demand Registration for the Stockholders pursuant to this Section 2.1 .
2.2 Short-Form Registrations .
(a) In addition to the Long-Form Demand Registration provided pursuant to Section 2.1 above, commencing the date on which the Company becomes eligible to register securities issued by it on a Form S-3 or any similar short-form registration, Stockholders holding at least 20% of the then issued and outstanding Common Stock shall be entitled to request registrations under the Securities Act of all or part of their Registrable Securities on Form S-3, if available to the Company, or any similar short-form registration statement (“ Short-Form Demand Registrations ” and, together with the Long-Form Demand Registration, “ Demand Registrations ”); provided, however , that with respect to any requests under this Section 2.2(a) : (i) the anticipated aggregate offering amount of the Registrable Securities covered by such registration shall exceed $100,000,000 (net of underwriting discounts and commissions); (ii) the requesting Stockholders shall, at the anticipated time of effectiveness of such registration statement, be permitted under the applicable Other Agreements to sell the Common Stock to be registered pursuant to the applicable registration statement; and (iii) the Company shall not be prohibited under the 2007 Registration Rights Agreement from filing such registration statement.
 
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(b) Within ten (10) days after receipt of any written request pursuant to this Section 2.2 , the Company will give written notice of such request to all other holders of Registrable Securities (and Other Registrable Securities), and will use reasonable best efforts to include in such registration all Registrable Securities (and Other Registrable Securities) with respect to which the Company has received written requests for inclusion within twenty (20) days after delivery of the Company’s notice. Demand Registrations will be Short-Form Demand Registrations whenever the Company is permitted to use any applicable short form. If for marketing or other reasons the underwriters with respect to any Short-Form Demand Registration request the inclusion in the registration statement of information which is not required under the Securities Act to be included in a registration statement on the applicable form for the Short-Form Demand Registration, the Company will provide such information as may be reasonably requested for inclusion by the underwriters in the Short-Form Demand Registration. The Stockholders shall be limited to one (1) Short-Form Demand Registrations pursuant to this Section 2.2 during each calendar year.
2.3 Payment of Expenses for Demand Registrations . The Company will pay all Registration Expenses (as defined in Section 6 below) for the Demand Registrations permitted under Sections 2.1 and 2.2 . A registration will not count as a Demand Registration until it has become effective.
2.4 Priority . If the managing underwriters with respect to a Demand Registration advise the Company in writing that, in their opinion, the inclusion of the number of Registrable Securities and other securities requested to be included creates a substantial risk that the price per share will be reduced, the Company will include in such registration, prior to the inclusion of any securities which are not Registrable Securities, the number of such Registrable Securities that in the opinion of such underwriters can be sold without creating such a risk, pro rata among the respective holders of such Registrable Securities on the basis of the number of such Registrable Securities requested by such holders to be included in the applicable Demand Registration; provided , however , that if (i) after the date of the request for such Demand Registration the holders of Other Registrable Securities shall have validly requested a demand registration under the 2007 Registration Rights Agreement and (ii) the Other Registrable Securities requested to be covered by such demand registration have not been sold and such demand registration shall not have been withdrawn or abandoned, then the Company will include such Other Registrable Securities with the Registrable Securities on a pro rata basis among the respective holders of such Registrable Securities and such Other Registrable Securities. In no event will a Demand Registration pursuant to Section 2.1 count as a Long-Form Demand Registration for purposes of Section 2.1 unless at least twenty-five percent (25%) of all Registrable Securities requested to be registered in such Demand Registration by the Stockholders initiating such Demand Registration (the “ Initiating Stockholders ”) are, in fact, registered in such registration.
2.5 Restrictions . The Company will not be obligated to effect any Demand Registration within one hundred eighty (180) days after the effective date of a previous Demand Registration, any demand registration under the 2007 Registration Rights Agreement or a previous registration under which the Initiating Stockholders had piggyback rights pursuant to Section 3 below
 
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wherein the Initiating Stockholders in the aggregate were permitted to register and sold, at least 50% of the Registrable Securities included therein. With respect to any Demand Registration, if the Board determines in good faith that such filing (i) would be materially detrimental to the Company, (ii) would require a disclosure of a material fact that might reasonably be expected to have a material adverse effect on the Company or any plan or proposal by the Company or any of its Subsidiaries to engage in any acquisition or disposition of assets or equity securities or any merger, consolidation, tender offer, material financing or other significant transaction, or (iii) is inadvisable because of the Company is planning to prepare and file a registration statement for a primary offering by the Company of its securities (which determination by the Board shall be certified in writing by an executive officer of the Company to the holders of Registrable Securities who have requested a Demand Registration), then the Company may postpone for up to one hundred twenty (120) days the filing or the effectiveness of a registration statement for a Demand Registration; provided , that the Company may not on any of the foregoing grounds postpone the filing or effectiveness of a registration statement for a Demand Registration for more than one hundred twenty (120) days during any twelve (12) month period (unless the holders of a majority of the unsold Registrable Securities included in such registration statement and not previously sold thereunder consent in writing to a longer postponement of the filing or effectiveness of such registration statement). In addition, the Company may postpone the filing of a Demand Registration in the event the Company shall be required to prepare audited financial statements as of a date other than its fiscal year.
2.6 Underwritten Offerings . All Demand Registrations shall be underwritten. Notwithstanding anything in this Agreement to the contrary, in no event shall the Company be obligated to effect more than one (1) Demand Registration in any twelve (12) month period.
2.7 Selection of Underwriters . In connection with any Demand Registration, the Company will have the right to select the managing underwriter(s) in respect of such offering in its sole discretion after consultation with the Initiating Stockholders holding a majority of the Registrable Securities to be sold pursuant to the applicable Demand Registration.
3. Shelf Registrations .
3.1 Right to Shelf Registration . Subject to the terms of this Agreement, in addition to the Demand Registrations and commencing the date on which the Company becomes eligible to register securities issued by it on a registration statement on Form S-3 or similar short-form registration, Stockholders shall be entitled to request that the Company file a shelf registration statement on Form S-3 pursuant to Rule 415 with respect to all or part of their Registrable Securities (including the Prospectus, amendments and supplements to the shelf registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed incorporated by reference, if any, in such shelf registration statement, the “ Shelf Registration Statement ”); provided, however , that the Company shall only be required to register on such Shelf Registration Statement those Registrable Securities that the requesting holders of Registrable Securities shall, at the anticipated time of effectiveness of such Shelf Registration Statement, be permitted to sell under the applicable Other Agreements. The Company shall use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective by the Commission as soon as practicable after such filing, and shall use its reasonable best efforts to keep the Shelf Registration Statement effective and updated,
 
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from the date such Shelf Registration Statement is declared effective until the earliest to occur (i) the first date as of which all of the shares of Registrable Securities included in the Shelf Registration Statement have been sold or (ii) a period of three years. If the Shelf Registration Statement has been outstanding at least three years, at the end of the third year, if requested by a holder of Registrable Securities holding at least 1% of the issued and outstanding shares of the Company, the Company shall use its reasonable best efforts to promptly refile a new shelf registration statement on Form S-3 pursuant to Rule 415 covering the Registrable Securities to the extent any securities registered under the previous Shelf Registration Statement remain unsold.
3.2 Payment of Expenses for Shelf Registrations . The Company will pay all Registration Expenses (as defined in Section 7 below) for the shelf registrations permitted under Section 3 .
4. Piggyback Registrations .
4.1 Right to Piggyback . At any time at least one hundred eighty (180) days following the consummation of the initial Public Offering of the Common Stock, whenever the Company proposes to register any of its Common Stock under the Securities Act for its own account or otherwise, and the registration form to be used may be used for the registration of Registrable Securities (each, a “ Piggyback Registration ”) (except for the registrations on Form S-8 or Form S-4 or any successor form thereto), the Company will give written notice, at least fifteen (15) days prior to the proposed filing of such registration statement, to the Stockholders (provided, such holders shall, at the anticipated time of effectiveness of such registration statement, be in compliance with the applicable Other Agreements and be permitted under the applicable Other Agreements to sell the Common Stock to be registered pursuant to the applicable registration statement) of its intention to effect such a registration and will use reasonable best efforts to include in such registration all Registrable Securities (in accordance with the priorities set forth in Sections 4.2 and 4.3 below) with respect to which the Company has received written requests for inclusion specifying the number of equity securities desired to be registered, which request shall be delivered within fifteen (15) days after the delivery of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at anytime in its sole discretion.
4.2 Priority on Primary Registrations . If a Piggyback Registration is an underwritten primary offering on behalf of the Company and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities requested to be included in the registration creates a substantial risk that the price per share of the primary securities will be reduced or that the amount of the primary securities intended to be included on behalf of the Company will be reduced, then the managing underwriter and the Company may exclude securities (including Registrable Securities) from the registration and the underwriting, and the number of securities that may be included in such registration and underwriting shall include: (a) first, any securities that the Company proposes to sell; (b) second, any Other Registrable Securities the Company is required to register under the terms of the 2007 Registration Rights Agreement; (c) third, any Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the total number of Registrable Securities which are requested by such holders to be included in such registration, and (d) fourth, other securities, if any, requested to be included in such registration to be allocated pro rata among the holders thereof.
 
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4.3 Priority on Secondary Registrations . If a Piggyback Registration is an underwritten secondary offering on behalf of holders of the Company’s securities and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in the registration creates a substantial risk that the price per share of securities offered thereby will be reduced, the Company will include in such registration: (a) first, the Common Stock requested to be included therein by the Person requesting such registration, (b) second, any Other Registrable Securities the Company is required to register in such registration under the terms of the 2007 Registration Rights Agreement; (c) third, the Registrable Securities requested to be included in such registration, pro rata among the other holders of such Registrable Securities on the basis of the total number of Registrable Securities which are requested by such holders to be included in such registration; and (d) fourth, other securities, if any, requested to be included in such registration to be allocated pro rata among the holders thereof.
4.4 Selection of Underwriters . In connection with any Piggyback Registration, the Company will have such right to select the managing underwriter(s) in respect of such offering in its sole discretion.
4.5 Payment of Expenses for Demand Registrations . The Company will pay all Registration Expenses (as defined in Section 7 below) for the Piggyback Registrations under this Section 4 .
5. Additional Agreements .
5.1 Holders’ Agreements . To the extent not inconsistent with applicable law, each holder of Registrable Securities agrees that upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, it will (a) not offer, sell, contract to sell, loan, grant any option to purchase, make any short sale or otherwise dispose of, hedge or transfer any of the economic interest in (or offer, agree or commit to do any of the foregoing) any shares of Common Stock, or any options or warrants to purchase any shares of Common Stock, or any securities convertible into, exchangeable for or that represent the right to receive shares of Common Stock, whether now owned or hereinafter acquired by such holder, owned directly (including holding as a custodian) or with respect to which such holder has beneficial ownership within the rules and regulations of the Commission (other than those included by such holder in the offering in question, if any) without the prior written consent of the Company or such underwriters, as the case may be, for up to fourteen (14) days prior to, and during the ninety (90) day period following, the effective date of the registration statement for such underwritten offering, and (b) enter into and be bound by such form of agreement with respect to the foregoing as the Company or such managing underwriter may reasonably request; provided that each executive officer and director of the Company also agrees to substantially similar restrictions.
 
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5.2 Company’s Agreements. The Company agrees not to effect any public sale or public distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the ninety (90) day period following, the effective date of a registration statement of the Company for an underwritten Public Offering (except as part of any such underwritten registration or pursuant to registrations on Form S-8 or Form S-4 or any successor forms thereto), unless the underwriters managing the Public Offering otherwise agree.
5.3 Suspension of Resales . The Company shall be entitled to suspend the use of the prospectus forming the part of any registration statement which has theretofore become effective at any time if, in the good faith judgment of the Company, there is a material development relating to the condition (financial or other) of the Company that has not been disclosed to the general public and the chief executive officer or chief financial officer of the Company certifies in writing to the holders of the Registrable Securities included in such registration statement and not previously sold thereunder that, after consultation with counsel, such officers have reasonably concluded that under such circumstances it would be in the Company’s best interest to suspend the use of such prospectus; provided, however , that the aggregate period of suspension under this Section 5.3 , when combined with the aggregate period of any delay under Section 2.5 hereof, may not exceed, in any twelve (12) month period, more than one hundred twenty (120) days unless the holders of a majority of the unsold Registrable Securities included in such registration statement and not previously sold thereunder consent in writing to a longer suspension. Each holder of Registrable Securities included in any such registration statement and not previously sold thereunder agrees that upon its receipt of such written certification it will immediately discontinue the sale of any Registrable Securities pursuant to such registration statement or otherwise until such holder has received copies of the supplemented or amended prospectus or until such holder is advised in writing that the use of the prospectus forming a part of such registration statement may be resumed and has received copies of any additional or supplemental filings that are incorporated by reference in such prospectus.
6. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its reasonable best efforts to effect the registration of such Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company will as expeditiously as reasonably possible:
(a) prepare and, as soon as practicable after the end of the period within which requests for registration may be given to the Company, file with the Commission a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus, or any amendments or supplements thereto, the Company will furnish copies of all such documents proposed to be filed to one counsel designated by holders of a majority of the Registrable Securities covered by such registration statement and to the extent practicable under the circumstances, provide such counsel an opportunity to comment on any information pertaining to the holders of Registrable Securities covered by such registration statement contained therein; and the Company shall consider in good faith any corrections reasonably requested by such counsel with respect to such information);
 
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(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus(es) used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than the earlier of (i) 180 days and (ii) the date that all of the securities covered by the registration statement have been sold, and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;
(c) in connection with any filing of any registration statement or prospectus or amendment or supplement thereto, cause such document (i) to comply in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder and (ii) to not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;
(d) furnish to each seller of Registrable Securities, without charge, such number of copies of such registration statement, each amendment and supplement thereto, the prospectus(es) included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;
(e) use its commercially reasonable efforts to register or qualify such Registrable Securities under such securities or blue sky laws of such jurisdictions as the Stockholders reasonably request, keep each such registration or qualification effective during the period the associated registration statement is required to be kept effective, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) consent to general service of process in any such jurisdiction, or (iii) subject itself or any of its Affiliates to taxation in any such jurisdiction in which it is not subject to taxation);
(f) promptly notify each seller of such Registrable Securities and, if requested by such seller, confirm in writing, when a registration statement has become effective and when any post-effective amendments and supplements thereto become effective;
(g) promptly notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;
 
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(h) use commercially reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or if no such securities are then listed, on a national securities exchange selected by the Company;
(i) provide a transfer agent, registrar and CUSIP number for all such Registrable Securities not later than the effective date of such registration statement;
(j) enter into such customary agreements (including underwriting agreements in customary form) and take all such other customary actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;
(k) use commercially reasonable efforts to cooperate with each seller and the underwriter or managing underwriter, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in such denominations (consistent with the provisions of the governing documents thereof) and registered in such names as each seller or the underwriter or managing underwriter, if any, may reasonably request at least three business days prior to any sale of Registrable Securities;
(l) subject to confidentiality agreements in form and substance acceptable to the Company, make available for inspection, at such place and in such manner as determined by the Company in its sole discretion, by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter, financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; provided, however , that any records, information or documents that are furnished by the Company and that are non-public shall be used only in connection with such registration;
(m) advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
(n) make available to its security holders, as soon as reasonably practicable, an earnings statement (which need not be audited) covering at least twelve (12) months which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
 
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(o) cooperate and assist in any filing required to be made with the Financial Industry Regulatory Authority (FINRA);
(p) at the request of any seller of such Registrable Securities in connection with an underwritten offering, furnish on the date or dates provided for in the underwriting agreement a letter or letters from the independent certified public accountants of the Company addressed to the underwriters and the sellers of Registrable Securities, covering such matters as such accountants, underwriters and sellers may reasonably agree upon, in which letter(s) such accountants shall state, without limiting the generality of the foregoing, that they are an independent registered public accounting firm within the meaning of the Securities Act and that in their opinion the financial statements and other financial data of the Company included in the registration statement, the prospectus(es), or any amendment or supplement thereto, comply in all material respects with the applicable accounting requirements of the Securities Act; and
(q) with respect to Demand Registrations, make senior executives of the Company reasonably available to assist the underwriters with respect to, and participate in, the so-called “road show” in connection with the marketing efforts for, and the distribution and sale of Registrable Securities pursuant to a registration statement.
7. Registration Expenses .
7.1 Company’s Expenses . The Company will pay all expenses incident to the Company’s performance of or compliance with this Agreement, including, but not limited to: all registration and filing fees; fees and expenses of compliance with securities or blue sky laws; printing expenses; messenger and delivery expenses; and fees and disbursements of counsel for the Company; reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities to be included in such registration to represent all holders of Registrable Securities to be included in the registration; fees and disbursements of the Company’s registered public accounting firm; and reasonable fees and disbursements of all other Persons retained by the Company (all such expenses being herein called “ Registration Expenses ”); provided, however, that, as between the Company and holders of Registrable Securities, all underwriting discounts and commissions and transfer taxes relating to the Registrable Securities will be borne by the holders of such Registrable Securities. In addition, the Company will pay its internal expenses (including, but not limited to, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance obtained by the Company and the expenses and fees for listing the securities to be registered on each securities exchange; provided, however , that if a request for Demand Registration is subsequently withdrawn at the request of a majority of the Initiating Holders, the holders of Registrable Securities subject to such withdrawn Demand Registration shall forfeit such Demand Registration unless the holders of Registrable Securities to be registered pay (or reimburse the Company) for all of the Registration Expenses with respect to such withdrawn Demand Registration.
7.2 Holder’s Expenses . To the extent that any expenses incident to any registration are not required to be paid by the Company, each holder of Registrable Securities included in a registration will pay all such expenses which are clearly and solely
 
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attributable to the registration of such holder’s Registrable Securities so included in such registration, and any other expenses not so attributable to one holder will be borne and paid by all sellers of securities included in such registration in proportion to the number of securities so included by each such seller.
8. Indemnification .
8.1 By the Company . The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities and, as applicable, each of its trustees, stockholders, members, directors, managers, partners, officers and employees, and each Person who controls such holder (within the meaning of the Securities Act), against all losses, claims, damages, liabilities and expenses (including, but not limited to, attorneys’ fees and expenses) caused by any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto (including, in each case, all documents incorporated therein by reference), or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. The payments required by this Section 8.1 will be made periodically during the course of the investigation or defense, as and when bills are received or expenses incurred.
8.2 By Each Holder of Registrable Securities . In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information relating to such holder as is reasonably necessary for use in connection with any such registration statement or prospectus and, to the extent permitted by law, will indemnify the Company and, as applicable, each of its directors, employees and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto (including, in each case, all documents incorporated therein by reference), or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in or omitted from any information furnished in writing by such holder for the acknowledged purpose of inclusion in such registration statement, prospectus or preliminary prospectus; provided, however, that the obligation to indemnify will be several, not joint and several, among such holders of Registrable Securities and the liability of each such holder of Registrable Securities will be in proportion to and limited to the net amount received by such holder from the sale of Registrable Securities pursuant to such registration statement, unless such loss, claim, damage, liability or expense resulted from such holder’s intentionally fraudulent conduct.
 
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8.3 Procedure . Each party entitled to indemnification under this Section 8 (the “ Indemnified Party ”) shall give written notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has received written notice of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that the counsel for the Indemnifying Party who is to conduct the defense of such claim or litigation is reasonably satisfactory to the Indemnified Party (whose approval shall not be unreasonably withheld or delayed). The Indemnified Party may participate in such defense at such Indemnified Party’s expense; provided, however, that the Indemnifying Party shall bear the expense of such defense of the Indemnified Party if (i) the Indemnifying Party has agreed in writing to pay such expenses, (ii) the Indemnifying Party shall have failed to assume the defense of such claim or to employ counsel reasonably satisfactory to the Indemnified Party, or (iii) in the reasonable judgment of the Indemnified Party, based upon the written advice of such Indemnified Party’s counsel, representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest; provided, however , that in no event shall the Indemnifying Party be liable for the fees and expenses of more than one counsel (excluding one local counsel per jurisdiction as necessary) for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same event, allegations or circumstances. The Indemnified Party shall not make any settlement without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The failure of any Indemnified Party to give notice as provided herein shall relieve the Indemnifying Party of its obligations under this Section 7 only to the extent that such failure to give notice shall materially prejudice the Indemnifying Party in the defense of any such claim or any such litigation. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the prior written consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement (a) that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation in form and substance reasonably satisfactory to such Indemnified Party or (b) that includes an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party.
8.4 Survival . The indemnification (and contribution provisions in Section 9 below) provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling Person of such Indemnified Party and will survive the transfer of securities.
9. Contribution .
9.1 Contribution . If the indemnification provided for in Section 8 from the Indemnifying Party is unavailable to or unenforceable by the Indemnified Party in respect to any costs, fines, penalties, losses, claims, damages, liabilities or expenses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such costs, fines, penalties, losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Parties in connection with the
 
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actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the costs, fines, penalties, losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 8 , any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. Notwithstanding this Section 9 , an indemnifying holder shall not be required to contribute any amount in excess of the amount by which (a) the total price at which the Registrable Securities sold by such holder exceeds (b) the amount of any damages which such indemnifying holder has otherwise been required to pay by reason of the untrue or alleged untrue statement or omission or alleged omission giving rise to such payments, unless such loss, claim, damage, liability or expense in respect of which contribution is required resulted from such holder’s intentionally fraudulent conduct.
9.2 Equitable Considerations; Etc. The Company and the holders of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
10. Compliance with Rule 144 and Rule 144A . In the event that the Company (a) registers a class of securities under Section 12 of the Exchange Act, (b) issues an offering circular meeting the requirements of Regulation A under the Securities Act or (c) commences to file reports under Section 13 or 15(d) of the Exchange Act following a Public Offering, then at the request of any holder of Registrable Securities who proposes to sell securities in compliance with Rule 144, the Company will (i) forthwith furnish to such holder a written statement of compliance with the filing requirements of the Commission as set forth in Rule 144, and (ii) make available to the public and such holders such information, and take such action as is reasonably necessary, to enable the holders of Registrable Securities to make sales pursuant to Rule 144. Unless the Company is subject to Section 13 or 15(d) of the Exchange Act, the Company will provide to the holder of Registrable Securities and to any prospective purchaser of Registrable Securities under Rule 144A of the Commission, the information described in Rule 144A(d)(4) of the Commission.
11. Participation in Underwritten Registrations . No Person may participate in any registration hereunder which is underwritten unless such Person (a) agrees to sell its securities on the basis provided in any underwriting arrangements approved by such Person or Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.
 
15

12. Arbitration .
12.1 Scope of Arbitration .
(a) Except as otherwise expressly provided in this Agreement, disputes between or among any of the parties hereto, and/or disputes between or among any of the parties hereto, shall be determined solely and exclusively by arbitration in accordance with this Section 12 , which shall be broadly construed in favor of arbitrability of all such disputes.
(b) In any arbitration, this Agreement and all other documentation determined by the Arbitrator (as defined below) to be relevant shall be admissible in evidence. In deciding any issue submitted to arbitration, the Arbitrator shall consider the rights, powers and obligations of each applicable Trustee (or its predecessors) (as the term “Trustee” is defined in the Global Hyatt Agreement and the Foreign Global Hyatt Agreement) in light of this Agreement, the relevant trust instruments, the laws specified in Section 13.5 and the laws of the place of arbitration to the extent necessary to render the arbitral award valid and enforceable.
12.2 Rules; Location .
(a) Except as otherwise provided herein, the Commercial Arbitration Rules of the American Arbitration Association in effect as of the Effective Date shall govern any arbitration hereunder, but such arbitration shall not be conducted under the auspices of the American Arbitration Association.
(b) All arbitrations shall be held in Chicago, Illinois, except to the extent that it involves any Stockholder listed under the heading “Foreign Stockholders” on Schedule 1 , in which case it shall be held at such place outside the United States as the Arbitrator selects after giving due regard to (i) the parties’ desire to maintain, to the maximum extent possible, the confidentiality of all arbitration proceedings commenced hereunder, all demands, pleadings, briefs or other documents relating to such proceedings and any decisions or awards of the Arbitrator and (ii) the ability of a court with jurisdiction over the parties to compel arbitration in such place and enforce any award resulting therefrom.
12.3 Arbitrator .
(a) All arbitrations will be before a single arbitrator (the “ Arbitrator ”), who shall be Independent, have a respected legal background, and be selected in accordance with this Section 12.3 .
(b) The parties agree that the initial Arbitrator shall be the Person serving as arbitrator under the Global Hyatt Agreement (the “ Proposed Arbitrator ”), if that Person shall agree to serve in such capacity. In the event the Proposed Arbitrator is unwilling or unable to serve as Arbitrator, and notwithstanding the provisions of Section 12.2(a) hereof, the Arbitrator shall be selected by the American Arbitration Association pursuant to Section L-3 of the Optional Procedures for Large Complex Commercial Disputes of the Commercial Arbitration rules of the American Arbitration Association (or any successor provision).
 
16

(c) The Proposed Arbitrator (if he agrees to serve as Arbitrator) or such other Person selected as the initial Arbitrator shall nominate a successor Arbitrator who shall become the successor Arbitrator upon (i) approval of six (6) of the Current Adult Beneficiaries (as defined in the Global Hyatt Agreement) and (ii) the execution and delivery by such individual of a joinder as contemplated by the Global Hyatt Agreement.
(d) Each successor Arbitrator shall appoint a subsequent successor who satisfies the criteria described in Section 12.3(a) , and in the absence thereof, and notwithstanding the provisions of Section 12.2(a) hereof, the successor Arbitrator shall be selected by the American Arbitration Association pursuant to Section L-3 of the Optional Procedures for Large Complex Commercial Disputes of the Commercial Arbitration rules of the American Arbitration Association (or any successor provision).
(e) Once an Arbitrator is identified as provided above, all parties to this Agreement and their counsel, Joined Agents (as defined in the Global Hyatt Agreement and the Foreign Global Hyatt Agreement, as applicable) and other representatives will refrain from all ex parte contacts with the Arbitrator.
12.4 Demand for and Action to Compel Arbitration .
(a) To demand arbitration hereunder, the party seeking arbitration shall be required to deliver written notice to the Arbitrator (when and if available) and all parties in respect of whom arbitration is sought, specifying in reasonable detail the issue or issues to be arbitrated. Upon receipt of such notice, the Arbitrator shall commence, conduct and conclude all proceedings within a reasonable time. Notwithstanding anything to the contrary contained in this Agreement, no Stockholder may demand arbitration subsequent to the date that is thirty (30) days following the date upon which such Stockholder no longer owns any Registrable Securities.
(b) Nothing herein shall be deemed to impair the right of any party to seek an order of any court of competent jurisdiction compelling arbitration or in aid of the jurisdiction of the Arbitrator.
12.5 Confidentiality .
(a) Except as may be required by applicable law and for communications among the parties to this Agreement and their respective counsel (and Persons retained by counsel for the purpose of assisting in any proceeding, who shall agree to be bound by a reasonable confidentiality agreement), all arbitration proceedings commenced hereunder, and all demands, pleadings, briefs or other documents relating to such proceedings, as well as any decisions or awards of the Arbitrator (except insofar as may be necessary to obtain judicial confirmation and/or enforcement of such decision or award), shall be completely and permanently confidential and shall not be communicated to third parties, and the Arbitrator will so order.
(b) Any party initiating judicial proceedings to compel arbitration or to confirm an award of the Arbitrator shall in good faith seek an order providing for the filing of all pleadings and arbitration documents under seal and all of the parties shall agree thereto.
 
17

(c) No tape or electronic recording or transcripts of arbitration proceedings shall be retained by any party after the completion of the arbitration proceeding; provided, however , that the Arbitrator (and any successor Arbitrators) may retain such records as he deems useful to the discharge of his duties hereunder and the Arbitrator may make any recordings or transcripts available upon request of a party to a subsequent arbitration pursuant to this Article (and solely for use in such subsequent arbitration) at his discretion and upon terms and conditions the Arbitrator deems appropriate.
12.6 Discovery and Conduct of Hearing .
(a) The parties to any arbitration hereunder shall be entitled to such pre-hearing discovery, if any, as may be determined by the Arbitrator.
(b) In conducting the arbitration, the Arbitrator may act in summary fashion, upon submission of papers, or in plenary fashion, in his discretion.
12.7 Form of Award; Remedies; Confirmation .
(a) An award of the Arbitrator shall be in writing and signed by him, shall not include findings of fact, conclusions of law, or other matters of opinion, shall state as briefly as possible the determination of the issue or issues submitted; provided, however , that the Arbitrator may make findings of fact and/or conclusions of law if and to the extent necessary to render the award valid and enforceable. The Arbitrator’s award shall be final and binding on the parties to this Agreement in all respects and for all purposes (without any right of appeal).
(b) Except as may otherwise be provided herein, the Arbitrator shall be authorized to award any form of relief as may be appropriate, consistent with the Commercial Arbitration Rules of the American Arbitration Association, including immediate, interim and/or final equitable relief, compensatory damages, fees, costs and expenses of the arbitration proceeding and non-monetary sanctions (but not Consequential Damages (as defined in the Global Hyatt Agreement and the Foreign Global Hyatt Agreement, as applicable), punitive damages, exemplary damages or multiple damages).
(c) A party to an arbitration shall have the right to petition a court of competent jurisdiction for an order confirming the Arbitrator’s award.
13. Miscellaneous .
13.1 Amendments and Waivers . Any waiver, permit, consent or approval of any kind or character on the part of any such holders of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing. Any Stockholder may, with respect to such Stockholder only, waive the application of any provision of this Agreement. Any amendment, modification, supplement or restatement of this Agreement must be effected by written agreement of the Company and Stockholders holding at least 75% of the outstanding number of Registrable Securities at the time any such amendment, modification, supplement or restatement is sought. No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or
 
18

subsequent such occurrence. Any amendment, modification, supplement or restatement or waiver effected in accordance with this paragraph shall be binding upon each holder of Registrable Securities and the Company as provided herein.
13.2 Successors and Assigns . Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of the respective successors, assigns, heirs, executors and personal representatives (and, with respect to the applicable Stockholders, each trustee of any other currently existing or hereinafter to be formed trust for the current or future, direct or indirect, vested or contingent, benefit of a beneficiary of any trust that is a Stockholder) of the parties hereto, whether so expressed or not. In addition, and whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of holders of Registrable Securities are also for the benefit of, and enforceable by, any transferee of such Registrable Securities that is a Person included within the definition of “Pritzker” (as defined in the Amended and Restated Certificate of Incorporation of the Company in effect upon the consummation of the initial Public Offering). Any successor or permitted assignee of any Stockholder hereunder shall execute a joinder, in form and substance reasonably acceptable to the Company, agreeing to be bound as a “Stockholder” hereunder and all references to a “Stockholder” herein shall be deemed to include each such successor and permitted assignee.
13.3 Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part of and shall not be utilized in interpreting this Agreement.
13.4 Notices . Any notice or communication by the Company or any Stockholder is duly given if in writing and delivered in person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the recipient’s address:
If to the Company:
Hyatt Hotels Corporation
Hyatt Center, 12th Floor
71 South Wacker Drive
Chicago, Illinois 60606
Facsimile No.: (312) 780-5282
Attention: General Counsel
With a copy to:
Latham & Watkins LLP
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, Illinois 60606
Facsimile No.: (312) 993-9767
Attention: Michael A. Pucker
 
19

If to a Stockholder, to the address indicated on Schedule 1 attached hereto as amended from time to time. The Company or any Stockholder, by notice to the other parties hereto, may designate additional or different addresses for subsequent notices or communications. All notices and communications will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. If a notice or communication is mailed, transmitted or sent in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
13.5 GOVERNING LAW . ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. SUBJECT TO COMPLIANCE WITH ARTICLE IV, AS APPLICABLE, EACH OF THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF, AND CONSENTS TO VENUE IN, THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS FOR ALL PURPOSES HEREUNDER.
13.6 Reproduction of Documents . This Agreement and all documents relating hereto, including, but not limited to, (i) consents, waivers, amendments and modifications which may hereafter be executed, and (ii) certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, optical disk, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any arbitral, judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
13.7 Remedies . Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party shall be entitled to immediate injunctive relief or specific performance without bond or the necessity of showing actual monetary damages in order to enforce or prevent any violations of the provisions of this Agreement.
13.8 Further Assurances . Each of the parties hereto will, without additional consideration, execute and deliver such further instruments and take such other action as may be reasonably requested by any other party hereto in order to carry out the purposes and intent of this Agreement.
13.9 No Presumption Against Drafter . Each of the parties hereto has jointly participated in the negotiation and drafting of this Agreement. In the event there arises any ambiguity or question or intent or interpretation with respect to this Agreement, this
 
20

Agreement shall be construed as if drafted jointly by all of the parties hereto and no presumptions or burdens of proof shall arise favoring any party by virtue of the authorship of any of the provisions of this Agreement.
13.10 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 Governmental Authority, 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. Upon such determination that 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 is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
13.11 Entire Agreement . This Agreement (including Schedules 1 and 2 attached hereto), together with the other agreements referred to herein, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede and shall supersede all prior agreements and understandings (whether written or oral) between the Company and the Stockholders, or any of them, with respect to the subject matter hereof.
13.12 Execution in Counterparts . This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic image scan shall be effective as delivery of a manually executed counterpart of this Agreement.
13.13 No Trustee Liability . When this Agreement is executed by a trustee of a trust, such execution is by the trustee, not individually, but solely as trustee in the exercise of and under the power and authority conferred upon and invested in such trustee, and it is expressly understood and agreed that nothing contained in this Agreement shall be construed as imposing any liability on any such trustee personally to pay any amounts required to be paid hereunder, or to perform any covenant, either express or implied, contained herein, all such personal liability, if any, having been expressly waived by the parties by their execution hereof. Any liability of a trust hereunder shall not be a personal liability of any trustee, grantor or beneficiary thereof, and any recourse against a trustee shall be solely against the assets of the pertinent trust.
13.14 No Third Party Beneficiaries . Except as provided in Sections 8 , 9 and 13.2 , nothing in this Agreement is intended or shall be construed to give any Person, other than the parties hereto, their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.
13.15 Waiver of Certain Damages. To the extent permitted by applicable law, each party hereto agrees not to assert, and hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive
 
21

damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any of the transactions contemplated hereby.
Signature pages follow.
 
22

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first above written.

The Company :	
	
HYATT HOTELS CORPORATION	
		
By:	 	/s/    Harmit Singh	
	 	Name: Harmit Singh	
	 	Title: CFO	
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

			
The Stockholders :	
	
THE TRUSTS IDENTIFIED ON SCHEDULE 2 ATTACHED HERETO:	
		
By:	 	                /s/ Thomas J. Pritzker	
	 	Thomas J. Pritzker, not individually, but solely as co-trustee of each of those separate and distinct trusts listed on Schedule 2	
		
By:	 	                /s/ Marshall E. Eisenberg	
	 	Marshall E. Eisenberg, not individually, but solely as co-trustee of each of those separate and distinct trusts listed on Schedule 2	
		
By:	 	                /s/ Karl J. Breyer	
	 	Karl J. Breyer, not individually, but solely	
	 	as co-trustee of each of those separate and distinct trusts listed on Schedule 2	
	
LASALLE TRUST NO. 35	
		
By:	 	                /s/ Thomas J. Pritzker	
	 	Thomas J. Pritzker, not individually, but solely as co-trustee of LaSalle Trust No. 35	
		
By:	 	                /s/ Marshall E. Eisenberg	
	 	Marshall E. Eisenberg, not individually, but solely as co-trustee of LaSalle Trust No. 35	
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

			
IHE, INC., a Bahamian International Business Company	
		
By:	 	/s/    Schevon V. Marche-Miller	
	 	Name: Commerce Services Limited	
	 	Title: Director	
		
By:	 	/s/    Michelle M. Gibson	
	 	Name: Corporate Associates Limited	
	 	Title: Director	
	
LUXURY LODGING, INC., a Bahamian International Business Company	
		
By:	 	/s/    Schevon V. Marche-Miller	
	 	Name: Commerce Services Limited	
	 	Title: Director	
		
By:	 	/s/    Helen M. Carroll	
	 	Name: Corporate Associates Limited	
	 	Title: Director	
	
HOSPITALITY HOTELS, INC., a Bahamian International Business Company	
		
By:	 	/s/    Schevon V. Marche-Miller	
	 	Name: Commerce Services Limited	
	 	Title: Director	
		
By:	 	/s/    Michelle M. Gibson	
	 	Name: Corporate Associates Limited	
	 	Title: Director	
	
WW HOTELS, INC., a Bahamian International Business Company	
		
By:	 	/s/    Helen M. Carroll	
	 	Name: Commerce Services Limited	
	 	Title: Director	
		
By:	 	/s/    Michelle M. Gibson	
	 	Name: Corporate Associates Limited	
	 	Title: Director	
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

			
HT-BIG ISLAND LAND, INC., a Delaware corporation	
		
By:	 	  /s/ Glen Miller	
	 	Name: Glen Miller	
	 	Title: Vice President	
	
WOODFIELD FINANCIAL, INC., a Delaware corporation	
		
By:	 	  /s/ Glen Miller	
	 	Name: Glen Miller	
	 	Title: Vice President	
	
PHIG, INC., a Delaware corporation	
		
By:	 	  /s/ Glen Miller	
	 	Name: Glen Miller	
	 	Title: Vice President	
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

HYATT HOTELS CORPORATION
REGISTRATION RIGHTS AGREEMENT
(Pritzker Stockholders)
SCHEDULE 1
Stockholders
Stockholder Name and Address
Domestic Stockholders :
Each of the Trusts listed on Schedule 2 hereto
c/o Diversified Financial Management Corp.
71 South Wacker Drive, Suite 4600
Chicago, Illinois 60606
LaSalle Trust No. 35
c/o Diversified Financial Management Corp.
71 South Wacker Drive, Suite 4600
Chicago, Illinois 60606
HT-Big Island Land, Inc.
c/o Diversified Financial Management Corp.
71 South Wacker Drive, Suite 4600
Chicago, Illinois 60606
Woodfield Financial, Inc.
c/o Diversified Financial Management Corp.
71 South Wacker Drive, Suite 4600
Chicago, Illinois 60606
PHIG, Inc.
c/o Diversified Financial Management Corp.
71 South Wacker Drive, Suite 4600
Chicago, Illinois 60606
 
Schedule 1-1

Foreign Stockholders :
IHE, INC.
c/o CIBC Trust Company (Bahamas) Limited
P.O. Box N-3933
Goodman’s Bay Corporate Centre
West Bay Street
Nassau, New Providence
Bahamas
Luxury Lodging, Inc.
c/o CIBC Trust Company (Bahamas) Limited
P.O. Box N-3933
Goodman’s Bay Corporate Centre
West Bay Street
Nassau, New Providence
Bahamas
Hospitality Hotels, Inc.
c/o CIBC Trust Company (Bahamas) Limited
P.O. Box N-3933
Goodman’s Bay Corporate Centre
West Bay Street
Nassau, New Providence
Bahamas
WW HOTELS, INC.
c/o CIBC Trust Company (Bahamas) Limited
P.O. Box N-3933
Goodman’s Bay Corporate Centre
West Bay Street
Nassau, New Providence
Bahamas
 
Schedule 1-2

HYATT HOTELS CORPORATION
REGISTRATION RIGHTS AGREEMENT
(Pritzker Stockholders)
SCHEDULE 2

N.F.P. QSST Trust # 21	  		  	F.L.P. Trust #14	
LaSalle Trust #13	  		  	F.L.P. Trust #15	
LaSalle Trust #14	  		  	F.L.P. Trust #16	
LaSalle Trust #15	  		  	F.L.P. Trust #17	
LaSalle Trust #17	  		  	F.L.P. Trust #19	
LaSalle Trust #18	  		  	F.L.P. Trust #20	
LaSalle Trust #19	  		  	F.L.P. Trust #21	
LaSalle Trust #27	  		  	F.L.P. Residuary Trust #1	
LaSalle Trust #41	  		  	F.L.P. Residuary Trust #5	
LaSalle Trust #42	  		  	F.L.P. Residuary Trust #6	
LaSalle Trust #43	  		  	F.L.P. Residuary Trust #9	
LaSalle Trust #44	  		  	F.L.P. Residuary Trust #11	
LaSalle Trust #45	  		  	F.L.P. Residuary Trust #12	
LaSalle Trust #46	  		  	F.L.P. Residuary Trust #13	
LaSalle Trust #47	  		  	F.L.P. Residuary Trust #14	
LaSalle Trust #48	  		  	F.L.P. Residuary Trust #15	
LaSalle Trust #49	  		  	F.L.P. Residuary Trust #16	
LaSalle Trust #50	  		  	F.L.P. Residuary Trust #17	
LaSalle Trust #51	  		  	F.L.P. Residuary Trust #18	
LaSalle Trust #52	  		  	F.L.P. Residuary Trust #19	
LaSalle Trust #53	  		  	F.L.P. Residuary Trust #20	
LaSalle Trust #54	  		  	F.L.P. Residuary Trust #21	
LaSalle Trust #55	  		  	F.L.P. Residuary Trust #22	
LaSalle Trust #56	  		  	F.L.P. Residuary Trust #23	
LaSalle Trust #57	  		  	F.L.P. Residuary Trust #24	
LaSalle Trust #58	  		  	F.L.P. Residuary Trust #25	
LaSalle Trust #59	  		  	F.L.P. Residuary Trust #26	
LaSalle Trust #60	  		  	F.L.P. Residuary Trust #27	
LaSalle Trust #61	  		  	F.L.P. Residuary Trust #28	
LaSalle Trust #62	  		  	F.L.P. Residuary Trust #29	
LaSalle Trust #63	  		  	F.L.P. Residuary Trust #30	
LaSalle Trust #64	  		  	F.L.P. Residuary Trust #31	
LA SALLE G.C. TRUST #11	  		  	F.L.P. Residuary Trust #32	
Don Trust #25	  		  	F.L.P. Residuary Trust #33	
F.L.P. Trust #10	  		  	F.L.P. Residuary Trust #34	
F.L.P. Trust #11	  		  	F.L.P. Residuary Trust #35	
F.L.P. Trust #12	  		  	F.L.P. Residuary Trust #36	
F.L.P. Trust #13	  		  	F.L.P. Residuary Trust #37	
 
Schedule 2-1

					
F.L.P. Residuary Trust #38	  		  	Garibaldi Trust – Oregon Trust #14	
F.L.P. Residuary Trust #39	  		  	Green Trust – Oregon Trust #15	
F.L.P. Residuary Trust #40	  		  	Harrisburg Trust – Oregon Trust #16	
F.L.P. Residuary Trust #41	  		  	Fossil Trust – Oregon Trust #17	
F.L.P. Residuary Trust #42	  		  	Gardiner Trust – Oregon Trust #18	
F.L.P. Residuary Trust #43	  		  	Gearhart Trust – Oregon Trust #19	
F.L.P. Residuary Trust #44	  		  	Gervais Trust – Oregon Trust #20	
F.L.P. Residuary Trust #45	  		  	Gilchrist Trust – Oregon Trust #21	
F.L.P. Residuary Trust #46	  		  	Glendale Trust – Oregon Trust #22	
F.L.P. Residuary Trust #47	  		  	Glenmorrie Trust – Oregon Trust #23	
F.L.P. Residuary Trust #48	  		  	Glide Trust – Oregon Trust #24	
F.L.P. Residuary Trust #49	  		  	Harbor Trust – Oregon Trust #25	
F.L.P. Residuary Trust #50	  		  	Hubbard Trust – Oregon Trust #26	
F.L.P. Residuary Trust #51	  		  	Huntington Trust – Oregon Trust #27	
F.L.P. Residuary Trust #52	  		  	Joseph Trust – Oregon Trust #28	
F.L.P. Residuary Trust #53	  		  	Kinzua Trust – Oregon Trust #29	
F.L.P. Residuary Trust #54	  		  	Lafayette Trust – Oregon Trust #30	
F.L.P. Residuary Trust #55	  		  	Lewisburg Trust – Oregon Trust #31	
F.L.P. Residuary Trust #56	  		  	Lowell Trust – Oregon Trust #32	
Nicholas Trust	  		  	Amity Trust – Oregon Trust #33	
Tom Trust	  		  	Applegate Trust – Oregon Trust #34	
Johnny Trust	  		  	Athena Trust – Oregon Trust #35	
Daniel Trust	  		  	Aumsville Trust – Oregon Trust #36	
Jim Trust	  		  	Belleview Trust – Oregon Trust #37	
Linda Trust	  		  	Bly Trust – Oregon Trust #38	
Karen Trust	  		  	Canyonville Trust – Oregon Trust #39	
Penny Trust	  		  	Charleston Trust – Oregon Trust #40	
Tony Trust	  		  	Chiloquin Trust – Oregon Trust #41	
Jay Robert Trust	  		  	Coburg Trust – Oregon Trust #42	
Gigi Trust	  		  	Condon Trust – Oregon Trust #43	
R. A. Trust #25	  		  	Dayton Trust – Oregon Trust #44	
Bandon Trust – Oregon Trust #1	  		  	Dillard Trust – Oregon Trust #45	
Barview Trust – Oregon Trust #2	  		  	Dundee Trust – Oregon Trust #46	
Brownsville Trust – Oregon Trust #3	  		  	Dunes Trust – Oregon Trust #47	
Carlton Trust – Oregon Trust #4	  		  	Elmira Trust – Oregon Trust #48	
Clakamas Trust – Oregon Trust #5	  		  	Canyon Trust – Oregon Trust #49	
Clatskanie Trust – Oregon Trust #6	  		  	Beech Trust – Oregon Trust #50	
Creswell Trust – Oregon Trust #7	  		  	Battle Trust – Oregon Trust #51	
Drain Trust – Oregon Trust #8	  		  	Blue Trust – Oregon Trust #52	
Eastside Trust – Oregon Trust #9	  		  	Sebastian Trust – Oregon Trust #53	
Elgin Trust – Oregon Trust #10	  		  	Camas Trust – Oregon Trust #54	
Enterprise Trust – Oregon Trust #11	  		  	Low Trust – Oregon Trust #55	
Estacada Trust – Oregon Trust #12	  		  	Alsea Trust – Oregon Trust #56	
Fairview Trust – Oregon Trust #13	  		  	Brogan Trust – Oregon Trust #57	
 
Schedule 2-2

					
Burnt Trust – Oregon Trust #58	  		  	Broadbent Trust – Oregon Trust #102	
Hayes Trust – Oregon Trust #59	  		  	Burlington Trust – Oregon Trust #103	
Parker Trust – Oregon Trust #60	  		  	Cheshire Trust – Oregon Trust #104	
Grass Trust – Oregon Trust #61	  		  	Cooston Trust – Oregon Trust #105	
Necanium Trust – Oregon Trust #62	  		  	Dodson Trust – Oregon Trust #106	
Siskiyou Trust – Oregon Trust #63	  		  	Drew Trust – Oregon Trust #107	
Willamette Trust – Oregon Trust #64	  		  	Durkee Trust – Oregon Trust #108	
Beaverton Trust – Oregon Trust #65	  		  	Englewood Trust – Oregon Trust #109	
Corvallis Trust – Oregon Trust #66	  		  	Firwood Trust – Oregon Trust #110	
Eugene Trust – Oregon Trust #67	  		  	Harper Trust – Oregon Trust #111	
Medford Trust – Oregon Trust #68	  		  	Jamieson Trust – Oregon Trust #112	
Parkrose Trust – Oregon Trust #69	  		  	Aloha Trust – Oregon Trust #113	
Portland Trust – Oregon Trust #70	  		  	Battin Trust – Oregon Trust #114	
Salem Trust – Oregon Trust #71	  		  	Brookings Trust – Oregon Trust #115	
Springfield Trust – Oregon Trust #72	  		  	Burns Trust – Oregon Trust #116	
Albany Trust – Oregon Trust #73	  		  	Canby Trust – Oregon Trust #117	
Altamont Trust – Oregon Trust #74	  		  	Coquille Trust – Oregon Trust #118	
Bend Trust – Oregon Trust #75	  		  	Gilbert Trust – Oregon Trust #119	
Gresham Trust – Oregon Trust #76	  		  	Glendoveer Trust – Oregon Trust #120	
Hillsboro Trust – Oregon Trust #77	  		  	Hazelwood Trust – Oregon Trust #121	
Keizer Trust – Oregon Trust #78	  		  	Hermiston Trust – Oregon Trust #122	
Milwaukie Trust – Oregon Trust #79	  		  	Kendall Trust – Oregon Trust #123	
Pendleton Trust – Oregon Trust #80	  		  	Metzger Trust – Oregon Trust #124	
Dallas Trust – Oregon Trust #81	  		  	Monmouth Trust – Oregon Trust #125	
Gladestone Trust – Oregon Trust #82	  		  	Newport Trust – Oregon Trust #126	
Hayesville Trust – Oregon Trust #83	  		  	Oakridge Trust – Oregon Trust #127	
Lebanon Trust – Oregon Trust #84	  		  	Ontario Trust – Oregon Trust #128	
Newberg Trust – Oregon Trust #85	  		  	Baker Trust – Oregon Trust #129	
Powellhurst Trust – Oregon Trust #86	  		  	Benton Trust – Oregon Trust #130	
Rockwood Trust – Oregon Trust #87	  		  	Curry Trust – Oregon Trust #131	
Woodburn Trust – Oregon Trust #88	  		  	Douglas Trust – Oregon Trust #132	
Antelope Trust – Oregon Trust #89	  		  	Grant Trust – Oregon Trust #133	
Drewsey Trust – Oregon Trust #90	  		  	Lake Trust – Oregon Trust #134	
Granite Trust – Oregon Trust #91	  		  	Marion Trust – Oregon Trust #135	
Greenhorn Trust – Oregon Trust #92	  		  	Polk Trust – Oregon Trust #136	
Hardman Trust – Oregon Trust #93	  		  	Columbia Trust – Oregon Trust #137	
Juntura Trust – Oregon Trust #94	  		  	Gilliam Trust – Oregon Trust #138	
Lonerock Trust – Oregon Trust #95	  		  	Clerk Trust – Oregon Trust #139	
Shaniko Trust – Oregon Trust #96	  		  	Jackson Trust – Oregon Trust #140	
Arago Trust – Oregon Trust #97	  		  	Jefferson Trust – Oregon Trust #141	
Bayshore Trust – Oregon Trust #98	  		  	Klamath Trust – Oregon Trust #142	
Beatty Trust – Oregon Trust #99	  		  	Linn Trust – Oregon Trust #143	
Birkenfeld Trust – Oregon Trust #100	  		  	Morrow Trust – Oregon Trust #144	
Blodgett Trust – Oregon Trust #101	  		  	Clatsop Trust – Oregon Trust #145	
 
Schedule 2-3

					
Coos Trust – Oregon Trust #146	  		  	Heppner Trust – Oregon Trust #190	
Josephine Trust – Oregon Trust #147	  		  	Moro Trust – Oregon Trust #191	
Lane Trust – Oregon Trust #148	  		  	Tillamook Trust – Oregon Trust #192	
Malheur Trust – Oregon Trust #149	  		  	Idanha Trust – Oregon Trust #193	
Sherman Trust – Oregon Trust #150	  		  	Idaville Trust – Oregon Trust #194	
Union Trust – Oregon Trust #151	  		  	Imbler Trust – Oregon Trust #195	
Wasco Trust – Oregon Trust #152	  		  	Independence Trust – Oregon Trust #196	
Crescent Trust – Oregon Trust #153	  		  	Interlachen Trust – Oregon Trust #197	
Summit Trust – Oregon Trust #154	  		  	Ione Trust – Oregon Trust #198	
Miller Trust – Oregon Trust #155	  		  	Irrigon Trust – Oregon Trust #199	
Davis Trust – Oregon Trust #156	  		  	Irving Trust – Oregon Trust #200	
Owyhee Trust – Oregon Trust #157	  		  	Oakland Trust – Oregon Trust #201	
Cow Trust – Oregon Trust #158	  		  	Oceanside Trust – Oregon Trust #202	
Magone Trust – Oregon Trust #159	  		  	Odell Trust – Oregon Trust #203	
Oswego Trust – Oregon Trust #160	  		  	Olney Trust – Oregon Trust #204	
Rider Trust – Oregon Trust #161	  		  	Ophir Trust – Oregon Trust #205	
Wallowa Trust – Oregon Trust #162	  		  	Orenco Trust – Oregon Trust #206	
Harney Trust – Oregon Trust #163	  		  	Orient Trust – Oregon Trust #207	
Young Trust – Oregon Trust #164	  		  	Oxbow Trust – Oregon Trust #208	
Crater Trust – Oregon Trust #165	  		  	Rainer Trust – Washington Trust #1	
Summer Trust – Oregon Trust #166	  		  	Slide Trust – Washington Trust #2	
Abert Trust – Oregon Trust #167	  		  	Crystal Trust – Washington Trust #3	
Alkali Trust – Oregon Trust #168	  		  	Ellis Trust – Washington Trust #4	
Adams Trust – Oregon Trust #169	  		  	Olympus Trust – Washington Trust #5	
Adrian Trust – Oregon Trust #170	  		  	Carrie Trust – Washington Trust #6	
Alvadore Trust – Oregon Trust #171	  		  	Elk Trust – Washington Trust #7	
Azalea Trust – Oregon Trust #172	  		  	Constance Trust – Washington Trust #8	
Ballston Trust – Oregon Trust #173	  		  	Henderson Trust – Washington Trust #9	
Barlow Trust – Oregon Trust #174	  		  	Anderson Trust – Washington Trust #10	
Beaver Trust – Oregon Trust #175	  		  	Twin Trust – Washington Trust #11	
Beck Trust – Oregon Trust #176	  		  	Haystack Trust – Washington Trust #12	
Bonneville Trust – Oregon Trust #177	  		  	Pilchuck Trust – Washington Trust #13	
Boring Trust – Oregon Trust #178	  		  	Index Trust – Washington Trust #14	
Brickerville Trust – Oregon Trust #179	  		  	Bearhead Trust – Washington Trust #15	
Bridge Trust – Oregon Trust #180	  		  	Strawberry Trust – Washington Trust #16	
Brightwood Trust – Oregon Trust #181	  		  	Simcoe Trust – Washington Trust #17	
Ophelia Trust – Oregon Trust #182	  		  	Clifty Trust – Washington Trust #18	
Buxton Trust – Oregon Trust #183	  		  	Cashmere Trust – Washington Trust #19	
Carver Trust – Oregon Trust #184	  		  	Clark Trust – Washington Trust #20	
Astoria Trust – Oregon Trust #185	  		  	Bonanza Trust – Washington Trust #21	
Prineville Trust – Oregon Trust #186	  		  	Goode Trust – Washington Trust #22	
Roseburg Trust – Oregon Trust #187	  		  	Logan Trust – Washington Trust #23	
Lakeview Trust – Oregon Trust #188	  		  	Jack Trust – Washington Trust #24	
Vale Trust – Oregon Trust #189	  		  	Okanogan Trust – Washington Trust #25	
 
Schedule 2-4

					
Colville Trust – Washington Trust #26	  		  	Grandview Trust – Washington Trust #70	
Kaniksu Trust – Washington Trust #27	  		  	Malden Trust – Washington Trust #71	
Umatilla Trust – Washington Trust #28	  		  	Tekoa Trust – Washington Trust #72	
Pinchot Trust – Washington Trust #29	  		  	Pack Trust – Washington Trust #73	
Gifford Trust – Washington Trust #30	  		  	Fairfield Trust – Washington Trust #74	
Lathrop Trust – Washington Trust #31	  		  	Ritzville Trust – Washington Trust #75	
Ross Trust – Washington Trust #32	  		  	Warden Trust – Washington Trust #76	
Olympic Trust – Washington Trust #33	  		  	Bridgeport Trust – Washington Trust #77	
Bremerton Trust – Washington Trust #34	  		  	Quincy Trust – Washington Trust #78	
Vancouver Trust – Washington Trust #35	  		  	Penawowa Trust – Washington Trust #79	
Darrington Trust – Washington Trust #36	  		  	Almota Trust – Washington Trust #80	
Keechelus Trust – Washington Trust #37	  		  	Quiet Trust – Washington Trust #81	
Federation Trust – Washington Trust #38	  		  	Lemei Trust – Washington Trust #82	
Hanford Trust – Washington Trust #39	  		  	Soda Trust – Washington Trust #83	
Pauls Trust – Washington Trust #40	  		  	Boistford Trust – Washington Trust #84	
Butte Trust – Washington Trust #41	  		  	Snag Trust – Washington Trust #85	
Steptoe Trust – Washington Trust #42	  		  	Windy Trust – Washington Trust #86	
Fairchild Trust – Washington Trust #43	  		  	Mica Trust – Washington Trust #87	
Coulee Trust – Washington Trust #44	  		  	Gypsy Trust – Washington Trust #88	
Vernon Trust – Washington Trust #45	  		  	Glacier Trust – Washington Trust #89	
Mcnary Trust – Washington Trust #46	  		  	Monte Cristo Trust – Washington Trust #90	
Maryhill Trust – Washington Trust #47	  		  	Wenatchee Trust – Washington Trust #91	
Pastime Trust – Washington Trust #48	  		  	Vesper Trust – Washington Trust #92	
Chelan Trust – Washington Trust #49	  		  	Gunn Trust – Washington Trust #93	
Moses Trust – Washington Trust #50	  		  	Pyramid Trust – Washington Trust #94	
Entiat Trust – Washington Trust #51	  		  	Mission Trust – Washington Trust #95	
Wallola Trust – Washington Trust #52	  		  	Signal Trust – Washington Trust #96	
Banks Trust – Washington Trust #53	  		  	Under Trust – Washington Trust #97	
Riffe Trust – Washington Trust #54	  		  	Saddle Trust – Washington Trust #98	
Sacajewea Trust – Washington Trust #55	  		  	Abercrombie Trust – Washington Trust #99	
Bryan Trust – Washington Trust #56	  		  	Hall Trust – Washington Trust #100	
Newman Trust – Washington Trust #57	  		  	Molybenite Trust – Washington Trust #101	
Rock Trust – Washington Trust #58	  		  	Chewelah Trust – Washington Trust #102	
Roosevelt Trust – Washington Trust #59	  		  	Boyer Trust – Washington Trust #103	
Shannon Trust – Washington Trust #60	  		  	Cougar Trust – Washington Trust #104	
Stevens Trust – Washington Trust #61	  		  	Redtop Trust – Washington Trust #105	
Spectacle Trust – Washington Trust #62	  		  	Chimney Trust – Washington Trust #106	
Galispell Trust – Washington Trust #63	  		  	July Trust – Washington Trust #107	
West Trust – Washington Trust #64	  		  	Star Trust – Washington Trust #108	
Marengo Trust – Washington Trust #65	  		  	Pinnacle Trust – Washington Trust #109	
Spangle Trust – Washington Trust #66	  		  	Remmel Trust – Washington Trust #110	
Packwood Trust – Washington Trust #67	  		  	Mile Trust – Washington Trust #111	
Moore Trust – Washington Trust #68	  		  	Zebra Trust – Washington Trust #112	
Almira Trust – Washington Trust #69	  		  	Iron Trust – Washington Trust #113	
 
Schedule 2-5

					
Foot Trust – Washington Trust #114	  		  	Quimalt Trust – Washington Trust #158	
Bells Trust – Washington Trust #115	  		  	Queets Trust – Washington Trust #159	
Badger Trust – Washington Trust #116	  		  	Wind Trust – Washington Trust #160	
Yearling Trust – Washington Trust #117	  		  	Marysville Trust – Washington Trust #161	
King Trust – Washington Trust #118	  		  	Lynwood Trust – Washington Trust #162	
Ant Trust – Washington Trust #119	  		  	Edmonds Trust – Washington Trust #163	
Aix Trust – Washington Trust #120	  		  	Wine Trust – Washington Trust #164	
Snoqualmie Trust – Washington Trust #121	  		  	Seattle Trust – Washington Trust #165	
Twisp Trust – Washington Trust #122	  		  	Burien Trust – Washington Trust #166	
Rainy Trust – Washington Trust #123	  		  	Townsend Trust – Washington Trust #167	
Washington Trust – Washington Trust #124	  		  	Flagler Trust – Washington Trust #168	
Harts Trust – Washington Trust #125	  		  	Angeles Trust – Washington Trust #169	
Cascade Trust – Washington Trust #126	  		  	Aberdeen Trust – Washington Trust #170	
Austin Trust – Washington Trust #127	  		  	Hoquiam Trust – Washington Trust #171	
Stampede Trust – Washington Trust #128	  		  	Zesty Trust – Washington Trust #172	
Swauk Trust – Washington Trust #129	  		  	Bellingham Trust – Washington Trust #173	
Blewitt Trust – Washington Trust #130	  		  	Blaine Trust – Washington Trust #174	
Cayuse Trust – Washington Trust #131	  		  	Chuckanut Trust – Washington Trust #175	
By Trust – Washington Trust #132	  		  	Anacortes Trust – Washington Trust #176	
Over Trust – Washington Trust #133	  		  	Amarillo Residuary Trust #1	
Satus Trust – Washington Trust #134	  		  	Amarillo Residuary Trust #2	
Copper Trust – Washington Trust #135	  		  	Amarillo Residuary Trust #3	
Snowy Trust – Washington Trust #136	  		  	Amarillo Residuary Trust #4	
Ozette Trust – Washington Trust #137	  		  	Amarillo Residuary Trust #5	
Skokomich Trust – Washington Trust #138	  		  	Amarillo Residuary Trust #6	
Cherokee Trust – Washington Trust #139	  		  	Amarillo Residuary Trust #7	
Spokane Trust – Washington Trust #140	  		  	Amarillo Residuary Trust #8	
Lummi Trust – Washington Trust #141	  		  	Amarillo Residuary Trust #9	
Shoalwater Trust – Washington Trust #142	  		  	Amarillo Residuary Trust #10	
Hoh Trust – Washington Trust #143	  		  	DNP Residuary Trust #1	
Quillayute Trust – Washington Trust #144	  		  	DNP Residuary Trust #2	
Nooksack Trust – Washington Trust #145	  		  	DNP Residuary Trust #3	
Suiattle Trust – Washington Trust #146	  		  	DNP Residuary Trust #4	
White Trust – Washington Trust #147	  		  	DNP Residuary Trust #5	
Icicle Trust – Washington Trust #148	  		  	DNP Residuary Trust #6	
Klickitat Trust – Washington Trust #149	  		  	DNP Residuary Trust #7	
Willapa Trust – Washington Trust #150	  		  	DNP Residuary Trust #8	
Snow Trust – Washington Trust #151	  		  	DNP Residuary Trust #9	
Dickey Trust – Washington Trust #152	  		  	ECI Family Trust #1	
Toutle Trust – Washington Trust #153	  		  	ECI Family Trust #2	
Salmon Trust – Washington Trust #154	  		  	ECI Family Trust #3	
Yellow Trust – Washington Trust #155	  		  	ECI Family Trust #4	
Chehalis Trust – Washington Trust #156	  		  	ECI Family Trust #5	
Wynoochee Trust – Washington Trust #157	  		  	ECI Family Trust #6	
 
Schedule 2-6

					
ECI QSST Trust #1	  		  	A.N.P. Trust #7B – John	
ECI QSST Trust #2	  		  	A.N.P. Trust #7C – Gigi	
ECI QSST Trust #3	  		  	A.N.P. Trust #7D – Dan	
ECI QSST Trust #4	  		  	A.N.P. Trust #8	
ECI QSST Trust #5	  		  	A.N.P. Trust #9	
ECI QSST Trust #6	  		  	A.N.P. Trust #10	
Don G.C. Trust #1	  		  	A.N.P. Trust #11	
Don G.C. Trust #2	  		  	A.N.P. Trust #12	
Don G.C. Trust #3	  		  	A.N.P. Trust #13A – Tom	
Don G.C. Trust #4	  		  	A.N.P. Trust #13B – John	
Don G.C. Trust #5	  		  	A.N.P. Trust #13C – Gigi	
Don G.C. Trust #6	  		  	A.N.P. Trust #13D – Dan	
Don G.C. Trust #7	  		  	A.N.P. Trust #14	
Don G.C. Trust #8	  		  	A.N.P. Trust #15	
Don G.C. Trust #9	  		  	A.N.P. Trust #16	
Don G.C. Trust #10	  		  	A.N.P. Trust #17	
R.A. G.C. Trust #1	  		  	A.N.P. Trust #18 – John	
R.A. G.C. Trust #2	  		  	A.N.P. Trust #18 – Thomas	
R.A. G.C. Trust #3	  		  	A.N.P. Trust #19	
R.A. G.C. Trust #4	  		  	A.N.P. Trust #20	
R.A. G.C. Trust #5	  		  	A.N.P. Trust #21	
R.A. G.C. Trust #6	  		  	A.N.P. Trust #22 – James	
R.A. G.C. Trust #7	  		  	A.N.P. Trust #22 – Linda	
R.A. G.C. Trust #8	  		  	A.N.P. Trust #23 – Karen	
R.A. G.C. Trust #9	  		  	A.N.P. Trust #23 – Linda	
R.A. G.C. Trust #10	  		  	A.N.P. Trust #24 – James	
LaSalle G.C. Trust #2	  		  	A.N.P. Trust #24 – Karen	
LaSalle G.C. Trust #3	  		  	A.N.P. Trust #25	
LaSalle G.C. Trust #4	  		  	A.N.P. Trust #26	
LaSalle G.C. Trust #5	  		  	A.N.P. Trust #27	
LaSalle G.C. Trust #6	  		  	A.N.P. Trust #28 – James	
LaSalle G.C. Trust #7	  		  	A.N.P. Trust #28 – Linda	
LaSalle G.C. Trust #8	  		  	A.N.P. Trust #29 – Karen	
LaSalle G.C. Trust #9	  		  	A.N.P. Trust #29 – Linda	
LaSalle G.C. Trust #10	  		  	A.N.P. Trust #30 – James	
A.N.P. Trust #1	  		  	A.N.P. Trust #30 – Karen	
A.N.P. Trust #2	  		  	A.N.P. Trust #31	
A.N.P. Trust #3	  		  	A.N.P. Trust #32	
A.N.P. Trust #4 – Daniel	  		  	A.N.P. Trust #33	
A.N.P. Trust #4 – John	  		  	A.N.P. Trust #34 – Anthony	
A.N.P. Trust #5 – Daniel	  		  	A.N.P. Trust #34 – Penny	
A.N.P. Trust #5 – Jean	  		  	A.N.P. Trust #35 – Anthony	
A.N.P. Trust #6	  		  	A.N.P. Trust #35 – Jay Robert	
A.N.P. Trust #7A – Tom	  		  	A.N.P. Trust #36 – Jay Robert	
 
Schedule 2-7

					
A.N.P. Trust #36 – Penny	  		  	P.P.C. Trust #3 – Jay Robert	
A.N.P. Trust #37	  		  	P.P.C. Trust #4 – Jim	
A.N.P. Trust #38	  		  	P.P.C. Trust #4 – Anthony	
A.N.P. Trust #39	  		  	P.P.C. Trust #4 – Jay Robert	
A.N.P. Trust #40 – Anthony	  		  	P.P.C. Trust #5 – Karen	
A.N.P. Trust #40 – Penny	  		  	P.P.C. Trust #5 – Anthony	
A.N.P. Trust #41 – Anthony	  		  	P.P.C. Trust #6 – Daniel	
A.N.P. Trust #41 – Jay Robert	  		  	P.P.C. Trust #6 – Penny	
A.N.P. Trust #42 – Jay Robert	  		  	P.P.C. Trust #6 – Gigi	
A.N.P. Trust #42 – Penny	  		  	P.P.C. Trust #6 – Anthony	
P.P.C. Trust #2 – Tom	  		  	P.P.C. Trust #7 – John	
P.P.C. Trust #2 – Gigi	  		  	P.P.C. Trust #7 – Penny	
P.P.C. Trust #3 – Linda	  		  		
 
Schedule 2-8

Exhibit 10.43
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
W2007 WKH HOLDINGS, LLC
(F/K/A W2007 WAIKIKI HOLDINGS, L.L.C.)
THE INTERESTS OF THE MEMBERS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE OR THE DISTRICT OF COLUMBIA. NO RESALE OR TRANSFER OF AN INTEREST BY A MEMBER IS PERMITTED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS, AND ANY VIOLATION OF SUCH PROVISIONS COULD EXPOSE THE SELLING OR TRANSFERRING MEMBER AND THE COMPANY TO LIABILITY.
Dated as of October 9 , 2009

TABLE OF CONTENTS

ARTICLE 1.	
	
DEFINITIONS	
			
1.1	  	Definitions	  	2	
1.2	  	Rules of Construction	  	17	
1.3	  	Terms Generally	  	17	
	
ARTICLE 2.	
	
THE COMPANY AND ITS BUSINESS	
			
2.1	  	Company Name	  	18	
2.2	  	Term	  	18	
2.3	  	Filing of Certificate and Amendments	  	18	
2.4	  	Company’s Purposes	  	18	
2.5	  	Principal Office; Mailing Address; Registered Agent	  	19	
2.6	  	Names and Addresses of the Members	  	19	
2.7	  	Representations and Covenants by the Members	  	19	
		
ARTICLE 3.	  		
		
MANAGEMENT OF COMPANY BUSINESS	  		
			
3.1	  	Management and Control by Each Managing Member	  	23	
3.2	  	Rights and Responsibilities of Hyatt and Limitations on its Authority	  	27	
3.3	  	Subsidiaries	  	27	
3.4	  	Acts of the Company and the Members	  	28	
3.5	  	Documents	  	28	
3.6	  	Sale of the Property	  	28	
3.7	  	Decisions Requiring Approval of Hyatt	  	33	
	
ARTICLE 4.	
	
CERTAIN RIGHTS AND DUTIES OF MEMBERS	
			
4.1	  	Other Activities of the Members	  	34	
4.2	  	Indemnification	  	36	
4.3	  	Compensation of Members and their Affiliates; Goldman, Sachs & Co	  	36	
4.4	  	Use of Company Property	  	37	
4.5	  	Title to Company Assets	  	37	
4.6	  	Designation of Tax Matters Member	  	37	
 
-i-

					
4.7	  	Intentionally Omitted	  	37	
4.8	  	Financing Fees	  	38	
4.9	  	Break-Up Fees and Related Expenses	  	38	
4.10	  	REIT Structure Implementation	  	38	
	
ARTICLE 5.	
	
FINANCIAL REPORTS AND STATEMENTS	
			
5.1	  	Financial Reports and Statements	  	39	
5.2	  	Budget for Real Estate Taxes, Insurance Premiums and Debt Service	  	40	
	
ARTICLE 6.	
	
CAPITAL CONTRIBUTIONS, LOANS AND LIABILITIES	
			
6.1	  	Capital Contributions; Failure to Fund Property Closing Date Capital Contributions	  	40	
6.2	  	Capital Calls for Additional Capital Contributions	  	42	
6.3	  	Failure to Fund Additional Capital Contributions	  	44	
6.4	  	Dilution for Failure to Fund Capital Calls	  	46	
6.5	  	Capital of the Company	  	46	
6.6	  	Limited Liability of Members	  	47	
6.7	  	Recourse Carveout Guaranty	  	47	
6.8	  	Obligation to Fund Post-Syndication Amounts	  	47	
6.9	  	Failure to Fund Five Year Amounts	  	47	
6.10	  	Replacement Loan	  	48	
6.11	  	Obligation to Fund Initial Renovation Costs	  	48	
	
ARTICLE 7.	
		
CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS	  		
			
7.1	  	Capital Accounts	  	49	
7.2	  	Profits and Losses	  	50	
	
ARTICLE 8.	
	
APPLICATIONS AND DISTRIBUTIONS OF AVAILABLE CASH	
			
8.1	  	Applications and Distributions	  	52	
8.2	  	Liquidation	  	53	
8.3	  	Repayment of Member Loans	  	53	
8.4	  	Withholding Taxes	  	54	
 
-ii-

					
ARTICLE 9.	
	
TRANSFER OF COMPANY INTERESTS; SALE OF ASSETS	
			
9.1	  	Limitations on Assignments of Interests by Members	  	54	
9.2	  	First Offer Right on Offered Whitehall Interests	  	54	
9.3	  	Drag-Along Rights; Tag-Along Rights	  	57	
9.4	  	Permitted Whitehall Group Transfers	  	59	
9.5	  	Permitted Hyatt Transfers	  	59	
9.6	  	Transfer Requirements	  	60	
9.7	  	Requirements for Admission of a Substituted Member	  	60	
9.8	  	Acceptance of Prior Acts	  	61	
	
ARTICLE 10.	
	
DISSOLUTION OF THE COMPANY; WINDING-UP AND DISTRIBUTION OF ASSETS	
			
10.1	  	Dissolution	  	61	
10.2	  	Winding-Up	  	62	
10.3	  	Distribution of Assets	  	62	
	
ARTICLE 11.	
	
AMENDMENTS	
			
11.1	  	Amendments	  	63	
11.2	  	Additional Members	  	63	
	
ARTICLE 12.	
	
MISCELLANEOUS	
			
12.1	  	Further Assurances	  	64	
12.2	  	Notices	  	64	
12.3	  	Headings and Captions	  	64	
12.4	  	Variance of Pronouns	  	64	
12.5	  	Counterparts	  	64	
12.6	  	GOVERNING LAW	  	64	
12.7	  	Arbitration	  	65	
12.8	  	Partition	  	66	
12.9	  	Invalidity	  	66	
12.10	  	Successors and Assigns	  	66	
12.11	  	Entire Agreement	  	66	
12.12	  	No Waivers; Remedies	  	66	
 
-iii-

					
12.13	  	No Brokers	  	66	
12.14	  	Maintenance as a Separate Entity	  	67	
12.15	  	Confidentiality	  	67	
12.16	  	No Third Party Beneficiaries	  	68	
12.17	  	Power of Attorney	  	68	
12.18	  	Time of Essence	  	69	
12.19	  	Partnership for Tax Purposes	  	69	
12.20	  	Property Management Agreement	  	69	
12.21	  	Acquisition Mortgage Loan	  	69	
 
-iv-

			
SCHEDULES	
		
Schedule 1	 	Legal Description of the Property	
Schedule 2.6	 	Names and Addresses of Members and Counsel	
Schedule 3.4	 	Representatives of the Members	
Schedule 3.7(b)	 	Post-Property Closing Organizational Structure	
Schedule 6.1(a)	 	Property Closing Date Capital Contributions of the Members	
	
EXHIBITS	
		
Exhibit A	 	Form of Member Loan Note	
Exhibit B	 	Form of Reimbursement Agreement	
 
-v-

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
W2007 WKH HOLDINGS, LLC
This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of October 9, 2009, is by and among W2007 Finance Sub, LLC, a Delaware limited liability company (“ Finance Sub ”), Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“ Whitehall Parallel ”), and Hyatt Corporation, a Delaware corporation (“ Hyatt ”).
R E C I T A L S
A. Whitehall Street Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“ Whitehall Street ”), and Hyatt formed the Company under the Act pursuant to a Certificate of Formation, filed with the Secretary of State of the State of Delaware on January 30, 2007.
B. Whitehall Street and Hyatt entered into that certain Limited Liability Company Agreement of the Company, dated as of February 7, 2007 (the “ Original Agreement ”).
C. Pursuant to that certain Assignment of Limited Liability Company Interests, dated as of May 23, 2007, among Whitehall Street, Whitehall Parallel and Finance Sub, Whitehall Street assigned all of its interests in the Company to Whitehall Parallel and Finance Sub, and Whitehall Parallel and Finance Sub were admitted as Members of the Company.
D. Azabu Buildings Co., Ltd., a Japan corporation, as seller (the “ Seller ”), and Hyatt, as purchaser, entered into an Acquisition Agreement, dated as of February 7, 2007 (as amended, the “ Acquisition Agreement ”), pursuant to which Hyatt (or the Company or one of its Subsidiaries, as a permitted assignee of Hyatt pursuant to the Acquisition Agreement) shall receive 100% of the shares of NewCo, which owns or leases (or shall own and lease prior to the closing under the Acquisition Agreement) (i) among other things, the properties commonly known as the Hyatt Regency Waikiki located in Waikiki, Hawaii, which are legally described on Schedule 1 attached hereto, together with the ballroom, parking garage and administrative offices and affiliated assets and operations currently owned by the Seller and its Affiliates (the “ Hotel ”), (ii) 100% of the shares of Azabu USA Corporation, a Hawaii corporation (“ Azabu USA ”) which owns or leases the King’s Village properties which are legally described on Schedule 1 attached hereto (“ King’s Village ”), and (iii) 100% of the common shares of Azabu FF&E Subsidiary, Inc., a Delaware corporation (“ Azabu FF&E ”) which owns all related personal property and FF&E (collectively and together with all buildings and improvements situated thereon and all personal property and FF&E related thereto, the “ Property ”). The Members acknowledge that the acquisition structure described in the immediately preceding sentence shall be modified simultaneously with the Property Closing as described herein.

E. The Members, on behalf of the Company, shall advance funds to the Company pro rata in accordance with such Member’s Percentage Interest for the payment of the earnest money deposit in the form of cash or one or more letters of credit (the “ Deposit ”) to the escrow agent pursuant to the Acquisition Agreement. In exchange for such funding of the Deposit under the Acquisition Agreement, each of the Members wish to ensure that each Member receives proper credit for such amounts for Capital Account and Capital Contribution purposes in proportion to such Member’s Percentage Interest of the Deposit.
F. The Company intends to close the transactions contemplated by the Acquisition Agreement (the “ Acquisition ”) in accordance with the terms and conditions set forth in the Acquisition Agreement and, promptly thereafter, the Company intends as its purpose to (i) acquire, own, finance, manage, operate, improve, develop, refinance and sell the Property, and (ii) market and lease and/or, at the option of the Managing Members, sell King’s Village.
G. Finance Sub, Whitehall Parallel and Hyatt entered into that certain Amended and Restated Limited Liability Company Agreement of the Company, dated as of July 15, 2008 (the “ Original Amended Agreement ”).
H. On July 16, 2008, the name of the Company was changed from W2007 Waikiki Holdings, L.L.C. to W2007 WKH Holdings, LLC.
NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby amend and restate the Original Amended Agreement in its entirety and adopt the following as their “limited liability company agreement” (as that term is used in the Act) and hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions . As used in this Agreement, the following terms have the meanings set forth below:
“ AAA ” means the American Arbitration Association.
“ Accountant ” has the meaning set forth in Section 5.1(a)(i).
 
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“ Acquisition ” has the meaning set forth in the Recitals.
“ Acquisition Agreement ” has the meaning set forth in the Recitals.
“ Acquisition Financing ” means, collectively, the Acquisition Mortgage Loan and the Acquisition Mezzanine Loan.
“ Acquisition Mezzanine Lender ” means EuroHypo AG, New York Branch.
“ Acquisition Mezzanine Loan ” means the mezzanine loan made by Acquisition Mezzanine Lender to Mezzanine Borrower or another Subsidiary of the Company to finance, in part, the Acquisition.
“ Acquisition Mezzanine Loan Repayments ” means the amounts necessary to repay the principal balance, interest and expenses under the Acquisition Mezzanine Loan as the same become due and payable pursuant to the terms of the documents evidencing the Acquisition Mezzanine Loan including, without limitation, payment of the Acquisition Mezzanine Loan in full upon acceleration thereof (upon maturity or otherwise).
“ Acquisition Mezzanine Loan Term Sheet ” means the summary of terms for the Acquisition Mezzanine Loan.
“ Acquisition Mortgage Lender ” means the lender(s) making the Acquisition Mortgage Loan.
“ Acquisition Mortgage Loan ” means the mortgage loan made or guaranteed by the Acquisition Mortgage Lender to Mortgage Borrower or another Subsidiary of the Company to finance, in part, the Acquisition.
“ Acquisition Mortgage Loan Term Sheet ” means the summary of terms for the Acquisition Mortgage Loan except that, notwithstanding anything to the contrary set forth in the Acquisition Mortgage Loan Term Sheet, the final amount of the Acquisition Mortgage Loan will be the greater of (i) $277,500,000 or (ii) 65% of the sum of (A) $420,000,000 and (B) plus all direct acquisition, joint venture formation and Acquisition Mortgage Loan and Acquisition Mezzanine Loan negotiation and closing costs.
“ Act ” means the Delaware Limited Liability Company Act (6 Del. C. 18-101 et seq.), as amended.
“ Additional Capital Contribution ” has the meaning set forth in Section 6.2(a) .
“ Affiliate ” means, for any Person: (i) any other Person that directly or indirectly through one or more intermediaries controls or is controlled by or is under common control with that Person; (ii) any other Person owning or controlling 10% or more of the
 
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outstanding voting securities of, or other ownership interests in, that Person (or any other Person in which that Person owns 10% or more of the outstanding voting securities or ownership interests); (iii) any officer, director, general partner or managing member of that Person; and/or (iv) if that Person is an officer, director, general partner or managing member of any Person, the Person for which that Person acts in any such capacity.
“ Agreement ” means this Second Amended and Restated Limited Liability Company Agreement, as it may be amended or modified from time to time.
“ Approval Period ” has the meaning set forth in Section 4.1(c)(i) .
“ Archon ” means Archon Group, L.P., a Delaware limited partnership.
“ Archon Representative ” means the employee(s) of Archon selected by Archon with the approval of the Managing Members as the “owner’s representative” for the Property.
“ Available Cash ” means, for any fiscal period, the excess, if any, of (A) the sum of (i) all cash receipts of the Company and/or any Subsidiary during that fiscal period from whatever source and (ii) any cash reserves of the Company and/or any Subsidiary existing at the start of that fiscal period, less (B) the sum of (i) all cash amounts paid or payable (without duplication) in that fiscal period on account of any expenses of any type whatsoever incurred in connection with the Company’s and/or any Subsidiary’s business (including capital expenditures, operating expenses and all other amounts payable under the Management Agreements (if any) and/or the Property Management Agreement, taxes, amortization and interest on any debt of the Company and/or any Subsidiary, expenses incurred in connection with the satisfaction of any refinancing of the Property and fees payable to any Person pursuant to Section 4.3 ), and (ii) all cash amounts paid into the Capital Fund (as defined in the Property Management Agreement) and any other cash reserves that the Managing Members determine may be required for the working capital, capital expenditures and future needs of the Company and/or any Subsidiary or, if the Managing Members have not yet made that determination for that fiscal period, an amount equal to 105% of (x) the amounts required for the working capital and capital expenditures of the Company and/or any Subsidiary, or (y) if greater, the amount of reserves for working capital and Required Expenditures held by the Company and/or any Subsidiary on the first day of that fiscal period.
“ Azabu FF&E ” has the meaning set forth in the Recitals.
“ Azabu USA ” has the meaning set forth in the Recitals.
“ Bankruptcy ” means, with respect to the affected party: (i) the entry of an Order for Relief under the Bankruptcy Code; (ii) the admission by such party in writing of its inability to pay its debts as they mature; (iii) the making by such party of an assignment for the benefit of creditors; (iv) the filing by such party of a petition in bankruptcy or a petition for relief under the Bankruptcy Code or
 
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any other applicable federal or state bankruptcy or insolvency statute or any similar law; (v) the expiration of 60 days after the filing of an involuntary petition under the Bankruptcy Code or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of such party’s debts under any other federal or state insolvency law, unless that petition is vacated, set aside or stayed within the 60-day period; (vi) an application by such party for the appointment of a receiver for the assets of such party; or (vii) the imposition of a judicial or statutory lien on all or a substantial part of such party’s assets unless the lien is discharged or vacated or the enforcement thereof is stayed within 60 days after the effective date of the lien.
“ Bankruptcy Code ” means Title 11 of the United States Code, as amended.
“ Book Value ” means, for any Company Asset, its adjusted basis for federal income tax purposes, except that the initial Book Value of any asset contributed by a Member to the Company will equal the agreed gross fair market value of the asset, and the Book Value will thereafter be adjusted consistently with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for revaluations under Section 7.1(b) and for Depreciation for that asset.
“ Business Day ” means a day upon which banks in The City of New York are not authorized or required by law to be closed.
“ Capital Account ” has the meaning set forth in Section 7.1 .
“ Capital Call ” means any written notice from any Managing Member to the Members (or to Hyatt only, as applicable) delivered in accordance with Article 6 requesting a contribution in cash of capital to the Company, which notice must state the total amount of the contributions required to be made, the amount to be funded by each Member under Section 6.2 , the amount of capital previously contributed by each of the Members and the total amount of capital for each Member assuming full contribution. For all purposes of this Agreement, the term Capital Call shall include any Discretionary Capital Calls.
“ Capital Contribution ” means, for any Member, the aggregate amount of capital contributed or deemed contributed to the Company by that Member in accordance with Article 6 (including such Member’s Initial Capital Contribution and any Additional Capital Contributions made by such Member).
“ Certificate of Formation ” means the Certificate of Formation of the Company filed with the State of Delaware on January 30, 2007, as the same may be amended and/or restated from time to time.
“ Claimant ” has the meaning set forth in Section 12.7(b) .
 
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“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Company ” means W2007 WKH Holdings, LLC, a Delaware limited liability company.
“ Company Assets ” means all right, title and interest of the Company in and to all or any portion of the assets of the Company, the Company’s interest in any Subsidiary or the assets of any of its Subsidiaries, as appropriate, and any property of any type of the Company or its Subsidiaries (whether real, personal, tangible or intangible), or estate or interest acquired in exchange therefor or in connection therewith, including the Property (together with all improvements constructed (or to be constructed) therein).
“ Company Loan ” has the meaning set forth in Section 6.3(a)(iii) .
“ Confidential Information ” has the meaning set forth in Section 12.15(a) .
“ Contributing Member ” has the meaning set forth in Section 6.3(a) .
“ control ” means, for any Person, the power to direct the management and policies of that Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. The terms “controlling” and “controlled” have meanings correlative to the foregoing.
“ Debtor Member ” means any Member that is a borrower under a Member Loan, for so long as that Member Loan remains outstanding.
“ Deposit ” has the meaning set forth in the Recitals.
“ Depreciation ” means, for any Fiscal Year, all non-cash deductions allowable under the Code, including all deductions attributable to depreciation or cost recovery with respect to Company Assets, including any improvements made thereto and any tangible personal property located therein, or amortization of the cost of any intangible property or other assets acquired by the Company that have a useful life exceeding one year; except that, with respect to any Company Asset whose tax basis differs from its Book Value at the beginning of that Fiscal Year or other period, Depreciation means an amount that bears the same ratio to such beginning Book Value as the depreciation, amortization or other cost recovery deduction for such period for such asset for federal income tax purposes bears to its adjusted tax basis as of the beginning of such Fiscal Year. However, if the federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year is zero, Depreciation will be determined using any method selected by the Managing Members, in their sole discretion.
“ Dilution Factor ” means (i) in all cases other than with respect to Discretionary Capital calls, 2.0 and (ii) only with respect to Discretionary Capital Calls, 1.0.
 
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“ Discretionary Capital Call ” means any Capital Call pursuant to Section 6.2(a)(ii) to fund capital improvements to the Property to the extent such capital improvements are not any of the following: (i) installations or replacements of FF&E; (ii) capital improvements required to comply with Legal Requirements and/or with the terms of the Property Management Agreement; (iii) capital improvements required in response to an Emergency; and (iv) capital improvements made pursuant to any renovation plan approved by Hyatt or by the Property Manager. Any Capital Call proposal which is to fund any of the items in clauses (i) through (iv) and/or to fund any Required Expenditure shall not be considered a Discretionary Capital Call.
“ Effective Date ” means February 7, 2007.
“ Emergency ” means an event, incident or occurrence which (i) threatens the life, health, injury or safety of any individual, including any employee, guest or invitee of the Hotel and/or (ii) threatens injury or damage to any property.
“ Escrow Agent ” has the meaning set forth in Section 3.6(e) .
“ Excluded Transaction Costs ” has the meaning set forth in Section 3.6(c) .
“ Failed Contribution ” has the meaning set forth in Section 6.3(a) .
“ Five Year Amounts ” means amounts required to allow the borrower of the Acquisition Mortgage Loan and the borrower of the Replacement Loan to fully repay, net of the proceeds of any refinancings, the then outstanding amounts of the Acquisition Mortgage Loan and the Replacement Loan.
“ FF&E ” means, with respect to the Property, furnishings, fixtures and equipment in the guest rooms, hallways, lobbies, restaurants, lounges, meeting and banquet rooms, parking facilities and other public areas or otherwise on the Property.
“ FF&E Subsidiary ” means W2007 WKH Hotel TRS, Inc., a Delaware corporation (f/k/a Azabu FF&E).
“ Finance Sub ” has the meaning set forth in the first paragraph of this Agreement.
“ Fiscal Year ” means the fiscal year of the Company, which is the calendar year, except that the first “Fiscal Year” means the period from the Effective Date until December 31, 2007 and, upon termination of the Company, “Fiscal Year” means the period from the end of the last preceding Fiscal Year to the date of termination.
“ Funded Portion ” has the meaning set forth in Section 6.3(a)(1) .
“ GAAP ” means generally accepted accounting principles.
 
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“ Goldman, Sachs & Co. ” means Goldman, Sachs & Co., a New York limited partnership, or any entity that is a successor to all or substantially all of the business of Goldman, Sachs & Co.
“ Governmental Authority ” means any court, board, agency, department, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, municipal, city, town, special district or otherwise) whether now or hereafter in existence.
“ GS ” has the meaning set forth in Section 4.3(b) .
“ Guaranty ” shall mean any guaranty, indemnity or other assurance of payment, directly or indirectly, provided by any Person in any manner or form by virtue of which such Person becomes primarily, secondarily, contingently or otherwise liable for another Person’s obligations, including by acting as an account party on, or becoming obligated to reimburse amounts drawn under, any letter of credit obtained for such other Person.
“ Hotel ” has the meaning set forth in the Recitals.
“ Hyatt ” has the meaning set forth in the first paragraph of this Agreement.
“ Hyatt Permitted Transferee ” means (a) any Pritzker Affiliate, (b) any Person to whom Property Manager assigns the Property Management Agreement in accordance with the terms of the Property Management Agreement, (c) only if Hyatt’s Interest in the Company is not the only asset of Hyatt, any Person that is a successor or assignee of Hyatt resulting from any merger or sale of all or substantially all of the ownership interests in Hyatt (whether pursuant to a public offering, public markets transaction or private sale), consolidation, recapitalization or reorganization, (d) only if Hyatt’s Interest in the Company is not the only asset of Hyatt, any Person that shall acquire all, or substantially all, of the assets of Hyatt, or (e) any other Person(s) approved in writing by the Managing Members, in their sole discretion.
“ Hyatt Property Purchase Notice ” has the meaning set forth in Section 3.6(b) .
“ Hyatt Transfer Notice ” has the meaning set forth in Section 9.2(b) .
“ Indebtedness ” means, with respect to any Person, (i) all indebtedness (whether secured or unsecured) of such Person for borrowed money or for the deferred purchase price of property, goods or services, including reimbursement, and all other obligations contingent or otherwise of such Person with respect to surety bonds, letters of credit and bankers’ acceptances, whether or not matured, and hedges and other derivative contracts and financial instruments, (ii) all obligations of such Person evidenced by notes, bonds, derivatives, loan agreements, reimbursement agreements or similar instruments (including senior, mezzanine and junior borrowings, which may provide the lender with a participation in profits), (iii) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and
 
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remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all capital lease obligations of such Person, (v) all indebtedness referred to in clause (i), (ii), (iii) or (iv) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon or in property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (vi) all Indebtedness of others guaranteed by such Person or for which such Person has otherwise assumed responsibility on, before or after the date such Indebtedness is incurred.
“ Initial Renovation Costs ” means Ten Million Dollars ($10,000,000) (in excess of reserves) of renovation costs and expenses for renovations of the Property that are agreed to by the Members in their reasonable discretion.
“ Institutional Lender ” means an Affiliate of the Whitehall Group (including The Goldman Sachs Group, Inc.) or any one or more of the following other entities: a savings bank, a savings and loan association, a commercial bank or trust company, an insurance company subject to regulation by any Governmental Authority or body, a real estate investment trust, a union, governmental or secular employees’ welfare, benefit, pension or retirement fund, a pension fund property unit trust (whether authorized or unauthorized), an investment company or trust, a merchant or investment bank or any other entity generally viewed as an institutional lender. An entity other than an Affiliate of the Whitehall Group may be considered an Institutional Lender only if that entity, together with its Affiliates, has total assets of at least one billion dollars ($1,000,000,000) and stockholders’ equity or net worth of at least two hundred and fifty million dollars ($250,000,000) (or, in either case, the equivalent thereof in a foreign currency) as of the date the entity makes a loan to a member of the Whitehall Group. Any Person otherwise satisfying the foregoing definition will be considered an Institutional Lender whether (i) acting for itself or (ii) as trustee, as general partner of a partnership, in a fiduciary, management or advisory capacity or, in the case of a bank, as agent bank, for any number of lenders, so long as in the case of clause (ii) the day-to-day management decisions relating to the loan made by that Institutional Lender are either exercised by or recommended by that Institutional Lender and, during the life of the loan, the Institutional Lender may only be removed from its clause (ii) capacity if it is replaced by another Institutional Lender also acting in the manner specified in clause (ii).
“ Interest ” means the entire limited liability company interest of a Member in the Company at any particular time, including the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement and in the Act, together with the obligations of such Member to comply with all the terms and provisions of this Agreement.
“ Interest Purchase Deposit ” has the meaning set forth in Section 9.2(e) .
 
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“ Interest Rate ” means (i) in all cases other than with respect to Company Loans and Member Loans made by a Contributing Member as a result of a Discretionary Capital Call, a rate of interest per annum equal to the lesser of (a) twenty percent (20%), and (b) the maximum rate permitted by applicable law, in each case compounded on a monthly basis, and (ii) only with respect to Company Loans and Member Loans made by a Contributing Member as a result of Discretionary Capital Calls, a rate of interest per annum equal to the lesser of (a) the Prime Rate plus five percent (5%), and (b) the maximum rate permitted by applicable law, in each case compounded on a monthly basis.
“ IRS ” means the Internal Revenue Service and any successor agency or entity thereto.
“ King’s Village ” has the meaning set forth in the Recitals.
“ King’s Village Subsidiary ” means W2007 WKH King’s Village TRS, Inc., a Hawaii corporation (f/k/a Azabu USA).
“ Legal Requirement ” means all statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting the Property or any part thereof, or the construction, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses, authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Company or any Subsidiary, at any time in force affecting the Property or any part thereof, including any that may (a) require repairs, modifications or alterations in or to the Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.
“ Lender Member ” means any Member that has made a Member Loan, for as long as that Member Loan remains outstanding.
“ List ” means the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury, and/or any other similar list maintained by the Office of Foreign Assets Control pursuant to any authorizing statute, executive order or regulation.
“ Lockout Period ” means the period ending on the third (3 rd ) anniversary of the Property Closing Date.
“ Losses ” has the meaning set forth in Section 7.2(a) .
“ Management Agreements ” means any development, leasing, property management, sales agency, marketing or other service agreements heretofore or hereafter entered into by the Company or any of its Subsidiaries with Hyatt and/or any Affiliate of Hyatt relating to any or all portions of the Property, including the Property Management Agreement.
 
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“ Managing Member ” means each of Finance Sub, Whitehall Parallel and the Sister Whitehall Funds. Wherever in this Agreement a “Managing Member” or “the Managing Members” is or are authorized or empowered to take any action, including to make any decision, grant any consent or approval, give any notice, and/or make any election, and if each of Finance Sub, Whitehall Parallel and the Sister Whitehall Funds is a Managing Member at such time, then any of Finance Sub, Whitehall Parallel or the Sister Whitehall Funds, acting alone, may take such action.
“ Member ” means each member of the Whitehall Group, Hyatt and any Substituted Members.
“ Member-Funded Debt ” means any non-recourse debt of the Company which debt is loaned or guaranteed by any Member or is treated as Member non-recourse debt with respect to a Member under Treasury Regulations Section 1.704-2(b)(4), or both.
“ Member Loan ” has the meaning set forth in Section 6.3(a)(ii) .
“ Mezzanine Borrower ” means W2007 WKH Mezzanine Borrower, LLC, a Delaware limited liability company.
“ Minimum Gain ” means an amount equal to the excess of the principal amount of debt for which no Member is liable (“ non-recourse debt ”), over the adjusted basis of the Company Assets which basis represents the minimum taxable gain that would be recognized by the Company if the non-recourse debt were foreclosed upon and the Company Assets were transferred to the creditor in satisfaction thereof, and which is referred to as “minimum gain” in Treasury Regulations Section 1.704-1(b)(4)(iv). A Member’s share of Minimum Gain will be determined in accordance with Treasury Regulations Section 1.704-2. Minimum Gain includes, where applicable, “partner non-recourse minimum gain,” as referred to in Treasury Regulations Section 1.704-2.
“ Mortgage Borrower ” means W2007 WKH Senior Borrower, LLC, a Delaware limited liability company.
“ NewCo ” has the meaning set forth in the Acquisition Agreement.
“ Non-Contributing Member ” has the meaning set forth in Section 6.3(a) .
“ Offered Whitehall Interests ” has the meaning set forth in Section 9.2(a) .
“ Offeree Member ” has the meaning set forth in Section 4.1(c)(i) .
“ Offeror Member ” has the meaning set forth in Section 4.1(c) .
“ Organizational Documents ” means, for any Person, (i) in the case of a corporation, that Person’s certificate of incorporation and by-laws, and any shareholder agreement, voting trust or similar arrangement applicable to any of that Person’s authorized shares
 
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of capital stock, (ii) in the case of a partnership, that Person’s certificate of limited partnership or partnership agreement, and any voting trusts or similar arrangements applicable to any of its partnership interests, (iii) in the case of a limited liability company, that Person’s certificate of formation, limited liability company agreement or other document affecting the rights of holders of limited liability company interests, or (iv) in the case of any other legal entity, that Person’s organizational documents and all other documents affecting the rights of holders of equity interests in that Person.
“ Original Agreement ” has the meaning set forth in the Recitals.
“ Original Amended Agreement ” has the meaning set forth in the Recitals.
“ Owner ” means W2007 WKH Owner, LLC, a Delaware limited liability company and the surviving entity of the merger of NewCo with and into Owner which shall occur simultaneously with the Property Closing.
“ Percentage Interest ” means, for any Member, the percentage set forth opposite such Member’s name in Section 6.1(b) , as that percentage interest shall be adjusted from time to time under the terms of Section 6.4 .
“ Permitted Transferee ” means a Hyatt Permitted Transferee or a Whitehall Permitted Transferee, as the case may be.
“ Person ” means any individual, partnership, corporation, limited liability company, trust or other legal entity.
“ Post-Syndication Amounts ” means all amounts due on the Acquisition Mezzanine Loan and any Replacement Loan.
“ Pre-Syndication Amounts ” means amounts required (x) to pay any anticipated shortfalls in the payment of interest or expenses under the Acquisition Mezzanine Loan, or (y) to reimburse the Whitehall Group for all interest and expenses paid by the Whitehall Group in funding Acquisition Mezzanine Loan Repayments pursuant to Section 6.10 .
“ Prime Rate ” means the interest rate per annum as published, from time to time, in The Wall Street Journal as the “Prime Rate” in its column entitled “Money Rate”.
“ Pritzker Affiliate ” means (a) any Affiliate of Hyatt, (b) any one or more of the direct lineal descendants, natural or adoptive, of Nicholas J. Pritzker, deceased, or their respective current or former spouses, (c) any one or more trusts, the principal beneficiaries of which are one or more of the persons described in clause (b)  above, (d) the legal representatives of any person or trust described in clause (b)  or (c)  above, and (e) any Affiliate of any Pritzker Affiliate or any general or limited partnership, corporation or limited liability company at least fifty and one-tenth percent (50.1%) of the voting securities or ownership interests in which are owned, directly or indirectly, by one or more of the Persons described in clauses (b) , (c)  or (d)  above or this clause (e) .
 
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“ Profits ” has the meaning set forth in Section 7.2(a) .
“ Property ” has the meaning set forth in the Recitals.
“ Property Closing ” means the completion of the acquisition of the Property by the Company and/or one or more Subsidiaries pursuant to the terms and conditions of the Acquisition Agreement.
“ Property Closing Date ” means the date on which the Property Closing occurs.
“ Property Closing Date Capital Contributions ” means the Capital Contributions made on or before the Property Closing Date by the Members (including the Members’ share of the Deposit), in the amounts set forth on Schedule 6.1(a) attached hereto, as such Schedule 6.1(a) may be modified by the Managing Members on or prior to the Property Closing Date as required to satisfy the Company’s and/or its Subsidiaries obligations under the Acquisition Agreement.
“ Property Closing Period ” has the meaning set forth in Section 3.6(c) .
“ Property Management Agreement ” means the property management agreement relating to the Property between the Company (and/or a Subsidiary) and the Property Manager entered into on the Property Closing Date, as the same may be hereafter amended or modified from time to time.
“ Property Manager ” means Hyatt Corporation, a Delaware corporation, or any successor or assign thereto permitted under the Property Management Agreement or, if the Property Management Agreement is no longer in effect, such other Person approved by the Managing Members pursuant to the terms of this Agreement. Notwithstanding anything to the contrary contained herein, the “Property Manager” shall not be construed to be a “manager” of the Company for purposes of the Act.
“ Property Marketing Period ” has the meaning set forth in Section 3.6(c) .
“ Property Purchase Notice Deposit ” has the meaning set forth in Section 3.6(e) .
“ Proposed Property Purchase Price ” has the meaning set forth in Section 3.6(a) .
“ Property Sale Election Period ” has the meaning set forth in Section 3.6(b) .
“ Proposed Sale Notice ” has the meaning set forth in Section 3.6(a) .
“ Proposed Transfer Notice ” has the meaning set forth in Section 9.2(a) .
 
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“ Proposed Transfer Price ” has the meaning set forth in Section 9.2(a) .
“ Proposing Member ” has the meaning set forth in Section 9.3(a) .
“ Prospective Acquisition ” has the meaning set forth in Section 4.1(c) .
“ Prospective Acquisition Notice ” has the meaning set forth in Section 4.1(c)(ii) .
“ Purchase Documents ” means any agreements, instruments or documents to be executed and delivered in connection with the acquisition of the Property by the Company and/or any Subsidiary.
“ Recourse Carveout Guaranty ” means any Guaranty given in connection with a loan made to the Company or any Subsidiary pursuant to which a Member (or one or more of its Affiliates) agrees to indemnify the lender against or to pay the lender for losses related to fraud or intentional misrepresentation, misappropriation or misapplication, environmental matters, bankruptcy, waste, criminal conduct and other customary recourse carveouts (but “Recourse Carveout Guaranty” specifically excludes guarantees of principal and interest other than for customary “springing recourse carveouts”, such as for bankruptcy and impermissible transfers).
“ Renovation LC ” has the meaning set forth in Section 6.11 .
“ Replacement Loan ” has the meaning set forth in Section 6.10 .
“ Replacement Loan Interest Rate ” has the meaning set forth in Section 6.10 .
“ Required Expenditure ” means all costs, expenditures or amounts required (i) to be expended in connection with the Company, any Subsidiary, the Property, whether or not of a recurring nature, to preserve, protect, operate or maintain the Property, (ii) to pay any uncontrollable expenses, including any real estate taxes, operating deficits, insurance premiums, costs of restoring the Property after a casualty or condemnation thereof, utility costs, marketing costs, fees, reimbursements and any other amounts payable under any development agreement, any property management agreement, leasing agreement and/or any sales agency agreement, including any Management Agreement and/or Property Management Agreement, costs of compliance with any Legal Requirements, payments with respect to the Acquisition Mortgage Loan or any other loan or any refinancing thereof or other mortgages and other liens except for the Acquisition Mezzanine Loan or a Replacement Loan, and payments on or of contractual obligations of the Company and/or any Subsidiary, (iii) to reimburse any Member (or its Affiliates) for amounts paid pursuant to a Recourse Carveout Guaranty to the extent such amounts are not paid by such Member due to the gross negligence, willful misconduct, bad faith, fraud, misappropriation or any other criminal act by such Member or such Member’s Affiliates, or (iv) to fund any other emergency or non-discretionary expenditures, including loan balancing calls (other than with respect to the Acquisition Mezzanine Loan or a Replacement Loan).
 
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“ Securities Act ” means the Securities Act of 1933, as amended.
“ Sellers ” has the meaning set forth in the Recitals.
“ Sister Whitehall Funds ” means Finance Sub, Whitehall Parallel and any other fund that is an Affiliate of Whitehall Street formed to co-invest alongside Whitehall Street.
“ Subsidiary ” means any subsidiary that may be formed by the Company in accordance with this Agreement, each of which shall be wholly-owned directly or indirectly by the Company (other than FF&E Subsidiary, of which 500 shares of preferred stock are held by Hyatt), and shall expressly include, following the closing under the Acquisition Agreement, W2007 WKH REIT, Inc. a Delaware corporation, Mezzanine Borrower, Senior Borrower, Owner, King’s Village Subsidiary and FF&E Subsidiary.
“ Substituted Member ” means any Person admitted to the Company as a Member pursuant to the provisions of Section 9.7 .
“ Successful Syndication ” means the occurrence of Global Hyatt Corporation selling, participating or otherwise transferring or no longer guaranteeing all but $75,000,000 of the Acquisition Mortgage Loan at a rate equal to or better than par.
“ Tag-Along Member ” has the meaning set forth in Section 9.3(b) .
“ Tax Matters Member ” has the meaning set forth in Section 4.6 .
“ Third Party Property Purchase Price ” has the meaning set forth in Section 3.6(c) .
“ Third Party Property Purchaser ” has the meaning set forth in Section 3.6(c) .
“ Third Party Transferee ” has the meaning set forth in Section 9.2(c) .
“ Third Party Transfer Price ” has the meaning set forth in Section 9.2(c) .
“ Total Distributions ” means, at any time, the total amount of Available Cash distributed or deemed distributed to all the Members pursuant to Section 8.1 .
“ Transaction Costs ” has the meaning set forth in Section 3.6(c) .
“ Transfer ” means, with respect to a Member, (i) any transfer, sale, resignation, pledge, hypothecation, encumbrance, assignment or other disposition of any portion of that Member’s Interest or the proceeds thereof (whether voluntarily, involuntarily, by operation
 
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of law or otherwise), (ii) in the case of any Member whose sole or principal asset is its Interest in the Company, (a) any transfer, sale, resignation, pledge, hypothecation, encumbrance, assignment or other disposition of the direct ownership or Control of such Member (whether voluntarily, involuntarily, by operation of law or otherwise), and (b) any transfer, sale, resignation, pledge, hypothecation, encumbrance, assignment or other disposition of any ownership interest in any Person whose sole or principal assets are the ownership interests in such Member (whether directly or indirectly and whether voluntarily, involuntarily, by operation of law or otherwise).
“ Transferee ” means any Person who receives from any Member, via transfer, sale, resignation, pledge, hypothecation, encumbrance, assignment or other disposition, any portion of that Member’s Interest or the proceeds thereof (whether voluntarily, involuntarily, by operation of law or otherwise).
“ Transfer Closing Period ” has the meaning set forth in Section 9.2(c) .
“ Transfer Election Period ” has the meaning set forth in Section 9.2(b) .
“ Transfer Marketing Period ” has the meaning set forth in Section 9.2(c) .
“ Treasury Regulations ” means the regulations promulgated under the Code in effect as of the Effective Date.
“ Whitehall Employee Fund ” shall mean Whitehall Street Global Employee Fund 2007, L.P., a Delaware limited partnership.
“ Whitehall Group ” means Finance Sub, Whitehall Parallel and Whitehall Street, together with any assignee or transferee of the foregoing that becomes a Substituted Member. “ Member of the Whitehall Group ” or “ member of the Whitehall Group ” means any one of the foregoing.
“ Whitehall Group Transferor ” has the meaning set forth in Section 9.2(a) .
“ Whitehall Parallel ” has the meaning set forth in the first paragraph of this Agreement.
“ Whitehall Permitted Transferee ” means (a) any Sister Whitehall Funds or any other Affiliate of any member of the Whitehall Group, (b) only if any Whitehall Group member’s Interest in the Company is not the only asset of such member, any Person that is a successor or assignee of such member of the Whitehall Group resulting from any merger or sale of all or substantially all of the ownership interests in or assets of such member of the Whitehall Group (whether pursuant to a public offering, public markets transaction or private sale), consolidation, recapitalization or reorganization, (c) only if any Whitehall Group member’s Interest in the Company is not the only asset of such member, any Person that shall acquire all, or substantially all, of the assets of any member of the Whitehall Group or (d) subject to the limitations set forth in Section 9.4(b) , any Institutional Lender to whom a security interest or pledge is granted pursuant to Section 9.4(b) .
 
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“ Whitehall Street ” has the meaning set forth in the Recitals.
1.2 Rules of Construction . This Agreement is not subject to the principle of construing its meaning against the party that drafted it, and each Member acknowledges that it was represented by its own counsel in connection with its negotiation and drafting. Wherever in this Agreement any Member is permitted or required to make a decision or determination or take an action in its “discretion” or its “judgment,” that means that such Member may take that decision in its “sole discretion” or “sole judgment.” Wherever in this Agreement a Member is empowered to take or make a decision, direction, consent, vote, determination, election, action or approval, such Member is entitled to consider, favor and further only such interests and factors as it desires, including its own interests, and has no duty or obligation to consider, favor or further any other interest of the Company, any Subsidiary or any other Member. Wherever in this Agreement a Member is to act in “its discretion,” “in good faith” or under another express standard, such Member may act under that express standard and is not, and will not be, subject to any other or different standard arising from this Agreement or any other agreement contemplated herein or by relevant provisions of law (including the Act) or in equity or otherwise. Nothing in this Agreement shall be construed to negate any duty of good faith that is implied by law.
1.3 Terms Generally . For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article (or elsewhere herein) include both the plural and the singular;
(b) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;
(c) the words “including” and “include” and other words of similar import are deemed to be followed by the phrase “without limitation”; and
(d) the word “shall,” means “has a duty to.”
 
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ARTICLE 2.
THE COMPANY AND ITS BUSINESS
2.1 Company Name . The Company’s business is conducted under the name of “W2007 WKH Holdings, LLC” in the State of Delaware and under that name or any assumed names that the Managing Members deems necessary or appropriate to comply with the requirements of any other jurisdiction where the Company may be required to qualify as a foreign limited liability company, and the Managing Members shall promptly notify the other Members of any such assumed names. Title to any property owned or leased by the Company must be held in the name of the Company or a Subsidiary.
2.2 Term . The term of the Company commenced on the Effective Date and will continue in full force and effect until terminated following dissolution as hereinafter provided. The Company’s existence as a separate legal entity will continue until the cancellation of the Certificate of Formation as provided in Section 18-203 of the Act.
2.3 Filing of Certificate and Amendments . On or before the Effective Date, the Certificate of Formation was filed with the Secretary of State of the State of Delaware and the Members agree that Elizabeth Burban was an authorized signatory for that purpose in accordance with Section 18-204 of the Act. The Members will do all acts necessary to constitute the Company as a limited liability company under the laws of Delaware and all acts necessary to qualify the Company as a foreign limited liability company under the laws of, or the right otherwise to do business in, any state in which the Managing Members determine it is necessary or desirable to have such qualification or right to do business.
2.4 Company’s Purposes .
(a) The Company is organized and formed for the sole purpose of, directly or indirectly, acquiring, financing, owning, managing, maintaining, dealing with, operating, improving, developing, permitting, promoting, leasing, refinancing, converting, marketing, and selling the Property. The Company may do all acts and things necessary, appropriate, incidental to or convenient to accomplish the purposes described herein, and has authority to (i) enter into, perform and carry out contracts of any kind, including licensing agreements, (ii) incur obligations and liabilities of any kind, (iii) borrow money and issue evidences of Indebtedness, whether secured or unsecured, and (iv) acquire, own, manage, improve, transfer and develop any real or personal property (or any interest therein).
(b) Neither the Company nor any Member is, or will be, by virtue of executing this Agreement, responsible or liable for any Indebtedness or obligation of any other Member incurred or arising either before or after the Effective Date, except that the Company only (and not any Member) has those responsibilities, liabilities, Indebtedness, and obligations that the Company expressly assumes as of the Effective Date or incurs after the Effective Date in accordance with the terms of this Agreement.
 
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(c) The Members hereby enter into this Agreement to set forth certain rights and obligations of the Members, the procedures for managing and operating the Company and related matters. The Members intend and agree that this Agreement is for all purposes the “limited liability company agreement” of the Company as defined in the Act. Except to the extent stated in this Agreement, (a) the rights and obligations (i) of the Company and its Members and (ii) among the Members and (b) the management, operation, termination and dissolution of the Company shall be governed by the provisions of the Act in the absence of any other written agreements between the Members.
(d) Each member of the Whitehall Group and each of the following individuals acting on behalf of either member of the Whitehall Group, Roy Lapidus, David Gutstadt and Steven Angel is hereby designated as an “authorized person” within the meaning of the Act. Any one of such authorized persons is hereby authorized and shall execute, deliver and file any other certificates or documents (and any amendments and/or restatements thereof) on behalf of the Company. The Whitehall Group, from time to time, may designate other individuals and remove and/or replace individuals as “authorized persons.”
2.5 Principal Office; Mailing Address; Registered Agent . The principal office and mailing address of the Company shall be c/o Whitehall Street Real Estate Limited Partnership 2007, 85 Broad Street, New York, New York 10004, Attention: Chief Financial Officer. The Company may change its principal office and/or mailing address to any location as may at any time or from time to time be determined by the Managing Members. The Managing Member shall provide notice to the other Members of any such change in the Company’s principal office and/or mailing address. The Company will maintain a registered office at The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name and address of the Company’s registered agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
2.6 Names and Addresses of the Members . The names and addresses of the Members and their counsel are set forth in Schedule 2.6 . Members may change addresses by sending written notice of the new address to the other Members.
2.7 Representations and Covenants by the Members . Each Member represents, warrants, covenants, acknowledges and agrees that:
(a) It is a corporation, limited liability company or limited partnership, as applicable, duly organized or formed and validly existing in good standing under the laws of the state of its organization or formation; it has all requisite corporate, limited liability
 
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company or limited partnership power and authority to enter into this Agreement, to acquire and hold its Interest and to perform its obligations hereunder; and the execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate, limited liability company or limited partnership action; and it has obtained any consent, approval, authorization or order of any court or governmental agency or body required for its execution, delivery and performance of this Agreement.
(b) This Agreement and all agreements, instruments and documents herein provided to be executed or caused to be executed by it are duly authorized, executed and delivered by and are and will be binding and enforceable against it.
(c) Its execution, delivery, and performance of this Agreement and the performance of its obligations hereunder will not (i) conflict with, result in a breach of or constitute a default (or any event that, with notice or lapse of time, or both, would constitute a default) or result in the acceleration of any obligation under any of the terms, conditions or provisions of any other agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets are subject, (ii) conflict with or violate any of the provisions of its Organizational Documents, or (iii) violate any statute or any order, rule or regulation of any court or governmental or regulatory agency, body or officials.
(d) There is no action, suit or proceeding pending or, to its knowledge, threatened against it in any court or by or before any other governmental agency or instrumentality that would prohibit its entry into or performance of, or that could have a material adverse effect on its ability to perform its obligations under this Agreement.
(e) It has been advised to and has engaged its own counsel (whether in-house or external) and any other advisers it deems necessary and appropriate. By reason of its business or financial experience, or by reason of the business or financial experience of its own attorneys, accountants and financial advisors (which advisors, attorneys and accountants are not Affiliates of the Company or any other Member) and who are not compensated, directly or indirectly, by the Company or any Member or any Affiliate thereof, it is capable of evaluating the risks and merits of an investment in the Interest and of protecting its own interests in connection with this investment. Nothing in this Agreement should or may be construed to allow any Member to rely upon the advice of counsel acting for another Member or to create an attorney-client relationship between a Member and counsel for another Member.
(f)(1) It acknowledges and agrees that Sullivan & Cromwell LLP serves as counsel to the Whitehall Group, and that Sullivan & Cromwell LLP does not serve as counsel to any other Member. Every Member of the Company that is not a member of the Whitehall Group acknowledges and agrees that it does not have an attorney-client relationship with Sullivan & Cromwell LLP, and that no such relationship will arise in the course of the Company’s existence or dissolution by any means. Every Member of the Company that is not a member of the Whitehall Group represents, warrants and covenants that, in the event of litigation or arbitration between any
 
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member of the Whitehall Group and any other Member of the Company, or between Property Manager and the Company or any Subsidiary, such Member (and the Company and such Subsidiary) will not seek the removal of Sullivan & Cromwell LLP as counsel to the Whitehall Group for any purported conflict of interest or attorney-client relationship allegedly existing between Sullivan & Cromwell LLP and such Member (or the Company and such Subsidiary).
(2) It acknowledges and agrees that Kirkland & Ellis LLP serves as counsel to Hyatt and as counsel to Property Manager, and that Kirkland & Ellis LLP does not serve as counsel to any other Member. Every Member of the Company other than Hyatt acknowledges and agrees that it does not have an attorney-client relationship with Kirkland & Ellis LLP, and that no such relationship will arise in the course of the Company’s existence or dissolution by any means. Every Member of the Company other than Hyatt represents, warrants and covenants that, in the event of litigation or arbitration between Hyatt and any other Member of the Company, or between Property Manager and the Company or any Subsidiary, such Member (and the Company and such Subsidiary) will not seek the removal of Kirkland & Ellis LLP as counsel to Hyatt or as counsel to Property Manager for any purported conflict of interest or attorney-client relationship allegedly existing between Kirkland & Ellis LLP and such Member (or the Company and such Subsidiary).
(3) It acknowledges and agrees that each of Sullivan & Cromwell LLP and Kirkland & Ellis LLP has served and may in the future serve as counsel to the Company (and its Subsidiaries) in respect of the preparation and negotiation of the Acquisition Agreement (and documents related thereto), the acquisition of the Hotel and related personal property as set forth in the Acquisition Agreement and the financing and refinancing of the Property. Each Member of the Company waives any conflicts arising out of such representation and agrees not to seek the removal of either Sullivan & Cromwell LLP or Kirkland & Ellis LLP from representing any other Member or its Affiliates or the Company and its Subsidiaries by reason of any purported conflict of interest or attorney-client relationship allegedly existing between Sullivan & Cromwell LLP or Kirkland & Ellis LLP (in their representation of the Company (and its Subsidiaries)) and such Members.
(g) It has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the purchase or sale of its Interest.
(h) It is acquiring the Interest for investment purposes for its own account only and not with a view to, or for sale in connection with, any distribution of all or any part of the Interest.
 
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(i) It is financially able to bear the economic risk of its investment in its Interest, including the total loss thereof.
(j) No Person has at any time expressly or impliedly represented, guaranteed, or warranted to it that it may freely transfer its Interest, that a percentage of profit and/or amount or type of consideration will be realized as a result of its investment in its Interest, that past performance or experience on the part of the Members in the Company or their respective Affiliates in any way indicates the future results of the ownership of its Interest or of the overall Company business, that any cash distributions from Company operations or otherwise will be made by any specific date or will be made at all, or that any specific tax benefits will accrue as a result of an investment in the Company.
(k) It acknowledges that its Interest has not been registered under the Securities Act, or qualified under the blue sky laws of any state, in reliance, in part, on its representations, warranties, and agreements herein.
(l) It agrees that the Company is under no obligation to register or qualify the Interest under the Securities Act or under any state securities law, or to assist it in complying with any exemption from registration and qualification.
(m) It acknowledges that its investment in the Interest is speculative, involves a substantial risk of loss of its entire investment in the Company, that it understands and takes full cognizance of the risk factors related to purchase of the Interest, including that the Company is newly organized and has no financial or operating history, and that the other Members may (and will be permitted to) advance and seek to protect their own individual interests when making decisions or exercising rights relating to the Company and not necessarily the interests of the Company or another Member.
(n) It is familiar with the definition of “accredited investor” in Rule 501(a) of Regulation D and it represents that it is an “accredited investor” within the meaning of that Rule.
(o) It acknowledges that there are substantial restrictions on the transferability of its Interest pursuant to this Agreement, that there is no public market for its Interest and none is expected to develop, and that, accordingly, it may not be possible for it to liquidate its investment in the Company. Without limiting the other representations set forth herein, and without limiting Article 9 of this Agreement, it will not make a Transfer of all or any part of the Interest or any direct or indirect ownership interest in it that will result in the violation by it or the Company of the Securities Act, or any other applicable securities laws.
(p) It has consulted with its own attorneys, accountants and financial advisors regarding all legal, tax and financial matters concerning an investment in the Company and the tax consequences of participating in the Company. It acknowledges that the tax consequences of its investment in the Company will depend on its particular circumstances, and neither the Company, the Members
 
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nor the partners, shareholders, members, managers, fiduciaries, agents, officers, directors, employees, Affiliates or consultants of any of them will be responsible or liable for the legal, tax or financial consequences to it of an investment in the Company. It will look solely to, and rely upon, its own advisers with respect to the legal, tax and financial consequences of this investment.
(q)(i) each Person owning a ten percent (10%) or greater interest in such Member (A) is not currently identified on the List, and (B) is not a Person with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or executive order of the President of the United States, and (ii) such Member has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times. This Section 2.7(q) shall not apply to any Person to the extent that such Person’s interest in the Member is through either (A) a Person (other than an individual) whose securities are listed on a national securities exchange, or quoted on an automated quotation system, in the United States, or a wholly-owned subsidiary of such a Person or (B) an “employee pension benefit plan” or “pension plan” as defined in Section 3(2) of ERISA.
(r) It shall comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect and shall promptly notify the other Members in writing if it becomes aware that any of the foregoing representations, warranties or covenants are no longer true or have been breached or if the Member has a reasonable basis to believe that they may no longer be true or have been breached.
ARTICLE 3.
MANAGEMENT OF COMPANY BUSINESS
3.1 Management and Control by Each Managing Member .
(a) Subject only to the limitations set forth in Section 3.7 , each Managing Member shall have the full and exclusive right, power, authority and discretion, acting alone and without the consent of any other Member, to conduct the business and affairs of the Company and any Subsidiaries, and to do all things necessary to carry on the business of the Company and any Subsidiaries, and is hereby authorized to execute and deliver on behalf of the Company and any Subsidiaries any and all documents, contracts, certificates, agreements and instruments, and to take any action of any kind and to do anything and everything each Managing Member deems necessary, desirable or appropriate, including delegating such authority to officers and other Persons, in accordance with the provisions of this Agreement and applicable law. Without limiting the foregoing, each Managing Member shall have the sole
 
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and exclusive right, power and authority to make all decisions (affirmative or negative) and to take any actions on behalf of the Company or any Subsidiary or to revoke any such decisions or actions, and to take any and all other actions, and to make any and all other decisions in respect of the Company and any of its Subsidiaries as determined by the Managing Members in their sole discretion, including but not limited to all of the following actions:
(i) sell, or contract to sell, the Property, the Company and/or any Subsidiary or Affiliate, either directly or indirectly, without Hyatt approval unless the approval of Hyatt shall be required pursuant to Section 3.6 hereof;
(ii) incur, and cause the Company and/or any Subsidiary or Affiliate to incur, Indebtedness, either on behalf of the Company, or any entity in which the Company has an interest and, in its discretion, secure any and all of such Indebtedness with some or all of the Company Assets; provided that any such Indebtedness incurred by the Company and/or any Subsidiary or Affiliate shall be limited to the assets of the Company and its Subsidiaries and shall be non-recourse to Hyatt (other than pursuant to any Recourse Carveout Guaranty executed by a Member) and provided further that Managing Member shall cause Mortgage Borrower to fully cooperate with the Acquisition Mortgage Lender pursuant to the terms of the documents governing the Acquisition Mortgage Loan to obtain ground lessor consent to record a first mortgage lien on the Property in conjunction with “rent reset” negotiations currently underway with two ground lessors and to seek similar consent under the ground lease for which the “rent reset” negotiations have been settled, with such cooperation to include commencing litigation, if necessary, to enforce the landlord’s obligation to be reasonable in providing its consent to such mortgage;
(iii) open, maintain, and close bank and brokerage accounts and draw checks or other orders for the payment of moneys;
(iv) manage the Company and its Subsidiaries, including, but not limited to, the exercise of any and all voting and other rights of ownership with respect to the Company Assets and any other investments actually made by the Company and/or any Subsidiary;
(v) deal with the Property Manager (and any other counterparty to a Management Agreement) on behalf of the Company and/or any Subsidiary in connection with the Property Management Agreement or any Management Agreement, to give any consent, approval, notice, election or direction required of or permitted by the Company as “Owner” thereunder, to confirm calculations on behalf of the “Owner” as to the fees payable in accordance with the terms of such agreements, to exercise any termination provisions contained therein on behalf of “Owner”, and to make any amendment to such agreements in accordance with the terms of such agreement on behalf of “Owner”;
 
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(vi) do any and all acts on behalf of the Company and/or any Subsidiary, and exercise all rights of the Company or Subsidiary (including, exercise of (i) any voting rights and other rights of the Company or Subsidiary as a securityholder, member, partner or a party to a shareholder, credit or similar agreement and (ii) rights to make or not make an election under Section 754 of the Code permitting the adjustment in basis of Company Assets upon the occurrence of certain events) with respect to its ownership in the Property;
(vii) employ and dismiss from employment any and all financial advisers, underwriters, investment bankers, attorneys, accountants, consultants, appraisers, asset managers or custodians of the Company Assets or other agents, on such terms and for such compensation as the Managing Members may determine;
(viii) enter into, execute, supplement, acknowledge and deliver any and all contracts, agreements, guaranties, indemnities or other instruments as the Managing Members shall determine to be appropriate in furtherance of the purposes of the Company and/or any Subsidiary from the Company Assets; provided , however , that the Managing Members shall not have the authority to bind personally any of the other Members (as distinguished from the Company or any Subsidiary) in connection with the rights set forth in this Section 3.1(a)(8) ;
(ix) admit an assignee of all or any portion of a Member’s Interest to be a Substituted Member in the Company and/or any Subsidiary pursuant to and subject to the terms of Section 9.7 ;
(x) incur all expenditures (including Required Expenditures) permitted by this Agreement and, to the extent that funds of the Company are available or callable, pay, and establish reserves in respect of, all expenses, debts and obligations of the Company;
(xi) bring and defend actions and proceedings at law or equity and before any governmental, administrative or other regulatory agency, body or commission;
(xii) determine the accounting methods and conventions to be used in the preparation of any accounting or financial records of the Company; and
(xiii) take all actions necessary or desirable in furtherance of, in connection with, or incidental to, any of the foregoing.
(b) Neither Managing Member will be liable for acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties.
 
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(c) Each Managing Member may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon their opinion as to matters within their professional or expert competence will be conclusively presumed to have been done or omitted in good faith and not to constitute negligence or willful misconduct.
(d) Persons dealing with the Company and/or any Subsidiary may rely conclusively upon the right, power, authority and direction of each Managing Member (or any officer or other Person to whom such Managing Member may delegate authority) as herein set forth.
(e) Wherever in this Agreement any member of the Whitehall Group, as a Managing Member, makes a consent or acts to make a decision on behalf of the Company and/or any Subsidiary, such consent or decision of such member of the Whitehall Group may be relied upon by Hyatt as a consent or decision of all of the Managing Members and shall be binding on the Whitehall Group.
(f) Except as otherwise expressly and specifically provided in this Agreement, no Member (other than the Managing Members) has any authority to bind, to act for, to execute any document or instrument on behalf of or to assume any obligation or responsibility on behalf of the Company, any Subsidiary, or any other Member.
(g) Each Member agrees that, upon receipt of notice of any default under any agreement evidencing or relating to Indebtedness of the Company and/or any Subsidiary, such Member shall give notice to the other Members of such default.
(h) Each Managing Member may request that Archon make payments for debt service of any Indebtedness of the Company and/or any Subsidiary, real estate and property taxes and insurance premiums, or any one or more of the foregoing in respect of the Property.
(i) If the Whitehall Group provides a Guaranty (other than a Recourse Carveout Guaranty) of any portion of a loan provided to the Company or a Subsidiary and the effect of providing such Guaranty is to cause such loan to be characterized as Member-Funded Debt, the Whitehall Group shall, at least ten (10) days prior to the closing of such loan, give Hyatt notice thereof. Hyatt shall have the right, by delivering notice to the Whitehall Group no later than five (5) days after receipt of the notice from the Whitehall Group, to elect to enter into such Guaranty as well on the same terms and conditions;  provided , however , that (i) if Hyatt does not elect to participate within such five (5) day period, the Whitehall Group shall have the right, power and authority to deliver such Guaranty without any further consent or approval of Hyatt and (ii) if Hyatt desires to enter into such Guaranty, (A) it shall do so promptly so as not to delay the closing of the loan and its failure to do so shall not preclude the Whitehall Group from proceeding to close the loan and providing the Guaranty, (B) such Guaranty shall be several, and not joint and several with respect to any Guaranty provided by the Whitehall Group, and (C) Hyatt’s liability under such Guaranty shall be limited to Hyatt’s Percentage Interest of the Indebtedness guaranteed by such Guaranty.
 
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(j) If all of the following conditions have occurred: (1) Whitehall Group’s aggregate Percentage Interest is reduced to a percentage that is less than fifty percent (50%), (2) Hyatt’s aggregate Percentage Interest is increased to a percentage that is greater than fifty percent (50%) and (3) Hyatt is not in breach of its representations or obligations pursuant to this Agreement, then Hyatt, at its option, may elect to become the sole Managing Member, shall become the “tax matters partner” as provided in Section 4.6 and all references in Section 3.6 to Hyatt shall be deemed to refer to the Whitehall Group instead, and, upon such election, all matters hereunder that would, prior to such election, have required Hyatt’s consent shall instead required the consent of the Whitehall Group. If Whitehall Group’s aggregate Percentage Interest is reduced to a percentage that is equal to fifty percent (50%) and Hyatt’s aggregate Percentage Interest is increased to a percentage that is equal to fifty percent (50%), then all decisions taken hereunder shall require the unanimous approval of both of the Whitehall Group and Hyatt.
3.2 Rights and Responsibilities of Hyatt and Limitations on its Authority . Hyatt shall not (and shall not have any right, power or authority to), without the prior approval of the Managing Members, bind or take any action on behalf of or in the name of the Company or any Subsidiary, or enter into any commitment or obligation binding upon the Company or any Subsidiary, except for actions expressly authorized under this Agreement, the Property Management Agreement or actions authorized by the Managing Members or the Members in the manner set forth herein. No provision of this Agreement shall be deemed to alter, limit, waive or otherwise modify any of Hyatt’s or any Affiliate of Hyatt’s rights and obligations under the Property Management Agreement.
3.3 Subsidiaries . The Managing Members, on behalf of the Company, may form at any time one or more Subsidiaries to hold title to all or any portion of the Property. The Managing Members shall notify the other Members of the formation of any additional Subsidiaries of the Company. Any and all references herein to the Company or any Managing Member or Member causing or directing any action on behalf of a Subsidiary shall be deemed to refer to the Company causing (or such Managing Member or Member causing the Company to cause), in its capacity as the sole member of such Subsidiary, such action to be taken for and on behalf of such Subsidiary subject to the terms of this Agreement. Notwithstanding anything contained herein to the contrary, any action to be taken or made by or on behalf of a Subsidiary will require the approval of the Managing Members (including the formation of such Subsidiary). It is expressly understood that the Company may conduct its business directly or indirectly through one or more Subsidiaries; it being the intent of the Members that the Organizational Documents relating to any Subsidiary shall be interpreted together with the provisions of this Agreement to have substantially the same effect as would be the case if all the interests therein were held or all such business were conducted by the Company pursuant to the terms of this Agreement (including the
 
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provisions herein regarding the management and governance of the Company). Any action to be taken by any such Subsidiary shall be construed as an action taken by the Company and shall be subject to the same rights and limitations granted and imposed on the Members under this Agreement.
3.4 Acts of the Company and the Members .
(a) Whenever in this Agreement or elsewhere it is provided that consent is required of, a demand is to be made by, or acts are to be performed by or at the direction of, Hyatt, all such consents, demands and acts are to be made, given or performed upon the consent of any of the Persons listed on Schedule 3.4 attached hereto under the heading “Representatives of Hyatt”, each of whom are vested with the authority of Hyatt, unless the other Members receive a notice from Hyatt designating one or more replacement representatives.
(b) Whenever in this Agreement or elsewhere it is provided that consent is required of, a demand will be made by, or acts will be performed at the direction of, the Managing Members, all such consents, demands and acts are to be made, given or performed upon the consent of any of the Persons listed on Schedule 3.4 attached hereto under the heading “Representatives of the Managing Members”, each of whom with the authority of the Managing Member, unless the other Members receive a notice from the Managing Members designating one or more replacement representatives.
3.5 Documents . By way of clarification and without altering the terms of this Agreement including this Article 3 , each Managing Member has (or had) the full right, power and authority, acting alone and without the consent of any other Member, to execute and deliver the Acquisition Agreement, the Management Agreements, the Property Management Agreement, the Purchase Documents and any loan documents in respect of the Property on behalf of the Company and any Subsidiary and to take any and all other actions at the closing of the Company’s and/or any Subsidiary’s purchase and/or financing of the Property as may be necessary to complete such purchase or to give further effect to any of the foregoing documents.
3.6 Sale of the Property . Notwithstanding anything to the contrary contained herein, (x) the Whitehall Group may, and shall have the full right, power and authority to, at any time (including during the Lockout Period), in its discretion and without Hyatt’s consent or approval, elect to Transfer (i) King’s Village to an independent third party which is not an Affiliate of any Member and/or (ii) the Property to a lender pursuant to any deed-in-lieu of foreclosure (provided that Hyatt’s consent, if required by Section 3.7(e) , is first obtained for such a Transfer to a lender), without compliance with this Section 3.6 , (y) prior to the expiration of the Lockout Period, the Whitehall Group shall not cause the sale of the Property (or any components thereof whether directly or indirectly through the sale of any Subsidiaries) without the prior written consent of Hyatt, except as permitted by clause (x) of this sentence with respect
 
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to King’s Village or a deed-in-lieu of foreclosure, and (z) at any time after the expiration of the Lockout Period, the Whitehall Group shall have the right, power and authority to commence the marketing, and cause the sale, of all (but not less than all) of the Property (which sale may, at the Whitehall Group’s election, be structured as a sale of the ownership interests in a Subsidiary) subject only to a right of first offer in favor of Hyatt pursuant to the following provisions:
(a) The Whitehall Group shall give written notice (the “ Proposed Property Sale Notice ”) to Hyatt setting forth the proposed purchase price (the “ Proposed Property Purchase Price ”) of the proposed sale.
(b) Hyatt shall have thirty (30) days (the “ Property Sale Election Period ”) after the delivery by the Whitehall Group to Hyatt of the Proposed Sale Notice to elect to purchase the Property (or the ownership interests in a Subsidiary being sold) (such election to be made, if at all, by giving written notice thereof (the “ Hyatt Property Purchase Notice ”) to the Whitehall Group within the Property Sale Election Period).
(c) If Hyatt fails to timely deliver the Hyatt Property Purchase Notice together with the Property Purchase Notice Deposit, then, Hyatt shall have no further right to purchase the Property (or the ownership interests in a Subsidiary being sold), except as may be expressly provided for below in this Section 3.6(c) , and the Whitehall Group shall have the right, power and authority to cause the Company and/or its Subsidiaries to enter into an agreement to sell, and to sell, the Property (or the ownership interests in a Subsidiary being sold) to a third party which is not an Affiliate of any Member (“ Third Party Property Purchaser ”) at any time or times during the Property Marketing Period as long as the Third Party Property Purchaser pays a gross cash purchase price (the “ Third Party Property Purchase Price ”) that, before deducting or netting any anticipated or actual Transaction Costs (but taking into account any Excluded Transaction Costs) borne by the Company or its Subsidiaries, is not less than 98% of the Proposed Property Purchase Price. The Whitehall Group shall contemporaneously provide Hyatt notice of any purchase agreement entered into by the Company or its Subsidiaries to sell the Property (or the ownership interests in a Subsidiary being sold) and shall provide Hyatt a copy of such purchase agreement. If during the Property Marketing Period, the Whitehall Group receives an offer for less than 98% of the Proposed Property Purchase Price, then the Whitehall Group, if it wishes to accept such offer, shall so notify Hyatt and provide Hyatt with all other written offers received by the Whitehall Group during the Property Marketing Period. Within ten (10) Business Days after receiving such notice (and, if such notice is given within ten (10) Business Days prior to the expiration of the Property Marketing Period, the Property Marketing Period shall be extended day-by-day to give effect to the ten (10) Business Day notice period of this sentence), Hyatt shall have the right to deliver to the Whitehall Group a Hyatt Property Purchase Notice accepting the price set forth in the third party offer. If an agreement is executed during the Property Marketing Period but the closing under such agreement does not occur within forty-five (45) days after the end of the Property Marketing Period (the “ Property Closing Period ”),
 
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the provisions of this Section 3.6 will apply as to any sale of the Property (or the ownership interests in a Subsidiary being sold) occurring after such forty-five (45) day period. Hyatt shall not have the right to approve, object or interfere with any sale under, and conforming to, this Section 3.6 irrespective of the terms of the sale (the Whitehall Group being fully authorized and empowered to execute and deliver all necessary documents, agreements and instruments on behalf of the Company and any of its Subsidiaries and to make representations and warranties on the Company’s and any of its Subsidiaries’ behalf, provided that Hyatt (as distinguished from the Company and its Subsidiaries) will not be personally liable for any such representations and warranties). In connection with the sale of the Property (or the ownership interests in a Subsidiary being sold), Hyatt agrees, in its capacity as a Member, to cooperate fully and in good faith with the Whitehall Group and any potential purchaser and to deliver any materials reasonably requested by the potential purchaser (all of which shall be provided, to the extent reasonably available, within three (3) Business Days of request (or earlier if such earlier time period is reasonable)) and to use their reasonable best efforts to cause the sale of the Property (or the ownership interests in a Subsidiary being sold). “ Property Marketing Period ” means a one hundred eighty (180) day period; it being agreed and understood that the Whitehall Group shall have the right to end the Property Marketing Period at any time prior to the end of such 180-day period upon notice to Hyatt, which period shall commence on the earlier of (A) the first day after the Property Sale Election Period expires and (B) the date on which Hyatt notifies the Whitehall Group that Hyatt will not be purchasing the Property (or the ownership interests in a Subsidiary being sold); provided ; however , if Whitehall Group shall end the Property Marketing Period prior to the expiration of such 180-day period but issues another Proposed Property Sale Notice during such 180-day period (and Hyatt elects not to purchase the Property with respect thereto), then the 98% threshold set forth above shall be increased to 100% for the remainder of such 180-day period. “ Transaction Costs ” means those costs incurred in connection with any sale of the Property (or the ownership interests in a Subsidiary being sold) that are (i) in the nature of customary closing prorations and customary transaction costs, including legal fees, transfer taxes, debt repayment costs or any brokerage commissions that would actually be payable to any third-party broker, or (ii) other costs that would not be customarily borne by a seller of real property in Hawaii provided that the costs in this clause (ii) do not exceed Five Million Dollars ($5,000,000) in the aggregate; provided , however , “Transaction Costs” shall not include (and there shall be deducted from the aggregate gross consideration offered by a Third Party Property Purchaser for the purpose of determining whether such offer is less than 98% of the Proposed Property Purchase Price) the amount of (A) any transfer taxes or debt repayment costs that will be payable by the Company and its Subsidiaries in connection with a sale to such Third Party Property Purchaser to the extent such transfer taxes and debt repayment costs would demonstrably and unequivocally (based on the then applicable law and terms of loan documents to which the Company and its Subsidiaries are a party and without taking into account any possible waiver or consent that might be obtainable from a lender) not be payable if the Property (or the ownership interests in a Subsidiary being sold) were instead sold to Hyatt for the aggregate gross consideration offered by the
 
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Third Party Property Purchaser, and (B) any other costs and expenses borne by the Company or its Subsidiaries that do not otherwise qualify as “Transaction Costs” (the items borne by the Company or its Subsidiaries set forth in clauses (A) and (B) are referred to as the “ Excluded Transaction Costs ”).
(d) If Hyatt elects to purchase the Property (or the ownership interests in a Subsidiary being sold) within the Property Sale Election Period, then such exercise shall be deemed to create a contract between Hyatt, on one hand, and the Company or any Subsidiary of the Company that owns the Property (or the ownership interests in a Subsidiary being sold) on the other hand, pursuant to which Hyatt irrevocably agrees to acquire the Property (or the ownership interests in a Subsidiary being sold) for the Proposed Property Purchase Price (subject to customary closing prorations and customary allocations of transaction costs) and the closing date for such sale shall be twenty (20) Business Days after the making of such election, and the provisions of Section 3.6(e) shall apply.
(e) Simultaneously with the delivery of the Hyatt Property Purchase Notice (and as a condition to the effectiveness of such Hyatt Property Purchase Notice), Hyatt shall deliver to a third party escrow agent reasonably approved by a Managing Member (the “ Escrow Agent ”) a deposit by wire transfer of immediately available federal funds in an amount equal to Twenty Million Dollars ($20,000,000.00) (together with interest accrued thereon, the “ Property Purchase Notice Deposit ”). If Hyatt fails to deliver the Property Purchase Notice Deposit within the time frame and in the manner described above, then Hyatt shall be deemed to have failed to exercise the Purchase Option and the Whitehall Group may proceed in accordance with Section 3.6(c) above. If Hyatt delivers the Property Purchase Notice Deposit within the time frame and in the manner described above, then Hyatt shall be deemed to become a co-Managing Member of the Company (along with the Whitehall Group) until the closing on Hyatt’s purchase of the Property (or the ownership interests in a Subsidiary being sold) as provided herein, with all decisions or actions by the Managing Members on behalf of the Company and its Subsidiaries requiring the consent of Hyatt; provided , however , nothing in this sentence will require the consent of Hyatt to any action necessary to complete the sale pursuant to this Section 3.6 ; provided further , that Hyatt shall cease to be a co-Managing Member (and Hyatt’s consent shall no longer be required pursuant to this sentence) in the event of a failure by Hyatt to consummate the purchase of the Property (or the ownership interests in a Subsidiary being sold) on the relevant closing date in accordance with this Section 3.6 . The Property Purchase Notice Deposit shall be non-refundable to Hyatt in the event of a failure by Hyatt to consummate the purchase of the Property (or the ownership interests in a Subsidiary being sold) on the relevant closing date (other than solely by reason of a default by the Whitehall Group or the failure of the representations listed below to be true in all material respects), in which case the Whitehall Group may terminate (or cause the termination of) the contract created by the Proposed Sale Notice and the Hyatt Property Purchase Notice and the Whitehall Group may (A) retain the Property Purchase Notice Deposit as liquidated damages for the benefit and account of the Whitehall Group only and (B) the Whitehall Group shall be free to
 
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sell at any time the Property (or the ownership interests in a Subsidiary being sold) to any Person and on any terms as the Whitehall Group may determine in its sole discretion, without any consent or approval of any other Member and without having to comply with any of the terms of this Section 3.6 . The parties agree that damages to the Whitehall Group will be difficult and impracticable to ascertain in connection with a default by Hyatt under this Section 3.6 and the retention of the Property Purchase Notice Deposit by the Whitehall Group is a reasonable estimate of such damages from such default and shall not be considered a penalty. If the sale of the Property (or the ownership interests in a Subsidiary being sold) fails to occur on the relevant closing date solely by reason of a default by the Whitehall Group (other than as a result of any default by Hyatt), then, at the election of Hyatt, (x) the contract created by the Proposed Sale Notice shall be terminated and the Property Purchase Notice Deposit shall be refunded to Hyatt; or (y) Hyatt may seek specific performance of such contract, but Hyatt shall have no other rights or remedies by reason of such breach. If the closing of the sale of the Property (or the ownership interests in a Subsidiary being sold) to Hyatt occurs, then the Property Purchase Notice Deposit shall be applied towards the Purchase Price at closing. The Whitehall Group shall, and shall cause the Company to, execute such instruments of transfer as are customarily executed and reasonably requested to evidence and consummate the transfer of the Property (or the ownership interests in a Subsidiary being sold) to Hyatt; provided, however, that such documents shall indicate that the sale of the Property is on an “As-Is,” “Where Is,” “With-All-Faults” basis with no representations, warranties or indemnities whatsoever, other than representations to the effect that each of the relevant selling entities is duly organized and existing, that it is authorized and empowered to effect the sale, that it has duly executed and delivered all closing documents to which it is a party, that the execution, delivery and performance of such documents does not violate any applicable law or material agreement to which it is a party or by which it or the Company Assets are bound, and, in the case of a sale of interests in the Company, a representation that such interests being transferred are owned by the Whitehall Group and free from any liens and encumbrances.
(f) Notwithstanding anything to the contrary, the Whitehall Group shall, subject to and in accordance with this Section 3.6 , have full right, power and authority (acting alone and without the consent of any other Member) to execute, deliver and perform, for and in the name of the Company and/or any Subsidiary, any and all documents, agreements and instruments, and to take any other actions as may be required or desirable for the purpose of transferring the Property (or the ownership interests in a Subsidiary being sold) to a Third Party Property Purchaser or Hyatt, as the case may be.
(g) Except as otherwise expressly provided herein, each party shall bear its own legal fees and expenses in connection with a sale under this Section 3.6 , and the Whitehall Group and Hyatt (in the case of a sale pursuant to Section 3.6(d) ) shall each indemnify the other against claims for brokers’ fees and commissions. Unless otherwise provided in the offer from a Third Party Property Purchaser, the Company shall bear any debt repayment or assumption fees and the Company shall bear any transfer taxes and other
 
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closing costs as well as all costs of marketing the Property (or the ownership interests in a Subsidiary being sold) and any legal fees incurred as seller. If (i) there would be substantial transfer tax savings achieved by structuring a sale to Hyatt pursuant to this Section 3.6 as a sale of the Whitehall Group’s Interests in the Company instead of the Property, or (ii) Hyatt otherwise elects to purchase the Whitehall Group’s Interests in the Company instead of the Property, then, at the option of the Whitehall Group or Hyatt, the Whitehall Group or Hyatt may elect to have the Whitehall Group’s Interests, if applicable, transferred to Hyatt, in which case all of the provisions of this Section 3.6 shall apply mutatis mutandis , with such changes as are appropriate to reflect the fact that Interests rather than the Property are being sold; provided, however, that if the Whitehall Group elects to structure the sale to Hyatt as a sale of the Whitehall Group’s Interests, then the Whitehall Group shall also provide representations to Hyatt as to (x) ownership of their respective Interests free and clear of any liens and (y) the absence of any liabilities or obligations of the Company other than as disclosed in the Company’s financial statements or other reports made available to Hyatt before the date it posted the Property Purchase Notice Deposit. If there are any such transfer tax savings achieved by a sale of the Whitehall Group’s Interests, the purchase price paid by Hyatt pursuant to such sale shall be reduced by an amount equal to Hyatt’s then Percentage Interest multiplied by such savings.
3.7 Decisions Requiring Approval of Hyatt . Notwithstanding any provisions in this Agreement to the contrary other than Section 3.6 , no act shall be taken by the Company or any Subsidiary or by the Managing Members with respect to the following decisions, unless and until Hyatt’s prior written consent shall have been delivered to the Managing Members:
(a) instituting proceedings to adjudicate the Company or any Subsidiary bankrupt, or consent to the filing of a bankruptcy proceeding against the Company or any Subsidiary or file a petition or answer or consent seeking reorganization of the Company or any Subsidiary under the Bankruptcy Code or any other similar applicable federal or state law, or consent to the filing of any such petition against the Company or any Subsidiary, or consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or any Subsidiary or of its property, or make an assignment for the benefit of creditors of the Company or any Subsidiary, or admit the Company’s or any Subsidiary’s inability to pay its debts generally as they become due;
(b) merging or consolidating the Company or any Subsidiary with or into another Person other than with respect to the restructuring done in conjunction with the Property Closing which will result in the organizational structure for the Company and its Subsidiary shown on Schedule 3.7(b) ;
(c)(i) approving the terms and conditions of any direct or indirect sale or transfer of any components of the Property, and (ii) except in accordance with Section 3.6 , approving the terms and conditions of any direct or indirect sale or transfer of all of the Property; provided , however , that the Managing Members may, in their discretion, sell King’s Village, without Hyatt’s consent or approval, to an independent third party which is not an Affiliate of any Member;
 
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(d) entering, or causing the Company or any Subsidiary to enter, into any agreement with the Whitehall Group (or any member thereof) or any Affiliate of the Whitehall Group (or any member thereof) other than a Replacement Loan pursuant to and in accordance with Section 6.10 ;
(e) providing any deed-in-lieu of foreclosure to any holder of Indebtedness, unless such Indebtedness has been accelerated by such holder;
(f) terminating the Property Management Agreement except in accordance with its express terms; and
(g) funding amounts for costs or expenses relating to any future renovations of the Property that exceed Five Million Dollars ($5,000,000).
In the event of any need for consent of Hyatt to any of the decisions in this Section 3.7 , either Managing Member shall make such request of Hyatt in writing and shall provide Hyatt with all information reasonably necessary to make an informed decision. Hyatt shall be entitled to grant or withhold its consent to any of the decisions in this Section 3.7 in its sole and absolute discretion. A Managing Member shall use its commercially reasonable efforts to keep Hyatt informed of the status of any matter regarding which such Managing Member intends to request Hyatt’s consent under this Section 3.7 . For the avoidance of doubt, and notwithstanding anything to the contrary herein, (i) any sale permitted pursuant to the terms of Section 3.6 shall not constitute a decision requiring Hyatt consent and the Whitehall Group shall be fully authorized to act on behalf of the Company in carrying out such a sale in accordance with Section 3.6 and (ii) the Whitehall Group shall be authorized to transfer the Property to another Subsidiary of the Company to facilitate any financing not prohibited under this Agreement.
ARTICLE 4.
CERTAIN RIGHTS AND DUTIES OF MEMBERS
4.1 Other Activities of the Members .
(a) Subject to Section 4.1(c) , each Member may engage or invest in any other activity or venture, whether or not competitive with the Company and/or any Subsidiary, or possess any interest therein independently or with others. None of the Members, the Company, any Subsidiary or any other Person employed by, related to or in any way affiliated with any Member, the Company or any Subsidiary shall have any duty or obligation to disclose or offer to the Company, any Subsidiary or any Member, or obtain for the
 
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benefit of the Company, any Subsidiary or the Members, any other activity or venture or interest therein including any development property. None of the Company, any Subsidiary, any Member, the creditors of the Company or any Subsidiary or any other Person having any interest in the Company or any Subsidiary shall have (A) any claim, right or cause of action against any Member or any other Person employed by, related to or in any way affiliated with, any Member by reason of any direct or indirect investment or other participation, whether active or passive, in any such activity or venture or interest therein, or (B) any right to any such activity or venture or interest therein or the income or profits derived therefrom.
(b) The fact that a Member, an Affiliate of a Member, or any officer, director, employee, member, partner, shareholder, subsidiary, parent company, consultant or agent of such Member or such Affiliate, is directly or indirectly interested in or connected with any Person employed by the Company or any Subsidiary to render or perform a service, or from or to whom the Company or any Subsidiary may buy or sell any property or have other business dealings, does not prohibit, limit or restrict the right of the Managing Members to cause the Company and/or any Subsidiary to employ, hire, engage or otherwise retain that Person at competitive rates of compensation, and neither the Company or any Subsidiary nor any of the other Members has any right in or to any income or profits derived therefrom.
(c) From the Effective Date until the termination of this Agreement, if any Member or its Affiliate (the “ Offeror Member ”) has an opportunity to acquire, directly or indirectly, (i) all or any portion of the land ground leased to the Company and/or any Subsidiary or (ii) any sublandlord’s interest under the subleases for the real property (in each case, a “ Prospective Acquisition ”), then:
(i) The Offeror Member shall (or shall cause its Affiliates to) offer to the other Members of the Company (the “ Offeree Members ”) by providing notice of the Prospective Acquisition (the “ Prospective Acquisition Notice ”), setting forth the terms and conditions and the actual purchase price of such Prospective Acquisition. The Offeree Member shall have thirty (30) days after the receipt of the Prospective Acquisition Notice (the “ Approval Period ”) to approve the Prospective Acquisition on the terms and conditions and for the actual purchase price set forth in the Prospective Acquisition Notice. Upon approval, the Company or any Subsidiary shall have the exclusive right to acquire such Prospective Acquisition and the Members shall cooperate fully and in good faith in connection with the purchase of the Prospective Acquisition. The actual purchase price shall be paid by the Members of the Company or its Subsidiary, as applicable, pro rata in proportion to each Member’s Percentage Interest.
(ii) If the Offeree Members fail to timely approve the Prospective Acquisition within the Approval Period, the Offeree Member shall have no further right to participate in the Prospective Acquisition, and the Offeror Member shall have the right to
 
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acquire independently or with others the Prospective Acquisition; provided , however , that if the Offeror Member does not complete such Prospective Acquisition within thirty (30) days following the Approval Period, then the Offeree Member shall have the right to participate in any Prospective Acquisitions of the Members.
4.2 Indemnification .
(a) Except as otherwise expressly set forth in this Agreement, no Member shall be liable, responsible or accountable in damages to the Company or any Subsidiary, any third party or to any other Member for (i) any act performed within the scope of the authority conferred on the Member by this Agreement except for the gross negligence, fraud or willful misconduct of the Member in carrying out its obligations hereunder, (ii) the Member’s failure or refusal to perform any act, except those required by the terms of this Agreement, (iii) the Member’s performance of, or failure to perform, any act on the reasonable reliance on advice of legal counsel to the Company or any Subsidiary or (iv) the negligence, dishonesty or bad faith of any agent, consultant or broker of the Company or any Subsidiary.
(b) In any threatened, pending or completed action, suit or proceeding brought by an unaffiliated third party, the Company shall indemnify and defend each Member against all damages, penalties, costs, and expenses of any kind or nature whatsoever (including reasonable attorneys’ fees, costs of investigation, fines, judgments and amounts paid in settlement, actually incurred by the Member in connection with the action, suit or proceeding) by virtue of its status as Member or in any of its capacities provided for hereunder with respect to the Member’s good faith act or failure to act, other than liabilities and losses resulting from the Member’s gross negligence, fraud or willful misconduct, or for the Member’s acts that are in contravention of an express term of this Agreement.
(c) The indemnification provided by this Section 4.2 is recoverable only out of the assets of the Company, and no Member has any personal liability, or obligation to contribute capital to the Company, on account thereof.
4.3 Compensation of Members and their Affiliates; Goldman, Sachs & Co. as Exclusive Financial Advisor .
(a) Neither any Member nor any Affiliate of any Member is entitled to compensation from the Company or any Subsidiary in connection with any matter that may be undertaken in connection with the fulfillment of its duties and responsibilities hereunder, except as provided in this Section 4.3 and Section 4.8 .
(b) On or before the Property Closing Date, the Managing Member (on behalf of the Company or one of its Subsidiaries) will enter into the Property Management Agreement with the Property Manager.
 
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(c) All costs of the Archon Representative charged by Archon to the Managing Members for owner’s representative services or other similar services, will be an expense of the Company. Such costs shall reflect only the actual costs incurred by Archon for the Archon Representative and will not include any profit or mark-up or any allocation of overhead.
4.4 Use of Company Property . No Member may make use of the funds or property of the Company or any Subsidiary, or assign any rights it may have to specific Company Assets, other than for the business or benefit of the Company or such Subsidiary, subject, in all instances, to the terms of this Agreement (including Article 9 ).
4.5 Title to Company Assets . Title to the Company Assets will be held by the Company and/or by any Subsidiary as a separate entity, and no Member, individually or collectively, will have any ownership interest in the Company Assets or any portion thereof. If, for any reason, legal title to a Company Asset is held in the name of a Member or an Affiliate of a Member or in the name of the Property Manager, such Person will hold the Company Asset solely for the use and benefit of the Company in accordance with this Agreement. All Company Assets must be recorded as the property of the Company or any Subsidiary on its books and records, irrespective of the name in which legal title to those Company Assets is held.
4.6 Designation of Tax Matters Member . Finance Sub is the “tax matters partner” of the Company and any Subsidiary, as provided in the regulations promulgated under Section 6231 of the Code (the “ Tax Matters Member ”). Each Member shall execute, certify, acknowledge, deliver, swear to, file and record all documents necessary or appropriate to evidence its approval of this designation. Each Member reserves all rights under applicable law, including the right to retain independent counsel of its choice at its expense (which counsel will be entitled to prior review of submissions by the Company in respect of any dispute with relevant taxing authorities). The Company shall indemnify the Tax Matters Member for, and hold it harmless against, any claims made against it in its capacity as Tax Matters Member in accordance with Section 4.2 . Nothing in this Section 4.6 limits the ability of any Member to take any action in its individual capacity relating to the Company that is left to the determination of an individual Member under Sections 6222 to 6231 of the Code or any similar provision of state or local law. All actual out-of-pocket expenses incurred by the Tax Matters Member shall be borne by the Company. Such expenses shall include fees of attorneys and other tax professionals, accountants, appraisers and experts, filing fees and reasonable out-of -pocket costs and expenses, but will not include any profit or mark-up or any allocation of overhead. Any decisions made by the Tax Matters Member, including whether or not to settle or contest any tax matter, whether or not to extend the period of limitations for the assessment or collection of any tax and the choice of forum for such contest shall be made in the Tax Matters Member’s sole and absolute discretion.
4.7 Intentionally Omitted .
 
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4.8 Financing Fees . The Company will retain Goldman, Sachs & Co., and any Affiliate(s) that Goldman, Sachs & Co. designates (collectively, “ GS ”) to provide all financial advisory, investment banking, environmental consulting or similar services to the Company and any Subsidiary, in connection with any refinancing for the Property or the Company or its Subsidiaries other than the Acquisition Financing, unless GS declines the engagement. If GS accepts the engagement, GS is entitled to receive from the Company its customary fees and commissions for its services and its customary indemnification. If GS procures any refinancing for the Property or the Company or its Subsidiaries other than the Acquisition Financing and other than any Replacement Loan, then, in each instance, GS and Hyatt shall be entitled to receive a financial advisory fee equal to 0.75% of the maximum gross loan amount payable at the closing of the loan, with GS entitled to two-thirds of such fee and Hyatt entitled to one-third of such fee; provided , however , such fee shall only be payable in the event such refinancing is more economically beneficial to the Company than keeping the existing financing in place.
4.9 Break-Up Fees and Related Expenses . Following the execution of this Agreement, petition to the applicable Bankruptcy Court and delivery thereto of an executed Acquisition Agreement in respect of the acquisition of the Property, if such Bankruptcy Court shall approve the sale of the Property to any third-party purchaser, then the Breakup Fee (as defined in the Acquisition Agreement) and any and all costs and expenses incurred by the Whitehall Group and Hyatt in respect of the acquisition of the Property shall be allocated equally between the Whitehall Group and Hyatt (i.e., fifty percent (50%) to each).
4.10 REIT Structure Implementation . The Managing Member shall have the right, and the Members agree to cooperate with each other, to implement a structure under which certain Subsidiaries of the Company would be classified as Real Estate Investment Trusts (or subsidiaries thereof) for U.S. federal income tax purposes, and the Members shall cooperate with each other to take all steps reasonably necessary to properly implement and maintain such structure, unless implementing such structure would have a material adverse financial effect on the Company (taking into account the viable alternative options) and have a disproportionately negative financial effect on Hyatt’s Interest.
 
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ARTICLE 5.
FINANCIAL REPORTS AND STATEMENTS
5.1 Financial Reports and Statements .
(a) The Managing Members have engaged Archon to coordinate, at the sole cost and expense of the Company, the preparation and delivery to the Members of financial statements of the Company and any Subsidiary and to do the following:
(i) use commercially reasonable efforts to, within sixty (60) days after the end of the Company’s Fiscal Year, deliver to the Members (a) such tax information with respect to such Fiscal Year as is necessary for inclusion in the Members’ U.S. federal and state income tax and other tax returns including, without limitation, a spreadsheet including the same information as that contained in an IRS Schedule K-1 (and, as soon as reasonably possible thereafter, a completed IRS Schedule K-1 prepared by the Accountants), and (b) an annual report of the Company and the Subsidiaries including an annual balance sheet, profit and loss statement and a statement of changes in financial position, and a statement showing distributions to the Members all as prepared in accordance with GAAP consistently applied and audited by the Company’s independent public accountants, which shall initially be Ernst & Young LLP or another nationally recognized accounting firm selected by the Managing Members (the “ Accountants ”), and a statement showing allocations to the Members of taxable income, gains, losses, deductions and credits, as prepared by such Accountants;
(ii) use commercially reasonable efforts to, within forty-five (45) days after the end of each quarter of each Fiscal Year, deliver to Members (a) quarterly financial statements of the Company and the Subsidiaries, including a quarterly balance sheet, profit and loss statement and a statement of changes in financial position, and a statement showing distributions to the Members, all as prepared in accordance with GAAP consistently applied and (b) such tax estimates as any Managing Member shall reasonably request; and
(iii) use commercially reasonable efforts to cause the Accountants to prepare the income tax returns of the Company in a manner that would allow the Managing Members to timely file such income tax returns.
All of the above reports, tax schedules and filings and financial statements shall be prepared on an accrual basis and shall otherwise be in form reasonably acceptable to the Managing Members. Archon’s obligations hereunder are not to guaranty timely delivery of audits, tax returns or similar third party work product, and the failure of the auditor or another third party to make such delivery shall not itself constitute a default hereunder on the part of Archon. Any Managing Member may, from time to time, at the sole cost and expense of the Company, perform or cause to be performed an audit of the Company and/or any Subsidiary and its operations, including any operations or records pertaining to the Property and the Company Assets.
(b) Accounting Expenses . All out-of-pocket expenses incurred by or on behalf of the Company or on behalf of Hyatt in furtherance of its obligations under this Section 5.1 and payable to Persons who are not Affiliates of any Member in connection with the keeping of the books and records of the Company and any Subsidiary and the preparation of audited or unaudited financial statements and federal and local tax and information returns required to implement the provisions of this Agreement or required by any Governmental Authority with jurisdiction over the Company and/or any Subsidiary shall be borne by the Company as an ordinary expense of its business.
 
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5.2 Budget for Real Estate Taxes, Insurance Premiums and Debt Service . In order to assist the Members in maintaining internal books and records relating to the Company and its Subsidiaries, the Managing Member agrees to use good faith efforts to prepare and distribute to the Members before the start of each Fiscal Year a budget for the real estate taxes, debt service and insurance premiums with respect to the Property that are anticipated to be payable that Fiscal Year by the Company and its Subsidiaries, to the extent that they are not included in the operating budgets for the Hotel pursuant to the Property Management Agreement. Hyatt acknowledges and agrees that (a) the Managing Member’s obligations hereunder are not to assure timely delivery of the budget or to assure that the budget will accurately forecast the actual amount of real estate taxes, debt service and insurance premiums, which may vary from budget for a variety of reasons, (b) the budget will be prepared for informational purposes only, and (c) the failure of Managing Member to make such delivery shall not (i) constitute a default hereunder on the part of the Managing Member or give rise to any claims by Hyatt in law or in equity or (ii) limit, impede or otherwise prejudice any rights of the Managing Members hereunder, including the right to make Capital Calls.
ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
6.1 Capital Contributions; Failure to Fund Property Closing Date Capital Contributions .
(a) As of the date hereof, the Members have made Capital Contributions in the amounts set forth in Schedule 6.1(a) . On or before the Property Closing Date, the Members shall each make the additional Property Closing Date Capital Contributions in the amounts set forth in Schedule 6.1(a) hereto, as such Schedule 6.1(a) may be modified by the Members on or prior to the Property Closing Date as required to satisfy the Company’s and/or its Subsidiaries obligations under the Acquisition Agreement.
 
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(b) As of the Effective Date, the Members shall be deemed to have had the initial Percentage Interests as set forth below:

Member	  	Percentage Interest	 	
Finance Sub	  	77.56773	% 	
Whitehall Parallel	  	2.53227	% 	
Hyatt	  	19.9
 	%  
 	
Total	  	100.0	% 	
(c) If the Property Closing occurs and the Members fund the Property Closing Date Capital Contributions in the amounts set forth in Schedule 6.1(a) hereto, the Members Percentage Interests shall be adjusted such that, as of the Property Closing Date, the Members shall have the Percentage Interests as set forth below:

Member	  	Percentage Interest	 	
Finance Sub	  	87.16443	% 	
Whitehall Parallel	  	2.84557	% 	
Hyatt	  	9.99
 	%  
 	
Total	  	100.0	% 	
The Members acknowledge that Hyatt has funded $8,855,500 (or 19.9%) of the total cash portion of the Deposit of $44,500,000 required under the Acquisition Agreement and, given that the Percentage Interest of Hyatt will be adjusted to 9.99% as of the Property Closing Date, the Members agree, if the Property Closing occurs, to refund to Hyatt $4,409,950 of the amount so funded by Hyatt (i.e., the difference between 9.99% and 19.9% of the total cash portion of the Deposit).
(d) If, on the scheduled Property Closing Date, Hyatt is ready, willing and able to close the Acquisition and actually makes its Property Closing Date Capital Contribution in accordance with its Percentage Interest as of the Property Closing Date (as set forth in Section 6.1(c)) and the Acquisition Mortgage Lender actually funds the Acquisition Mortgage Loan to the Company (or one or more of its Subsidiaries) as specified in the Acquisition Mortgage Loan Term Sheet, and either (i) the Acquisition Mezzanine Lender does not fund, for any reason whatsoever (including, without limitation, the failure to meet a closing condition or the exercise by the Acquisition Mezzanine Lender of any right of termination under the Acquisition Mezzanine Loan Term Sheet), the Acquisition Mezzanine Loan on such date in accordance with the Acquisition Mezzanine Loan Term Sheet (and in such event the Whitehall Group is not ready, willing and able to replace the Acquisition Mezzanine Lender and make a loan to the Company (or one or more of its Subsidiaries) on the same terms as set forth in the Acquisition Mezzanine Loan Term Sheet) or (ii) the Whitehall Group is not
 
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ready, willing and able, for any reason whatsoever, to close the Acquisition on such date or fails for any reason to make its Property Closing Date Capital Contribution in accordance with its Percentage Interest as of the Property Closing Date (as set forth in Section 6.1(c)), then, in either case, the Whitehall Group shall promptly reimburse Hyatt for the 19.9% share of the Deposit funded by Hyatt (either in cash or in the form of one or more letters of credit) and all third party out-of-pocket costs and expenses (including, without limitation, legal fees) incurred by Hyatt in connection with the Acquisition.
(e) If, on the scheduled Property Closing Date, the Whitehall Group is ready, willing and able to close the Acquisition and actually makes its Property Closing Date Capital Contribution in accordance with its Percentage Interest as of the Property Closing Date (as set forth in Section 6.1(c)), and the Acquisition Mezzanine Lender actually funds the full amount of the Acquisition Mezzanine Loan to the Company (or one or more of its Subsidiaries) as specified in the Acquisition Mezzanine Loan Term Sheet (or the Whitehall Group is ready, willing and able to replace the Acquisition Mezzanine Lender and make a loan to the Company (or one or more of its Subsidiaries) on the same terms as set forth in the Acquisition Mezzanine Loan Term Sheet), and either (i) the Acquisition Mortgage Lender does not fund, for any reason whatsoever (including, without limitation, the failure to meet a closing condition or the exercise by the Acquisition Mortgage Lender of any right of termination under the Acquisition Mortgage Loan Term Sheet), the Acquisition Mortgage Loan on such date in accordance with the Acquisition Mortgage Loan Term Sheet or (ii) Hyatt is not ready, willing and able, for any reason whatsoever, to close the Acquisition on such date or fails for any reason to make its Property Closing Date Capital Contribution in accordance with its Percentage Interest as of the Property Closing Date (as set forth in Section 6.1(c)), then, in either case, Hyatt shall promptly reimburse the Whitehall Group for the 80.1% share of the Deposit funded by the Whitehall Group (either in cash or in the form of one or more letters of credit) and all third party out-of-pocket costs and expenses (including, without limitation, legal fees) incurred by the Whitehall Group in connection with the Acquisition.
(f) If any Member fails to make its Property Closing Date Capital Contribution required of it under Section 6.1(a) , then in addition to the rights and remedies set forth in Sections 6.1(d) and 6.1(e) above, as applicable, the failure of such Member to make its Property Closing Date Capital Contribution shall result in the other Members (provided such Members have made their Property Closing Date Capital Contributions) having such rights and remedies as are available at law or in equity, and the failing Member will forfeit all of its Interests in the Company.
6.2 Capital Calls for Additional Capital Contributions .
(a) After the Property Closing Date Capital Contributions have been funded, either Managing Member may (and, with respect to clause (vi) below only, any other Member may), at the time or times indicated below, require all of the Members to make additional
 
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cash capital contributions (“ Additional Capital Contributions ”) to the Company (i) that any Managing Member at any time or times determines is necessary, in its sole discretion, to fund any Required Expenditure in excess of available, unrestricted cash, (ii) otherwise to conduct the business of the Company as either Managing Member at any time or times reasonably deems necessary in accordance with the Company purposes, (iii) that any Managing Member at any time or times prior to a Successful Syndication determines is necessary, in its sole discretion, to fund any Pre-Syndication Amounts, (iv) that any Managing Member at any time or times after a Successful Syndication determines is necessary, in its sole discretion, to fund any Post-Syndication Amounts, (v) on the fifth anniversary of the Property Closing Date, if there is a Replacement Loan and any portion of such Replacement Loan remains outstanding, that any Managing Member determines is necessary, in its sole discretion, to fund any Five Year Amounts or (vi) that any Managing Member, at any time or times prior to or on the eighteen month anniversary of the Property Closing Date, or any other Member, on the eighteen month anniversary of the Property Closing Date, determines is necessary to fund any Initial Renovation Costs. Either Managing Member (or any Member, in the case of clause (vi) above) shall notify all the Members of any Capital Calls. Any Capital Call (x) must be in writing to all the Members, (y) must provide for at least ten (10) Business Days’ advance notice before the Additional Capital Contributions are due and payable, and (z) must be apportioned pro rata among the Members according to each Member’s Percentage Interest. Within ten (10) Business Days after receipt of a Capital Call (or such later date as may be specified in the particular Capital Call), each Member shall contribute cash to the capital of the Company in an amount equal to that Member’s pro rata portion of the Capital Call based on that Member’s Percentage Interest.
(b) With respect to any Capital Call, any member of the Whitehall Group may contribute within the time period specified by the applicable Capital Call all or a portion of the capital required to be contributed to the Company by any other member of the Whitehall Group. In that case, the provisions of Sections 6.3 and 6.4 will not apply to the non-funding member(s) of the Whitehall Group, and the portion of the capital contributed by the funding member(s) of the Whitehall Group will be deemed to have been made on behalf of the non-funding members of the Whitehall Group.
(c) Other than the remedies described in this Article 6 , no Member shall be personally liable to fund pursuant to a Capital Call and shall not be deemed in default under this Agreement if it fails to contribute capital pursuant to such Capital Call. The sole and exclusive remedies available shall be those specifically set forth in this Article 6 .
(d) In accordance with Section 4.2(c) hereof, the Managing Members shall have no right or authority to make Capital Calls for the specific purpose of enabling the Company to pay indemnification to the Members.
(e) The Managing Members shall have no right or authority to make Capital Calls for amounts paid by any member of the Whitehall Group (or any Affiliate thereof) pursuant to a Recourse Carveout Guaranty if such payments are required as a result of the gross negligence, willful misconduct, bad faith, fraud, misappropriation or any other criminal act by any member of the Whitehall Group (or any Affiliate thereof).
 
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(f) Furthermore, no Member will have the right to contribute capital except pursuant to a Capital Call in accordance with this Article 6 .
6.3 Failure to Fund Additional Capital Contributions .
(a) If any Member fails to make an Additional Capital Contribution required of it under a Capital Call in the amount and within the time periods specified therein (that Member is hereinafter referred to as a “ Non-Contributing Member ”), the Managing Members shall provide notice of such failure to the other Members and all Members who are not Non-Contributing Members may fund all or part of the amount of the Additional Capital Contribution not funded by the Non-Contributing Member (that amount is hereinafter referred to as the “ Failed Contribution ”, and each such Member who funds any part of a Failed Contribution is hereinafter referred to as a “ Contributing Member ”). Each Contributing Member will have the right to fund a portion of the Failed Contribution pro rata in proportion to the relative Percentage Interests of all Contributing Members (but the Contributing Members may agree among themselves to some other manner to fund the Failed Contribution). Upon the funding by a Contributing Member of all or part of a Failed Contribution, the Contributing Member(s) may elect either of the following (and if there is more than one Contributing Member, each may separately make its own election):
(i) A Contributing Member may, at any time (subject to the remainder of this paragraph (i)), elect to treat the portion (the “ Funded Portion ”) of the Failed Contribution funded by that Contributing Member as a capital contribution by that Contributing Member, with the corresponding dilution of the Non-Contributing Member provided for in Section 6.4 . If the Contributing Member has elected to proceed under paragraph (ii) or (iii) below, it may thereafter elect in accordance with paragraph (ii) or (iii), as applicable, to treat the Funded Portion (as modified by paragraph (ii) or (iii), as applicable) funded by it as a capital contribution by it, with the corresponding dilution of the Non-Contributing Member provided for in Section 6.4 .
(ii) A Contributing Member may at any time (even after first electing to proceed under paragraph (iii) below) elect to treat the Funded Portion as a loan (a “ Member Loan ”) by that Contributing Member to the Non-Contributing Member (bearing interest at the applicable Interest Rate), which Member Loan will be treated as a loan made by the Contributing Member to the Non-Contributing Member, followed by a Capital Contribution in the amount of the Member Loan by the Non-Contributing Member. Any Member Loan will be recourse only to the Non-Contributing Member’s Interest, shall have no fixed maturity date and shall be repaid directly by the Company on behalf of the Non-Contributing Member only as set forth in Section 8.3 . Funds used to repay a Member Loan must be applied first to interest and then to principal. At any time before full repayment of any
 
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Member Loan (provided only that thirty (30) days shall have elapsed from the time such Member Loan was first funded, prior to which time the Member Loan shall be repayable at the option of the Non-Contributing Member with no penalty other than the interest that has accrued), the Lender Member may elect, in its sole discretion, to terminate that Member Loan, in which event, the Lender Member shall be deemed to have funded (and the Debtor Member shall be deemed to have failed to fund) a Capital Contribution in an amount equal to the principal balance of, and all accrued and unpaid interest on, such Member Loan and the Non-Contributing Member’s Percentage Interest will be diluted and the Lender Member’s Percentage Interest will be increased as set forth in Section 6.4 , with the entire outstanding principal and accrued and unpaid interest (as of the date of termination) treated as the amount of the Funded Portion and the Capital Accounts of the Contributing and Non-Contributing Members adjusted as provided in Section 6.4 . Each Member Loan may, at the election of the Lender Member, be evidenced by a promissory note in the form of Exhibit A , and that Lender Member is hereby granted an irrevocable power of attorney, coupled with an interest, to execute and deliver on behalf and in the name of the Debtor Member that promissory note and such Uniform Commercial Code financing and continuation statements and other security instruments for the purpose of creating a security interest in the Debtor Member’s Interest as reasonably requested by such Lender Member, and as may be necessary to perfect and continue the security interest in the Debtor Member’s Interest in favor of such Lender Member until such Member Loan is paid in full or converted as described below. The failure of a Lender Member or Debtor Member to execute the promissory note will not invalidate or otherwise affect the enforceability of, or amounts owing under, any Member Loan.
(iii) A Contributing Member may elect to be deemed to have made a demand loan to the Company (a “ Company Loan ”) in the amount equal to that Member’s contribution ( i.e. , both the Funded Portion and the amounts required to be contributed by such Member pursuant to the relevant Capital Call), unless the existence of a Company Loan would violate the terms of any third-party loan documents, in which case the Contributing Member will be deemed to have made a Member Loan. A Company Loan will bear interest at the applicable Interest Rate and will be repaid to the Contributing Member from Available Cash otherwise distributable to the Members before any other distributions of Available Cash are made to any Member. Any payments made by the Company on such Company Loans shall be applied first to interest and then to principal and shall not be deemed a distribution from the Company to the Contributing Member nor affect the Capital Accounts of the Members. At any time before full repayment of any Company Loan (provided only that thirty (30) days shall have elapsed from the time such Company Loan was first funded, prior to which, the Company Loan shall be repayable at the option of the Non-Contributing
 
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Member with no penalty other than the interest that has accrued), the Contributing Member may elect, in its sole discretion, to terminate that Company Loan and have (i) the entire outstanding principal and accrued and unpaid interest (as of the date of such termination) be treated as a Capital Contribution made by such Contributing Member on the date of such termination, (ii) in respect of failure to fund Additional Capital Contributions, the Non-Contributing Member’s Percentage Interest diluted as set forth in Section 6.4 , with the portion of the outstanding principal and accrued and unpaid interest (as of the date of such termination) attributable to the amount funded by the Contributing Member on behalf of the Non-Contributing Member in connection with such Capital Call deemed to be and treated as the amount of the Funded Portion and (iii) the Capital Accounts of the Contributing Member and the Non-Contributing Member adjusted as provided in Section 6.4 . Notwithstanding the foregoing, if any member of the Whitehall Group is a Non-Contributing Member, then the other member of the Whitehall Group that is a Contributing Member shall not have the right to make a Company Loan with respect to the other member of the Whitehall Group’s Failed Contribution, and shall only have the remedies against such member of the Whitehall Group as provided in Section 6.3(a)(i) and Section 6.3(a)(ii) .
6.4 Dilution for Failure to Fund Capital Calls . In respect of failure to fund Additional Capital Contributions, if any Contributing Member elects to make a capital contribution for a Non-Contributing Member, including as a result of terminating a Member Loan or Company Loan previously made by the Contributing Member (at which time such Member Loan or Company Loan shall no longer be deemed outstanding and such Non-Contributing Member will receive full distributions after taking into account the diluted Percentage Interest of such Non-Contributing Member), the Percentage Interest of each Contributing Member will be increased by a percentage equal to the quotient (rounded up to the nearest one hundredth of one percent) obtained when (x) the applicable Dilution Factor multiplied by the Funded Portion funded by that Contributing Member is divided by (y) the sum of all Members’ Capital Contributions as of that date (including the Funded Portion(s)). The Percentage Interest of the Non-Contributing Member will be decreased by a percentage equal to the aggregate sum of the increase in the Percentage Interests of all Contributing Members as a result of the failure of the Non-Contributing Member to fund the Capital Calls in question, such that the adjusted Percentage Interest of the Members will at all times add up to 100%. After determining the adjusted Percentage Interests, each Member will be deemed, as of any date, to have made Capital Contributions equal to that Member’s adjusted Percentage Interest multiplied by the total Capital Contributions made by all Members as of that date.
6.5 Capital of the Company . Except as otherwise expressly provided herein, no Member may withdraw or receive any interest or other return on, or return of, all or any part of its Capital Contribution, or receive any Company Asset (other than cash) in return for its Capital Contribution. No Member may make a Capital Contribution to the Company except as expressly authorized by this Agreement.
 
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6.6 Limited Liability of Members . No Member will be bound by, nor be personally liable for, the expenses, liabilities, Indebtedness or obligations of the Company or any Subsidiary, whether arising in contract, tort or otherwise. Without affecting the rights and remedies provided under this Article 6 , no Member will be required to contribute any amounts in excess of the amounts set forth in Sections 6.1 , 6.2 and 6.3 . The Capital Call provisions of Section 6.2 of this Agreement are intended solely to benefit the Members, and no Member has any obligation to any creditor of the Company or any Subsidiary to make any capital contributions to the Company or any Subsidiary.
6.7 Recourse Carveout Guaranty . In the event a lender providing financing to the Company and/or its Subsidiaries requires a Recourse Carveout Guaranty to be delivered in connection with such financing, each of the Members agree that they will enter into or cause an Affiliate of such Member acceptable to lender to enter into a Recourse Carveout Guaranty pursuant to which such Member (or Affiliate) will be liable for the actions or omissions of such Member (or Affiliate). In the event one or more Members (or any Affiliate thereof) elects to deliver any Recourse Carveout Guaranty in connection with any such financing, then at the request of such Member, the other Members shall, prior to the execution of any Recourse Carveout Guaranty such Member(s), enter into a reimbursement agreement in the form attached hereto as Exhibit B .
6.8 Obligation to Fund Post-Syndication Amounts . Notwithstanding anything to the contrary set forth in this Article 6 , if Hyatt makes an Additional Capital Contribution with respect to a Capital Call made pursuant to Section 6.2(a)(iv) then, notwithstanding anything to the contrary set forth in this Agreement, the Whitehall Group shall fund its pro rata share of such Capital Call; provided that at the time of such Capital Call either (a) repayment of the Acquisition Mezzanine Loan (as opposed to just the recourse carveouts) is recourse to any member of the Whitehall Group or any of their respective Affiliates or (b) either (i) any member of the Whitehall Group or any of their respective Affiliates is the lender under the Replacement Loan or (ii) the Replacement Loan is recourse to any member of the Whitehall Group or any of their respective Affiliates.
6.9 Failure to Fund Five Year Amounts . Notwithstanding anything to the contrary set forth in this Article 6 , if Hyatt shall be a Non-Contributing Member with respect to the portion of a Capital Call made pursuant to Section 6.2(a)(v) , Hyatt shall automatically forfeit all of its Interests in the Company and the Whitehall Group’s pro rata share of such portion of such Capital Call (based on the Percentage Interests of the Whitehall Group) shall automatically be converted into a Capital Contribution to the Company.
 
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6.10 Replacement Loan . Notwithstanding anything to the contrary in this Agreement, prior to a Successful Syndication, the Whitehall Group shall be responsible for funding 100% of Acquisition Mezzanine Loan Repayments (subject to either Managing Member’s right to make Capital Calls pursuant to Section 6.2(a)(iii) ) due on or prior to the fourth anniversary of the Property Closing Date, with such funding to take the form of either (a) purchasing the Acquisition Mezzanine Loan from the holder thereof or (b) making a loan to the Subsidiary of the Company that is the borrower under the Acquisition Mezzanine Loan to pay off the Acquisition Mezzanine Loan (in either case, a “ Replacement Loan ”). Such Replacement Loan shall have (or be amended to have, in the case of a purchase of the Acquisition Mezzanine Loan) a maturity date no earlier than the maturity date of the Acquisition Mortgage Loan and shall have the same terms and conditions (including any extension fees to which the original Acquisition Mezzanine Lender was entitled) as the Acquisition Mezzanine Loan, including bearing interest at a rate equal to (i) until the fourth anniversary of the Property Closing Date, the interest rate that would have been applicable under the Acquisition Mezzanine Loan, had the Acquisition Mezzanine Loan not been replaced by the Replacement Loan, and (ii) beginning on the fourth anniversary of the Property Closing Date, LIBOR plus 800 basis points (either (i) or (ii), as applicable, the “ Replacement Loan Interest Rate ”). With respect to a Replacement Loan, if the Managing Members do not elect to make a Capital Call for any shortfalls for amounts due on such Replacement Loan pursuant to Section 6.2(a)(iv) , such amounts shall accrue interest at the Replacement Loan Interest Rate until sufficient net cash flow from the Property exists to pay such amounts (with any accrued interest thereon); provided that any amounts due on the Replacement Loan will be paid to the holder thereof before any amounts are distributed to the Members hereunder. The Whitehall Group agrees that it shall not exercise any remedies available to the lender under the Replacement Loan due to a default of the borrower thereunder until the fifth anniversary of the Property Closing Date.
6.11 Obligation to Fund Initial Renovation Costs . In order to secure the Members’ obligation to make Capital Contributions hereunder with respect to Initial Renovation Costs, the Members shall, within thirty (30) days after the Property Closing Date, deliver one or more letters of credit (each, a “ Renovation LC ”) in the amount of their respective pro rata shares of the then remaining unfunded portion of the Initial Renovation Costs. Each Renovation LC shall name the Company as a beneficiary and provide for the issuing bank to accept a draw request from any Member. The amount of each Renovation LC may be reduced from time to time as the Members make Capital Contributions with respect to the Initial Renovation Costs, and the Members, as representatives of the beneficiary of the Renovation LCs, shall sign instructions to the bank issuing the Renovation LCs to effect such reduction. Notwithstanding anything to the contrary set forth in this Article 6 , if any Member shall be a Non-Contributing Member with respect to a Capital Call to fund Initial Renovation Costs, the Contributing Member shall cause the Company to make a draw request on the Renovation LC provided by such Non-Contributing Member in order to fund such Non-Contributing Member’s Failed Contribution as the sole and exclusive remedy of the Contributing Member and the Company for such Failed Contribution and, upon receipt of funds from such draw request, the Non-Contributing Member shall be deemed to have funded its pro rata share of such Capital Call as and when called and shall not be considered a defaulting Member for the purposes of this Agreement; provided , however , that if
 
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funds are not received with respect to such draw request from the bank issuing such Renovation LC for any reason including, without limitation, the issuing bank does not honor such draw request or if there is an injunction or some other legal bar to funding such draw request, then the other remedies for failure to fund Capital Contributions set forth in the Article 6 shall be available.
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS AND LOSSES AND ALLOCATIONS
7.1 Capital Accounts .
(a) The Company shall maintain a capital account (the “ Capital Account ”) for each Member in accordance with federal income tax accounting principles. Each Member’s Capital Account as of the date hereof will equal the total Capital Contributions made by such Member pursuant to Section 6.1(a) .
(b) The Capital Account of each Member will be increased by (i) the amount of any cash and the agreed Book Value of any property (net of liabilities encumbering the property) as of the date of contribution subsequently contributed as a Capital Contribution to the capital of the Company by that Member, (ii) the amount of any Profits allocated to that Member, (iii) any items of income specially allocated to that Member under this Article 7 , (iv) that Member’s pro rata share (determined in the same manner as that Member’s share of Profits pursuant to Section 7.2 ) of income of the Company that is exempt from tax. The Capital Account of each Member will be decreased by (i) the amount of any Losses allocated to that Member, (ii) the amount of distributions to that Member, (iii) any deductions specially allocated to that Member under this Article 7 , and (iv) that Member’s pro rata share (determined in the same manner as that Member’s share of Losses pursuant to Section 7.2 ) of any other expenditures of the Company that are not deductible in computing Company Profits or Losses and which are not chargeable to capital account. For the avoidance of doubt, the maintenance of the Member’s Capital Accounts described above is intended to comply with the detailed capital accounting rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv) and shall be adjusted upon the occurrence of certain events as provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and shall be interpreted consistently with these rules.
(c) A transferee of all (or a portion) of an Interest will succeed to the Capital Account (or portion of the Capital Account) attributable to the transferred Interest.
 
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7.2 Profits and Losses .
(a) The profits and losses of the Company (“ Profits ” and “ Losses ”) will be the net income or net loss (including capital gains and losses), respectively, of the Company determined for each Fiscal Year in accordance with the accounting method followed for U.S. federal income tax purposes, except that, other than as set forth in Section 7.2(d)(i) hereof, in computing Profits and Losses, all depreciation and cost recovery deductions will be deemed equal to Depreciation and gains or losses will be determined by reference to Book Value rather than tax basis. Whenever a proportionate part of the Profits or Losses is allocated to a Member, every item of income, gain, loss, deduction or credit entering into the computation of such Profits or Losses or arising from the transactions with respect to which such Profits or Losses were realized will be credited or charged, as the case may be, to such Member in the same proportion; except that “recapture income,” if any, will be allocated to the Members who were allocated the corresponding Depreciation deductions.
(b) If any Member transfers all or any part of its Interest during any Fiscal Year or its Interest is increased or decreased, Profits and Losses attributable to that Interest for that Fiscal Year (except as otherwise provided below) will be apportioned between the transferor and transferee or computed as to such Members, as the case may be, in accordance with the method selected by either Managing Member, as long as such apportionment is permissible under the Code and applicable regulations thereunder.
(c) For all purposes, including federal, state and local income tax purposes, after giving effect to any special allocations described in Section 7.2(d) hereof, Profits and Losses will be allocated each year among the Members pro rata among all the Members in proportion to their relative Percentage Interests.
(d) Notwithstanding Sections 7.2(c) hereof,
(i) For federal income tax purposes (but not for purposes of crediting or charging Capital Accounts), Depreciation or gain or loss realized by the Company with respect to any property that was contributed to the Company or that was held by the Company at a time when the Book Value of the Company Assets was adjusted in accordance with the third sentence of Section 7.1(b) will, in accordance with Section 704(c) of the Code and Treasury Regulations Section 1.704-1(b)(2)(iv) (d) and (f) , be allocated among the Members in a manner which takes into account the differences between the adjusted basis for federal income tax purposes to the Company of its interest in such property and the fair market value of such interest at the time of its contribution or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the Company during a taxable year (including any Minimum Gain attributable to Member-Funded Debt), each Member at the end of that year will be allocated, prior to any other allocations required under this Article 7 , items of gross income for that year (and, if necessary, for subsequent years) in the amount and proportions described in Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(4).
 
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(iii) Notwithstanding the allocations provided for in Sections 7.2(c) , no allocation of an item of loss or deduction may be made to a Member to the extent the allocation would cause or increase a deficit balance in that Member’s Capital Account as of the end of the taxable year to which the allocation relates. If any Member receives an adjustment, allocation or distribution that causes or increases such a deficit balance, taking into account the rules of Treasury Regulations Sections 1.704-1(b)(2)(ii) (d)(4) , (5)  and (6) , that Member will be allocated (after taking into account any allocations made pursuant to Section 7.2(d)(ii) ) items of income and gain in an amount and manner to eliminate the Member’s Capital Account deficit attributable to that adjustment, allocation or distribution as quickly as possible. For purposes of this Section 7.2(d)(iii) , there will be excluded from a Member’s deficit Capital Account balance at the end of a taxable year of the Company (a) the Member’s share, determined in accordance with Section 704(b) of the Code and Treasury Regulations Section 1.704-2(g) of Minimum Gain (but for Minimum Gain attributable to Member-Funded Debt, such Minimum Gain will be allocated to the Member or Members to whom the Member-Funded Debt is attributable under Treasury Regulations Section 1.704-2(i)) and (b) the amount, if any, that the Member must restore to the Company under Treasury Regulations Section 1.704-1(b)(2)(ii)( c ).
(iv) Notwithstanding the allocations provided for in Section 7.2(d)(ii) and Section 7.2(c) , if there is a net increase in Minimum Gain of the Company during a taxable year of the Company that is attributable to Member-Funded Debt, then, first, Depreciation, to the extent the increase in Minimum Gain is allocable to depreciable property, and then a proportionate part of other deductions and expenditures described in Sections 514(c)(9) and 705(a)(2)(B) of the Code, will be allocated to the lending or guaranteeing Member (and to joint lenders or guarantors in proportion to their relative obligations), as long as the total amount of deductions so allocated for any year does not exceed the increase in Minimum Gain attributable to such Member-Funded Debt in that year.
(v) Any special allocation under Sections 7.2(d)(ii) through (iv)  must be taken into account in computing subsequent allocations of Profits and Losses of any item thereof pursuant to this Article 7 , so that the net amount of any items so allocated and the Profits, Losses and all items thereof allocated to each Member pursuant to this Article 7 will, to the extent permissible under Section 704(b) of the Code and the Treasury Regulations promulgated thereunder, be equal to the net amount that would have been allocated to each Member pursuant to this Article 7 if the special allocation had not occurred.
 
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(vi) The Members intend that the allocations provided for in this Article 7 should cause the Capital Account of each Member immediately prior to the liquidation of the Company (after making allocations under this Article 7 for the year of the liquidation) to be equal to the liquidating distributions to be received by such Member pursuant to Section 10.3(e) hereof. If any Member’s Capital Account at such time differs from the liquidating distributions to be received by such Member pursuant to Section 10.3(e) hereof, then notwithstanding the allocation provisions of this Article 7 but subject to the limitations in this Section 7.2(d) , the Company shall specially allocate Profits and Losses (including, if necessary, gross items of income and deduction) to the Members in the year of its liquidation as is necessary to cause the Capital Account of each Member to be equal (or, if not possible, without violating the requirements of Section 514(c)(9) of the Code, as close to equal as possible) to the liquidating distributions to be received by such Member pursuant to Section 10.3(e) hereof.
(e) No Member will be responsible to restore or repay to the Company or any other Member any deficit in such Member’s Capital Account existing at any time.
(f) The allocations described herein are intended to comply with the provisions of Sections 514(c)(9) and 704(b) of the Code and Treasury Regulations promulgated thereunder and are not intended to comply with the Qualified Income Offset provisions described therein. The Managing Members shall be permitted to adjust these allocations to comply with those provisions.
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
8.1 Applications and Distributions .
(a) The Managing Members shall determine the amount and timing of distributions of Available Cash; provided, however , the Managing Members shall use commercially reasonable efforts to cause the Company to distribute Available Cash not less frequently than quarterly; provided, further , that any such distributions shall be subject to legal and contractual requirements and financing restrictions. The Managing Members will use commercially reasonable efforts to cause the Company to distribute Available Cash from capital transactions promptly after the occurrence of any such capital transaction; provided, however , that any such distributions shall be subject to legal and contractual requirements and financing restrictions. The Managing Members may reserve amounts (to the extent not duplicative with any other reserves established in determining Available Cash) for potential or pending litigation and other actual or potential liabilities in such amounts and for such period of time as the Managing Members deem appropriate in its reasonable discretion. Prior to making any distributions, the accrued and unpaid interest on all Company Loans, as well as the entire
 
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principal balance of each such Company Loan, must be repaid in full. If there are multiple Company Loans outstanding at any time, amounts applied pursuant to the preceding sentence shall be allocated among the outstanding Company Loans in proportion to the relative outstanding amounts of the accrued and outstanding principal of each Company Loan. Subject to this Section 8.1(a) , the Company will make any such distributions to the Members in accordance with Section 8.1(b) .
(b) Available Cash will be distributed, on a pari passu basis, to all Members pro rata in proportion to their relative Percentage Interests.
(c) Notwithstanding anything in this Section 8.1 to the contrary, the allocations made pursuant to Article 7 , as adjusted pursuant to this Article 8 , must comply with Sections 514(c)(9) and 704(b) of the Code and the Treasury Regulations promulgated thereunder. Each of the Managing Members shall be authorized to modify any of the allocation provisions as such Managing Member, as applicable, determines is reasonably necessary to ensure compliance with Sections 514(c)(9) and 704(b) of the Code and the Treasury Regulations promulgated thereunder.
(d) The Members have (i) no right under Section 18-604 of the Act to withdraw or resign and receive the fair value of their Interests, (ii) no right to demand or receive any distribution from the Company in any form other than cash and in accordance with the provisions of this Agreement concerning distributions, and (iii) no right under the first sentence of Section 18-606 of the Act.
8.2 Liquidation . In the event of the sale or other disposition of all or substantially all the Company Assets, the Company will be dissolved and the proceeds of the sale or disposition will be distributed to the Members in liquidation as provided in Article 10 , except that, to the extent that the Company receives a purchase money note or notes in exchange for all or a portion of the Company Assets, the Company will continue in existence until those purchase money notes or notes have been paid in full.
8.3 Repayment of Member Loans . If, as a result of a Member Loan, any Member becomes a Debtor Member, then any distributions that would otherwise be payable to the Debtor Member pursuant to Section 8.1 or Section 10.3 will instead be paid to the Lender Member or Members, first to pay any accrued interest (at the applicable Interest Rate) and then to pay the principal amount thereof, until these Member Loans (including any accrued and unpaid interest) are repaid in full. A Member Loan will be secured by a lien on the Debtor Member’s Interest, and any Transferee of the Debtor Member’s Interest will take that Interest subject to the lien. If there are two or more Lender Members with respect to any Debtor Member, distributions under this Section 8.3 will be made pro rata to each Lender Member in proportion to the relative principal amount of Member Loans (including accrued and unpaid interest) that each Lender Member has outstanding as a percentage of total outstanding Member Loans made to the Debtor Member by all Lender Members. Any amounts distributed pursuant to this Section 8.3 will, for tax allocation and all other purposes of this Agreement, be treated as if they had been distributed to the Debtor Member, not the Lender Member or Members.
 
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8.4 Withholding Taxes . Either Managing Member may withhold or cause to be withheld from any Member’s distributions from the Company any amounts on account of taxes or similar charges, if any, as are required to be withheld by applicable law. Any amounts withheld by the Company pursuant to this Section 8.4 , shall be timely remitted by the Company to the appropriate taxing authority. Any amounts withheld or offset by either Managing Member in accordance with this Section 8.4 will nevertheless, for purposes of this Agreement, be treated as if they had been distributed to the Member from which they are withheld.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS; SALE OF ASSETS
9.1 Limitations on Assignments of Interests by Members . Except as provided in this Article 9 , no Member may engage in or permit a Transfer of any portion of its Interest. Any purported Transfer in violation of this Article 9 is void ab initio , and does not bind the Company. Any Member making a purported Transfer in violation of this Article 9 shall indemnify the Company and the other Members from any federal, state or local income taxes, or transfer taxes, including transfer gains taxes, arising from the purported Transfer. Each Transferee of any Member that is permitted under this Agreement shall, upon becoming a member of the Company, represent, warrant and covenant to the other Members the representations, warranties and covenants set forth in Section 2.7 (in each case as applies to such Transferee).
9.2 First Offer Right on Offered Whitehall Interests . Prior to the expiration of the Lockout Period, no member of the Whitehall Group shall Transfer all or any portion of their Interests in the Company to any Person other than a Whitehall Permitted Transferee without the prior written consent of Hyatt. At any time after the expiration of the Lockout Period, any member of the Whitehall Group shall each have the right, power and authority (without the prior consent or approval of Hyatt) to propose to Transfer all or any portion of its Interests in the Company to any Person, provided that if the Proposed Transferee is not a Whitehall Permitted Transferee, then such Transfer shall be subject to the following provisions:
(a) Any member, individually, or any members collectively, of the Whitehall Group desiring to sell (the “ Whitehall Group Transferor ”) shall give written notice (the “ Proposed Transfer Notice ”) to Hyatt setting forth the proposed purchase price (the “ Proposed Transfer Price ”) and the percentage of its Interest that such member(s) desire to sell (the “ Offered Whitehall Interests ”).
 
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(b) Hyatt shall have thirty (30) days (the “ Transfer Election Period ”) after the delivery to Hyatt by the Whitehall Group Transferor of the Proposed Transfer Notice to elect to purchase the Offered Whitehall Interests (such election to be made, if at all, by giving written notice thereof (the “ Hyatt Transfer Notice ”) to the Whitehall Group Transferor within the Transfer Election Period).
(c) If Hyatt fails to timely deliver the Hyatt Transfer Notice together with the Interest Purchase Deposit, then, Hyatt shall have no further right to purchase the Offered Whitehall Interests, except as may be expressly provided for below in this Section 9.2(c) , and the Whitehall Group Transferor shall have the right, power and authority to Transfer such Offered Whitehall Interests to a third party which is not an Affiliate of any Member (“ Third Party Transferee ”) at any time or times during the Transfer Marketing Period (as defined below) as long as the Third Party Transferee pays a gross cash purchase price (the “ Third Party Transfer Price ”) that, before deducting or netting any anticipated or actual Transaction Costs (but taking into account any Excluded Transaction Costs) borne by the Company or its Subsidiaries, is not less than 98% of the Proposed Transfer Price. The Whitehall Group Transferor shall contemporaneously provide Hyatt notice of any purchase agreement entered into by the Whitehall Group Transferor to sell the Offered Whitehall Interests and shall provide Hyatt a copy of such purchase agreement. If during the Transfer Marketing Period, the Whitehall Group receives an offer for the Offered Whitehall Interests in an amount that is less than 98% of the Proposed Transfer Price, then the Whitehall Group Transferor, if it wishes to accept such offer, shall so notify Hyatt and provide Hyatt with all other written offers received by the Whitehall Group during the Transfer Marketing Period. Within ten (10) Business Days after receiving such notice (and, if such notice is given within ten (10) Business Days prior to the expiration of the Transfer Marketing Period, the Transfer Marketing Period shall be extended day-by-day to give effect to the ten (10) Business Day notice period of this sentence), Hyatt shall have the right to deliver to the Whitehall Group Transferor a Hyatt Transfer Notice accepting the price set forth in the third party offer. If an agreement is executed during the Transfer Marketing Period but the closing under such agreement does not occur within forty-five (45) days after the end of the Transfer Marketing Period (the “ Transfer Closing Period ”), the provisions of this Section 9.2 will apply as to any Transfer of Offered Whitehall Interests occurring after such forty-five (45) day period. Hyatt shall not have the right to approve, object or interfere with any Transfer under, and conforming to, this Section 9.2 irrespective of the terms of the Transfer (the Whitehall Group Transferor being fully authorized and empowered to execute and deliver all necessary documents, agreements and instruments on behalf of the Company and any of its Subsidiaries but not to make any representations and warranties on the Company’s or any of its Subsidiaries’ behalf to effectuate such Transfer or otherwise obligate the Company or any of its Subsidiaries to incur any liability as a result of such Transfer). In connection with the Transfer, Hyatt agrees, in its capacity as a Member, to cooperate fully and in good faith with the Whitehall Group Transferor and any potential transferee and to deliver any materials reasonably requested by the potential transferee (all of which shall be provided, to the extent reasonably available, within
 
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three (3) Business Days of request (or earlier if such earlier time period is reasonable)) and to use their reasonable best efforts to cause the Transfer of such Offered Whitehall Interests. “ Transfer Marketing Period ” means a one hundred eighty (180) day period; it being agreed and understood that the Whitehall Group shall have the right to end the Transfer Marketing Period at any time prior to the end of such 180-day period upon notice to Hyatt, which period shall commence on the earlier of (A) the first day after the Transfer Election Period expires and (B) the date on which Hyatt notifies the Whitehall Group that Hyatt will not be purchasing such Offered Whitehall Interests; provided ; however , if Whitehall Group shall end the Transfer Marketing Period prior to the expiration of such 180-day period but issues another Proposed Transfer Notice during such 180-day period (and Hyatt elects not to purchase the Offered Whitehall Interests with respect thereto), then the 98% threshold set forth above shall be increased to 100% for the remainder of such 180-day period.
(d) If Hyatt elects to purchase such Offered Whitehall Interests within the Transfer Election Period, then such exercise shall be deemed to create a contract between Hyatt, on one hand, and the Whitehall Group Transferor on the other hand, pursuant to which Hyatt irrevocably agrees to acquire such Offered Whitehall Interests for the Proposed Transfer Price (subject to customary closing prorations and customary allocations of transaction costs) and the closing date for such Transfer shall be twenty (20) Business Days after the making of such election, and the provisions of Section 9.2(e) shall apply.
(e) Simultaneously with the delivery of the Hyatt Transfer Notice (and as a condition to the effectiveness of such Hyatt Transfer Notice), Hyatt shall deliver to the Escrow Agent a deposit by wire transfer of immediately available federal funds in an amount equal to five percent (5%) of the Proposed Transfer Price (together with interest accrued thereon, the “ Interest Purchase Deposit ”). If Hyatt fails to deliver the Interest Purchase Deposit in the manner described above, then Hyatt shall be deemed to have failed to exercise the Transfer Option and the Whitehall Group Transferor may proceed in accordance with Section 9.2(c) above. If Hyatt delivers the Proposed Purchase Deposit within the time frame and in the manner described above and Hyatt’s aggregate Percentage Interest will be increased to equal or exceed fifty percent (50%) upon the consummation of such acquisition, then Hyatt shall be deemed to become a co-Managing Member of the Company (along with the Whitehall Group) until the closing on Hyatt’s purchase of the Offered Whitehall Interests as provided herein, with all decisions or actions by the Managing Members on behalf of the Company and its Subsidiaries requiring the consent of Hyatt; provided , however , nothing in this sentence will require the consent of Hyatt to any action necessary to complete the sale pursuant to this Section 9.2 ; provided , further , that Hyatt shall cease to be a co-Managing Member (and Hyatt’s consent shall no longer be required pursuant to this sentence) in the event of a failure by Hyatt to consummate the purchase of the Offered Whitehall Interests on the relevant closing date in accordance with this Section 9.2 . The Interest Purchase Deposit shall be non-refundable to Hyatt in the event of a failure by Hyatt to consummate the Transfer on the relevant closing date
 
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(other than solely by reason of a default by the Whitehall Group Transferor or the failure of the representations listed below to be true in all material respects), in which case the Whitehall Group Transferor may terminate (or cause the termination of) the contract created by the Proposed Transfer Notice and the Hyatt Transfer Notice and the Whitehall Group Transferor may (A) retain the Interest Purchase Deposit as liquidated damages for the benefit and account of the Whitehall Group Transferor only and (B) the Whitehall Group Transferor shall be free to Transfer any time such Offered Whitehall Interests to any Person and on any terms as the Whitehall Group Transferor may determine in its sole discretion, without any consent or approval of any other Member and without having to comply with any of the terms of this Section 9.2 . The parties agree that damages to the Whitehall Group Transferor will be difficult and impracticable to ascertain in connection with a default by Hyatt under this Section 9.2 and the retention of the Interest Purchase Deposit by the Whitehall Group Transferor is a reasonable estimate of such damages from such default and shall not be considered a penalty. If the Transfer fails to occur on the relevant closing date solely by reason of a default by the Whitehall Group Transferor (other than as a result of any default by Hyatt), then, at the election of Hyatt, (x) the contract created by the Proposed Transfer Notice shall be terminated and the Interest Purchase Deposit shall be refunded to Hyatt; or (y) Hyatt may seek specific performance of such contract, but Hyatt shall have no other rights or remedies by reason of such breach. If the closing of the Transfer to Hyatt occurs, then the Interest Purchase Deposit shall be applied towards the Transfer Purchase Price at closing.
(f) Except as otherwise expressly provided herein, each party shall bear its own legal fees and expenses in connection with a Transfer under this Section 9.2 , and the Whitehall Group Transferor and Hyatt (in the case of a Transfer pursuant to Section 9.2(d) ) shall each indemnify the other against claims for brokers’ fees and commissions. If a Transfer is consummated with a Third Party Transferee, then the Whitehall Group Transferor (or the Third Party Transferee, if otherwise provided in any offer from such Third Party Transferee) shall bear any debt repayment or assumption fees and any transfer taxes and other closing costs as well as all costs of marketing the Interests and any legal fees incurred as transferor. If a Transfer is consummated with Hyatt pursuant to Section 9.2(d) , then the Company shall bear any debt repayment or assumption fees and the Company shall bear any transfer taxes and other closing costs as well as all costs of marketing the Interests and any legal fees incurred as transferor.
9.3 Drag-Along Rights; Tag-Along Rights .
(a) Drag-Along Rights . Other than with respect to a Transfer by any member of the Whitehall Group in accordance with Section 9.4 . In the event that any member, individually, or any members collectively, of the Whitehall Group (the “ Proposing Member ”) propose to Transfer all (but not less than all) its respective Interest to any Person after first offering such Interest to Hyatt pursuant to the provisions of Section 9.2 , the Proposing Member may upon not less than fifteen (15) Business Days’ prior notice
 
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require the other Members to Transfer their Interest at the price and upon the same terms and conditions of such proposed Transfer. Each Member shall use its commercially reasonable efforts to cooperate with any Transfer pursuant to this Section 9.3(a) and shall take all necessary and desirable actions in connection with the consummation of the Transfer as are reasonably requested by the Proposing Member, including the provision of representations, warranties or indemnifications with respect to such Member’s Interest only; provided that no Member shall be required to incur any out-of-pocket expenses in connection with such Transfer that are not reimbursed to such Member; and provided further that no such Member shall be required to provide representations, warranties or indemnifications in connection with any such Transfer that would result in an aggregate liability in excess of such Member’s proceeds from such Transfer. The aggregate proceeds received from the Transfer of the Members’ Interests (i.e., the aggregate proceeds received for both the Proposing Member’s Interests and the Interests of any other Member who has exercised its “drag-along” rights pursuant to this Section 9.3(a) ) pursuant to this Section 9.3(a) shall be allocated and distributed to the selling Members in accordance with the distribution provisions of Section 8.1(b) , and subject to Section 8.3 .
(b) Tag-Along Rights . If the Proposing Member proposes to Transfer greater than ten percent (10%) of its Interest to any Person that is not a Whitehall Permitted Transferee after first offering such Interest to Hyatt pursuant to the provisions of Section 9.2 and does not exercise its “drag-along rights” pursuant to Section 9.3(a) , it shall nonetheless give each other Member not less than fifteen (15) Business Days’ prior notice of its proposed Transfer (including the price and other material terms thereof) and shall not Transfer its Interests to any Person unless each other Member is given the opportunity, to be exercised in a writing to the Proposing Member within ten (10) Business Days after receipt of the Proposing Member’s notice, to Transfer a portion of its Interests equal to the percentage that the Proposing Member proposes to Transfer of its Interests, at the price and upon the same terms and conditions of such proposed Transfer. If any other Member shall elect to exercise its right under this Section 9.3(b) (a “ Tag-Along Member ”) and Transfer its Interest as set forth in the first sentence hereof, the Interests sold to such Person shall be increased by the Tag-Along Member’s Interest or, in the discretion of the Proposing Member, the Interest to be sold by the Proposing Member and by the Tag-Along Member(s) shall be reduced pro rata, so that the Interest sold to such third party by the Proposing Member and Tag-Along Member(s) shall remain equal to the Interest which the Proposing Member originally proposed to sell. Each Member shall use its commercially reasonable efforts to cooperate with any Transfer pursuant to this Section 9.3(b) and shall take all necessary and desirable actions in connection with the consummation of the Transfer as are reasonably requested by the Proposing Member, including the provision of representations, warranties or indemnifications with respect to such Member’s Interest only; provided that no Member shall be required to incur any out-of-pocket expenses in connection with such Transfer that are not reimbursed to such Member; and provided further that no such Member shall be required to provide representations, warranties or indemnifications in connection with any such Transfer that would result in an aggregate liability in excess of such Member’s proceeds from such Transfer.
 
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The aggregate proceeds received from the Transfer of the Members’ Interests (i.e., the aggregate proceeds received for both the Proposing Member’s Interests and the Interests of any other Member who has exercised its “tag-along” rights pursuant to this Section 9.3(b) ) pursuant to this Section 9.3(b) shall be allocated among and distributed to the selling Members in accordance with the distribution provisions of Section 8.1(b) , and subject to Section 8.3 .
9.4 Permitted Whitehall Group Transfers .
(a) Any member of the Whitehall Group may, at any time and from time to time, Transfer its Interest (in whole or in part) to any other member of the Whitehall Group or to a Whitehall Permitted Transferee. Upon such Transfer any such assignee(s) shall automatically become Substituted Member(s) without any further consent, approval or other action. Upon such Transfer, the term “Whitehall Group” shall include each such assignee. The Members hereby agree that, at the request of any member of the Whitehall Group, they will enter into an amendment to this Agreement to further evidence or give effect to any Transfer pursuant to this Section 9.4(a) . Prior to the expiration of the Lockout Period, no member of the Whitehall Group may engage in or permit a Transfer of any portion of its Interest other than to another member of the Whitehall Group or any Whitehall Permitted Transferee. Subject to Section 9.3 , at any time after the end of the Lockout Period, any member of the Whitehall Group may Transfer its Interest (in whole or in part) to any other Person (not described in the preceding sentence) after complying with Section 9.2 .
(b) Each member of the Whitehall Group may pledge or grant a security interest in all or part of its Interest to an Institutional Lender to secure a loan made in whole or in part to or guaranteed in whole or in part by that Member by that Institutional Lender, and the Institutional Lender will have the right, without consent of any Member, to foreclose on that Interest, but will not have the right to exercise the management rights of the Managing Members without Hyatt’s consent to each decision.
(c) No consent of any other Member is required to effect a Transfer under this Section 9.4 and Transfers under this Section 9.4 to Whitehall Permitted Transferees are not subject to either Section 9.2 or Section 9.3 .
9.5 Permitted Hyatt Transfers .
(a) Notwithstanding the Lockout Period, Hyatt may, at any time and from time, Transfer, directly or indirectly, it’s Interest (in whole or in part) to one or more Hyatt Permitted Transferees. Prior to the expiration of the Lockout Period, Hyatt shall not engage in or permit a Transfer of any portion of its Interest other than to a Hyatt Permitted Transferee. Upon such Transfer any such assignee(s) shall automatically become Substituted Member(s) without any further consent, approval or other action. The Members hereby agree that, at the request of Hyatt, they will enter into an amendment to this Agreement to further evidence or give effect to any Transfer
 
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pursuant to this Section 9.5(a) . At any time after the end of the Lockout Period, Hyatt may Transfer its Interest (in whole or in part) to any other Person (not described in the preceding sentence). Each Transferee of Hyatt shall, upon becoming a member of the Company, represent, warrant and covenant to the other Members the representations, warranties and covenants set forth in Section 2.7 (in each case as applies to such Transferee).
(b) No consent of any other Member (including the Managing Members) is required to effect a Transfer under this Section 9.5 and Transfers under this Section 9.5 are not subject to either Section 9.2 or Section 9.3 .
9.6 Transfer Requirements . No Transfer may be made by any Member, and any of the Managing Members may prohibit and may refuse to accept any Transfer, if any of the following conditions are not satisfied:
(a) Either Managing Member has determined, in its discretion, and after obtaining any opinion of counsel it deems necessary, that registration is not required under the Securities Act for the Transfer; the Transfer does not violate the applicable federal or state securities, real estate syndication, or comparable laws; the Transfer does not result in the imposition of any state, city or local transfer taxes, (unless the Transferor or Transferee pays the taxes); and the Transfer does not cause the Company to be treated as a “publicly traded partnership” within the meaning of Section 7704 of the Code.
(b) The Transferee has made such representations, warranties and covenants evidencing compliance with U.S. federal and state securities laws (including representations as to its net worth, sophistication and investment intent) as either Managing Member deems necessary.
(c) A duplicate original of the assignment or instrument of transfer, duly executed and acknowledged by the assignor or transferor, has been delivered to the Company, and the assignment or instrument evidences the written acceptance by the Transferee of all the terms and provisions of this Agreement, the Transferee’s representation that the Transfer was made in accordance with all applicable laws and regulations, and the consent to the Transfer required under Article 9 , if any.
(d) The Transfer does not violate the terms of the Property Management Agreement.
9.7 Requirements for Admission of a Substituted Member .
(a) A Member who assigns its entire Interest pursuant to a Transfer or Transfers permitted under this Agreement will not cease to be a Member of the Company unless and until a Substituted Member is admitted in its place. However, an assigning Member may, prior to the admission of a Substituted Member, assign its economic interest in its Interest, to the extent otherwise permitted under this Article 9 .
 
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(b) Any Person who is a Transferee of any portion of the Interest of a Member and who has satisfied the requirements of this Article 9 will become a Substituted Member only after either Managing Member has entered the Transferee as a Member on the books and records of the Company (which Managing Member shall do upon satisfaction of such requirements), and the Transferee has paid all reasonable legal fees and filing costs in connection with the substitution as a Member. Notwithstanding the foregoing, any Transferee that is a Whitehall Permitted Transferee or a Hyatt Permitted Transferee shall automatically become a Substituted Member upon satisfaction of the conditions set forth in Section 9.6 and the payment by the Permitted Transferee of all reasonable legal fees and filing costs in connection with the substitution as a Member.
(c) A Transferee of any of the Interest of a Member who does not become (or has ceased to be) a Substituted Member and desires to make a further Transfer of its Interest, or any part thereof, must comply with the requirements of this Article 9 to the same extent as any Member desiring to make a Transfer of its Interest.
9.8 Acceptance of Prior Acts . Any Person, by becoming a Member, accepts, ratifies and is bound by all actions duly taken pursuant to the terms and provisions of this Agreement by the Company prior to the date it became a Member and, without limiting the generality of the foregoing, ratifies and approves all agreements and other instruments executed and delivered on behalf of the Company which are in force and effect on that date.
ARTICLE 10.
DISSOLUTION OF THE COMPANY;
WINDING-UP AND DISTRIBUTION OF ASSETS
10.1 Dissolution .
(a) The Company will be dissolved and its affairs wound up upon the first to occur of the following:
(i) the sale or other disposition of all the Company Assets and receipt of the final payment of any installment obligation received as a result of the sale or disposition;
(ii) the written consent of the Members;
(iii) any event that makes it unlawful for the Company’s business to be continued;
 
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(iv) the issuance of a decree by any court of competent jurisdiction that the Company be dissolved and liquidated; or
(v) the entry of a decree of judicial dissolution under Section 18-802 of the Act.
(b) Except to the extent provided in Article 9 , no Member has the right to (i) withdraw or resign as a Member of the Company, (ii) redeem, or request redemption of, its Interest or any part thereof or (iii) dissolve itself voluntarily.
(c) Except as otherwise provided in Section 10.1(a) , the Company will not be dissolved or terminated by reason of the Bankruptcy, removal, withdrawal, dissolution or admission of any Member.
10.2 Winding-Up .
(a) If the Company is dissolved under Section 10.1(a) , either Managing Member or a liquidating trustee, as the case may be, shall wind up the Company’s affairs.
(b) Upon dissolution of the Company and until the filing of a certificate of cancellation as provided in the Act, either Managing Member or a liquidating trustee, as the case may be, may, in the name of, and on behalf of, the Company, prosecute and defend suits, whether civil, criminal or administrative, settle and close the Company’s business, dispose of and convey the Company’s property, discharge or make reasonable provision for the Company’s liabilities, and distribute to the Members in accordance with Section 10.3 any remaining assets of the Company. The previous sentence does not affect the liability of Members nor impose liability on any liquidating trustee.
(c) Upon completing the winding-up of the Company, either Managing Member or liquidating trustee, as the case may be, shall file a certificate of cancellation in the Office of the Secretary of State of Delaware as provided in the Act.
10.3 Distribution of Assets . Upon the winding-up of the Company, the assets will be distributed as follows:
(a) to the payment of expenses of the liquidation;
(b) to the payment of debts and liabilities of the Company, including debts and liabilities owed to Members (other than liabilities for distributions to Members and former members under Section 18-601 or Section 18-604 of the Act) to the extent permitted by applicable law, in order of priority as provided by applicable law;
(c) to the setting up of any reserves that either Managing Member or the liquidating trustee, as the case may be, determines are reasonably necessary for the payment of any contingent or unforeseen liabilities or obligations of the Company or the Members;
 
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(d) to the payment of debts and liabilities of the Company owed to Members to the extent not paid under Section 10.3(b) above; and
(e) to the Members in accordance with the positive balance in each Member’s Capital Account.
Distributions to a Member pursuant to this Section 10.3 will only be made after payment in full by that Member (in its capacity as a Debtor Member) of any Member Loans owed to any Lender Members out of such distributions. Such payment will be deemed a distribution to the relevant Debtor Member, followed by repayment by that Debtor Member to the relevant Lender Members of the Member Loans.
ARTICLE 11.
AMENDMENTS
11.1 Amendments . No amendment or modifications to any terms of this Agreement, or cancellation of this Agreement, shall be valid unless with the consent of all of the Members and in writing and signed by all of the Members; provided , however , that the Managing Members may amend Schedule 6.1(a) from time to time to reflect the capital contributions made by the Members as provided in this Agreement or to reflect the addition or substitution of a Member as provided in this Agreement. No amendment, modification, supplement, discharge or waiver hereof or hereunder requires the consent of any Person not a party to this Agreement. Notwithstanding the foregoing, the Members agree that either Managing Member (without the consent of any other Member) shall have right to amend this Agreement in order to comply with any customary “single purpose entity” requirements or other requirements of any lenders or rating agency. Notwithstanding the foregoing, no consent of any Member other than a Managing Member shall be required for an amendment or restatement entered into merely to reflect any Transfer made pursuant to Section 9.4 or Section 9.5 .
11.2 Additional Members . If this Agreement is amended as a result of adding or substituting a Member, the amendment to this Agreement must be signed by the Members, by the Person to be added or substituted and by the assigning Member, if any. In making any amendments, the Managing Members shall prepare and file for recordation any necessary documents and certificates.
 
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ARTICLE 12.
MISCELLANEOUS
12.1 Further Assurances . Each party to this Agreement shall execute, acknowledge, deliver, file and record any further certificates, amendments, instruments and documents, and shall do all other acts and things that either Managing Member deems are necessary or advisable to carry out this Agreement, or as are required by law.
12.2 Notices . Unless otherwise specified in this Agreement, all notices, demands, elections, requests or other communications that any party to this Agreement may desire or be required to give hereunder must be in writing and must be given (i) by hand delivery, (ii) by depositing the same in the United States mail, first-class, postage prepaid, (iii) by certified mail, return receipt requested, (iv) by a recognized overnight courier service providing confirmation of delivery, or (v) by facsimile transmission with a copy of any such notice sent by regular first class mail (with confirmation of receipt) to the address or facsimile numbers set forth on Schedule 2.6 , as applicable, or at any other address designated by the addressee thereof (or, in the case of the Company, as designated by either Managing Member) upon written notice to all of the Members. All notices given pursuant to this Section 12.2 are deemed to have been given on the date of delivery (if delivered by hand) or on the date of delivery as established by the return receipt, courier service confirmation (or the date on which the return receipt, or courier service confirms that acceptance of delivery was refused by the addressee), or facsimile confirmation received by the sender.
12.3 Headings and Captions . All headings and captions contained in this Agreement and the table of contents hereto are inserted for convenience only and are not a part of this Agreement.
12.4 Variance of Pronouns . All pronouns and all variations thereof refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or entity may require.
12.5 Counterparts . This Agreement may be executed in two or more counterparts, each of which constitutes an original and all of which, when taken together, constitute one Agreement. This Agreement may be executed by telecopier or other facsimile signature and any such signature is an original for all purposes.
12.6 GOVERNING LAW . THIS AGREEMENT IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
 
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12.7 Arbitration .
(a) Arbitration is the exclusive method for resolution of any claims or disputes arising out of, or in connection with, this Agreement or the business or affairs of the Company or any Subsidiary, and the determination of the arbitrators will be final and binding (except to the extent there exist grounds for vacation of an award under applicable arbitration statutes) on the Members.
(i) The parties agree that they will give conclusive effect to the arbitrators’ determination and award and that judgment thereon may be entered in any court having jurisdiction.
(ii) The AAA Commercial Arbitration Rules will apply to any proceedings commenced under this Section 12.7 .
(iii) The arbitrators may issue awards for compensatory damages and/or equitable remedies (including injunctive relief and specific performance) only and may not, and will have no power to, award indirect, consequential, or punitive damages.
(iv) The parties waive any claim for, and the arbitrators will have no power to award, damages for defamation, negligent or intentional infliction of emotional distress, or similar torts based on harm to one’s reputation or emotional or mental condition.
(v) The arbitrators may award the prevailing party its attorneys’ fees and other costs incurred in connection with the proceeding. If any party fails to appear at any properly noticed arbitration proceeding, an award may be entered against that party by default or otherwise, notwithstanding such failure to appear.
(b) The number of arbitrators will be three, each of whom will be disinterested in the dispute or controversy and impartial with respect to all parties hereto. A Member must commence arbitration by serving a demand for arbitration on the other Members and the AAA. The initiating Member (“ Claimant ”) must appoint an arbitrator within 10 Business Days of the demand. The respondent(s), collectively, must appoint an arbitrator within 10 Business Days of the appointment of an arbitrator by the Claimant. The third arbitrator will be appointed by both arbitrators within 10 Business Days of appointment of the second arbitrator. If they cannot agree, the AAA will appoint the third arbitrator.
(c) The place of arbitration will be the Borough of Manhattan, The City of New York. The arbitration will be conducted in the English language. The arbitrators shall decide the dispute in accordance with the law of Delaware. To the fullest extent permitted by law, they shall apply the Commercial Arbitration Rules of the AAA, except to the extent that such rules conflict with the provisions of this Section 12.7 , in which event the provisions of this Section 12.7 control. The arbitration provisions contained herein are self-executing and will remain in full force and effect after expiration or termination of this Agreement.
 
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12.8 Partition . No Member nor any successor-in-interest to any Member has the right to have the property of the Company or any Subsidiary partitioned, or to file a complaint or institute any proceeding at law or in equity to have the property of the Company or any Subsidiary partitioned, and each Member, on behalf of itself, its successors, representatives, heirs and assigns, hereby waives any such right.
12.9 Invalidity . Every provision of this Agreement is intended to be severable. The invalidity and unenforceability of any particular provision of this Agreement in any jurisdiction will not affect the other provisions hereof, and this Agreement must be construed in all respects as if that invalid or unenforceable provision were omitted.
12.10 Successors and Assigns . This Agreement is binding upon the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and legal assigns and inures to the benefit of the parties hereto and, except as otherwise provided herein, their respective successors, executors, administrators, legal representatives, heirs and legal assigns. No Person other than the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and permitted assigns has any rights or claims under this Agreement.
12.11 Entire Agreement . This Agreement, together with all Schedules and Exhibits attached hereto (which are incorporated herein by reference), supersedes all prior agreements among the parties with respect to the subject matter hereof, including the Original Agreement and the Original Amended Agreement, and contains the entire agreement among the parties with respect to its subject matter.
12.12 No Waivers; Remedies . No failure on the part of any party to this Agreement to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. Any waiver shall be in writing and signed by the party against whom the waiver is effective. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
12.13 No Brokers . The members of the Whitehall Group represent and warrant to Hyatt that there are no brokerage commissions or finders’ fees (or any basis therefor) resulting from any action taken by the Managing Members or any Person acting or purporting to act on their behalf upon entering into this Agreement. Hyatt represents and warrants to the members of the Whitehall Group that there are no brokerage commissions or finders’ fees (or any basis therefor) resulting from any action taken by Hyatt or any Person acting or purporting to act on its behalf upon entering into this Agreement. Each Member shall indemnify and defend each other Member for all costs, damages or other expenses arising out of any misrepresentation made in connection with this Section 12.13 .
 
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12.14 Maintenance as a Separate Entity . The Company shall maintain books and records and Bank Accounts separate from those of its Affiliates; shall at all times hold itself out to the public as a legal entity separate and distinct from any of its Affiliates (including in its operating activities, in entering into any contract, in preparing its financial statements, and on its stationery and any signs it posts), and shall cause its Subsidiary to do the same and to conduct business with it on an arm’s-length basis; shall not commingle its assets with assets of any of its Affiliates; shall not guarantee any obligation of any of its Affiliates; and shall cause its business to be carried on by the Members.
12.15 Confidentiality .
(a) Each Member shall not disclose or permit the disclosure of any of the terms of this Agreement or of any other confidential, non-public or proprietary information relating to the Property or the business of the Company or any Subsidiary (collectively, “ Confidential Information ”), except that such disclosure may be made (i) to any Person who is a member, partner, officer, investor, director or employee of such Member, any Person who is reasonably likely to become a member, partner, officer, investor, director or employee of such Member, or counsel to or accountants of such Member solely for their use and on a need-to-know basis, as long as such Persons are notified of the Members’ confidentiality obligations hereunder, (ii) with the prior consent of the other Members, (iii) subject to the next paragraph, in response to a subpoena or order issued by a court, arbitrator or governmental body, agency or official, (iv) to any lender or prospective lender providing financing to the Company or any Subsidiary and any prospective purchaser of the Property or (v) as required by applicable law.
(b) If a Member receives a request or demand to disclose any Confidential Information under a subpoena or order, that Member shall (i) promptly notify the other Members thereof, (ii) consult with the other Members on the advisability of taking steps to resist or narrow that request or demand and (iii) if disclosure is required or deemed advisable, cooperate with any of the other Members to obtain an order or other assurance that confidential treatment will be accorded the Confidential Information that is disclosed.
(c) No Member may issue or publish any press release or other public communication about the formation or existence of the Company or any Subsidiary without the express written consent of the Managing Members.
(d) Each of the parties to the proposed transactions described herein (and each employee, representative or other agent thereof) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions described herein and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax
 
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treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties, their respective Affiliates, and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the proposed transaction but does not include the identity of the parties or their respective Affiliates.
12.16 No Third Party Beneficiaries . This Agreement does not grant any rights, benefits or privileges to any Person not a party to this Agreement. No creditor of the Company, any Subsidiary, or of any Member, has any right whatsoever to require any Member to contribute capital to the Company or any Subsidiary.
12.17 Power of Attorney .
(a) Each of the undersigned irrevocably constitutes and appoints the Managing Members with full power of substitution, as its true and lawful attorney, in its name, place and stead, to execute, acknowledge, swear to, deliver, record and file, as appropriate and in accordance with this Agreement (i) all amendments to the original Certificate of Formation required or permitted by law or the provisions of this Agreement, (ii) all certificates and other instruments requiring execution by the Members or any of them and deemed necessary or advisable by either Managing Member to qualify or continue the Company as a company wherein the members have limited liability in the jurisdictions where the Company conducts its operations, (iii) all instruments requiring execution by the Members or any of them and that either Managing Member deems appropriate to reflect the substitution of Transferees as Substituted Members pursuant to Section 9.7, and (iv) all conveyances and other instruments deemed necessary or advisable by either Managing Member to effect the dissolution and termination of the Company in accordance with this Agreement.
(b) The powers of attorney granted pursuant to this Section 12.17 are coupled with an interest and will be irrevocable and survive and not be affected by the subsequent death, incapacity, disability, Bankruptcy or dissolution of the grantor; may be exercised by either Managing Member either by signing separately as attorney-in-fact for each Member or by either Managing Member acting as attorneys-in-fact for all of them; and will survive the delivery of an assignment by a Member of the whole or any fraction of its Interest, except that, where the whole of such Member’s Interest has been assigned in accordance with this Agreement, the power of attorney of the assignor will survive the delivery of that assignment for the sole purpose of enabling the Members to execute, acknowledge, swear to, deliver, record and file any instrument necessary or appropriate to effect such substitution. In the event of any conflict between this Agreement and any document, instrument, conveyance or certificate executed or filed by either Managing Member pursuant to such power of attorney, this Agreement controls.
 
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(c) Each Member shall execute and deliver to either Managing Member, within 5 days after the receipt of Managing Member’s request, any further designations, powers of attorney and other instruments that either Managing Member deems necessary or appropriate.
12.18 Time of Essence . Time is of the essence in the performance of each and every term of this Agreement.
12.19 Partnership for Tax Purposes . The Company must be treated as a partnership for tax purposes under U.S. federal, state and local income tax laws. Neither the Company nor any of its Members may take any action or position or make any election for U.S. federal, state or local income tax purposes, in a tax return or otherwise, that is inconsistent with the classification of the Company as a partnership for U.S. federal, state and local income tax purposes, including any election under Treasury Regulations Section 301.7701-3 to treat the Company as a corporation for U.S. federal income tax purposes.
12.20 Property Management Agreement . This Agreement shall not alter, limit, waive or otherwise modify any of the rights, remedies or obligations of the parties to the Property Management Agreement as set forth therein. Furthermore, any default by Hyatt under the terms of this Agreement shall not be deemed a default under the Property Management Agreement, and vice versa.
12.21 Acquisition Mortgage Loan . Each member of the Whitehall Group acknowledges that an Affiliate of Hyatt is an Acquisition Mortgage Lender, and agrees that this Agreement shall not alter, limit, waive or otherwise modify any of the rights, remedies or obligations of the parties to the documents evidencing the Acquisition Mortgage Loan as set forth therein.
 
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Limited Liability Company Agreement as of the day and year first above written.

W2007 FINANCE SUB, LLC , a Delaware limited liability company	
		
By:	 	WHITEHALL STREET GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007, its managing member	
		
By:	 	WH ADVISORS, L.L.C. 2007, its General Partner	
		
By:	 	/s/    Roy Lapinus	
Name:	 	Roy Lapinus	
Title:	 		
	
WHITEHALL PARALLEL GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007 , a Delaware limited partnership	
		
By:	 	WH PARALLEL ADVISORS, L.L.C. 2007, its General Partner	
		
By:	 	/s/    Roy Lapinus	
Name:	 	Roy Lapinus	
Title:	 		
	
HYATT CORPORATION, a Delaware corporation	
		
By:	 	/s/    Mark Hoplamazian	
Name:	 	Mark Hoplamazian	
Title:	 	CEO	

SCHEDULE 1
Legal Description of the Property
-ITEM I:-
TAX MAP KEY (1) 2-6-023-011
TAX MAP KEY  (1) 2-6-023-010
(A)
LEASE
LESSOR: BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation
LESSEE: HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership

DATED:	 	May 3, 1974	
FILED:	 	Land Court Document No. 678622	
RECORDED:	 	Liber 9879 Page 324	
TERM:	 	seventy-three (73) years and ten (10) months commencing March 1, 1974 and terminating at midnight, December 31, 2047	
Said above Lease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789469, recorded in Liber 11803 at Page 264.
THE LESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED
ASSIGNOR: AZABU BUILDINGS CO., LTD., a Japan corporation, Debtor and Debtor-in-Possession in those certain proceedings entitled In re Azabu Buildings Co., Ltd., Bk. Case No. 05-50011, United States Bankruptcy Court for the District of Hawaii
ASSIGNEE: AZABU NEWCO, INC., a Delaware corporation

DATED:	 	July 14, 2008	
FILED:	 	Land Court Document No. 3769130	
RECORDED:	 	Document No. 2008-112671	
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
(B)

SUBLEASE
SUBLESSOR: HEMMETER INVESTMENT COMPANY
SUBLESSEE: HEMMETER CENTER CORP.

DATED:	 	May 3, 1974	
FILED:	 	Land Court Document No. 678623	
RECORDED:	 	Liber 9879 Page 361	
TERM:	 	seventy-three (73) years and ten (10) months less one (1) day commencing March 1, 1974, and terminating midnight, December 30, 2047	
Said Sublease was amended and supplemented by instrument dated November 16, 1976, filed as Land Court Document No. 789470, recorded in Liber 11803 at Page 274.
The Sublessee’s interest by mesne assignments assigned to AZABU NEWCO, INC., a Delaware corporation, by instrument dated July 14, 2008, filed as Land Court Document No. 3769130, recorded as Document No. 2008-112671.
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
Said Lease and Sublease, as amended, demising the following described premises:
-FIRST:-
All of those certain parcels of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOTS: C, area 16,804 square feet, and
D, area 651 square feet, more or less,
as shown on Map 4, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1677 of Matson Navigation Company;
As to Lot C, together with access over Lot D to a public highway, as set forth by Land Court Order No. 13415, filed January 6, 1955.
Being land(s) described in Transfer Certificate of Title No. 404,048 issued to C.K. (NEVADA) LLC, a Nevada limited liability company.
-SECOND:-
All of those certain parcels of land situate at Kalia, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOTS 45 and 54 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an aggregate area of 10,000 square feet, more or less.

-ITEM II:-
TAX MAP KEY (1) 2-6-023-005
(A)
LEASE
LESSOR: HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and HARRY STEINER, Trustees under the Will of James Steiner, deceased,
LESSEE : HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership,

DATED:	 	October 9, 1975	
FILED:	 	Land Court Document No. 737643	
TERM:	 	commencing October 9, 1975 and terminating at midnight, December 31, 2047	
THE LESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED
ASSIGNOR: AZABU BUILDINGS CO., LTD., a Japan corporation, Debtor and Debtor-in-Possession in those certain proceedings entitled In re Azabu Buildings Co., Ltd., Bk. Case No. 05-50011, United States Bankruptcy Court of the District of Hawaii
ASSIGNEE: AZABU NEWCO, INC., a Delaware corporation

DATED:	 	July 14, 2008	
FILED:	 	Land Court Document No. 3769130	
RECORDED:	 	Document No. 2008-112671	
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
(B)
SUB-SUBLEASE
SUB-SUBLESSOR: BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA
SUB-SUBLESSEE: BANKERS LIFE INSURANCE COMPANY OF NEBRASKA

DATED:	 	October 9, 1975	
FILED:	 	Land Court Document No. 737647	
TERM:	 	seventy-two years commencing October 9, 1975, and terminating midnight, December 29, 2047	

Said Sub-Sublease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789466.
The Sub-Sublessee’s interest by mesne assignments assigned to AZABU NEWCO, INC., a Delaware corporation, by instrument dated July 14, 2008, filed as Land Court Document No. 3769130, recorded as Document No. 2008-112671.
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
Said Lease and Sub-Sublease, as amended, demising the following described premises:
All of that certain parcel of land situate on the northeast side of Kalakaua Avenue at Kapuni and Uluniu, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOT 1, area 10,000 square feet, more or less, as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1840 of Harry Steiner and Hawaiian Trust Company, Limited, Trustees under the Will and of the Estate of James Steiner, deceased;
Being land(s) described in Transfer Certificate of Title No. 497,237 issued to 2424 KALAKAUA ASSOCIATES, a Hawaii limited partnership.
-ITEM III:-
TAX MAP KEY (1) 2-6-023-077
TAX MAP KEY (1) 2-6-023-009
TAX MAP KEY (1) 2-6-023-078
TAX MAP KEY (1) 2-6-023-080
TAX MAP KEY (1) 2-6-023-012
(A)
SUBLEASE
SUBLESSOR: BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation
SUBLESSEE: HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership

DATED:	 	May 3, 1974	
FILED:	 	Land Court Document No. 678620	
RECORDED:	 	Liber 9879 Page 60	
TERM:	 	seventy-five (75) years less one (1) day, commencing January 1, 1973, and terminating at midnight, December 30, 2047	

Said Sublease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789461, recorded in Liber 11803 at Page 219.
THE SUBLESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED
ASSIGNOR: AZABU BUILDINGS CO., LTD., a Japan corporation, Debtor and Debtor-in-Possession in those certain proceedings entitled In re Azabu Buildings Co., Ltd., Bk. Case No. 05-50011, United States Bankruptcy Court for the District of Hawaii
ASSIGNEE: AZABU NEWCO, INC., a Delaware corporation

DATED:	 	July 14, 2008	
FILED:	 	Land Court Document No. 3769130	
RECORDED:	 	Document No. 2008-112671	
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
(B)
SUB-SUBLEASE
SUB-SUBLESSOR: HEMMETER INVESTMENT COMPANY
SUB-SUBLESSEE: HEMMETER CENTER CORP.

DATED:	 	May 3, 1974	
FILED:	 	Land Court Document No. 678621	
RECORDED:	 	Liber 9879 Page 116	
TERM:	 	seventy-five (75) years less two (2) days, commencing January 1, 1973, and terminating midnight, December 29, 2047	
Said Sub-Sublease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789463, recorded in Liber 11803 at Page 231.
The Sub-Sublessee’s interest by mesne assignments assigned to AZABU NEWCO, INC., a Delaware corporation, by instrument dated July 14, 2008, filed as Land Court Document No. 3769130, recorded as Document No. 2008-112671.
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.

Said Sublease and Sub-Sublease, as amended, demising the following described premises:
-FIRST:-
All of those certain parcels of land situate on the Northeast side of Kalakaua Avenue at Kapuni and Uluniu, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOTS: 2, area 9,350 square feet,
3, area 7,650 square feet,
4, area 40,000 square feet,
5, area 5,000 square feet,
6, area 5,000 square feet, and
7, area 5,000 square feet, more or less,
as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1840 of Harry Steiner and Hawaiian Trust Company, Limited, Trustees under the Will and of the Estate of James Steiner, deceased;
Being land(s) described in Transfer Certificate of Title No. 497,237 issued to 2424 KALAKAUA ASSOCIATES, a Hawaii limited partnership.
-SECOND:-
All of that certain parcel of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOT 47 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 5,000 square feet, more or less.
-ITEM IV:-
TAX MAP KEY (1) 2-6-023-006
(A)
SUBLEASE
SUBLESSOR: BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation
SUBLESSEE: HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership

			
DATED:	 	May 3, 1974	
RECORDED:	 	Liber 9879 Page 223	
TERM:	 	seventy-four (74) years and one (1) month less two (2) days commencing on December 1, 1973, and ending on December 29, 2047	
Said Sublease was amended by instrument dated November 16, 1976, recorded in Liber 11803 at Page 245.
THE SUBLESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED
ASSIGNOR: AZABU BUILDINGS CO., LTD., a Japan corporation, Debtor and Debtor-in-Possession in those certain proceedings entitled In re Azabu Buildings Co., Ltd., Bk. Case No. 05-50011, United States Bankruptcy Court for the District of Hawaii
ASSIGNEE: AZABU NEWCO, INC., a Delaware corporation

DATED:	 	July 14, 2008	
FILED:	 	Land Court Document No. 3769130	
RECORDED:	 	Document No. 2008-112671	
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.
(B)
SUB-SUBLEASE
SUB-SUBLESSOR: HEMMETER INVESTMENT COMPANY
SUB-SUBLESSEE: HEMMETER CENTER CORP.

DATED:	 	May 3, 1974	
RECORDED:	 	Liber 9879 Page 277	
TERM:	 	seventy-four (74) years and one (1) month less three (3) days commencing on December 1, 1973, and ending on December 28, 2047	
Said Sub-Sublease was amended by instrument dated November 16, 1976, recorded in Liber 11803 at Page 253.
The Sub-Sublessee’s interest by mesne assignments assigned to AZABU NEWCO, INC., a Delaware corporation, by instrument dated July 14, 2008, filed as Land Court Document No. 3769130, recorded as Document No. 2008-112671.
NOTE – Azabu Newco, Inc., a Delaware corporation, is now known as W2007 WKH Owner, LLC, a Delaware limited liability company, as set forth by Certificate of Merger filed as Land Court Document No. 3775264, and Affidavit recorded as Document No. 2008-121841.

Said Sublease and Sub-Sublease, as amended, demising the following described premises:
All of those certain parcels of land situate at the corner of Uluniu and Koa Avenues at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOTS 77, 78 and 79 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 15,000 square feet, more or less, said lots having a frontage on Koa Avenue of 150 feet, a frontage on Uluniu Avenue of 100 feet and a depth along Lot 80 of 100 feet and a width along Lots 84, 85 and 86 of 150 feet.

SCHEDULE 2.6
Names and Addresses of Members and Counsel

Managing Members :	
	
W2007 Finance Sub, LLC and	
Whitehall Parallel Global Real Estate Limited Partnership 2007
c/o Whitehall Street Global Real Estate Limited Partnership 2007
85 Broad Street
New York, New York 10004-2456	
Attention:	 	Whitehall Chief Financial Officer, Whitehall General Counsel	
Telephone:	 	(212) 902-1000	
Facsimile:	 	(212) 357-5505	
		
Counsel:	 		
	
Anthony J. Colletta, Esq.
Sullivan & Cromwell LLP	
125 Broad Street
New York, New York 10004-2498	
Telephone:	 	(212) 558-4608	
Facsimile:	 	(212) 291-9029	
		
Hyatt:	 		
	
Hyatt Corporation	
71 South Wacker Drive, 12 th Floor	
Chicago, Illinois 60606	
Attention:	 	General Counsel	
Telephone:	 	(312) 780-5816	
Facsimile:	 	(312) 780-5282	
		
Counsel:	 		
	
Stephen G. Tomlinson, P.C., and
Gary E. Axelrod, Esq.	
Kirkland & Ellis LLP	
200 E. Randolph Drive	
Chicago, Illinois 60601	
Telephone:	 	(312) 861-2000	
Facsimile:	 	(312) 861-2200	

SCHEDULE 3.4
Representatives of the Members
Representatives of Hyatt
Charles Ephraim
Tiffany Leadbetter
Representatives of the Managing Members
Roy Lapidus
Alan S. Kava
Steven Angel

SCHEDULE 3.7
Post-Property Closing Organizational Structure

SCHEDULE 6.1(a)
Capital Contributions of the Members

Member	  	Capital Contributions
and Capital Account
as of July      , 2008	  	Property Closing
Date Capital
Contributions 1	 	
Finance Sub	  	$	34,517,638.74	  	$	30,276,146.52	  	
			
Whitehall Parallel	  	$	1,126,861.26	  	$	988,393.70	  	
			
Hyatt	  	$	8,855,500.00	  	$	(1,445,953.22	) 	
			
Total	  	$	44,500,000.00	  	$	29,818,587.00	  	

1	The Members intend that this Schedule 6.1(a) will be modified at the time the Members make the following payments in accordance with their respective Percentage Interest as of the Property Closing Date: (i) the Deposit and (ii) the purchase price pursuant to the Acquisition Agreement.	

EXHIBIT A
FORM OF MEMBER LOAN NOTE

$[ — ]	  	[ — ], 200[ — ]	
FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF THE DEBTOR MEMBER], a [INSERT TYPE OF ENTITY] (the “ Maker ”), does hereby promise to pay to [INSERT NAME OF FUNDING MEMBER], a [INSERT TYPE OF ENTITY] (the “ Payee ”), or its order, at its offices in New York, New York, or such other address as may be duly designated by the holder of this Note, [ — ] ($[ — ]), with interest thereon at the rate equal to twenty-five percent (25%) per annum. The principal amount of the loan together with any interest thereon is payable on the Maturity Date (as defined below).
“ Business Day ” means a day upon which banks in New York City are not authorized or required by law to be closed.
“ Maturity Date ” means the earliest of the date on which (i) the final liquidating distribution by the Company and (ii) any sale of the Maker’s Interest is completed.
1. Capitalized terms used but not defined herein have the meaning set forth in the Second Amended and Restated Limited Liability Company Agreement (the “ LLC Agreement ”) of W2007 WKH Holdings, LLC (the “ Company ”), dated as of October 9, 2009.
2. Interest due on this Note is calculated on the basis of a 360-day year for the actual number of days elapsed prior to the Maturity Date and shall be compounded monthly.
3. This Note evidences a Member Loan made by Payee to Maker pursuant to Section 6.3 of the LLC Agreement. This Note may be prepaid at any time by the Maker in whole or in part at the election of the Maker, in an amount equal to the outstanding principal amount thereof plus accrued interest.
4. The Maker hereby authorizes the Company to (i) make any and all distributions that would otherwise be payable to the Maker by the Company pursuant to Articles 8 and 11 of the LLC Agreement and (ii) pay any and all proceeds which would otherwise be payable to the Maker from, and upon the closing of, any sale of the Maker’s Interest in the Company, directly to the Payee and any other Members that have made Member Loans to the Maker (to be split among them pro rata in accordance with the relative amounts of such Member Loans to the Maker) until such time as the obligations evidenced by this Note have been paid in full.

5. If the Maker fails to repay this Note on the Maturity Date, the Maker shall reimburse the holder of this Note for all of its costs and expenses incurred in enforcing this Note, including reasonable attorneys’ fees and expenses. The obligations of the Maker hereunder shall be recourse only to the Maker’s Interest in the Company.
6. This Note may be discharged, terminated, amended, supplemented or otherwise modified only by an instrument in writing signed by the party against which enforcement of such discharge, termination or modification is sought.
7. To the fullest extent permitted by law, the Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note and expressly agrees that, without in any way affecting the liability of the Maker hereunder, the holder hereof may extend the time for payment of any amount due hereunder, accept additional security, release any party liable hereunder or any security now or hereafter securing this Note, without in any other way affecting the liability and obligation of the Maker or any other person.
8. No failure by the holder hereof to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof will constitute a waiver of any such term or of any such breach. No waiver of any breach will affect or alter this Note, which will continue in full force and effect, nor will such waiver affect or alter the rights of the holder hereof with respect to any other then existing or subsequent breach. The acceptance by the holder hereof of any payment hereunder that is less than payment in full of all amounts due at the time of such payment will not, without the express written consent of the holder hereof: (i) constitute a waiver of the right to exercise any of such holder’s remedies at that time or at any subsequent time, (ii) constitute an accord and satisfaction, or (iii) nullify any prior exercise of any remedy.
9. No acceptance of a past due payment or indulgences granted from time to time may be construed (i) as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of such right of acceleration or of the right of the holder hereof thereafter to insist upon strict compliance with the terms of this Note, or (ii) to prevent the exercise of such right of acceleration or any other right granted hereunder or by law.
10. In case any one or more of the provisions of this Note are determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.
11. Nothing contained in this Note or elsewhere may be deemed or construed to create a partnership or joint venture between the holder hereof and the Maker or between the holder hereof and any other person, or cause the holder hereof to be responsible in any way for the debts or obligations of the Maker or any other person.

12. It is hereby expressly agreed that, if from any circumstances whatsoever, fulfillment of any provision of this Note, at the time performance of such provision will be due, violates any applicable usury statute or any other law, then ipso facto such provision will be conformed to comply with such statute or law. In no event shall the Maker be bound to pay for the use, forbearance or detention of the money lent pursuant hereto, interest of more than the current legal limit; the right to demand any such excess being hereby expressly waived by the holder hereof.
13. THIS NOTE IS MADE UNDER AND IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE-OF-LAW RULES.
14. Any legal action or proceeding with respect to this Note may be brought in any state or federal court located in the State of New York. By execution and delivery hereof, the Maker hereby accepts for itself and in respect of property, generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing herein, however, shall affect the right of the holder hereof to commence legal proceedings or otherwise proceed against Maker in any other jurisdiction.
15. WITH RESPECT TO ANY SUCH LEGAL ACTION OR PROCEEDING, THE MAKER HEREBY IRREVOCABLY WAIVES TRIAL BY JURY, AND THE MAKER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS. SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE MADE BY THE PAYEE ON THE MAKER BY MAILING A COPY OF THE SUMMONS AND ANY COMPLAINT TO THE MAKER, BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT WHITEHALL STREET GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007, 85 BROAD STREET, NEW YORK, NEW YORK 10004-2456, ATTENTION: WHITEHALL CHIEF FINANCIAL OFFICER, WHITEHALL GENERAL COUNSEL, SUCH PERSONS BEING HEREBY AUTHORIZED AND APPOINTED AS AGENT FOR SERVICE OF PROCESS BY MAKER.

IN WITNESS WHEREOF, the Maker has caused this instrument to be duly executed on the date in the year first above written.

MAKER:	
	
[INSERT NAME OF MAKER]	
		
By:	 	 	
Name:	 		
Title:	 		

EXHIBIT B
FORM OF REIMBURSEMENT AGREEMENT
This Reimbursement Agreement, dated as of [              ], 200    (this “ Agreement ”), is made by and among W2007 Finance Sub, LLC, a Delaware limited liability company (“ Finance Sub ”), Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“ Whitehall Parallel ” and, together with Finance Sub and any of Sister Whitehall Funds that become Members pursuant to Section 9.4(a) of the LLC Agreement, the “ Whitehall Members ”) and Hyatt Corporation, a Delaware corporation (“ Hyatt ”; and, together with the Whitehall Members, the “ Members ”).
W I T N E S E T H:
WHEREAS, the Members formed W2007 WKH Holdings, LLC a Delaware limited liability company (the “ Company ”), in accordance with the statutes and laws of the State of Delaware, and the Members entered into a Second Amended and Restated Limited Liability Company Agreement, dated as of October 9, 2009 (the “ LLC Agreement ”; capitalized terms used but not defined herein shall have the meaning given such terms in the LLC Agreement);
WHEREAS, pursuant to the terms of Section 6.7 of the LLC Agreement, one or more of the Members and/or any of their respective Affiliates (on behalf of the Members) selected by the Members (any Member or Affiliate thereof that acts as such guarantor, a “ Recourse Guarantor ”;), may provide a Recourse Carveout Guaranty in connection with the initial acquisition financing (and any refinancing thereto) to the Companies and/or its Subsidiaries;
WHEREAS, each of Hyatt, on the one hand, and the Whitehall Members, on the other hand (as applicable, the “ Reimbursement Party ”) agrees pursuant to the terms of this Agreement and Section 6.7 of the LLC Agreement, to reimburse the other (on behalf of the Recourse Guarantor) for any payments made under any Recourse Carveout Guaranty by a Guarantor in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:
1. Guaranty Reimbursement .
(a) If, at any time, a Recourse Guarantor makes a payment (the amount of any such payment, the “ Funded Amount ”) under a Recourse Carveout Guaranty then, within

five (5) Business Days after the later of (i) the payment of such Funded Amount by such Recourse Carveout Guaranty Guarantor and (ii) the Reimbursement Party receiving notice of the payment of such Funded Amount by such Recourse Carveout Guaranty Guarantor, then, subject to Section 1(c) below, the applicable Reimbursement Party shall reimburse the Recourse Guarantor an amount equal to its then Percentage Interest of the Funded Amount.
(b) All amounts required to be reimbursed by the Reimbursement Party under this Agreement shall be payable in immediately available funds and any failure by the Reimbursement Party to timely pay any amount due hereunder shall have the consequences described in the LLC Agreement.
(c) To the extent that any payment made under a Recourse Carveout Guaranty by a Recourse Guarantor is due to the gross negligence, willful misconduct, bad faith, fraud, misappropriation or any other criminal act by such Recourse Guarantor or any Affiliate thereof, then the Reimbursement Parties shall have no obligation to reimburse the Recourse Guarantor for any of the Funded Amount, and the Recourse Guarantor shall be liable for the entire Funded Amount without any rights or obligations against the Company, any of its Subsidiaries, any of the Members or any Reimbursement Party.
(d) To the extent that any payment made under a Recourse Carveout Guaranty by a Recourse Guarantor is due to the gross negligence, willful misconduct, bad faith, fraud, misappropriation or any other criminal act by a Reimbursement Party or any Affiliate thereof, the Reimbursement Party shall be liable to reimburse the Recourse Guarantor for the entire Funded Amount and not only the Percentage Interest of such Funded Amount.
2. Obligations Unconditional . The reimbursement obligations of each Reimbursement Party hereunder are absolute, irrevocable and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the obligation giving rise to the payment of the Funded Amount or any agreement or instrument relating thereto, or any substitution, release or exchange of any other guarantee of or security for any obligation, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; it being the intent of the parties hereto that such obligations shall be absolute and unconditional under any and all circumstances. With respect to its obligations hereunder, the Reimbursement Party hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any other party exhaust any right, power or remedy or proceed against any Person.
3. Reinstatement . The obligations of the Reimbursement Party hereunder shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of such Reimbursement Party in respect of any obligation hereunder is rescinded or must be otherwise restored by the Person receiving such payment, whether as a result of any proceedings in bankruptcy or reorganization or otherwise.

4. Governing Law . THIS AGREEMENT IS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
5. Consent to Jurisdiction . WITH RESPECT TO ANY SUCH LEGAL ACTION OR PROCEEDING, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY, AND HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTIONS.
6. Invalidity . Every provision of this Agreement is intended to be severable. The invalidity and unenforceability of any particular provision of this Agreement in any jurisdiction shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.
7. Waivers . No waiver of any provision hereof by any party hereto shall be deemed a waiver by any other party nor shall any such waiver by any party be deemed a continuing waiver of any matter by such party.
8. Notices . Any notice or demand which is made hereunder shall be delivered in accordance with Section 12.2 of the LLC Agreement.
9. Assignment; Successors and Assigns; No Third-Party Rights . No party may assign its rights nor delegate its obligations under this Agreement, in whole or in part, without the prior written consent of each party hereto. This Agreement shall be binding upon the permitted successors and assigns of the parties hereto and shall inure to the benefit of each party and its successors and assigns. Nothing expressed or referred to in this Agreement will be construed to give any person other than the parties to this Agreement and any Recourse Carveout Guaranty Guarantor any legal or equitable right, remedy or claim under or with respect to 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 to this Agreement, the Recourse Carveout Guaranty Guarantor and their respective successors and permitted assigns and no other Person.
10. Amendments . This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
11. Counterparts . This Agreement may be executed by facsimile in two or more counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one Agreement.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement on the date first above written.

W2007 FINANCE SUB, LLC , a Delaware limited liability company	
		
By:    	 	WHITEHALL STREET GLOBAL REAL
ESTATE LIMITED PARTNERSHIP 2007,
its managing member	
		
By:	 	WH ADVISORS, L.L.C. 2007, its
General Partner	
			
	 	By:	 	 	
	 	Name:	 		
	 	Title:	 		
	
WHITEHALL PARALLEL GLOBAL REAL ESTATE LIMITED PARTNERSHIP 2007 , a Delaware limited partnership	
		
By:	 	WH PARALLEL ADVISORS, L.L.C. 2007,
its General Partner	
			
	 	By:	 	 	
	 	Name:	 		
	 	Title:	 		
	
HYATT CORPORATION, a Delaware
corporation	
		
By:	 	 	
	 	Name:	 		
	 	Title:	 		

Exhibit 10.44

 
SENIOR LOAN AGREEMENT
Dated as of July 16, 2008
Between
W2007 WKH SENIOR BORROWER, LLC,
as Borrower
and
SDI, INC.,
as Lender

 

							
I.	  	DEFINITIONS; PRINCIPLES OF CONSTRUCTION	  	1	
				
	  	Section 1.1	  	Definitions	  	1	
				
	  	Section 1.2	  	Principles of Construction	  	31	
			
II.	  	GENERAL TERMS	  	31	
				
	  	Section 2.1	  	Loan Commitment; Disbursement to Borrower; Term	  	31	
				
	  	Section 2.2	  	Interest; Loan Payments; Late Payment Charge	  	33	
				
	  	Section 2.3	  	Prepayments	  	38	
				
	  	Section 2.4	  	Interest Rate Cap Agreement	  	40	
				
	  	Section 2.5	  	Release on Payment in Full	  	42	
			
III.	  	CASH MANAGEMENT	  	42	
				
	  	Section 3.1	  	Establishment of Accounts	  	42	
				
	  	Section 3.2	  	Deposits into Collection Account and Lockbox Account	  	43	
				
	  	Section 3.3	  	Account Name	  	44	
				
	  	Section 3.4	  	Eligible Accounts	  	44	
				
	  	Section 3.5	  	Permitted Investments	  	44	
				
	  	Section 3.6	  	The Initial Deposits	  	45	
				
	  	Section 3.7	  	Transfers to and Disbursements from Collection Account and Lockbox Account	  	45	
				
	  	Section 3.8	  	Withdrawals from Subaccounts	  	46	
				
	  	Section 3.9	  	Sole Dominion and Control	  	46	
				
	  	Section 3.10	  	Security Interest	  	46	
				
	  	Section 3.11	  	Rights on Default	  	46	
				
	  	Section 3.12	  	Financing Statement; Further Assurances	  	47	
				
	  	Section 3.13	  	Borrower’s Obligation Not Affected	  	47	
				
	  	Section 3.14	  	Payments Received Under This Agreement	  	47	
				
	  	Section 3.15	  	Waiver of Funding of Reserve Funds	  	47	
				
	  	Section 3.16	  	Additional Escrows	  	48	
			
IV.	  	BORROWER REPRESENTATIONS AND WARRANTIES	  	48	
				
	  	Section 4.1	  	Borrower Representations	  	48	
				
	  	Section 4.2	  	Survival of Representations	  	71	
			
V.	  	BORROWER COVENANTS	  	71	
				
	  	Section 5.1	  	Affirmative Covenants	  	71	
				
	  	Section 5.2	  	Negative Covenants	  	93	

							
VI.	  	INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS	  	100	
				
	  	Section 6.1	  	Insurance	  	100	
				
	  	Section 6.2	  	Casualty	  	105	
				
	  	Section 6.3	  	Condemnation	  	105	
				
	  	Section 6.4	  	Restoration	  	106	
			
VII.	  	SUBACCOUNT FUNDS	  	111	
				
	  	Section 7.1	  	Ground Rent Escrow Fund	  	111	
				
	  	Section 7.2	  	Tax and Insurance Escrow Fund	  	112	
				
	  	Section 7.3	  	Debt Service Fund	  	113	
				
	  	Section 7.4	  	FF&E Reserve Fund	  	113	
				
	  	Section 7.5	  	Mezzanine Debt Service Fund	  	116	
				
	  	Section 7.6	  	Interest Reserve Fund	  	116	
				
	  	Section 7.7	  	Reserve Funds, Generally	  	117	
			
VIII.	  	DEFAULTS	  	118	
				
	  	Section 8.1	  	Event of Default	  	118	
				
	  	Section 8.2	  	Remedies	  	123	
				
	  	Section 8.3	  	Remedies Cumulative; Waivers	  	125	
				
	  	Section 8.4	  	Right to Cure Defaults	  	125	
				
	  	Section 8.5	  	Power of Attorney	  	125	
			
IX.	  	SPECIAL PROVISIONS	  	125	
				
	  	Section 9.1	  	Sale of Notes and Securitization	  	125	
				
	  	Section 9.2	  	Securitization Indemnification	  	128	
				
	  	Section 9.3	  	Servicer	  	131	
				
	  	Section 9.4	  	Full Recourse	  	131	
				
	  	Section 9.5	  	Mezzanine Financing	  	131	
				
	  	Section 9.6	  	Certain Additional Rights of Lender	  	133	
				
	  	Section 9.7	  	Intercreditor Agreement	  	134	
				
	  	Section 9.8	  	Third-Party Lender Refinancing	  	134	
				
	  	Section 9.9	  	Confidentiality	  	135	
			
X.	  	MISCELLANEOUS	  	135	
				
	  	Section 10.1	  	Survival	  	135	
				
	  	Section 10.2	  	Lender’s Discretion	  	136	
				
	  	Section 10.3	  	Governing Law	  	136	
 
ii

							
	  	Section 10.4	  	Modification, Waiver in Writing	  	136	
				
	  	Section 10.5	  	Delay Not a Waiver	  	137	
				
	  	Section 10.6	  	Notices	  	137	
				
	  	Section 10.7	  	Trial by Jury	  	138	
				
	  	Section 10.8	  	Headings	  	138	
				
	  	Section 10.9	  	Severability	  	138	
				
	  	Section 10.10	  	Preferences	  	139	
				
	  	Section 10.11	  	Waiver of Notice	  	139	
				
	  	Section 10.12	  	Remedies of Borrower	  	139	
				
	  	Section 10.13	  	Expenses; Indemnity	  	139	
				
	  	Section 10.14	  	Schedules and Exhibits Incorporated	  	141	
				
	  	Section 10.15	  	Offsets, Counterclaims and Defenses	  	141	
				
	  	Section 10.16	  	No Joint Venture or Partnership; No Third Party Beneficiaries	  	142	
				
	  	Section 10.17	  	Publicity	  	142	
				
	  	Section 10.18	  	Waiver of Marshalling of Assets	  	143	
				
	  	Section 10.19	  	Waiver of Counterclaim	  	143	
				
	  	Section 10.20	  	Conflict; Construction of Documents; Reliance	  	143	
				
	  	Section 10.21	  	Brokers and Financial Advisors	  	143	
				
	  	Section 10.22	  	Prior Agreements	  	144	
				
	  	Section 10.23	  	Successors and Assigns	  	144	
SCHEDULES:
Schedule I – The Land
Schedule II – Organizational Chart of Borrower
Schedule III – Ground Leases and Operating Lease
Schedule IV – Hotel Management Agreement
Schedule V – Mezzanine Loan Documents
Schedule VI – Permitted Encumbrances
Schedule VII – Current Material Agreements
Schedule VIII – Qualified King’s Village Managers
Schedule IX – Qualified Managers
Schedule X – Form of Mortgage
Schedule XI – Title Endorsements
Schedule XII – Form of Assignment of Leases and Rents
 
iii

SENIOR LOAN AGREEMENT
THIS SENIOR LOAN AGREEMENT , dated as of July 16, 2008 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Agreement”), between W2007 WKH SENIOR BORROWER, LLC , a Delaware limited liability company, having its principal place of business at c/o Whitehall Street Global Real Estate Limited Partnership 2007, c/o Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, Attention: Whitehall Chief Financial Officer (“Borrower”), and SDI, INC. , a Nevada corporation, having its principal place of business at 71 South Wacker Drive, Chicago, Illinois 60606, 12th Floor, Attention: General Counsel (“Lender”).
WITNESSETH:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in accordance with the terms of this Agreement and the other Loan Documents (as hereinafter defined).
NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Agreement, the parties hereto hereby covenant, agree, represent and warrant as follows:
 
 	I.	DEFINITIONS; PRINCIPLES OF CONSTRUCTION	
Section 1.1 Definitions .
For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:
“Acceptable Counterparty” means any Counterparty to the Interest Rate Cap Agreement that has and shall maintain, until the expiration of the applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than “AA-” (or the equivalent) by the Rating Agencies.
“Account Collateral” shall mean: (i) the Accounts, and all Cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in the Accounts from time to time; (ii) any and all amounts invested in Permitted Investments; (iii) all interest, dividends, Cash, instruments and other property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing; (iv) all accounts receivable of Borrower and each Owner Party; and (v) to the extent not covered by clauses (i) - (iv) above, all “proceeds” (as defined under the UCC) of any or all of the foregoing.
“Accounts” shall mean all reserve, escrow and security accounts and subaccounts which have been or may be established by the Loan Documents.

“Acknowledgement of Hotel Manager” shall mean that certain Subordination, Non-Disturbance and Attornment Agreement, dated as of the date hereof, between Lender and Hotel Manager, with the Owner Parties as joinder parties, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Acknowledgement of King’s Village Manager” shall mean that certain Subordination, Non-Disturbance and Attornment Agreement, between Lender and King’s Village Manager, to be entered into at such time, if any, that there is a separate King’s Village Management Agreement and Hotel Management Agreement, as such Acknowledgement of King’s Village Manager may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Acknowledgement of Manager” shall mean that certain Subordination, Non-Disturbance and Attornment Agreement, between Lender and the then Manager, to be entered into at such time, if any, that there is a separate Management Agreement and Hotel Management Agreement, as such Acknowledgment of Manager may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Acquisition Agreement” shall mean that certain Acquisition Agreement, entered into as of February 7, 2007, between Azabu Buildings Company, Ltd. a/k/a Azabu Tatemono K.K. and Hyatt Corporation, as amended through the date hereof and as may be further amended, restated, replaced, supplemented or otherwise modified from time to time.
“Act” shall have the meaning set forth in Section 4.1.34(v) hereof.
“Additional Indemnified Liabilities” shall have the meaning set forth in Section 10.13(b) hereof.
“Adjusted Prime Rate” shall mean an interest rate per annum equal to the Prime Rate in effect from time to time plus the Prime Rate Spread.
“Administrative Fee” shall have the meaning set forth in Section 2.2.1(b) hereof.
“Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by or is under common control with such Person or is a director or officer of such Person or of an Affiliate of such Person. Such term, as it relates to Borrower, shall include each Guarantor unless otherwise specified or if the context may otherwise require.
“Affiliated Loans” shall have the meaning set forth in Section 5.1.10(n) hereof.
“Affiliated Manager” shall mean any Manager or King’s Village Manager that is an Affiliate of, or in which any Loan Party or an Affiliate thereof has, directly or indirectly, any legal, beneficial or economic interest.
“ALTA” shall mean American Land Title Association, or any successor thereto.
 
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“Annual Budget” shall mean the operating budget, including all planned Capital Expenditures, for the Property prepared by Borrower for the applicable Fiscal Year or other period.
“Applicable Interest Rate” shall mean (i) when LIBOR is applicable to the Loan, a rate per annum equal to 30-day LIBOR plus the Spread, and (ii) when LIBOR is not applicable to the Loan, the Prime Rate plus the Prime Rate Spread.
“Applicable Laws” shall mean all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations and court orders.
“Appraisal” shall mean an appraisal prepared in accordance with the requirements of FIRREA and USPAP, prepared by an independent third party appraiser holding an MAI designation, who is state licensed or state certified if required under the laws of the state where the Property is located, who meets the requirements of FIRREA and USPAP and who is otherwise satisfactory to Lender.
“Approved Accountant” shall mean a “Big Four” accounting firm or other independent certified public account acceptable to Lender.
“Approved Annual Budget” shall have the meaning set forth in Section 5.1.10(e) hereof.
“Assignment of Agreements” shall mean that certain Assignment of Agreements, Permits and Contracts, dated as of the date hereof, from one or more of the Owner Parties to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Assignment of Hotel Management Agreement” shall mean that certain Assignment of Hotel Management Agreement, dated as of the date hereof, from FF&E Subsidiary and King’s Village Subsidiary to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Assignment of Interest Rate Cap” shall mean that certain Collateral Assignment of Interest Rate Cap Agreement made by Borrower to Lender, dated promptly after the execution and delivery hereof, required by this Agreement as security for the Loan, consented to by the Counterparty, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Assignment of King’s Village Management Agreement” shall mean that certain Assignment of King’s Village Management Agreement, among Lender, King’s Village Subsidiary and King’s Village Manager, to be entered into at such time, if any, that there is a separate Hotel Management Agreement and King’s Village Management Agreement, as such Assignment of King’s Village Management Agreement may be amended, restated, replaced, supplemented or otherwise modified from time to time.
 
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“Assignment of Leases” shall mean that certain first priority Assignment of Leases and Rents, dated as of the date hereof, from one or more of the Owner Parties, as assignor, to Lender, as assignee, assigning to Lender all of such Owner Parties’ interest in and to the Leases and Rents of the Property as security for their respective obligations under the Debt Guaranty, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Assignment of Management Agreement” shall mean that certain Conditional Assignment of Management Agreement among Lender, FF&E Subsidiary and the then Manager, to be entered into at such time, if any, that there is a separate Hotel Management Agreement and Management Agreement, as such Assignment of Management Agreement may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Award” shall mean any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of the Property.
“Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq. , and the regulations adopted and promulgated pursuant thereto (as the same may be amended from time to time).
“Borrower” shall have the meaning set forth in the introductory paragraph hereto, together with their successors and assigns, as may be permitted hereunder.
“Borrower Pledge Agreement” shall mean that certain Pledge and Security Agreement, dated as of the date hereof, executed and delivered by Borrower to Lender, as security for the Loan, as it may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Borrower’s LLC Agreement” shall have the meaning set forth in Section 4.1.34(v) hereof.
“Borrower’s Organizational Documents” shall mean the Organizational Documents of Borrower.
“Breakage Costs” shall have the meaning set forth in Section 2.2.3(d) hereof.
“Business Day” shall mean any day other than a Saturday, Sunday or any other day on which national banks in New York, New York are not open for business.
“Business Party” shall have the meaning set forth in Section 4.1.34(t) hereof.
“Capital Expenditures” shall mean, for any period, the amount expended with respect to the Property for items capitalized under GAAP (including expenditures for building improvements or major repairs, leasing commissions and tenant improvements).
“Cash” shall mean coin or currency of the United States of America or immediately available federal funds, including such funds delivered by wire transfer.
“Casualty” shall have the meaning set forth in Section 6.2 hereof.
 
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“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii) hereof.
“Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv) hereof.
“Closing Date” shall mean the date of the funding of the Loan.
“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended from time to time, and any successor statutes thereto, and all applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.
“Collateral” shall mean the “Collateral” as defined in any of the Pledge Agreements and all other collateral for the Loan granted in the Loan Documents.
“Collection Account” shall have the meaning set forth in Section 3.1 hereof.
“Collection Account Agreement” shall have the meaning set forth in Section 3.1 hereof.
“Collection Account Bank” shall mean Bank of Hawaii.
“Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the result or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain, of all or any part of the Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Property or any part thereof.
“Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
“Control” (and the correlative terms “controlled by,” “control of” and “controlling”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of the business and affairs of the entity in question by reason of the ownership of beneficial interests, by contract or otherwise.
“Counterparty” shall mean NatIXIS Financial Products Inc. or any other Person which is the issuer of the Interest Rate Cap Agreement.
“Covered Disclosure Information” shall have the meaning set forth in Section 9.2(b) hereof.
“Creditors Rights Laws” shall mean with respect to any Person, any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to its debts or debtors.
“Debt” shall mean the outstanding principal amount of the Loan set forth in, and evidenced by, this Agreement and the Note, together with all interest accrued and unpaid thereon, and all other sums due to Lender in respect of the Loan under the Note, this Agreement, the Pledge Agreements or any other Loan Document.
 
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“Debt Guaranty” shall mean that certain Debt Guaranty, dated as of the date hereof, made by the Owner Parties in favor of Lender, pursuant to which each of the Owner Parties guarantees to Lender the performance by Borrower of all of its obligations under the Loan Documents.
“Debt Service” shall mean, with respect to any particular period of time, interest payments due under the Note for such period.
“Debt Service Account” shall have the meaning set forth in Section 3.1(c) hereof.
“Debt Service Fund” shall have the meaning set forth in Section 7.4 hereof.
“Debt Service Coverage Ratio” shall mean a ratio in which:
(a) the numerator is the Net Operating Income for the 12 full calendar month period preceding the date of calculation as set forth in the financial statements required hereunder; and
(b) the denominator is the aggregate amount of Debt Service on the principal amount of the Loan then outstanding which would be due and payable for such 12 full calendar month period, calculated at an interest rate equal to the Applicable Interest Rate.
“Default” shall mean the occurrence of any event hereunder or under any other Loan Document which, but for the giving of notice or passage of time, or both, would constitute an Event of Default.
“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of (a) the Maximum Legal Rate, or (b) four percent (4%) above the Applicable Interest Rate.
“Disclosure Document” shall have the meaning set forth in Section 9.2(a) hereof.
“Eligible Account” shall mean a separate and identifiable account from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or state-chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state-chartered depository institution or trust company, is subject to regulations substantially similar to 12 C.F.R.§9.10(b), having in either case a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal and state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” shall mean a depository institution or trust company, insured by the Federal Deposit Insurance Corporation, (a) the short term unsecured debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s and F-1 by Fitch in the case of accounts in which funds are held for thirty (30) days or less, or (b) the long term unsecured debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s in the case of accounts in which funds are held for more than thirty (30) days.
 
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“Embargoed Person” shall have the meaning set forth in Section 4.1.43 hereof.
“Environmental Indemnity” shall mean that certain Environmental Indemnity Agreement, dated as of the date hereof, executed by Borrower, Hyatt Guarantor and Whitehall Guarantor in connection with the Loan for the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Environmental Law” shall mean any federal, state and local laws, statutes, ordinances, rules, regulations, standards, policies and other government directives or requirements, as well as common law, that, at any time, apply to Borrower or any Owner Party or the Property or to the operations of Borrower or any Owner Party relating thereto and relate to Hazardous Materials, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act and the Resource Conservation and Recovery Act.
“Environmental Liens” shall have the meaning set forth in Section 5.1.19(a) hereof.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.
“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.
“Exchange Act” shall have the meaning set forth in Section 9.2(a) hereof.
“Exchange Act Filing” shall have the meaning set forth in Section 9.2(a) hereof.
“Extended Maturity Date” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Extension Option” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Extension Term” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Fee Estate” shall mean, with respect to any Ground Lease, the fee interest of the lessor under such Ground Lease, and the leasehold estate(s), if any, which may be superior to such Ground Lease, in the land and the improvements demised under such Ground Lease.
“Fee Owner” shall mean, with respect to any Ground Lease, the owner of the related Fee Estate or Fee Estates.
“FF&E” shall mean collectively all furniture, furnishings, fixtures, “Soft Goods” (all fabric, textile and flexible plastic products (not including items which are classified as “Fixed Asset Supplies” under the uniform System of Accounts) which are used in furnishing the Property, including, without limitation: carpeting, drapes, bedspreads, wall and floor coverings, mats, shower curtains and similar items), “Case Goods” (furniture and furnishings used in the Property, including, without limitation: chairs, beds, chests, headboards, desks, lamps, tables, television sets, mirrors, pictures, wall decorations and similar items), signage, audio-visual equipment, kitchen, restaurant and bar appliances and equipment, vehicles, carpeting and all equipment, including, without limitation, front desk and back-of-the house computer equipment, specialized hotel and spa equipment and recreational equipment.
 
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“FF&E Pledge Agreement” shall mean that certain Security Agreement, dated as of the date hereof, made by FF&E Subsidiary in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“FF&E Reserve Account” shall have the meaning set forth in Section 3.1(d) hereof.
“FF&E Reserve Fund” shall have the meaning set forth in Section 7.3 hereof.
“FF&E Reserve Monthly Deposit” means one-twelfth of the amount equal to the annual amounts required to be expended and/or reserved under the Hotel Management Agreement or the Management Agreement for FF&E for the Property, provided that if there is no such reserve under the Hotel Management Agreement or the Management Agreement, then an amount equal to four percent (4%) of the Gross Income from Operations for the prior calendar month.
“FF&E Subsidiary” shall mean W2007 WKH Hotel TRS, Inc., a Delaware corporation.
“Filer” shall have the meaning set forth in Section 9.2(b) hereof.
“Filer Group” shall have the meaning set forth in Section 9.2(b) hereof.
“FIRREA” means the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as the same may be amended from time to time.
“First Extension Option” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on December 31 during the term of the Loan.
“Fitch” shall mean Fitch, Inc.
“Flood Insurance Acts” shall have the meaning set forth in Section 6.1(a)(vii) hereof.
“GAAP” shall mean generally accepted accounting principles in the United States of America as of the date of the applicable financial report.
“Governmental Authority” shall mean any court, board, agency, commission, office, central bank or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city, country or otherwise) or quasi-governmental unit whether now or hereafter in existence.
“Gross Income from Operations” shall mean all income, computed in accordance with GAAP derived from the ownership and operation of the Property from whatever source, including, but not limited to, the Rents, utility charges, escalations, service fees or charges, license fees, parking fees, rent concessions or credits, and other required pass-throughs, but excluding sales, use and
 
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occupancy or other taxes on receipts required to be accounted for by the Owner Parties to any Governmental Authority, refunds and uncollectible accounts, sales of FF&E, Insurance Proceeds (other than business interruption or other loss of income insurance), Awards, Security Deposits, interest on credit accounts, utility and other similar deposits, payments received under the Interest Rate Cap Agreement, interest on credit accounts and interest on the Reserve Funds. Gross income shall not be diminished as a result of the Pledge Agreements or the creation of any intervening estate or interest in the Property or any part thereof.
“Ground Lease” shall mean, individually and collectively, as the context may require, each ground lease, lease, sublease and “overlease” described on Schedule III attached hereto and made a part hereof.
“Ground Lessor Consent” shall have the meaning set forth in Section 5.1.25 hereof.
“Ground Lessors” shall mean the ground lessors, lessors and sublessor under the Ground Leases.
“Ground Rent” shall have the meaning set forth in Section 5.1.22(a) hereof.
“Ground Rent Account” shall have the meaning set forth in Section 3.1(a) hereof.
“Ground Rent Escrow Fund” shall have the meaning set forth in Section 7.1 hereof.
“Guarantor(s)” shall mean, individually, each of the Owner Parties, Hyatt Guarantor, Whitehall Guarantor and any other Person guaranteeing any payment or performance obligation of Borrower under any Loan Document, and collectively, all of the foregoing.
“Guaranty” shall mean that certain Guaranty of the Non-Recourse Exceptions, dated as of the date hereof, from Hyatt Guarantor and Whitehall Guarantor to Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Hazardous Materials” shall mean petroleum and petroleum products and compounds containing them, including gasoline, diesel fuel and oil; explosives; flammable materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint; asbestos or asbestos-containing materials in any form that is or could become friable; underground or above-ground storage tanks, whether empty or containing any substance; toxic mold; any substance the presence of which on the Property is prohibited by any federal, state or local authority; any substance that requires special handling; and any other material or substance now or in the future defined as a “hazardous substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of similar import within the meaning of any Environmental Law.
“Hotel” shall have the meaning set forth in the definition of “Improvements.”
“Hotel Company” shall mean the hotel company (including licensor) under the Hotel Management Agreement.
 
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“Hotel Management Agreement” shall mean that certain hotel and retail management agreement more specifically identified on Schedule IV attached hereto and made a part hereof with respect to the management of the Hotel and King’s Village and certain other agreements among Hotel Manager, FF&E Subsidiary, King’s Village Subsidiary and Hotel Company, or such other hotel and retail management agreement and/or license agreement that may be entered into in accordance with the terms of this Agreement.
“Hotel Manager” shall mean Hyatt Corporation, a Delaware corporation or, if the context requires, a Qualified Manager who is managing the Hotel in accordance with the terms of this Agreement and the then applicable Hotel Management Agreement.
“Hyatt Guarantor” shall mean Global Hyatt Corporation, a Delaware corporation.
“Hyatt Preferred Stock Agreement” shall mean that certain Waiver Agreement, dated as of the date hereof, made by Hyatt Corporation and FF&E Subsidiary in favor of Lender with respect to 500 shares of preferred stock in FF&E Subsidiary owned by Hyatt Corporation, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Improvements” shall mean all buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land, including, without limitation, all rights, title and interest of any Owner Party therein, as lessee, sublessee or sub-sublessee and otherwise, in, to and under the Ground Leases, which, as of the date hereof, are operated as a 1230-room Hyatt Regency Hotel (the “Hotel”) and an ancillary shopping center facility known as “King’s Village” (“King’s Village”), including, without limitation, the related convention center and parking facilities.
“Indemnified Parties” shall mean Lender, any Affiliate of Lender who is or will have been involved in the origination of the Loan, any Person who is or will have been involved in the servicing, syndication, participation or sale of the Loan, any Person in whose name the encumbrances created by the Security Instruments is or will have been recorded, Persons who may hold or acquire or will have held a full or partial interest in the Loan, the holders of any Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest (equitable or beneficial) in the Loan for the benefit of third parties, as well as the respective directors, officers, shareholders, partners, members, employees, agents, servants, representatives, contractors, subcontractors, Affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including but not limited to any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan or the Property, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business).
“Indemnified Taxes” shall mean any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority.
 
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“Independent Director” shall have the meaning set forth in Section 4.1.34(t) hereof.
“Initial Deposits” shall have the meaning set forth in Section 3.6 hereof.
“Insolvency Opinion” shall mean that certain bankruptcy non-consolidation opinion letters delivered by counsel for Borrower and Owner in connection with the Loan, in form and substance reasonably satisfactory to Lender and approved by the Rating Agencies, as the case may be.
“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.
“Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
“Intercreditor Agreement” shall have the meaning set forth in Section 9.7(a) hereof.
“Interest Period” shall mean, in connection with the calculation of interest accrued with respect to any specified Payment Date except the initial and final Payment Dates, the period from and including the first (1st) day of the prior calendar month to and including the last day of the prior calendar month. Each Interest Period shall be a full month and shall not be shortened by reason of any payment of the Loan prior to the expiration of such Interest Period, except that (i) the initial Interest Period shall be the period from and including the Closing Date to and including the last day of the calendar month in which the Closing Date occurs, and (ii) the final Interest Period shall be the period from and including the first (1st) day of the calendar month in which the Maturity Date occurs to and including the Maturity Date.
“Interest Rate Cap Agreement” shall mean the interest rate cap agreement (together with the confirmation and schedules relating thereto), between an Acceptable Counterparty and Borrower obtained by Borrower. The agreement shall be written on the then current standard ISDA documentation, and shall provide for interest periods and calculations consistent with the payment terms of this Agreement. After delivery of a Replacement Interest Rate Cap Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to mean such Replacement Interest Rate Cap Agreement.
“Interest Reserve Account” shall have the meaning set forth in Section 3.1(f) hereof.
“Interest Reserve Fund” shall have the meaning set forth in Section 7.6 hereof.
“Investment Grade” shall mean a rating of not less than BBB- or its equivalent by the Rating Agencies.
“Investor” shall have the meaning set forth in Section 5.1.10(i) hereof.
“King’s Village” shall have the meaning set forth in the definition of “Improvements.”
“King’s Village Management Agreement” shall mean that certain management agreement with respect to King’s Village (as of the date hereof, the King’s Village Management Agreement is part of, and included within, the Hotel Management Agreement and, accordingly, all references herein to the King’s Village Management Agreement shall be deemed to be a reference to the Hotel
 
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Management Agreement until such time as the King’s Village Management Agreement is no longer a part of, and included within, the Hotel Management Agreement), or the then applicable Replacement King’s Village Management Agreement or such other King’s Village management agreement entered into in accordance with the provisions of this Agreement.
“King’s Village Manager” shall mean a Qualified King’s Village Manager who is managing King’s Village in accordance with the terms and provisions of this Agreement and the then applicable King’s Village Management Agreement.
“King’s Village Pledge Agreement” shall meant that certain Security Agreement, dated as of the date hereof, made by King’s Village Subsidiary in favor of Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“King’s Village Subsidiary” shall mean W2007 WKH King’s Village TRS, Inc., a Hawaii corporation.
“Land” shall mean (i) the Owner Parties’ leasehold estates in the real property described on Schedule I attached hereto and made a part hereof, as such leasehold estate was created by the Ground Leases; (ii) any greater or additional estate therein as hereafter may be acquired by any Owner Party or an Affiliate thereof; and (iii) the Owner Parties’ fee simple absolute estate in the parcel known as “Ti Leaf Parcel,” also described on Schedule I , including any easements that benefit any of the foregoing.
“Leases” shall mean all leases, tenancies, licenses, subleases, rental and room agreements, registration cards and agreements, if any, and other agreements, whether or not in writing, providing for the possession, use, enjoyment or occupancy of the Land and/or the Improvements heretofore or hereafter entered into and all extensions, amendments and modifications thereto, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, whether before or after the filing by or against any Owner Party of any petition for relief under the Bankruptcy Code, less and except the Ground Leases.
“Leasing Guidelines” shall mean the leasing guidelines set forth in the Approved Annual Budget.
“Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting Borrower, the Collateral, any Owner Party or the Property or any part thereof, or the zoning, construction, use, alteration, occupancy or operation thereof (including, without limitation, as a first-class, full-service hotel), or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instruments, either of record or known to Borrower or any Owner Party, at any time in force affecting the Property or any part thereof, including, without limitation, any which may (a) require repairs, modifications or alterations in or to the Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.
 
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“Lender” shall have the meaning set forth in the introductory paragraph hereto, together with its successors and assigns.
“Liabilities” shall have the meaning set forth in Section 9.2(b) hereof.
“LIBOR” shall mean for each Interest Period, the quoted offered rate for 30-day United States dollar deposits with leading banks in the London interbank market that appears as of 11:00 a.m. (London time) on the related LIBOR Determination Date on the display page designated as Telerate Page 3750.
If, as of such time on any LIBOR Determination Date, no quotation is given on Telerate Page 3750, then the Lender shall establish LIBOR on such LIBOR Determination Date by requesting four Reference Banks meeting the criteria set forth herein to provide the quotation offered by its principal London office for making 30-day United States dollar deposits with leading banks in the London interbank market as of 11:00 a.m., London time, on such LIBOR Determination Date.
(i) If two or more Reference Banks provide such offered quotations, then LIBOR for the next Interest Period shall be the arithmetic mean of such offered quotations (rounded upward if necessary to the nearest whole multiple of 1/1,000%).
(ii) If only one or none of the Reference Banks provides such offered quotations, then LIBOR for the next Interest Period shall be the Reserve Rate.
(iii) If on any LIBOR Determination Date, Lender is required but is unable to determine the LIBOR in the manner provided in paragraphs (i) and (ii) above, LIBOR for the next Interest Period shall be LIBOR as determined on the preceding LIBOR Determination Date.
All percentages resulting from any calculations of LIBOR referred to in this Agreement will be carried out to five decimal places and all U.S. dollar amounts used in or resulting from such calculations will be rounded upwards to the nearest cent.
“LIBOR Business Day” shall mean a day upon which (i) United States dollar deposits may be dealt in on the London interbank markets and (ii) commercial banks and foreign exchange markets are open in London, England and in New York, New York, USA.
“LIBOR Determination Date” shall mean, with respect to any Interest Period, the date that is two (2) LIBOR Business Days prior to the first (1st) calendar day of the month in which such Interest Period commenced.
“Licenses” shall have the meaning set forth in Section 4.1.21 hereof.
 
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“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment for security, security interest, or any other encumbrance, charge or transfer for security of, on or affecting Borrower, any Owner Party, the Collateral or the Property, any portion thereof or any interest therein, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement, and mechanic’s, materialmen’s and other similar liens and encumbrances.
“Liquidation Event” shall have the meaning set forth in Section 2.3.2(a) hereof.
“Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement and the other Loan Documents in the maximum principal amount of Two Hundred Seventy Seven Million Five Hundred Thousand and No/100 Dollars ($277,500,000.00), as the same may be amended or split pursuant to the terms hereof.
“Loan Documents” shall mean, collectively, this Agreement, the Note, the Assignment of Leases, the Assignment of Hotel Management Agreement, the Assignment of King’s Village Management Agreement, the Assignment of Management Agreement, the Assignment of Interest Rate Cap Agreement, the Assignment of Agreements, the Pledge Agreements, the Security Instruments, the Environmental Indemnity, the Acknowledgement of Hotel Manager, the Acknowledgement of King’s Village Manager, the Acknowledgement of Manager, the Guaranty, the Debt Guaranty, the Hyatt Preferred Stock Agreement, the Collection Account Agreement, the Lockbox Agreement, all replacements for any of the foregoing (as permitted hereunder) and all other documents pursuant to which any Person incurs or assumes any obligation to or for the benefit of Lender that are executed and/or delivered in connection with the Loan.
“Loan Party” shall mean individually and collectively, as the context requires, Borrower, the Owner Parties, the Guarantors, Principal and Sponsor.
“Lockbox Account” shall have the meaning set forth in Section 3.1 hereof.
“Lockbox Agreement” shall have the meaning set forth in Section 3.1 hereof.
“Lockbox Bank” shall mean First Hawaiian Bank.
“Losses” shall mean any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement of whatever kind or nature (including but not limited to attorneys’ fees and other costs of defense).
“Major Lease” shall mean (i) any Lease which, together with all other Leases to the same tenant and to all Affiliates of such tenant, (A) provides for rental income representing five percent (5%) or more of greater of (x) annual budgeted Retail Rents or (y) actual Retail Rents for the twelve (12) most recent months, (B) covers five percent (5%) or more of the total space at the Retail Space, in the aggregate, (C) provides for a lease term of more than ten (10) years including options to renew or (D) is with an Affiliate of Borrower and (ii) any instrument guaranteeing or providing credit support for any Major Lease.
 
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“Management Agreement” shall mean that certain management agreement with respect to the Hotel (as of the date hereof, the Management Agreement is part of, and included within, the Hotel Management Agreement and, accordingly, all references herein to the Management Agreement shall be deemed to be a reference to the Hotel Management Agreement until such time as the Management Agreement is no longer a part of, and included within, the Hotel Management Agreement), or the then applicable Replacement Management Agreement or such other Hotel management agreement entered into in accordance with the provisions of this Agreement.
“Manager” shall mean Hyatt Corporation, a Delaware corporation, or, if the context requires, a Qualified Manager who is managing the Hotel in accordance with the terms and provisions of this Agreement and the then applicable Management Agreement.
“Material Agreement” shall mean any agreement, other than the King’s Village Management Agreement, the Management Agreement, the Hotel Management Agreement, the Ground Leases, the Operating Lease and the Leases, entered into by Borrower or any Owner Party affecting or relating to the Property or the Collateral or otherwise imposing obligations on Borrower or any Owner Party which requires payment of more than $250,000.00, in payments or liability in any annual period and which (i) does not have the payments or liability thereunder reflected in the Approved Annual Budget; or (ii) is not an Ordinary Contract which is cancellable without penalty or premium on no more than ninety (90) days notice.
“Maturity Date” shall mean July 16, 2010, as such date may be extended pursuant to the terms hereof, or such other date on which the final payment of the principal of the Note becomes due and payable as therein or herein provided, whether at such stated maturity date, by declaration of acceleration, or otherwise.
“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the indebtedness evidenced by the Note and as provided for herein or in the other Loan Documents, under the laws of such state or states whose laws are held by any court of competent jurisdiction to govern the interest rate provisions of the Loan.
“Member” shall have the meaning set forth in Section 4.1.34(v) hereof.
“Mezzanine Debt Service” shall mean, with respect to any particular period of time, interest payments due under the Mezzanine Loan for such period.
“Mezzanine Debt Service Account” shall have the meaning set forth in Section 3.1(e) hereof.
“Mezzanine Debt Service Fund” shall have the meaning set forth in Section 7.5 hereof.
“Mezzanine Borrower” shall mean W2007 WKH Mezzanine Borrower, LLC, a Delaware limited liability company.
“Mezzanine Lender” shall mean Eurohypo AG, New York Branch.
 
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“Mezzanine Loan” shall mean that loan made by Mezzanine Lender to Mezzanine Borrower in the outstanding principal amount of Seventy Million Three Hundred Thousand and No/100 Dollars ($70,300,000).
“Mezzanine Loan Agreement” shall mean that certain Mezzanine Loan Agreement between Mezzanine Borrower and Mezzanine Lender, dated as of the date hereof, as further amended, restated, replaced, supplemented or otherwise modified from time to time.
“Mezzanine Loan Documents” shall mean, collectively, the Mezzanine Loan Agreement and any and all other documents defined as “Loan Documents” in the Mezzanine Loan Agreement and described on Schedule V attached hereto and made a part hereof, as such documents may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Monthly Debt Service Payment Amount” shall mean the amount of interest due and payable on each Payment Date, pursuant to the Note and Section 2.2 hereof.
“Monthly Ground Rent Amount” shall have the meaning set forth in Section 7.1 hereof.
“Monthly Insurance Premium Deposit” shall have the meaning set forth in Section 7.2 hereof.
“Monthly Mezzanine Debt Service Payment Amount” shall mean the amount of interest due and payable by Mezzanine Borrower on each payment date under the Mezzanine Loan, pursuant to the Mezzanine Loan Agreement.
“Monthly Tax Deposit” shall have the meaning set forth in Section 7.2 hereof.
“Moody’s” shall mean Moody’s Investors Service, Inc.
“Mortgages” shall mean those certain mortgages or deeds of trust made by each of the Owner Parties with respect to their respective interests in the Property, as security for each of their respective obligations under the Debt Guaranty, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, in accordance with the terms of this Agreement.
“Net Cash Flow” for any period shall mean the amount obtained by subtracting Operating Expenses and Capital Expenditures (not funded from Reserve Funds) for such period from Gross Income from Operations for such period.
“Net Liquidation Proceeds” shall mean, with respect to any Liquidation Event, all amounts paid to or received by or on behalf of any Owner Party in connection with such Liquidation Event, including, without limitation, proceeds of any sale, refinancing or other disposition or liquidation, less (i) in the event of a Liquidation Event consisting of a Casualty or Condemnation, Lender’s and/or the Owner Parties’ reasonable costs incurred in connection with the recovery thereof, (ii) in the event of a Liquidation Event consisting of a Casualty or Condemnation, the costs incurred by any Owner Party in connection with a Restoration of all or any portion of the
 
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Property to the extent Lender is required to make proceeds or awards available to Borrower under Article VI hereof for such costs, or otherwise elects to do so, in accordance with the Loan Documents, (iii) in the event of a Liquidation Event consisting of a Casualty or Condemnation or a Transfer, amounts required or permitted to be deducted therefrom under the Loan Documents, (iv) in the case of a foreclosure sale, disposition or transfer of the Property in connection with realization thereon following an Event of Default, such reasonable and customary costs and expenses of sale or other disposition (including attorneys’ fees and brokerage commissions), and (v) in the case of a foreclosure sale, all costs and expenses incurred by Lender under the Loan Documents as Lender shall be entitled to receive reimbursement for under the terms of the Loan Documents.
“Net Operating Income” shall mean the amount obtained by subtracting Operating Expenses from Gross Income from Operations.
“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
“Net Proceeds Deficiency” shall have the meaning set forth in Section 6.4(b)(vi) hereof.
“Non-U.S. Entity” shall have the meaning set forth in Section 2.2.8(b) hereof.
“Note” shall mean that certain promissory note of even date herewith in the original principal amount of Two Hundred Seventy Seven Million Five Hundred Thousand and No/100 Dollars ($277,500,000.00), made by Borrower in favor of Lender, as the same may be amended, restated, replaced, extended, renewed, supplemented, severed, split, or otherwise modified from time to time.
“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower or any Owner Party which is signed by a Responsible Officer of Borrower or such Owner Party.
“Operating Expenses” shall mean, without duplication, the total of all expenditures, computed in accordance with GAAP, of whatever kind relating to the operation, maintenance and management of the Property that are incurred on a regular monthly or other periodic basis, including without limitation, utilities, ordinary repairs and maintenance, insurance premiums, license fees, property taxes and assessments, advertising and marketing expenses, franchise fees, management fees, payroll and related taxes, Taxes and other taxes, computer processing charges, operational equipment or other lease payments as approved by Lender, and other similar costs, but excluding depreciation, Debt Service, Mezzanine Debt Service and actual Capital Expenditures, but including contributions to the Reserve Funds (other than funds contributed to any reserves for FF&E).
“Operating Lease” shall mean that certain Hotel Lease, dated as of the date hereof, between Owner, as landlord, and FF&E Subsidiary, as tenant, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, as permitted hereunder.
“Ordinary Contract” shall mean any trade or operational contracts entered into with trade creditors or other counterparties in the ordinary course of business, in arm’s-length transactions.
 
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“Organizational Documents” shall mean (i) with respect to a corporation, such Person’s certificate of incorporation and by-laws, and any shareholder agreement, voting trust or similar arrangement applicable to any of such Person’s authorized shares of capital stock, (ii) with respect to a partnership, such Person’s certificate of limited partnership, partnership agreement, voting trusts or similar arrangements applicable to any of its partnership interests, and (iii) with respect to a limited liability company, such Person’s certificate of formation, limited liability company agreement or other document affecting the rights of holders of limited liability company interests. In each case, “Organizational Documents” shall include any indemnity, contribution, shareholders or other agreement among any of the owners of the entity in question.
“Other Charges” shall mean maintenance charges, impositions other than Taxes, and any other charges, including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed against the Property or any part thereof.
“Owner” shall mean W2007 WKH Owner, LLC, a Delaware limited liability company.
“Owner Party” or “Owner Parties” shall mean, individually or collectively, as the context requires, Owner, FF&E Subsidiary and King’s Village Subsidiary.
“Owner Party’s Business Party” shall have the meaning set forth in Section 4.1.46(t) hereof.
“Owner Party’s Independent Director” shall have the meaning set forth in Section 4.1.46(t) hereof.
“Owner Party’s LLC Agreement” shall have the meaning set forth in Section 4.1.46(v) hereof.
“Owner Party’s Member” shall have the meaning set forth in Section 4.1.46(v) hereof.
“Owner Party’s Organizational Documents” shall have the meaning set forth in Section 4.1.46 hereof.
“Owner Party’s Special Member” shall have the meaning set forth in Section 4.1.46(v) hereof.
“Owner Party’s Principal” shall have the meaning set forth in Section 4.1.46 hereof.
“Owner Pledge Agreement” shall mean that certain pledge agreement, dated as of the date hereof, made by Owner in favor of Lender with respect to Owner’s ownership interests in each of FF&E Subsidiary and King’s Village Subsidiary, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
“Owner’s Remittance Amount” shall have the meaning set forth in the Hotel Management Agreement.
 
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“Owner’s Title Policy” shall mean that certain ALTA extended coverage owner’s policy of title insurance insuring the Owner Parties as the owner of the Property.
“Ownership Interest” means (i) any interest in the Property or (ii) in the case of any Loan Party, any ownership interest in such Loan Party, direct or indirect, contingent or fixed, at any level or any tier, of any nature whatsoever, whether in the form of a partnership interest, stock interest, membership interest, equitable interest, beneficial interests, profit interest, loss interest, voting rights, control rights, management rights or otherwise.
“Payment Date” shall mean the first (1st) day of each calendar month during the term of the Loan or, if such day is not a Business Day, the immediately succeeding Business Day, except that the final Payment Date shall be the Maturity Date.
“Permitted Encumbrances” shall mean, collectively, (a) the Liens and security interests created by the Loan Documents; (b) all Liens, encumbrances and other matters disclosed on Schedule VI attached hereto and made a part hereof; (c) Liens, if any, for Taxes imposed by any Governmental Authority not yet delinquent; (d) workers’, mechanics’, materialmen’s or similar Liens, if any, and Liens for delinquent taxes or impositions, in each case only if being contested in good faith and by appropriate proceedings, provided that no such Lien is in imminent danger of foreclosure and provided further, with respect to any individual Lien greater than $100,000 and with respect to Liens totaling, in the aggregate, $1,000,000, either (i) each such Lien is released or discharged of record or fully insured over by the title insurance company issuing the Title Insurance Policy within 30 days of its creation, or (ii) Borrower deposits with Lender, by the expiration of such 30-day period, an amount equal to 125% of the dollar amount of such Lien or a bond in the aforementioned amount from such surety, and upon such terms and conditions, as is reasonably satisfactory to Lender, as security for the payment or release of such Lien; (e) rights of existing and future tenants as tenants only pursuant to written Leases, in the case of future tenants, entered into in conformity with the Leasing Guidelines or otherwise in conformance with the provisions of this Agreement; (f) any attachment or judgment Lien, provided that the judgment it secures shall, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 60 days after the expiration of any such stay, provided that no such Lien is in imminent danger of foreclosure or is superior in priority to the Lien of any of the Mortgages; (g) mechanics’ liens, which are subordinate to the Lien of the Mortgages, arising out of work performed by or materials furnished to or on behalf of tenants for which neither Borrower nor any Owner Party is indebted, provided that no such Lien is in imminent danger of foreclosure and Borrower or such Owner Party is actively enforcing its rights under the applicable Leases to release or discharge, or cause to be released or discharged, such Lien of record; (h) easements, rights-of-way, restrictions (including zoning restrictions), defects or irregularities in title and other similar title matters not, in any respect (other than to a de minimis amount), interfering with the operation, use or value of the Property; (i) Liens created in connection with personal property financing leases or equipment or vehicle leases or financings not exceeding, at any one time, $200,000, individually, and $1,000,000, in the aggregate; and (j) such other title and survey exceptions as Lender has approved or may approve in writing in Lender’s sole discretion.
 
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“Permitted Investments” shall mean any one or more of the following obligations or securities acquired at a purchase price of not greater than par, including those issued by Servicer, the trustee under any Securitization or any of their respective Affiliates, payable on demand or having a maturity date not later than the Business Day immediately prior to the first Payment Date following the date of acquiring such investment and meeting one of the appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to payment of principal and interest by, the United States or any agency or instrumentality thereof provided such obligations are backed by the full faith and credit of the United States of America including, without limitation, obligations of: the U.S. Treasury (all direct or fully guaranteed obligations), the Farmers Home Administration (certificates of beneficial ownership), the General Services Administration (participation certificates), the U.S. Maritime Administration (guaranteed Title XI financing), the Small Business Administration (guaranteed participation certificates and guaranteed pool certificates), the U.S. Department of Housing and Urban Development (local authority bonds) and the Washington Metropolitan Area Transit Authority (guaranteed transit bonds); provided , however , that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit System (consolidated systemwide bonds and notes), the Federal Home Loan Banks (consolidated debt obligations), the Federal National Mortgage Association (debt obligations), the Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt obligations); provided , however , that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(iii) federal funds, unsecured certificates of deposit, time deposits, bankers’ acceptances and repurchase agreements with maturities of not more than 365 days of any bank, the short term obligations of which at all times are rated in the highest short term rating category by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency in the highest short term rating category and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities); provided , however , that the investments described in this clause must (A) have a
 
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predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(iv) fully Federal Deposit Insurance Corporation-insured demand and time deposits in, or certificates of deposit of, or bankers’ acceptances with maturities of not more than 365 days and issued by, any bank or trust company, savings and loan association or savings bank, the short term obligations of which at all times are rated in the highest short term rating category by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency in the highest short term rating category and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities); provided , however , that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(v) debt obligations with maturities of not more than 365 days and at all times rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities) in its highest long-term unsecured rating category; provided , however , that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(vi) commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) with maturities of not more than 365 days and that at all times is rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities) in its highest short-term unsecured debt rating; provided , however , that the investments described in this clause must (A) have a predetermined fixed dollar of principal due at maturity that cannot vary or change, (B) if rated by S&P, must not
 
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have an “r” highlighter affixed to their rating, (C) if such investments have a variable rate of interest, such interest rate must be tied to a single interest rate index plus a fixed spread (if any) and must move proportionately with that index, and (D) such investments must not be subject to liquidation prior to their maturity;
(vii) units of taxable money market funds, with maturities of not more than 365 days and which funds are regulated investment companies, seek to maintain a constant net asset value per share and invest solely in obligations backed by the full faith and credit of the United States, which funds have the highest rating available from each Rating Agency (or, if not rated by all Rating Agencies, rated by at least one Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed in writing that such investment would not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities) for money market funds; and
(viii) any other security, obligation or investment which has been approved as a Permitted Investment in writing by (a) Lender and (b) each Rating Agency, as evidenced by a written confirmation that the designation of such security, obligation or investment as a Permitted Investment will not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned to the Securities by such Rating Agency;
provided , however , that no obligation or security shall be a Permitted Investment if (A) such obligation or security evidences a right to receive only interest payments or (B) the right to receive principal and interest payments on such obligation or security are derived from an underlying investment that provides a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment.
“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
“Personal Property” shall mean FF&E and, without duplication, all machinery, furnishings, equipment, fixtures, inventory and articles of personal property and accessions thereof and renewals, replacements thereof and substitutions therefor (including, but not limited to, beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, linens, pillows, blankets, glassware, silverware, foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers, radios, television sets, intercom and paging equipment, electric and electronic equipment, dictating equipment, private telephone systems, medical equipment, potted plants, heating, lighting and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and air-conditioning systems, elevators, escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing
 
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equipment, call systems, brackets, electrical signs, bulbs, bells, ash and fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage disposals, washers and dryers), other customary hotel equipment and other tangible property of every kind and nature whatsoever owned by any Owner Party, or in which any Owner Party has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by any Owner Party, or in which any Owner Party has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements.
“Plan” shall mean an employee benefit plan (as defined in section 3(3) of ERISA) whether or not subject to ERISA or a plan or other arrangement within the meaning of section 4975 of the Code.
“Plan Assets” shall mean assets of a Plan within the meaning of section 29 C.F.R. section 2510.3-101 or similar law.
“Pledge Agreement(s)” shall mean, individually, the Borrower Pledge Agreement, the FF&E Pledge Agreement, the Owner Pledge Agreement and the King’s Village Pledge Agreement, and collectively, all of the foregoing.
“Pledged Interests” shall mean (i) all membership interests, partnership interests, stock and any other equity interests owned by Borrower in Owner and by Owner in the FF&E Subsidiary and the King’s Village Subsidiary, and more fully described in the Pledge Agreements; and (ii) all FF&E now or hereafter located at the Property, owned or leased by FF&E Subsidiary and more fully described in the FF&E Pledge Agreement.
“Policies” shall have the meaning set forth in Section 6.1(b) hereof.
“Prepayment Date” shall have the meaning set forth in Section 2.3.1(a) hereof.
“Prime Rate” shall mean, on a particular date, a rate per annum equal to the rate of interest published in The Wall Street Journal as the “prime rate”, as in effect on such day, with any change in the prime rate resulting from a change in said prime rate to be effective as of the date of the relevant change in said prime rate; provided, however, that if more than one prime rate is published in The Wall Street Journal for a day, the average of the prime rates shall be used; provided, further, however, that the Prime Rate (or the average of the prime rates) will be rounded to the nearest 1/1000 of 1% or, if there is no nearest 1/1000 of 1%, to the next higher 1/1000 of 1%. In the event that The Wall Street Journal should cease or temporarily interrupt publication, then the Prime Rate shall mean the daily average prime rate published in another business newspaper, or business section of a newspaper, of national standing chosen by Lender. If The Wall Street Journal resumes publication, the substitute index will immediately be replaced by the prime rate published in The Wall Street Journal. In the event that a prime rate is no longer generally published or is limited, regulated or
 
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administered by a governmental or quasi-governmental body, then Lender shall select a comparable interest rate index which is readily available to Borrower and verifiable by Borrower but is beyond the control of Lender. Lender shall give Borrower prompt written notice of its choice of a substitute index and when the change became effective. Such substitute index will also be rounded to the nearest 1/1000 of 1% or, if there is no nearest 1/1000 of 1%, to the next higher 1/1000 of 1%. The determination of the Prime Rate by Lender shall be conclusive and binding absent manifest error.
“Prime Rate Spread” shall mean (expressed as the number of basis points) (a) LIBOR plus the Spread on the date LIBOR was last applicable to the Loan minus (b) the Prime Rate on the date that LIBOR was last applicable to the Loan; provided, however, in no event shall such difference be a negative number.
“Principal” shall have the meaning set forth in Section 4.1.34 hereof, together with its successors and assigns.
“Prohibited Person” shall mean any Person:
(a) listed in the Annex to, or otherwise subject to the provisions of, the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);
(b) that is owned or controlled by, or acting for or on behalf of, any person or entity that is listed to the Annex to, or is otherwise subject to the provisions of, the Executive Order;
(c) with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering law, including the Executive Order;
(d) who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;
(e) that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or other replacement official publication of such list; or
(f) who is an Affiliate of or affiliated with a Person listed above.
“Property” means all of the Owner Parties’ interest in (i) the Land; (ii) the Improvements; (iii) the Personal Property; (iv) the Leases; (v) the Rents; (vi) any Awards; (vii) any Proceeds; and (viii) all fixtures, easements, tangible property and tax certiorari claims, in each case relating to the use, ownership, occupation, operation or maintenance of the Property. Such term shall include, without limitation, all hotel facilities, parking facilities, convention center facilities, retail facilities and related facilities and amenities.
 
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“Provided Information” shall have the meaning set forth in Section 9.1(a) hereof.
“Qualified Insurer” shall have the meaning set forth in Section 6.1(b) hereof.
“Qualified King’s Village Manager” shall mean a reputable and experienced professional management organization (a) identified on Schedule VIII hereto, such Schedule subject to reasonable review and updates by either party at any time; (b) which manages, together with its Affiliates, in excess of one million (1,000,000) square feet of retail space of a type, quality and size similar to King’s Village; or (c) which is reasonably acceptable to Lender.
“Qualified Manager” shall mean a reputable and experienced professional management organization (a) either (i) identified on Schedule IX hereto, such Schedule subject to reasonable review and updates by either party at any time, or (ii) which manages, together with its Affiliates, ten (10) first-class, full-service hotels of a type, quality and size similar to the Hotel, totaling in the aggregate no less than 10,000 rooms; and (b) prior to whose employment as manager of the Hotel (i) before the occurrence of either a Successful Syndication or a Securitization, such employment shall not require Lender consent, (ii) after the occurrence of a Successful Syndication and before a Securitization, such employment shall have been approved by Lender (such approval not to be unreasonably withheld, conditioned or delayed), and (iii) after the occurrence of a Securitization, Lender shall have received written confirmation from the Rating Agencies that the employment of such manager will not result in a downgrade, withdrawal or qualification of the initial, or if higher, then current ratings of the Securities.
“Quality Assurance Reports” shall mean any quality assurance reports of inspection or compliance from a Hotel Company under a Hotel Management Agreement with respect to the Property.
“Rating Agencies” shall mean each of S&P, Moody’s, and Fitch, and any other nationally-recognized statistical rating agency which has been approved by Lender; provided, however, that after a Securitization such term shall refer only to those rating agencies that have rated the Securities.
“Reference Bank” shall mean a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market that has an established place of business in London. If any such Reference Bank should be removed from the Telerate Page 3750 or in any other way fail to meet the qualifications of a Reference Bank, Lender may designate alternative Reference Banks meeting the criteria specified above.
“Registration Statement” shall have the meaning set forth in Section 9.2(b) hereof.
“REIT” shall mean W2007 WKH REIT, Inc., a Delaware corporation.
“Release of Hazardous Materials” shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials.
“Renewal Lease” shall have the meaning set forth in Section 5.1.17(a) hereof.
 
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“Rents” shall mean all right, title and interest of any Owner Party, its successors and assigns in, to and under the Leases, including, without limitation, any guaranties of the lessees’ obligations thereunder, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, payments in connection with any termination, cancellation or surrender of any Lease, revenues, issues, registration fees, if any, and profits (including all oil and gas or other mineral royalties and bonuses) from the Land, the Improvements, all income, rents, room rates, issues, profits, revenues, deposits, accounts and other benefits from the operation of the hotel on the Land and/or the Improvements, including, without limitation, all revenues and credit card receipts collected from guest rooms, restaurants, bars, mini-bars, meeting rooms, banquet rooms and recreational facilities and otherwise, all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of sale, lease, sublease, license, concession or other grant of the right of the possession, use or occupancy of all or any portion of the Land and/or Improvements, or personalty located thereon, or rendering of services by Borrower, any Owner Party, Manager or any operator or manager of the hotel or the commercial space located in the Improvements or acquired from others including, without limitation, from the rental of any office space, retail space, commercial space, guest room or other space, halls, stores or offices, including any deposits securing reservations of such space, exhibit or sales space of every kind, license, lease, sublease and concession fees and rentals, health club membership fees, food and beverage wholesale and retail sales, service charges, vending machine sales and proceeds, if any, from business interruption or other loss of income insurance relating to the use, enjoyment or occupancy of the Land and/or the Improvements whether paid or accruing before or after the filing by or against any Owner Party of any petition for relief under the Bankruptcy Code and all proceeds from the sale or other disposition of the Leases.
“Replacement Interest Rate Cap Agreement” means an interest rate cap agreement from an Acceptable Counterparty with terms identical to the Interest Rate Cap Agreement.
“Replacement Hotel Management Agreement” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Hotel Management Agreement, or (ii) a management agreement with a Qualified Manager, which management agreement shall be reasonably acceptable to Lender in form and substance, provided , with respect to this subclause (ii), Lender, at its option, may require that Borrower obtain confirmation from the applicable Rating Agencies that such management agreement will not result in a downgrade, withdrawal or qualification of the initial, or if higher, then current rating of the Securities or any class thereof; (b) an acknowledgement of the property manager substantially in the form of the Acknowledgement of Hotel Manager (or such other form acceptable to Lender), executed and delivered to Lender by King’s Village Subsidiary and FF&E Subsidiary and such Qualified Manager at King’s Village Subsidiary’s and FF&E Subsidiary’s expense; and (iii) if such replacement manager is an Affiliated Manager, Borrower shall have delivered, or caused to be delivered, to Lender, an updated Insolvency Opinion acceptable to Lender with respect to such Affiliated Manager. Notwithstanding the foregoing, the Replacement Hotel Management Agreement shall only be subject to the reasonable approval of Lender in the event of a Successful Syndication.
 
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“Replacement King’s Village Management Agreement” shall mean, collectively, (a) either (i) a management agreement with a Qualified King’s Village Manager substantially in the same form and substance as the King’s Village Management Agreement, or (ii) a management agreement with a Qualified King’s Village Manager, which management agreement shall be reasonably acceptable to Lender in form and substance; (b) an acknowledgement of the replacement manager substantially in the form of the Acknowledgement of King’s Village Manager (or such other form acceptable to Lender), executed and delivered to Lender by King’s Village Subsidiary and such Qualified King’s Village Manager at King’s Village Subsidiary’s expense; and (c) if such replacement manager is an Affiliated Manager, Borrower shall have delivered, or caused to be delivered, to Lender, an updated Insolvency Opinion acceptable to Lender with respect to such Affiliated Manager. Notwithstanding the foregoing, each Replacement King’s Village Management Agreement shall only be subject to the reasonable approval of Lender in the event that neither Hyatt Corporation nor any Affiliate thereof (i) is holding (or has guaranteed) more than Seventy Five Million and No/100 Dollars ($75,000,000.00) of the Loan balance or (ii) controls the voting rights under the Loan (such event, a “Successful Syndication”).
“Replacement Management Agreement” shall mean, collectively, (a) either (i) a management agreement with a Qualified Manager substantially in the same form and substance as the Management Agreement, or (ii) a management agreement with a Qualified Manager, which management agreement shall be reasonably acceptable to Lender in form and substance, provided , with respect to this subclause (ii), Lender, at its option, may require that Borrower obtain confirmation from the applicable Rating Agencies that such management agreement will not result in a downgrade, withdrawal or qualification of the initial, or if higher, then current rating of the Securities or any class thereof; (b) an acknowledgement of the property manager substantially in the form of the Acknowledgement of Manager (or such other form acceptable to Lender), executed and delivered to Lender by FF&E Subsidiary and such Qualified Manager at FF&E Subsidiary’s expense; and (iii) if such replacement manager is an Affiliated Manager, Borrower shall have delivered, or caused to be delivered, to Lender, an updated Insolvency Opinion acceptable to Lender with respect to such Affiliated Manager. Notwithstanding the foregoing, the Replacement Management Agreement shall only be subject to the reasonable approval of Lender in the event of a Successful Syndication.
“Reserve Fund Deposits” shall mean the amounts to be deposited into the Reserve Funds for any given month or at any other time as provided in this Agreement or in the other Loan Documents.
“Reserve Funds” shall mean the Tax and Insurance Escrow Fund, the Ground Rent Escrow Fund and any other escrow or reserve funds established by the Loan Documents.
“Reserve Rate” shall mean the rate per annum which Lender determines to be either (i) the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 1/1,000%) of the one-month United States dollar lending rates that at least three major New York City banks selected by Lender are quoting, at 11:00 a.m. (New York time) on the relevant LIBOR Determination Date, to the principal London offices of at least two of the Reference Banks, or (ii) in the event that at least two such rates are not obtained, the lowest one-month United States dollar lending rate which New York City banks selected by Lender are quoting as of 11:00 a.m. (New York time) on such LIBOR Determination Date to leading European banks.
 
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“Responsible Officer” means with respect to a Person, the chairman of the board, president, chief operating officer, chief financial officer, treasurer, secretary or vice president of such Person (or, if such Person has no officers, of a Person controlling such Person).
“Restoration” shall mean the repair and restoration of the Property after a Casualty or Condemnation as nearly as possible to the condition the Property was in immediately prior to such Casualty or Condemnation, with such alterations as may be approved by Lender.
“Restricted Party” shall mean each Owner Party, Borrower, Principal, any Guarantor, or any Affiliated Manager or any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of, each Owner Party, Borrower, Principal, any Guarantor, any Affiliated Manager or any non-member manager.
“Retail Owner’s Remittance Amount” shall have the meaning set forth in the King’s Village Management Agreement. As of the date hereof, the Retail Owner’s Remittance Amount is part of the Owner’s Remittance Amount and is not a separate amount.
“Retail Rents” shall mean, at the time of calculation, the then aggregate annual rentals under all Leases for space in the Retail Space.
“Retail Space” shall mean the aggregate of all space within the Hotel and King’s Village available for rental for retail, office or other commercial purposes.
“S&P” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.
“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, transfer or pledge of a direct or indirect legal or beneficial interest.
“Second Extension Option” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Securities” shall have the meaning set forth in Section 9.1 hereof.
“Securitization” shall have the meaning set forth in Section 9.1 hereof.
“Securities Act” shall have the meaning set forth in Section 9.2(a) hereof.
“Security Deposits” shall have the meaning set forth in Section 5.1.17(e) hereof.
“Security Instrument(s)” shall mean, individually, the Mortgages, the Pledge Agreements, the Assignment of Leases, the Debt Guaranty, the Assignment of Agreements, the Assignment of Hotel Management Agreement, the Assignment of Interest Rate Cap, the Assignment of King’s Village Management Agreement, the Assignment of Management Agreement and other instruments or agreements given to Lender to secure Borrower’s, any Owner Party’s or Guarantors’ obligations to Lender, and collectively, all of the foregoing.
 
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“Senior Mezzanine Borrower(s)” shall have the meaning set forth in Section 9.5 hereof.
“Senior Mezzanine Lender” shall have the meaning set forth in Section 9.5 hereof.
“Senior Mezzanine Loan(s)” shall have the meaning set forth in Section 9.5 hereof.
“Senior Mezzanine Option” shall have the meaning set forth in Section 9.5 hereof.
“Senior Mortgage Loan” shall have the meaning set forth in Section 9.5 hereof.
“Servicer” shall have the meaning set forth in Section 9.3 hereof.
“Servicing Agreement” shall have the meaning set forth in Section 9.3 hereof.
“Servicing Fee” shall have the meaning set forth in Section 9.3 hereof.
“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c) hereof.
“Special Member” shall have the meaning set forth in Section 4.1.34(v) hereof.
“Sponsor” shall mean W2007 WKH Holdings, LLC, a Delaware limited liability company.
“Spread” shall mean 3.75%.
“Strike Rate” shall mean 5%.
“Subaccounts” shall have the meaning set forth in Section 3.1 hereof.
“Successful Syndication” shall have the meaning set forth in the definition of “Replacement King’s Village Management Agreement.”
“Survey” shall mean a survey prepared by a surveyor licensed in the state where the Property is located and satisfactory to Lender and the company or companies issuing the Title Insurance Policy, and containing a certification of such surveyor reasonably satisfactory to Lender.
“Tax and Insurance Account” shall have the meaning set forth in Section 3.1(b) hereof.
“Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.2 hereof.
“Taxes” shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or any part thereof, together with all interest and penalties thereon.
“Telerate Page 3750” means the display designated as page 3750 on the Dow Jones Telerate Service (or such other page as may replace page 3750 on that service or such other service as may be nominated by the British Bankers-Association as the information vendor for the purposes of displaying British Bankers-Association Interest Settlement Rates for U.S. dollar deposits).
 
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“Terrorism Insurance” shall have the meaning set forth in Section 6.1(b) hereof.
“Third Extension Option” shall have the meaning set forth in Section 2.1.5(b) hereof.
“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in a form acceptable to Lender (or, if the Property is located in a state which does not permit the issuance of such ALTA policy, such form as shall be permitted in such state and acceptable to Lender) issued with respect to the Property and insuring the Liens of the Mortgages encumbering all or any portion of the Property.
“Total Debt Service” shall mean, with respect to any particular period of time, the sum of all Debt Service and the Mezzanine Debt Service for such period.
“Total Debt Service Coverage Ratio” shall mean a ratio in which:
(a) the numerator is the Net Operating Income for the 12 full calendar month period preceding the date of calculation as set forth in the financial statements required hereunder; and
(b) the denominator is the aggregate amount of Total Debt Service on the principal amount of the Loan and Mezzanine Loan then outstanding which would be due and payable for such 12 full calendar month period, calculated at an interest rate equal to the Applicable Interest Rate.
“Transfer” shall have the meaning set forth in Section 5.2.10(a) hereof.
“Treasury Rate” means the yield on the ten year “on the run” U.S. Treasury obligation as reasonably determined by Lender.
“Trigger Event” shall be deemed to have occurred if the Total Debt Service Coverage Ratio falls below 1.05:1 for the period ending on the last calendar day of the month immediately preceding the date the Total Debt Service Coverage Ratio is calculated. If a Trigger Event is deemed to have occurred, it shall continue until such time that the Total Debt Service Coverage Ratio is at least 1.05:1 for a period of three (3) successive months.
“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the State of New York.
“UCC Financing Statements” shall mean the UCC financing statements delivered in connection with the Pledge Agreements and the other Loan Documents and filed in the applicable filing offices.
“UCC Title Insurance Policy” shall mean, with respect to the Collateral as defined in the Pledge Agreements, a UCC title insurance policy in the form acceptable to Lender issued with respect to such Collateral and insuring the lien of the Pledge Agreements encumbering such Collateral.
 
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“Underwriter Group” shall have the meaning set forth in Section 9.2(b) hereof.
“U.S. Obligations” shall mean direct non-callable obligations of the United States of America, the payment for which its full faith and credit is pledged.
“U.S.A. Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 (signed into law on October 26, 2001).
“USPAP” shall mean the Uniform Standard of Professional Appraisal Practice.
“Whitehall Guarantor” shall mean Whitehall Street Global Real Estate Limited Partnership 2007, a Delaware limited partnership.
Section 1.2 Principles of Construction .
All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.
 
 	II.	GENERAL TERMS	
Section 2.1 Loan Commitment; Disbursement to Borrower; Term .
2.1.1 Agreement to Lend and Borrow .
Subject to and upon the terms and conditions set forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.
2.1.2 Single Disbursement to Borrower .
Borrower may request and receive only one borrowing hereunder in respect of the Loan and any amount borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note and the Loan Documents .
The Loan shall be evidenced by the Note and secured by and/or entitled to the benefit of the Pledge Agreements, the Guaranty, the Security Instruments and the other Loan Documents.
 
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2.1.4 Use of Proceeds .
Borrower shall use the proceeds of the Loan to (a) acquire directly or indirectly all of the Ownership Interest, (b) make deposits into the Reserve Funds on the Closing Date in the amounts provided herein or in the other Loan Documents, (c) pay costs and expenses incurred in connection with the closing of the Loan, or (d) fund any working capital requirements of the Property. The balance, if any, shall be distributed to Borrower.
2.1.5 Term .
(a) Maturity Date . The Loan shall mature on the Maturity Date.
(b) Extension of the Maturity Date . Borrower shall have the option to extend the term of the Loan beyond the Maturity Date for three (3) successive terms (each, an “Extension Option”) of twelve (12) months each (each, an “Extension Term”) to (x) July 16, 2011 (the “First Extension Option”), (y) July 16, 2012 (the “Second Extension Option”) and (z) July 16, 2013 (the “Third Extension Option”) (each such date, an “Extended Maturity Date”), respectively, and, as to each Extension Option, upon satisfaction of the following terms and conditions:
(i) no Default for which Lender has given Borrower written notice or Event of Default shall have occurred and be continuing at the time the applicable Extension Option is exercised and on the date that the applicable Extension Term is commenced;
(ii) Borrower shall notify Lender in writing of its revocable election to extend the Maturity Date as aforesaid not earlier than one hundred twenty (120) days and no later than thirty (30) days prior to the then applicable Maturity Date; provided, however, that in the event of any revocation of its election to extend the Maturity Date, Borrower shall (A) notify Lender in writing of such revocation no later than five (5) Business Days prior to the then Maturity Date, and (B) promptly pay to Lender all reasonable out-of-pocket expenses incurred by Lender in connection with such revocation;
(iii) Borrower shall obtain and deliver to Lender prior to the commencement of the applicable Extension Term, one or more Replacement Interest Rate Cap Agreements, each acceptable to Lender, which Replacement Interest Rate Cap Agreements shall be effective commencing on the first day of such Extension Term and shall have (A) a maturity date not earlier than the Extended Maturity Date for such Extension Term, and (B) a strike rate equal to the greater of the Strike Rate or a rate that would provide a Debt Service Coverage Ratio of 1.05:1 for the period ending on the last calendar day of the month immediately preceding the date of Borrower’s written notice to extend;
 
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(iv) in connection with the First Extension Option, the Debt Service Coverage Ratio for the period ending on the last calendar day of the month immediately preceding the date of Borrower’s written notice to extend shall be no less than 1.25:1;
(v) in connection with each of the Second and Third Extension Options, the Debt Service Coverage Ratio as of the date of Borrower’s written notice to extend shall be no less than 1.40:1;
(vi) in connection with the Second Extension Option, Borrower shall have exercised the First Extension Option; and
(vii) in connection with the Third Extension Option, Borrower shall have exercised the Second Extension Option.
(c) All references in this Agreement and in the other Loan Documents to the Maturity Date shall mean the applicable Extended Maturity Date in the event the applicable Extension Option is exercised.
Section 2.2 Interest; Loan Payments; Late Payment Charge .
2.2.1 Payments .
(a) Interest . Interest on the outstanding principal balance of the Loan shall accrue from the Closing Date to the end of the Interest Period in which the Maturity Date occurs at the Applicable Interest Rate. Monthly installments of interest only shall be paid on each Payment Date commencing on September 1, 2008 and on each subsequent Payment Date thereafter up to and including the Maturity Date for the Interest Period in which such Payment Date or Maturity Date occurs. Interest on the outstanding principal amount of the Loan for the period through and including July 31, 2008 shall be paid by Borrower on the Closing Date. The outstanding principal balance of the Loan together with all accrued and unpaid interest thereon shall be due and payable on the Maturity Date, including, without limitation, all interest that would accrue on the outstanding principal balance of the Loan through the end of the Interest Period in which the Maturity Date occurs (even if such period extends beyond the Maturity Date).
(b) Administrative Fee . Borrower shall pay to Lender an administrative fee (the “Administrative Fee”) of Twenty Five Thousand and No/100 Dollars ($25,000.00) per annum, first due and payable on the Closing Date and then on each anniversary thereof.
(c) Payments Absolute . All payments and other amounts due under the Note, this Agreement and the other Loan Documents shall be made without any setoff, defense or irrespective of, and without deduction for, counterclaims.
 
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2.2.2 Interest Calculation .
Interest on the outstanding principal balance of the Loan shall be calculated by multiplying (a) the actual number of days elapsed in the period for which the calculation is being made by (b) a daily rate equal to the Applicable Interest Rate or the Default Rate, as applicable, divided by three hundred sixty (360) by (c) the outstanding principal balance.
2.2.3 LIBOR Rate Unascertainable; Illegality; Increased Costs .
(a) In the event that Lender shall have determined (which determination shall be conclusive absent manifest error) that by reason of circumstances affecting the interbank eurodollar market, adequate and reasonable means do not exist for ascertaining LIBOR for the next succeeding Interest Period, then Lender shall forthwith give notice by telephone and facsimile of such determination, to Borrower at least one (1) Business Day prior to the last day of the current Interest Period, with a written confirmation of such determination promptly thereafter. If such notice is given, the Loan shall bear interest at the Adjusted Prime Rate beginning on the first day of the next succeeding Interest Period. If, pursuant to the terms of this Section 2.2.3(a), the Loan is bearing interest at the Adjusted Prime Rate and Lender shall determine (which determination shall be conclusive absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, Lender shall give notice thereof to Borrower by telephone and facsimile of such determination, confirmed in writing, to Borrower as soon as reasonably practical, but in no event later than one (1) Business Day prior to the last day of the then current Interest Period. If such notice is given, the Loan shall bear interest at the Applicable Interest Rate beginning on the first day of the next succeeding Interest Period. Notwithstanding any provision of this Agreement to the contrary, in no event shall Borrower have the right to elect to have the Loan bear interest at the Adjusted Prime Rate.
(b) If any requirement of law or any change therein or in the interpretation or application thereof, shall hereafter make it unlawful for Lender in good faith to make or maintain the portion of the Loan bearing interest at the Applicable Interest Rate, (I) the obligation of Lender hereunder to make the Loan bearing interest at the Applicable Interest Rate shall be canceled forthwith and (II) the Loan shall automatically bear interest at the Adjusted Prime Rate on the next succeeding Payment Date or within such earlier period as required by Applicable Law. Borrower hereby agrees promptly to pay Lender (within ten (10) Business Days of Lender’s written demand therefor), any additional amounts necessary to compensate Lender for any reasonable costs incurred by Lender in making any conversion in accordance with this Agreement, including, without limitation, any interest or fees payable by Lender to lenders of funds obtained by it in order to make or maintain the Loan hereunder. Any such demand for payment from Lender shall demonstrate in reasonable detail the circumstances giving rise to Lender’s determination and the calculation substantiating the Adjusted Prime Rate and any additional costs incurred by Lender in making the conversion. Lender’s written notice of such costs, as certified to Borrower, shall be conclusive absent manifest error.
 
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(c) In the event that any change in any requirement of any Applicable Law or in the interpretation or application thereof, or compliance in good faith by Lender with any request or directive (whether or not having the force of law) hereafter issued from any Governmental Authority which is generally applicable to all Lenders subject to such Governmental Authority’s jurisdiction:
(i) shall hereafter impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of LIBOR hereunder;
(ii) shall, if the Loan is then bearing interest at the Applicable Interest Rate, hereafter have the effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by any amount deemed by Lender to be material; or
(iii) shall, if the Loan is then bearing interest at the Applicable Interest Rate, hereafter impose on Lender any other condition, the result of which is to increase the cost to Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;
then, in any such case, Borrower shall promptly pay Lender (within ten (10) Business Days of Lender’s written demand therefor), any additional amounts necessary to compensate Lender for such additional cost or reduced amount receivable which Lender deems to be material. If Lender becomes entitled to claim any additional amounts pursuant to this Section 2.2.3(c), Lender shall provide Borrower with written notice specifying in reasonable detail the event or circumstance by reason of which it has become so entitled and the additional amount required to fully compensate Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence submitted by Lender to Borrower shall be conclusive absent manifest error. This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under the Note, this Agreement and the other Loan Documents for a period of one (1) year; provided, however, that Borrower shall be responsible for only any such costs or amounts incurred by Lender prior to repayment of the Note in full and satisfaction of all such obligations of Borrower under the Note.
 
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(d) Borrower agrees to indemnify Lender and to hold Lender harmless from any loss or expense which Lender sustains or incurs as a consequence of any prepayment (whether voluntary or mandatory) of the Loan on a day that is not a Payment Date, including, without limitation, such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Applicable Interest Rate hereunder (“Breakage Costs”). This provision shall survive payment of the Note and the satisfaction of all other obligations of Borrower under this Agreement and the other Loan Documents.
2.2.4 Payment on Maturity Date .
Borrower shall pay to Lender on the Maturity Date the outstanding principal balance, all accrued and unpaid interest thereon, and all other amounts due hereunder and under the Note, the Pledge Agreements and the other Loan Documents, including, without limitation, all interest that would accrue on the outstanding principal balance of the Loan through and including the end of the Interest Period in which the Maturity Date occurs (even if such Interest Period extends beyond the Maturity Date).
2.2.5 Payments after Default .
Upon the occurrence and during the continuance of an Event of Default, (a) interest on the outstanding principal balance of the Loan and, to the extent permitted by Applicable Law, overdue interest and other amounts due in respect of the Loan, shall accrue at the Default Rate, calculated from the date such payment was due without regard to any grace or cure periods contained herein and (b) Lender shall be entitled to apply all Reserve Funds to the payment of the Debt in such order as Lender shall determine in its sole discretion, including, without limitation, alternating applications thereof between interest and principal. Interest at the Default Rate shall be computed from the occurrence of the Event of Default until the actual receipt and collection of the Debt (or that portion thereof that is then due). To the extent permitted by Applicable Law, interest at the Default Rate shall be added to the Debt, shall itself accrue interest at the same rate as the Loan and shall be secured by the Pledge Agreement. This paragraph shall not be construed as an agreement or privilege to extend the date of the payment of the Debt, nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of any Event of Default; the use of Reserve Funds as provided above shall not be deemed to cure or constitute a waiver of any Event of Default; and Lender retains its rights under the Note to accelerate and to continue to demand payment of the Debt upon the happening of any Event of Default, despite any such application of Reserve Funds.
2.2.6 Late Payment Charge .
If any principal, interest or any other sums due under the Loan Documents is not paid by Borrower on the date on which it is due, except for the sum payable on the Maturity Date or payable upon the occurrence of an Event of Default which results in the acceleration of the Maturity Date, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by Applicable Law in order to defray the expense incurred by Lender in handling and processing such delinquent payment and to compensate Lender for the loss of the use of such delinquent payment. Any such amount shall be secured by the Pledge Agreements, the Security Instruments and the other Loan Documents to the extent permitted by Applicable Law.
 
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2.2.7 Usury Savings .
This Agreement and the Note are subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance of the Loan at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the sums due under the Loan, shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated, and spread throughout the full stated term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the Maximum Legal Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is outstanding.
2.2.8 Indemnified Taxes .
(a) All payments made by Borrower hereunder shall be made free and clear of, and without reduction for or on account of, Indemnified Taxes, excluding (i) Indemnified Taxes measured by Lender’s net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which Lender is resident or organized, or any political subdivision thereof, (ii) taxes measured by Lender’s overall net income, and franchise taxes imposed on it, by the jurisdiction of Lender’s applicable lending office or any political subdivision thereof or in which Lender is resident or engaged in business, and (iii) withholding taxes imposed by the United States of America, any state, commonwealth, protectorate territory or any political subdivision or taxing authority thereof or therein as a result of the failure of Lender which is a Non-U.S. Entity to comply with the terms of paragraph (b) below. If any non excluded Indemnified Taxes are required to be withheld from any amounts payable to Lender hereunder, the amounts so payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all non excluded Indemnified Taxes) interest or any such other amounts payable hereunder at the rate or in the amounts specified hereunder. Whenever any non excluded Indemnified Tax is payable pursuant to Applicable Law by Borrower, Borrower shall send to Lender an original official receipt showing payment of such non excluded Indemnified Tax or other evidence of payment reasonably satisfactory to Lender. Borrower hereby indemnifies Lender for any incremental taxes, interest or penalties that may become payable by Lender which may result from any failure by Borrower to pay any such non excluded Indemnified Tax when due to the appropriate taxing authority or any failure by Borrower to remit to Lender the required receipts or other required documentary evidence.
 
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(b) In the event that Lender or any successor and/or assign of Lender is not incorporated under the laws of the United States of America or a state thereof (a “Non-U.S. Entity”) Lender agrees that, prior to the first date on which any payment is due such entity hereunder, it will deliver to Borrower, as applicable, (i) two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be, certifying in each case that such entity is entitled to receive payments under the Note, without deduction or withholding of any United States federal income taxes; or (ii) in the case of a Non-U.S. Entity claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code (x) a certificate to the effect that the Non-U.S. Entity is not a “bank,” a “10 percent shareholder” or a “controlled foreign corporation” as described in section 881 of the Code and (y) a Form W-8BEN. Each entity required to deliver to Borrower the forms described in the previous sentence further undertakes to deliver to Borrower two further copies of such forms, or successor applicable forms, or other manner of certification, as the case may be, on or before the date that any such form expires (which, in the case of the Form W-8ECI, is the last day of each U.S. taxable year of the Non-U.S. Entity) or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to Borrower, and such other extensions or renewals thereof as may reasonably be requested by Borrower, certifying that such entity is entitled to receive payments under the Note without deduction or withholding of any United States federal income taxes, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such entity from duly completing and delivering any such form with respect to it and such entity advises Borrower that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.
(c) This Section 2.2.8 shall survive payment of the Note and the satisfaction of all other obligations of Borrower under the Note, this Agreement and the other Loan Documents for a period of one (1) year; provided, however, that Borrower shall be responsible for only any such tax incurred by Lender prior to repayment of the Note in full and satisfaction of all such obligations of Borrower under the Note.
Section 2.3 Prepayments .
2.3.1 Voluntary Prepayments .
On any Business Day, Borrower may, at its option, prepay the Loan in whole or in part, upon satisfaction of the following conditions:
(a) Borrower shall provide prior written notice to Lender specifying the Payment Date (the “Prepayment Date”) upon which the prepayment is to be made, which notice shall be delivered to Lender not less than five (5) Business Days prior to such Prepayment Date; and
 
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(b) Borrower shall pay to Lender, simultaneously with such prepayment, (i) all accrued and unpaid interest calculated at the Applicable Interest Rate on the amount of principal being prepaid through and including the Prepayment Date together with an amount equal to the interest that would have accrued at the Applicable Interest Rate on the amount of principal being prepaid through the end of the Interest Period in which such prepayment occurs, notwithstanding that such Interest Period extends beyond the date of prepayment; (ii) Breakage Costs, if any, without duplication of any sums paid pursuant to the preceding clause (i); and (iii) all other sums then due under this Agreement, the Note or the other Loan Documents.
If a notice of prepayment is given by Borrower to Lender pursuant to this Section 2.3.1, the amount designated for prepayment and all other sums required under this Section 2.3.1 shall be due and payable on the Prepayment Date unless Borrower revokes such notice in writing on or before two (2) Business Days prior to such Prepayment Date. In the event of such revocation, Borrower shall promptly pay to Lender all reasonable out-of-pocket expenses incurred by Lender in connection with the cancelled prepayment.
2.3.2 Liquidation Events .
(a) In the event of (i) any Casualty to all or any portion of the Property, (ii) any Condemnation of all or any portion of the Property or (iii) any refinancing of the Property (each, a “Liquidation Event”), Borrower shall cause the related Net Liquidation Proceeds, if any, to be deposited directly into an account designated by Lender. On each date on which Lender actually receives a distribution of Net Liquidation Proceeds, if such date is a Payment Date, such Net Liquidation Proceeds shall be applied to the outstanding principal balance of the Note, together with interest that has accrued on such amount up to such date and all other sums then due, in an amount up to one hundred percent (100%) of such Net Liquidation Proceeds. In the event Lender receives a distribution of Net Liquidation Proceeds on a date other than a Payment Date, such amounts shall be held by Lender as collateral security for the Loan in an interest bearing account, with such interest accruing to the benefit of Borrower, and shall all be applied by Lender on the next Payment Date. Any Net Proceeds remaining after the payment of such principal balance, accrued interest, and other sums shall be paid to, or at the direction of, Borrower.
(b) Borrower shall promptly notify Lender of any Liquidation Event once Borrower has knowledge of such event. Borrower shall be deemed to have knowledge of (i) a sale (other than a foreclosure sale) of the Property on the date on which a contract of sale for such sale is entered into, and a foreclosure sale, on the date notice of such foreclosure sale is given, and (ii) a refinancing of the Property, on the date on which a binding commitment for such refinancing is entered into. The provisions of this Section 2.3.2 shall not be construed to contravene in any manner the restrictions and other provisions regarding Transfer of the Property set forth in this Agreement and the other Loan Documents.
2.3.3 Making of Payments .
Each payment by Borrower hereunder or under the Note shall be made in funds settled through the New York Clearing House Interbank Payments System or other funds immediately available to Lender by 1:00 p.m., New York City time, on or prior to the date such payment is due, to Lender by deposit to such account as Lender may designate by written notice to Borrower. Whenever any payment hereunder or under the Note shall be stated to be due on a day which is not a Business Day, such payment shall instead be due on the first Business Day succeeding such scheduled due date.
 
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2.3.4 Application of Prepayments .
All prepayments received pursuant to this Section 2.3 and Section 2.5 shall be applied as follows: (a) first, to interest on the outstanding principal balance being prepaid that accrued through and including the Prepayment Date, (b) second, to interest on the outstanding principal balance being prepaid that would have accrued through the end of the Interest Period in which the prepayment occurred, notwithstanding that such Interest Period extends beyond the date of prepayment, (c) third, to Breakage Costs, if any, without duplication of any sums paid pursuant to the preceding clause (b); (d) fourth, to all other sums due under this Agreement, the Note or the other Loan Documents in connection with a partial or total prepayment, and (e) fifth, to the payments of principal due under the Loan in the inverse order of maturity.
Section 2.4 Interest Rate Cap Agreement .
(a) Borrower shall obtain, or cause to be obtained, and shall thereafter maintain in effect, an Interest Rate Cap Agreement with an Acceptable Counterparty, which shall be coterminous with the Loan and have a notional amount which shall not at any time be less than the outstanding principal balance of the Loan and which shall at all times have a strike rate no greater than the Strike Rate. The Counterparty shall be obligated under the Interest Rate Cap Agreement to make monthly payments equal to the excess of LIBOR over the Strike Rate, calculated on the notional amount. The notional amount of the Interest Rate Cap Agreement may be reduced from time to time in amounts equal to any prepayment of the principal of the Loan in accordance with Section 2.3 hereof.
(b) Borrower shall collaterally assign to Lender pursuant to an assignment of interest rate cap agreement all of its right, title and interest to receive any and all payments under the Interest Rate Cap Agreement (and any related guarantee, if any) and shall deliver to Lender an executed counterpart of such Interest Rate Cap Agreement and notify the Counterparty of such collateral assignment (either in such Interest Rate Cap Agreement or by separate instrument). The Counterparty shall agree in writing to make all payments it is required to make under the Interest Rate Cap Agreement directly to the Lockbox Account. At such time as the Loan is repaid in full, all of Lender’s right, title and interest in the Interest Rate Cap Agreement shall terminate and Lender shall promptly execute and deliver at Borrower’s sole cost and expense, such documents as may be required to evidence Lender’s release of Lender’s security interest in the Interest Rate Cap Agreement and to notify the Counterparty of such release.
 
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(c) Borrower shall comply with all of its obligations under the terms and provisions of the Interest Rate Cap Agreement. All amounts paid by the Counterparty under the Interest Rate Cap Agreement shall be deposited immediately into the Lockbox Account. Borrower shall take all actions reasonably requested by Lender to enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a default by the Counterparty and shall not waive, amend or otherwise modify any of its rights thereunder.
(d) In the event of any downgrade, withdrawal or qualification of the rating of the Counterparty by the Rating Agencies below the level required to be maintained under the definition of Acceptable Counterparty, Borrower shall replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap Agreement with an Acceptable Counterparty not later than thirty (30) days following receipt of notice from Lender or Servicer of such downgrade, withdrawal or qualification.
(e) In the event that Borrower fails to purchase and deliver to Lender the Interest Rate Cap Agreement or any Replacement Interest Cap Agreement as and when required hereunder, Lender may purchase such Interest Rate Cap Agreement and the cost incurred by Lender in purchasing such Interest Rate Cap Agreement shall be paid by Borrower to Lender with interest thereon at the Default Rate from the date such cost was incurred by Lender until such cost is paid by Borrower to Lender.
(f) Each Interest Rate Cap Agreement shall contain the following language or its equivalent: “In the event of any downgrade, withdrawal or qualification of the rating of the Counterparty by the Rating Agencies below “AA-” (or the equivalent), the Counterparty must, within 30 days, either (x) post collateral on terms acceptable to each Rating Agency or (y) find a replacement Acceptable Counterparty, at the Counterparty’s sole cost and expense, acceptable to each Rating Agency (notwithstanding the foregoing, if the Counterparty’s rating is downgraded to “A” or lower, only the option described in clause (y) will be acceptable); provided that, notwithstanding such a downgrade, withdrawal or qualification, unless and until the Counterparty transfers the Interest Rate Cap Agreement to a replacement Acceptable Counterparty pursuant to the foregoing clause (y), the Counterparty will continue to perform its obligations under the Interest Rate Cap Agreement. Failure to satisfy the foregoing shall constitute an Additional Termination Event as defined by Section 5(b)(v) of the ISDA Master Agreement, with the Counterparty as the Affected Party.”
(g) In connection with an Interest Rate Cap Agreement, Borrower shall obtain and deliver to Lender an opinion of counsel from counsel for the Counterparty (upon which Lender and its successors and assigns may rely) which shall provide, in relevant part, unless otherwise agreed to by Lender, that:
(1) the Counterparty is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Interest Rate Cap Agreement;
 
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(2) the execution and delivery of the Interest Rate Cap Agreement by the Counterparty, and any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by-laws (or equivalent Organizational Documents) or any law, regulation or contractual restriction binding on or affecting it or its property;
(3) all consents, authorizations and approvals required for the execution and delivery by the Counterparty of the Interest Rate Cap Agreement, and any other agreement which the Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any governmental authority or regulatory body is required for such execution, delivery or performance; and
(4) the Interest Rate Cap Agreement, and any other agreement which the Counterparty has executed and delivered pursuant thereto, has been duly executed and delivered by the Counterparty and constitutes the legal, valid and binding obligation of the Counterparty, enforceable against the Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
Section 2.5 Release on Payment in Full .
Lender shall, upon the written request and at the expense of Borrower, upon payment in full of all principal and interest on the Loan and all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, release the Liens of (i) the Mortgages on the Owner Parties’ leasehold estates in the Property and on King’s Village Subsidiary’s fee simple absolute estate in “Ti Leaf Parcel,” (ii) the Pledge Agreements and (iii) other Security Instruments on the Collateral and the Property not theretofore released, and remit any remaining Reserve Funds to, or at the direction of, Borrower.
 
 	III.	CASH MANAGEMENT	
Section 3.1 Establishment of Accounts .
Borrower shall, promptly after the execution and delivery hereof, (i) establish an account with the Collection Account Bank (together with all subaccounts thereunder and/or related accounts, the “Collection Account”) in trust for the benefit of Lender, into which Borrower shall deposit or cause Manager and/or King’s Village Manager to deposit all Gross Income from Operations as provided in this Agreement, and (ii) execute an agreement with the Collection Account Bank and Lender (the “Collection Account Agreement”) providing for the control of the Collection Account by Lender as provided in this Agreement.
 
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Borrower shall also, promptly after the execution and delivery hereof, (i) establish an account with the Lockbox Bank (the “Lockbox Account”) in trust for the benefit of Lender, into which Borrower shall deposit or cause Manager and/or King’s Village Manager to deposit the Owner’s Remittance Amount and/or Retail Owner’s Remittance Amount, as applicable, in accordance with Sections 3.2 and 3.6 hereof, and (ii) execute an agreement with the Lockbox Bank and Lender (the “Lockbox Agreement”) providing for the control of the Lockbox Account by Lender and establishing the following Accounts (which may be book entry sub-accounts) at the Lockbox Bank into which the Owner’s Remittance Amount and Retail Owner’s Remittance Amount shall be deposited or allocated at the direction of Lender (collectively, the “Subaccounts”):
(a) An Account into which Borrower shall deposit, or cause to be deposited, the Monthly Ground Rent Amount (the “Ground Rent Account”);
(b) An Account into which Borrower shall deposit, or cause to be deposited, the Monthly Tax Deposit, and if applicable, the Monthly Insurance Premium Deposit (the “Tax and Insurance Account”);
(c) An Account into which Borrower shall deposit, or cause to be deposited, the Monthly Debt Service Payment Amount (the “Debt Service Account”);
(d) An Account into which Borrower shall deposit, or cause to be deposited, to the extent required hereunder, the FF&E Reserve Monthly Deposit (the “FF&E Reserve Account”);
(e) An Account into which Borrower shall deposit, or cause to be deposited, the Monthly Mezzanine Debt Service Payment Amount (the “Mezzanine Debt Service Account”); and
(f) An Account into which Borrower shall deposit, or cause to be deposited, to the extent required hereunder, the Interest Reserve Fund (the “Interest Reserve Account”).
Section 3.2 Deposits into Collection Account and Lockbox Account .
(a) Borrower shall cause Manager and/or King’s Village Manager on behalf of Borrower to deposit all funds constituting Gross Income from Operations promptly after receipt thereof into the Collection Account, in accordance with the terms of the Management Agreement and the King’s Village Management Agreement. Borrower shall (a) cause FF&E Subsidiary to (i) direct Manager to deposit all Gross Income from Operations from the Hotel into the Collection Account each month, and (ii) hold all funds constituting Gross Income from Operations from the Hotel prior to deposit into the Collection Account, in trust, for the benefit of Lender; and (b) cause King’s Village Subsidiary to (i) direct King’s Village Manager to deposit all Gross Income from Operations from King’s Village into the Collection Account each month, and (ii) hold all funds constituting Gross Income from Operations from King’s Village prior to deposit into the Collection Account, in trust, for the benefit of Lender.
 
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(b) Borrower shall cause Manager and/or King’s Village Manager on behalf of Borrower, on no less than a monthly basis, to deposit all funds constituting the Owner’s Remittance Amount and the Retail Owner’s Remittance Amount into the Lockbox Account, each in accordance with the terms of the Management Agreement and the King’s Village Management Agreement. Borrower shall (a) cause FF&E Subsidiary to (i) direct Manager to deposit the Owner’s Remittance Amount into the Lockbox Account each month, and (ii) hold all funds constituting the Owner’s Remittance Amount prior to deposit into the Lockbox Account, in trust, for the benefit of Lender; and (b) cause King’s Village Subsidiary to (i) direct King’s Village Manager to deposit the Retail Owner’s Remittance Amount into the Lockbox Account each month, and (ii) hold all funds constituting the Retail Owner’s Remittance Amount prior to deposit into the Lockbox Account, in trust, for the benefit of Lender.
Section 3.3 Account Name .
(a) The Accounts shall each be in the name of Borrower, but for the benefit of, and under the dominion and control of, Lender.
(b) In the event Lender transfers or assigns the Loan, Borrower acknowledges that the Collection Account Bank and Lockbox Bank, at Lender’s request, shall change the name of each Account to incorporate the name of the transferee or assignee. In the event Lender retains a servicer to service the Loan, Borrower acknowledges that the Collection Account Bank and Lockbox Bank, at Lender’s request, shall change the name of each Account to incorporate the name of the servicer, as agent for Lender.
Section 3.4 Eligible Accounts .
Borrower shall, and Borrower shall cause Collection Account Bank and Lockbox Bank to, maintain each Account located thereat as an Eligible Account.
Section 3.5 Permitted Investments .
Sums on deposit in any Subaccount may be invested in Permitted Investments provided (i) such investments are then regularly offered by Lockbox Bank for accounts of this size, category and type, (ii) such investments are permitted by Applicable Law, (iii) the maturity date of the Permitted Investment is not later than the date on which sums in the applicable Account are anticipated by Lender to be required for payment of an obligation for which such Subccount was created, and (iv) no Event of Default shall have occurred and be continuing. All income earned from Permitted Investments shall be the property of Borrower. Borrower hereby irrevocably authorizes and directs Lockbox Bank to hold any income earned from Permitted Investments as part of the Subaccounts. Borrower shall be responsible for payment of any federal, state or local income or other tax applicable to income earned from Permitted Investments. No other investments of the sums on deposit in the Subaccounts shall be permitted except as set forth in this Section 3.5. Lender shall not be liable for any loss sustained on the investment of any funds constituting the Reserve Funds or of any funds deposited in the related Subaccounts.
 
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Section 3.6 The Initial Deposits .
Lender shall determine, in its reasonable discretion, the initial deposit amounts (the “Initial Deposits”) required to be deposited in each of the Ground Rent Account and the Tax and Insurance Account, and Borrower shall deposit the respective Initial Deposits into each such Account promptly after the execution and delivery hereof.
Section 3.7 Transfers to and Disbursements from Collection Account and Lockbox Account .
So long as Lender has not notified Collection Account Bank in writing of both the occurrence of an Event of Default hereunder and the termination of the Hotel Management Agreement due to a default thereunder, all funds in the Collection Account may be used to pay Property operating expenses as provided in the Hotel Management Agreement, with all funds constituting the Owner’s Remittance Amount and the Retail Owner’s Remittance Amount to be deposited into the Lockbox Account in accordance with the terms of the Hotel Management Agreement.
Pursuant to the terms of the Lockbox Agreement, Lockbox Bank shall, so long as Lender has not notified Lockbox Bank in writing of an Event of Default hereunder, withdraw all funds on deposit in the Lockbox Account on the date immediately preceding each Payment Date (and if such day is not a Business Day then the succeeding day which is a Business Day), and shall disburse the funds in the Lockbox Account in the following order of priority:
(a) First, funds sufficient to pay the Monthly Ground Rent Amount shall be deposited into the Ground Rent Account;
(b) Second, funds sufficient to pay the Monthly Tax Deposit and, if applicable, the Monthly Insurance Premium Deposit, shall be deposited into the Tax and Insurance Account;
(c) Third, funds sufficient to pay the Monthly Debt Service Payment Amount shall be deposited into the Debt Service Account;
(d) Fourth, funds sufficient to pay the FF&E Reserve Monthly Deposit shall be deposited into the FF&E Reserve Account, to the extent same are not being reserved under the Management Agreement in a manner reasonably satisfactory to Lender;
(e) Fifth, funds sufficient to pay the Monthly Mezzanine Debt Service Payment Amount shall be deposited into the Mezzanine Debt Service Account and disbursed to or at the direction of Borrower; and
 
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(f) Lastly, (i) if Lender has notified Lockbox Bank in writing that a Trigger Event has occurred and Lender has not notified Lockbox Bank in writing that such Trigger Event is no longer continuing, all amounts remaining in the Lockbox Account shall be deposited into the Interest Reserve Account; or (ii) otherwise, such amounts shall be disbursed to or at the direction of Borrower. Upon receipt of notice from Lender that a Trigger Event is no longer continuing, Lockbox Bank shall disburse all amounts in the Interest Reserve Account to or at the direction of Borrower.
Section 3.8 Withdrawals from Subaccounts .
Lender shall have the right to withdraw funds from the Subaccounts in accordance with the provisions of Article VII hereof.
Section 3.9 Sole Dominion and Control .
Borrower acknowledges and agrees that the Accounts are subject to the sole dominion and control of Lender, its authorized agents or designees, subject to the terms hereof, the Collection Account Agreement and the Lockbox Agreement; and Borrower shall have no right of withdrawal with respect to any Account except with the prior written consent of Lender or as otherwise may be provided herein, in the Collection Account Agreement or in the Lockbox Agreement.
Section 3.10 Security Interest .
Borrower hereby grants to Lender a first priority security interest in each of the Accounts and the Account Collateral as additional security for the Debt.
Section 3.11 Rights on Default .
Notwithstanding anything to the contrary in this Article III, upon the occurrence of an Event of Default, Lender may promptly notify Collection Account Bank and Lockbox Bank in writing of such Event of Default and, without notice from Collection Account Bank, Lockbox Bank or Lender, (a) Borrower shall have no further right in respect of (including, without limitation, the right, if any, to instruct Collection Account Bank or Lockbox Bank to transfer from) the Accounts, (b) Lender may direct Collection Account Bank and Lockbox Bank to liquidate and transfer any amounts then invested in Permitted Investments to the Accounts or reinvest such amounts in other Permitted Investments as Lender may reasonably determine is necessary to perfect or protect any security interest granted or purported to be granted hereby or pursuant to the other Loan Documents or to enable Collection Account Bank and/or Lockbox Bank, as agent for Lender, or Lender to exercise and enforce Lender’s rights and remedies hereunder or under any other Loan Document with respect to any Account or any Account Collateral, and (c) Lender shall have all rights and remedies with respect to the Accounts and the amounts on deposit therein and the Account Collateral as described in this Agreement and in the Pledge Agreements, in addition to all of the rights and remedies available to a secured party under the UCC, and, notwithstanding anything to the contrary contained in this Agreement or in the Pledge Agreements or the Debt Guaranty, Lender may apply the amounts of such Accounts as Lender determines in its sole discretion including, but not limited to, payment of the Debt.
 
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Section 3.12 Financing Statement; Further Assurances .
Borrower hereby authorizes Lender to file, and upon Lender’s request, shall execute and deliver to Lender for filing, a financing statement or statements under the UCC in connection with any of the Accounts and the Account Collateral with respect thereto in the form required to properly perfect Lender’s security interest therein. Borrower agrees that at any time and from time to time, at the expense of Borrower, Borrower will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby (including, without limitation, any security interest in and to any Permitted Investments) or to enable Collection Account Bank, Lockbox Bank or Lender to exercise and enforce its rights and remedies hereunder with respect to any Account or Account Collateral.
Section 3.13 Borrower’s Obligation Not Affected .
The insufficiency of funds on deposit in the Accounts shall not absolve Borrower of the obligation to make any payments, as and when due pursuant to this Agreement and the other Loan Documents, and such obligations shall be separate and independent, and not conditioned on any event or circumstance whatsoever. Notwithstanding the foregoing, Borrower’s obligation to fund the Monthly Mezzanine Debt Service Payment Amount pursuant to Section 3.7 hereof shall be limited to the amount of any Owner’s Remittance Amount and Retail Owner’s Remittance Amount available after depositing the amounts required with respect to clauses (a) through (d) in Section 3.7.
Section 3.14 Payments Received Under This Agreement .
Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, and provided no Event of Default has occurred and is continuing, Borrower’s obligations with respect to the monthly deposits required to be made to the Debt Service Fund, the Tax and Insurance Escrow Fund, Ground Rent Escrow Fund and any other payment reserves established pursuant to this Agreement or any other Loan Document shall (provided Lender is not prohibited from withdrawing or applying any funds in the Accounts by Applicable Law or otherwise) be deemed satisfied to the extent sufficient amounts are deposited in the Lockbox Account established pursuant to this Agreement to satisfy such obligations on the dates each such payment is required, regardless of whether any of such amounts are so applied by Lender.
Section 3.15 Waiver of Funding of Reserve Funds .
Notwithstanding the foregoing, Lender, in its sole and absolute discretion, may waive the funding of any Reserve Funds if Lender is reasonably satisfied that such amounts are unnecessary for the payment of Taxes, Insurance Premiums, Ground Rent or other Operating Expenses because such amounts are being reserved and funded pursuant to the Management Agreement and King’s Village Management Agreement or another agreement(s) to which Manager and/or King’s Village Manager is a party.
 
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Section 3.16 Additional Escrows .
At Lender’s option, upon five (5) Business Days’ prior notice to Borrower, Lender may establish such additional escrows as it reasonably deems necessary to protect the Collateral or the Property. Any such additional escrows shall be established and operated in a manner consistent with the provisions of this Article III and Article VII hereof.
 
 	IV.	BORROWER REPRESENTATIONS AND WARRANTIES	
Section 4.1 Borrower Representations .
Borrower represents and warrants as of the Closing Date that:
4.1.1 Organization .
(a) Borrower is duly organized and is validly existing and in good standing in the jurisdiction in which it is organized, with requisite power and authority to own its assets and to transact the businesses in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with its assets, its businesses and operations. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its assets and to transact the businesses in which it is now engaged. Attached hereto as Schedule II is an organizational chart of Borrower. Borrower has delivered to Lender true and correct copies of the Organizational Documents for Borrower and each Owner Party, all of which are in full force and effect.
(b) Each of the Owner Parties is duly organized and is validly existing and in good standing in the jurisdiction in which it is organized, with requisite power and authority to own the Property and to transact the businesses in which it is now engaged. Each of the Owner Parties is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with the Property, its businesses and operations. Each of the Owner Parties possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own the Property and to transact the businesses in which it is now engaged.
4.1.2 Proceedings .
(a) Borrower has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents, and has the power and authority to execute, deliver and perform under this Agreement, the other Loan Documents and all the transactions contemplated hereby. This Agreement and the other Loan Documents have been duly executed and delivered by or on behalf of Borrower and constitute legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
 
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(b) Each of the Owner Parties and each of the Guarantors has taken all necessary action to authorize the execution, delivery and performance of the Loan Documents to which it is a party, and has the power and authority to execute, deliver and perform under the applicable Loan Documents and all the transactions contemplated hereby. Such Loan Documents have been duly executed and delivered by or on behalf of such Owner Party and such Guarantor and constitute legal, valid and binding obligations of such Owner Party and such Guarantor enforceable against each in accordance with their respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
4.1.3 No Conflicts .
The execution, delivery and performance of this Agreement and the other Loan Documents by Borrower, the Owner Parties or each Guarantor will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of their respective property or assets pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, management agreement, franchise agreement, or other agreement or instrument to which any of them is a party or by which any of their respective property or assets is subject, nor will such action conflict with any of the Organizational Documents of Borrower or any Owner Party, nor will such action result in any violation of the provisions of any law or statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over any of them or any of their respective property or other assets, or any license or other approval required to own and manage the Property, and any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by any of them or their respective obligations under this Agreement or any other Loan Documents have been obtained and is in full force and effect.
4.1.4 Litigation .
There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or, to the knowledge of Borrower and the Owner Parties, threatened against or affecting Borrower, any Owner Party, any Guarantor, the Collateral or the Property, which actions, suits or proceedings, if adversely determined against Borrower, any Owner Party, any Guarantor, the Collateral or the Property, is reasonably likely to materially and adversely affect the condition (financial or otherwise) or business of Borrower, any Owner Party, any Guarantor, the Collateral or the Property or its ability to carry out the transactions contemplated by this Agreement.
 
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4.1.5 Agreements .
Except for such agreements or instruments as constitute Permitted Encumbrances, neither Borrower nor any Owner Party is a party to any Material Agreement except those described in Schedule VII attached hereto and made a part hereof, or one or more Ordinary Contract(s) in the aggregate, which might materially and adversely affect the condition (financial or otherwise) or business of Borrower, any Owner Party, any Guarantor, the Collateral or the Property. Neither Borrower nor any Owner Party is in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Material Agreement, or one or more Ordinary Contract(s) in the aggregate, which default would have a material and adverse effect on Borrower, any Owner Party, the Collateral or the Property. Neither Borrower nor any Owner Party has any material financial obligation under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower or such Owner Party is a party or by which Borrower, any Owner Party, any Guarantor, the Collateral or the Property is otherwise bound, other than (a) obligations under the Ground Leases, the Operating Lease, the Leases, the King’s Village Management Agreement, the Management Agreement, the Hotel Management Agreement, the Security Instruments and all Material Agreements and Ordinary Contracts, (b) obligations under Permitted Encumbrances, (c) obligations incurred in the ordinary course of the business relating to Borrower’s ownership and operation of the Collateral, (d) obligations incurred in the ordinary course of the business relating to any Owner Party’s ownership and operation of the Property and (e) obligations under the Loan Documents.
4.1.6 Solvency .
(a) Borrower (i) has not entered into the transaction or executed the Note, this Agreement or any other Loan Documents with the actual intent to hinder, delay or defraud any creditor and (ii) has received reasonably equivalent value in exchange for its obligations under the Loan Documents. Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will, immediately following the making of the Loan, exceed Borrower’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. Borrower’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to incur debt and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by Borrower and the amounts to be payable on or in respect of obligations of Borrower). No petition under the Bankruptcy Code or similar state bankruptcy or insolvency law has been filed against Borrower, any Owner Party or any Guarantor in the last seven (7) years, and neither Borrower, any Owner Party nor any Guarantor in the last seven (7) years has not made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. Neither Borrower, any Owner Party nor any Guarantor is contemplating either the filing of a petition by it under the Bankruptcy Code or similar state bankruptcy or insolvency law or the liquidation of all or a major portion of its respective assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it or such Owner Party or such Guarantor. As of the date hereof, Borrower is solvent and intends to remain solvent.
 
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(b) Each of the Owner Parties (i) has not entered into the transaction or executed any of the Loan Documents to which it is a party with the actual intent to hinder, delay or defraud any creditor and (ii) has received reasonably equivalent value in exchange for its obligations under such Loan Documents. Giving effect to the Loan, the fair saleable value of each Owner Party’s assets exceeds and will, immediately following the making of the Loan, exceed such Owner Party’s total liabilities, including, without limitation, subordinated, unliquidated, disputed and contingent liabilities. Each Owner Party’s assets do not and, immediately following the making of the Loan will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Each Owner Party does not intend to incur debt and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by such Owner Party and the amounts to be payable on or in respect of obligations of such Owner Party). As of the date hereof, each Owner Party is solvent and intends to remain solvent.
4.1.7 Full and Accurate Disclosure .
No statement of fact made by either Borrower, any Owner Party or any Guarantor in this Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained herein or therein not misleading. There is no fact presently known to either Borrower or any Owner Party which has not been disclosed to Lender which materially and adversely affects, or is reasonably likely to materially and adversely affect, the Collateral, the Property or the business, operations or condition (financial or otherwise) of Borrower, any Owner Party or any Guarantor.
4.1.8 No Plan Assets .
None of the assets of Borrower, any Owner Party or any Guarantor constitute or will constitute “Plan Assets” of one or more Plans. In addition, (a) neither Borrower nor any Owner Party is an “employee benefit plan,” as defined in Section 3(3) of ERISA, whether or not subject to Title I of ERISA, or a “plan” as defined in Section 4975 of the Code, (b) neither Borrower nor any Owner Party is a “governmental plan” within the meaning of Section 3(32) of ERISA and (c) transactions by or with Borrower or the Owner Parties are not subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Code currently in effect, which prohibit or otherwise restrict the transactions contemplated by this Agreement. The provisions of this Section 4.1.8 shall survive payment of the Note and the satisfaction of all other obligations of Borrower, the Owner Parties and the Guarantors under this Agreement and the other Loan Documents with respect to any claims that arose prior to repayment of the Loan.
 
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4.1.9 Compliance .
Borrower and the Owner Parties, and the Collateral and Property and the use thereof, comply in all material respects with all applicable Legal Requirements, including, without limitation, all Environmental Laws, building and zoning ordinances and codes, except with respect to (i) Hotel - Notice of Order (No. 2008/Noo-096) and (ii) Notice of Violation (No. 2008/NOV-04-092). The instances of noncompliance contained within such notices, taken as a whole, do not have a material adverse effect on the Property. Neither Borrower nor any Owner Party is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority. No Guarantor is in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority where such default or violation has, or is reasonably likely to have, a material adverse effect on the Property or the Collateral. There has not been committed by Borrower, any Owner Party or, to Borrower’s knowledge, any other Person in occupancy of or involved with the operation or use of the Property any act or omission affording the federal government or any other Governmental Authority the right of forfeiture as against the Property or any part thereof or any monies paid in performance of Borrower’s and the Owner Parties’ obligations under any of the Loan Documents.
4.1.10 Financial Information .
All financial data, including, without limitation, the statements of cash flow and income and operating expense, that have been delivered to Lender in respect of Borrower, the Owner Parties, the Guarantors, the Collateral and the Property (i) are true, complete and correct in all material respects, (ii) fairly represent in all material respects the financial condition of Borrower, the Owner Parties, the Guarantors, the Collateral and the Property, as applicable, as of the date of such reports, and (iii) have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein. Except for Permitted Encumbrances, neither Borrower, any Owner Party nor any Guarantor has any material contingent or material fixed liabilities that are known to Borrower or any Owner Party and reasonably likely to have a material and adverse effect on the Collateral or the Property or the operation thereof as a first-class, full-service hotel except as referred to or reflected in said financial statements. Since the date of such financial statements, there has been no material and adverse change in the financial condition, operations or business of Borrower or any Owner Party from that set forth in said financial statements; and to Borrower’s knowledge, there has been no such change with respect to any Guarantor.
4.1.11 Condemnation .
No Condemnation or other similar proceeding has been commenced or, to the knowledge of Borrower and the Owner Parties, is threatened or contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.
4.1.12 Federal Reserve Regulations .
No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the other Loan Documents.
 
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4.1.13 Utilities and Public Access .
The Property has rights of access to public ways and is served by public water, sewer, sanitary sewer and storm drain facilities adequate to service the Property for its intended use. All public utilities necessary or convenient to the full use and enjoyment of the Property are located either in the public right-of-way abutting the Property (which are connected so as to serve the Property without passing over other property) or in recorded easements serving the Property and such easements are set forth in and insured by the Title Insurance Policy. All roads necessary for the use of the Property for its current purpose have been completed, are physically open and are dedicated to public use and have been accepted by all Governmental Authorities.
4.1.14 Not a Foreign Person .
Neither Borrower, any Owner Party nor any Guarantor is a “foreign person” within the meaning of § 1445(f)(3) of the Code.
4.1.15 Separate Lots .
The Property is comprised of one (1) or more parcels which constitute a separate tax lot or lots and does not constitute a portion of any other tax lot not a part of the Property.
4.1.16 Assessments .
There are no pending or, to Borrower’s and the Owner Parties’ knowledge, proposed special or other assessments for public improvements or otherwise affecting the Property, nor, to Borrowers’ and the Owner Parties’ knowledge, are there any contemplated improvements to the Property that may result in such special or other assessments.
4.1.17 Enforceability .
The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, any Owner Party or any Guarantor, including the defense of usury, and neither Borrower, any Owner Party nor any Guarantor has asserted any right of rescission, set-off, counterclaim or defense with respect thereto.
4.1.18 No Prior Assignment .
There are no prior assignments by either Borrower or any Owner Party of any of the Ground Leases or any portion of the Ground Rent due and payable or to become due and payable on any other portion of the Property which are presently outstanding. There are no prior assignments of the Collateral which are presently outstanding.
 
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4.1.19 Insurance .
Borrower and the Owner Parties have obtained and delivered to Lender insurance certificates with respect to all Policies reflecting the insurance coverages, amounts and other requirements set forth in this Agreement with all premiums paid thereunder. No material claims with respect to the Property have been made under any of the Policies, and neither Borrower nor any Owner Party, nor to Borrower’s and the Owner Parties’ knowledge, any other Person, has done, by act or omission, anything which would impair the coverage of any such Policies.
4.1.20 Use of Property .
The Property is used exclusively for hotel purposes and as a retail shopping center and other appurtenant and related uses, including, but not limited to, retail, restaurants and lounges and convention center and parking facilities.
4.1.21 Certificate of Occupancy; Licenses .
All certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required for the legal use, occupancy, assembly and operation of the Property by the Owner Parties as a first-class, full-service hotel and a first-class office-retail facility (as applicable) (collectively, the “Licenses”), have been obtained and are in full force and effect and are not subject to revocation, suspension or forfeiture. The use being made of the Property is in conformity with the certificate of occupancy issued for the Property.
4.1.22 Flood Zone .
Except as disclosed on the Survey, the Property is not located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards. If the Property is so located, the flood insurance required pursuant to Section 6.1(a)(vii) hereof is in full force and effect.
4.1.23 Physical Condition .
To Borrower’s and the Owner Parties’ knowledge, the Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, are in good condition, order and repair in all material respects; there exists no structural or other material defects or damages in the Property, whether latent or otherwise, and neither Borrower nor any Owner Party has received notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would materially and adversely affect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.
 
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4.1.24 Boundaries .
Except as disclosed on the Title Insurance Policy and Survey, all of the Improvements which were included in determining the appraised value of the Property lie wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances upon the Property encroach upon any of the Improvements so as to materially and adversely affect the value or marketability of the Property.
4.1.25 Ground Leases; Operating Lease .
The Property is not subject to any ground leases or other “overleases” other than the Ground Leases. Borrower has delivered to Lender a true, correct and complete copy of each of the Ground Leases and the Operating Lease, including, without limitation, all extensions, amendments and modifications thereto.
4.1.26 Title .
(a) Each of Borrower and the Owner Parties purporting to grant a Lien on any Collateral is the record and beneficial owner of, and has good title to, the Collateral, free and clear of all Liens except for the Permitted Encumbrances. The Pledge Agreements, together with the UCC Financing Statements relating to the Collateral, when properly filed in the appropriate records, will create valid, perfected first priority security interests in and to such Collateral, all in accordance with the terms of the Pledge Agreements for which a Lien may be perfected by filing a UCC Financing Statement. For so long as the Lien of any of the Pledge Agreements is outstanding, Borrower shall forever warrant, defend and preserve such title and the validity and priority of such Lien and shall forever warrant and defend such title, validity and priority to Lender against the claims of all persons whomsoever.
(b) The Owner Parties (i) have good title to the Property, (ii) possess a leasehold interest in the Property except for the parcel known as “Ti Leaf Parcel,” for which King’s Village Subsidiary possesses a fee simple absolute estate, and (iii) hold such interests in the Property free and clear of all Liens except for the Permitted Encumbrances. The Permitted Encumbrances do not and will not materially adversely affect or interfere with the value, or materially and adversely affect or interfere with the current use or operation, of the Property or the ability of Borrower to repay the Note or any other amount owing under the Note, the Pledge Agreements, the Loan Agreement, or the other Loan Documents or to perform its obligations thereunder in accordance with the terms of the Loan Agreement, the Note, the Pledge Agreements or the other Loan Documents.
4.1.27 Leases .
Borrower has delivered to Lender a true, correct and complete copy of each of the Leases, including, without limitation, all extensions, amendments and modifications thereto. To Borrower’s and the Owner Parties’ knowledge, none of the Leases is in material default or has been assigned or pledged by any Owner Party except pursuant to the Loan Documents.
 
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4.1.28 Filing and Recording Taxes .
All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements currently in effect in connection with (i) the transfer of the Property to the Owner Parties, (ii) the transfer of the Collateral and interests in the Property to Borrower and the Owner Parties, (iii) the making of the Loan or (iv) the other transactions contemplated by this Agreement have been paid or will be paid concurrently with the funding of the Loan. All recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Pledge Agreements, have been paid or will be paid concurrently with the funding of the Loan.
4.1.29 King’s Village Management Agreement; Management Agreement .
The King’s Village Management Agreement is in full force and effect, King’s Village Subsidiary is not in default thereunder and, to Borrower’s knowledge, there is no default thereunder by any other party thereto, and no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder. Borrower has delivered to Lender a true, correct and complete copy of the King’s Village Management Agreement, without limitation, all extensions, amendments and modifications thereto.
The Management Agreement is in full force and effect, FF&E Subsidiary is not in default thereunder and, to Borrower’s knowledge, there is no default thereunder by any other party thereto, and no event has occurred that, with the passage of time and/or the giving of notice would constitute a default thereunder. Borrower has delivered to Lender a true, correct and complete copy of the Management Agreement, without limitation, all extensions, amendments and modifications thereto.
4.1.30 Illegal Activity .
No portion of the Property or the Collateral has been or will be purchased with proceeds of any illegal activity and to the knowledge of Borrower and the Owner Parties, there are no illegal activities or activities relating to any controlled substances at the Property.
4.1.31 Disclosure .
To Borrower’s and the Owner Parties’ knowledge, all information submitted by Borrower and/or any Owner Party to Lender and in all financial statements, rent rolls, reports, certificates and other documents submitted in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in this Agreement or in any other Loan Document, are accurate, complete and correct in all material respects. To Borrower’s and the Owner Parties’ knowledge, there has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or
 
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otherwise misleading in any material respect or that otherwise materially and adversely affects or might materially and adversely affect the use, operation or value of the Property or the business operations or the financial condition of Borrower, any Owner Party or any Guarantor. To Borrower’s and the Owner Parties’ knowledge, Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact that could cause any information described in this Section 4.1.31 or any representation or warranty made herein to be materially misleading.
4.1.32 Investment Company Act .
Neither Borrower nor any Owner Party is (a) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (c) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
4.1.33 Principal Place of Business; State of Organization .
(a) Borrower’s principal place of business as of the date hereof is the address set forth in the introductory paragraph of this Agreement. Borrower is organized under the laws of the State of Delaware.
(b) Owner’s principal place of business as of the date hereof is the same as the principal place of business of Borrower. Owner is organized under the laws of the State of Delaware.
(c) King’s Village Subsidiary’s principal place of business as of the date hereof is the same as the principal place of business of Borrower. King’s Village Subsidiary is organized under the laws of the State of Hawaii.
(d) FF&E Subsidiary’s principal place of business as of the date hereof is the same as the principal place of business of Borrower. FF&E Subsidiary is organized under the laws of the State of Delaware.
4.1.34 Single Purpose Entity – Borrower . Borrower covenants and agrees that it has not, and Borrower’s Organizational Documents shall provide that it shall not, and that the Organizational Documents of its general partner(s), if Borrower is a partnership, or its managing member(s), if Borrower is a limited liability company with multiple economic members (in each case, “Principal”), shall provide that it has not and shall not, except as specifically provided for in this Agreement:
(a) own any asset or property other than (i) its interest in the Collateral, as defined in the Borrower Pledge Agreement, and (ii) incidental personal property necessary for the ownership of such Collateral, if any;
 
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(b) engage in any business or activity other than the ownership, management and transfer, in accordance with the terms of this Agreement, of such Collateral, and Borrower will conduct and operate its business as presently conducted and operated and such activities as are necessary or incidental in connection therewith in accordance with the terms of the Loan Documents;
(c) enter into or be a party to any transaction, contract or agreement with any Guarantor or with any Affiliate of Borrower or any Guarantor, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties;
(d) incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (i) the Debt and (ii) liabilities incurred in the ordinary course of business relating to the ownership and routine administration of such Collateral, provided such debt is not evidenced by a promissory note and is not at any time in an aggregate amount in excess of two percent (2%) of the original principal amount of the Loan, and further provided that all such trade debts are paid within ninety (90) days after the same are incurred or invoiced. No indebtedness other than the Debt of Borrower may be secured (senior, subordinate or pari passu) by such Collateral. The foregoing notwithstanding concerning the 90-day payment period above, Borrower may contest in good faith by appropriate legal proceeding the validity of any permitted trade indebtedness, provided, that (1) Borrower provides at least ten (10) days’ prior written notice to Lender; (2) no Event of Default has occurred and is continuing; (3) Borrower will furnish such security as required in the legal proceeding, or as reasonably requested by Lender, which shall not be less than 125% of the trade payables being contested; and (4) no portion of such Collateral or interest therein shall be at risk by being sold or encumbered;
(e) make any loans or advances to (i) any third party; (ii) any Guarantor; (iii) any Affiliate of Borrower or any Guarantor; or (iv) any constituent party of Borrower, and shall not acquire obligations or securities of its Affiliates other than Borrower’s ownership interest in the Owner Parties;
(f) fail to, except as provided in the Loan Documents, pay its debts from its assets as the same shall become due;
(g) fail to do or cause to be done all things necessary to preserve its existence, and Borrower will not, nor will Borrower permit any Guarantor to, amend, modify or otherwise change the certificate of formation, partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of Borrower in a manner which would affect the special purpose, bankruptcy-remote related provisions or the definitions related thereto, without the prior written consent of Lender;
 
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(h) fail to maintain financial statements, accounting records, tax returns, books and records, bank accounts and other entity documents separate from those of its Affiliates and any constituent party of Borrower or any other person or entity, and Borrower shall maintain its books, records, resolutions and agreements as official records; provided, however, that if Borrower is a disregarded entity under federal tax law, then Borrower’s owner may include Borrower’s tax reporting on such owner’s tax returns;
(i) fail to (i) hold itself out to the public as a legal entity separate and distinct from any other entity (including any Affiliate, any constituent party of Borrower or any Guarantor), (ii) correct any known misunderstanding regarding its status as a separate entity, or (iii) conduct business in its own name;
(j) fail to (i) preserve and keep in full force and effect (A) its existence and good standing in the state in which it was incorporated or formed, and (B) good standing and qualification to do business in the state in which such good standing and qualification to do business is required pursuant to the Legal Requirements, (ii) observe all partnership, corporate or limited liability company formalities, as applicable, or (iii) hold its assets in its own name;
(k) fail to (i) maintain adequate capital and a sufficient number of employees, if required, for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, or (ii) pay the salaries of its own employees, if any;
(l) (i) seek or consent to the dissolution or winding up, in whole or in part, of Borrower, (ii) merge with or be consolidated into any other entity or acquire by purchase or otherwise all or substantially all of the business assets of, or any stock or beneficial ownership in, any entity, or (iii) sell all or substantially all of the assets of Borrower;
(m) except as contemplated by this Agreement, commingle the funds and other assets of Borrower with those of any Affiliate, any Guarantor, any constituent party of Borrower or any other person, or fail to pay its own liabilities out of its own funds and assets;
(n) except as contemplated by this Agreement, fail to maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of (i) any constituent party of Borrower, (ii) any Guarantor, (iii) any Affiliate of Borrower or any Guarantor or (iv) any other person;
(o) assume, guarantee, become obligated for or hold itself out to be responsible for the debts or obligations of any other person or acquire obligations or securities of its partners, members or shareholders;
(p) except for its Ownership Interest in Owner, own any direct subsidiary, except with respect to the Owner Parties, or make any investment in any person or entity other than the Owner Parties;
 
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(q) fail to be a limited liability company formed under the laws of the State of Delaware, with Borrower’s Organizational Documents in form and substance reasonably satisfactory to Lender;
(r) fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;
In addition, until the Debt has been paid in full:
(s) Borrower shall provide in its (i) operating agreement, if it is a limited liability company, (ii) limited partnership agreement, if it is a limited partnership or (iii) certificate of incorporation, if it is a corporation, that for so long as the Loan is outstanding, it shall not file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors without the affirmative vote of the Independent Director and of all other general partners/managing members/directors;
(t) if Borrower is a limited liability company with a single economic member that complies with the requirements of Section 4.1.34(v) below, fail at any time to have at least two independent directors or non-economic special members (collectively, the “Independent Director”), each of which is not and has not been for at least five (5) years: (a) a stockholder, director, officer, employee, partner, member, attorney or counsel of Borrower or of Principal or any Affiliate of either of them; (b) a customer, supplier or other Person who derives its purchases or revenues (other than any fee paid to such director as compensation for such director to serve as an Independent Director) from its activities with Borrower, Principal or any Affiliate of either of them (a “Business Party”); (c) a Person controlling or under common control with any such stockholder, partner, member, director, officer, attorney, counsel or Business Party; or (d) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, attorney, counsel or Business Party;
(u) if Borrower is a single member limited liability company that complies with the requirements of Section 4.1.34(v) below, Borrower shall not permit its members or board of directors, as applicable, without the vote of the Independent Director, to take any action which, under any applicable organizational documents, requires the unanimous vote of one hundred percent (100%) of the members of Borrower or members of the board, as applicable (including the Independent Director);
(v) in the event Borrower is a Delaware limited liability company that does not have a managing member which complies with the requirements for a Principal under this Section 4.1.34, the limited liability company agreement of Borrower (“Borrower’s LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the last remaining member of Borrower (“Member”) to cease to be the member of Borrower (other than (1) upon an assignment by Member of all of its limited liability company interest in Borrower and the admission of the transferee in accordance with the Loan Documents and
 
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Borrower’s LLC Agreement, or (2) the resignation of Member and the admission of an additional member of Borrower in accordance with the terms of the Loan Documents and Borrower’s LLC Agreement), any person acting as Independent Director of Borrower shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower, automatically be admitted to Borrower as a special member (“Special Member”) and shall continue Borrower without dissolution and (B) Special Member may not resign from Borrower or transfer its rights as Special Member unless (1) a successor Special Member has been admitted to Borrower as Special Member in accordance with requirements of Delaware law and (2) such successor Special Member has also accepted its appointment as an Independent Director. Borrower’s LLC Agreement shall further provide that (v) Special Member shall automatically cease to be a member of Borrower upon the admission to Borrower of a substitute Member, (w) Special Member shall be a member of Borrower that has no interest in the profits, losses and capital of Borrower and has no right to receive any distributions of Borrower assets, (x) pursuant to Section 18-301 of the Delaware Limited Liability Company Act (the “Act”), Special Member shall not be required to make any capital contributions to Borrower and shall not receive a limited liability company interest in Borrower, (y) Special Member, in its capacity as Special Member, may not bind Borrower and (z) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower, including, without limitation, the merger, consolidation or conversion of Borrower; provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by Borrower’s LLC Agreement. In order to implement the admission to Borrower of Special Member, Special Member shall execute a counterpart to Borrower’s LLC Agreement; provided that, prior to its admission to Borrower as Special Member, Special Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a member of Borrower, to the fullest extent permitted by law, the personal representative of Member shall, promptly after the occurrence of the event that terminated the continued membership of Member in Borrower, agree in writing (A) to continue Borrower and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower, effective as of the occurrence of the event that terminated the continued membership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Member under any Creditors Rights Laws shall not cause Member or Special Member to cease to be a member of Borrower and upon the occurrence of such an event, the business of Borrower shall continue without dissolution. Borrower’s LLC Agreement shall provide that each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower upon the occurrence of any action initiated by or brought against Member or Special Member under any Creditors Rights Laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower;
 
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(w) If Borrower is a single member limited liability company that complies with the requirements of Section 4.1.34(v) above, Borrower shall deliver to Lender an opinion letter reasonably satisfactory to Lender, whereby the law firm opines (which opinion may be subject to standard assumptions, qualifications, limitations and exceptions acceptable to Lender), among other requirements of Lender, that: (1) the unanimous consent of Member and the Independent Director is required in order for Borrower to file a voluntary bankruptcy petition; (2) the provision in Borrower’s Organizational Documents that requires unanimous consent as a condition to filing a voluntary bankruptcy petition is enforceable against Member; (3) the bankruptcy of Member will not cause Borrower to be dissolved; (4) no creditor of Member shall have the right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, Borrower’s property; and (5) Delaware law, not federal law, governs the determination of what persons or entities have the authority to file a voluntary bankruptcy petition on behalf of Borrower.
4.1.35 Business Purposes .
The Loan is solely for the business purpose of Borrower, and is not for personal, family, household, or agricultural purposes.
4.1.36 Taxes .
Each of Borrower and the Owner Parties has filed all federal, state, county, municipal, and city income and other tax returns required to have been filed by it and has paid or made adequate provision for payment of all taxes and related liabilities which have become due pursuant to such returns or pursuant to any assessments received by it.
4.1.37 Forfeiture .
To Borrower’s and the Owner Parties’ knowledge, neither Borrower nor any Owner Party nor any other Person in occupancy of or involved with the operation or use of the Property has committed any act or omission affording the federal government or any state or local government the right of forfeiture as against the Collateral, the Property or any part thereof or any monies paid in performance of Borrower’s and the Owner Parties’ obligations under the Note, this Agreement or the other Loan Documents. Borrower hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture.
4.1.38 Environmental Representations and Warranties .
Borrower represents and warrants to Lender that, to Borrower’s and the Owner Parties’ knowledge: (a) there are no Hazardous Materials or underground storage tanks in, on, or under the Property, except those that are in compliance with current Environmental Laws and with permits issued pursuant thereto (if such permits are required), (b) there are no past, present or threatened Releases of Hazardous Materials in violation of any Environmental Law or, if continuing, could result in a violation of any Environmental Law, and which would require remediation by a Governmental Authority in, on, under or from the Property; (c) there is no threat of any
 
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Release of Hazardous Materials in violation of any Environmental Law or, if continuing, could result in a violation of any Environmental Law, migrating to the Property; (d) there is no past or present non-compliance with current Environmental Laws, or with permits issued pursuant thereto, in connection with the Property; (e) neither Borrower nor any Owner Party knows of or has received any written notice or other written communication from any Person (including but not limited to a Governmental Authority) relating to Hazardous Materials in, on, under or from the Property; and (f) Borrower has truthfully and fully provided to Lender, in writing, any and all information relating to environmental conditions in, on, under or from the Property known to Borrower or any Owner Party or contained in Borrower’s or the Owner Parties’ files and records, including but not limited to any reports relating to Hazardous Materials in, on, under or migrating to or from the Property.
4.1.39 Taxpayer Identification Number .
Borrower’s United States taxpayer identification number is 26-2833811. Owner’s United States taxpayer identification number is 26-2834000. King’s Village Subsidiary’s United States taxpayer identification number is 99-0248452. FF&E Subsidiary’s United States taxpayer identification number is 26-0318864.
4.1.40 OFAC .
Borrower represents and warrants that neither Borrower, any Guarantor nor any of their respective Affiliates is a Prohibited Person, and Borrower and the Guarantors and their respective Affiliates are in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.
4.1.41 Ground Lease and Operating Lease Representations .
(a) (i) Each of the Ground Leases and the Operating Lease is in full force and effect and has not been modified or amended in any manner whatsoever, (ii) there are no defaults under any of the Ground Leases or the Operating Lease by the Owner Parties, or, to the knowledge of Borrower and the Owner Parties, landlord or sublandlord thereunder (or sub-sublandlord thereunder with respect to the Operating Lease), and, to the knowledge of Borrower and the Owner Parties, no event has occurred which but for the passage of time, or notice, or both would constitute a default under such Ground Lease or the Operating Lease, (iii) all rents, additional rents and other sums due and payable under each of the Ground Leases and the Operating Lease have been paid in full, (iv) neither Borrower nor any Owner Party nor the landlord (sublandlord or sub-sublandlord) under each of the Ground Leases and the Operating Lease has commenced any action or given or received any notice for the purpose of terminating such Ground Lease or the Operating Lease, (v) no Fee Owner or Ground Lessor, as debtor in possession or by a trustee for such Fee Owner or Ground Lessor, has given any notice of, and the associated Owner Party has not consented to, any attempt to transfer the related Fee Estate free and clear of its Ground Lease under section 363(f) of the Bankruptcy Code, and (vi) no Fee Owner under any Ground Lease or Ground Lessor is subject to any voluntary or involuntary bankruptcy, reorganization or insolvency proceeding and no Fee Estate with respect to any Ground Lease is an asset in any voluntary or involuntary bankruptcy, reorganization or insolvency proceeding.
 
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(b) Except for Permitted Encumbrances, the Owner Parties’ interests in the Ground Leases and the Operating Lease are not subject to any Liens superior to, or of equal priority with, the Security Instruments.
4.1.42 Cash Management Accounts .
(a) This Agreement, the Collection Account Agreement and the Lockbox Agreement create valid and continuing security interests (as defined in the UCC) in the Collection Account, the Lockbox Account and each of the Subaccounts in favor of Lender, which security interests are prior to all other Liens and are enforceable as such against creditors of and purchasers from Borrower;
(b) Borrower and Lender agree that each of the Collection Account and the Lockbox Account is and shall be maintained (i) as a “deposit account” (as such term is defined in Section 9-102(a)(29) of the UCC), (ii) in such a manner that Lender shall have control (within the meaning of Section 9-104(a)(2) of the UCC) over such Account and (iii) such that neither Borrower nor Manager shall have any right of withdrawal from the Collection Account or Lockbox Account, as applicable, and no Account Collateral shall be released to Borrower or Manager from the Collection Account or Lockbox Account, as applicable, except with the prior written consent of Lender (which may be granted in Lender’s sole and absolute discretion) or as otherwise provided herein or in the Collection Account Agreement or the Lockbox Agreement, as applicable. Without limiting Borrower’s obligations under the immediately preceding sentence, Borrower shall only establish and maintain each of the Collection Account and the Lockbox Account with a financial institution that has executed a Collection Account Agreement or Lockbox Agreement, as applicable, in a form reasonably acceptable to Lender.
(c) Borrower and Lender agree that each Subaccount is and shall be maintained (i) as a “securities account” (as such term is defined in Section 8-501(a) of the UCC), (ii) in such a manner that Lender shall have control (within the meaning of Section 8-106(d)(2) of the UCC) over each such Subaccount, (iii) such that neither Borrower nor Manager shall have any right of withdrawal from such Accounts and, except with the prior written consent of Lender (which may be granted in Lender’s sole and absolute discretion) or as otherwise provided herein or in the Lockbox Agreement, no Account Collateral shall be released to Borrower from such Subaccounts, (iv) in such a manner that the Lockbox Bank shall agree to treat all property credited to each Subaccount as “financial assets” and (v) such that all securities or other property underlying any financial assets credited to such Subaccounts shall be registered in the name of Lockbox Bank, indorsed to Lockbox Bank or in blank or credited to another securities account maintained in the name of Lockbox Bank and in no case will any financial asset credited to any such Subaccounts be registered in the name of Borrower, payable to the order of Borrower or specially indorsed to Borrower except to the extent the foregoing have been specially indorsed to Lockbox Bank or in blank;
 
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(d) Borrower owns and has good and marketable title to the Collection Account, the Lockbox Account and each Subaccount free and clear of any Lien or claim of any Person;
(e) Borrower shall deliver to Lender, promptly after the execution and delivery hereof, (i) a fully executed Collection Account Agreement pursuant to which the Collection Account Bank agrees to comply with all instructions originated by Lender directing disposition of the funds in such accounts without further consent by Borrower, and (ii) a fully executed Lockbox Agreement pursuant to which the Lockbox Bank agrees to comply with all instructions originated by Lender directing disposition of the funds in such accounts without further consent by Borrower;
(f) Other than the security interest granted to Lender pursuant to this Agreement, Borrower has not pledged, assigned, or sold, granted a security interest in, or otherwise conveyed any of, the Collection Account, the Lockbox Account or any Subaccount; and
(g) The Collection Account, the Lockbox Account and the Subaccounts are not in the name of any Person other than Borrower or Lender. Borrower has not consented to either the Collection Account Bank or the Lockbox Bank to comply with instructions of any Person other than Lender.
4.1.43 Embargoed Person .
As of the date hereof and at all times throughout the term of the Loan, including after giving effect to any Transfers permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower, any Owner Party, Principal or any Guarantor constitute property of, or are beneficially owned, directly or indirectly, by any person, entity or government subject to trade restrictions under U.S. law, including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder, with the result that the investment in Borrower, such Owner Party, Principal or such Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan made by the Lender is in violation of law (“Embargoed Person”); (b) no Embargoed Person has any interest of any nature whatsoever in Borrower, any Owner Party, Principal or any Guarantor, as applicable, with the result that the investment in Borrower, such Owner Party, Principal or such Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law; and (c) none of the funds of Borrower, any Owner Party, Principal or any Guarantor, as applicable, have been derived from any unlawful activity with the result that the investment in Borrower, such Owner Party, Principal or such Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of law.
 
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4.1.44 Affiliates .
Borrower does not own any equity interests (directly or indirectly) in any Person other than its interests in the Owner Parties and the Pledged Interests.
4.1.45 Personal Property .
Borrower represents and warrants that the Owner Parties own, lease or license adequate Personal Property to maintain and operate the Hotel as a first-class, full-service hotel and King’s Village as an “upscale” shopping mall, in each case in accordance with the standards of this Agreement, the other Loan Documents, the King’s Village Management Agreement, the Management Agreement and the Hotel Management Agreement. The Personal Property is not subject to any Liens other than Permitted Encumbrances.
4.1.46 Single Purpose Entity – Owner Parties .
Borrower covenants and agrees on behalf of the Owner Parties that each Owner Party has not, and its Organizational Documents (the “Owner Party’s Organizational Documents”) shall provide that it shall not, and that the Organizational Documents of its general partner(s), if such Owner Party is a partnership, or its managing member(s), if such Owner Party is a limited liability company with multiple economic members (in each case, “Owner Party’s Principal”), shall provide that it has not and shall not, except as specifically provided for in this Agreement:
(a) own any asset or property other than (i) its interest in the Property and the Collateral, and (ii) incidental personal property necessary for the ownership or operation of the Property or the Collateral, if any;
(b) engage in any business or activity other than the ownership, management, leasing, operation and transfer, in accordance with the terms of this Agreement, of the Property and the Collateral, and such Owner Party will conduct and operate its business as presently conducted and operated and such activities as are necessary or incidental in connection therewith in accordance with the terms of the Loan Documents;
(c) enter into or be a party to any transaction, contract or agreement with any Guarantor or with any Affiliate of any Guarantor, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arms-length basis with third parties;
(d) incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than trade and operational debt incurred in the ordinary course of business with trade creditors in connection with owning, operating and maintaining the Property and the Collateral. Such Owner Party may contest in good faith by appropriate legal proceeding the validity of any permitted trade indebtedness, provided, that (1) such Owner Party provides at least ten (10) days’ prior written notice to Lender; (2) no Event of Default has occurred and is continuing; (3) such Owner Party will furnish such security as required in the legal proceeding, or as reasonably requested by Lender, which shall not be less than 125% of the trade payables being contested; and (4) no portion of the Property or the Collateral or interest therein shall be at risk by being sold or encumbered;
 
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(e) make any loans or any advances to (i) any third party; (ii) any Guarantor; (iii) any Affiliate of any Guarantor; or (iv) any constituent party of such Owner Party, and shall not acquire obligations or securities of its Affiliates other than Owner’s ownership interest in each of King’s Village Subsidiary and FF&E Subsidiary;
(f) fail to, except as provided in the Loan Documents, pay its debts from its assets as the same shall become due;
(g) fail to do or cause to be done all things necessary to preserve its existence, and such Owner Party will not, and will not permit any Guarantor to, amend, modify or otherwise change the certificate of formation, partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents of such Owner Party in a manner which would affect the special purpose, bankruptcy-remote related provisions or the definitions related thereto, without the prior written consent of Lender;
(h) fail to maintain financial statements, accounting records, tax returns, books and records, bank accounts and other entity documents separate from those of its Affiliates and any constituent party of such Owner Party or any other person or entity, and such Owner Party shall maintain its books, records, resolutions and agreements as official records; provided, however, that if such Owner Party is a disregarded entity under federal tax law, then such Owner Party’s owner may include such Owner Party’s tax reporting on such owner’s tax returns;
(i) fail to (i) hold itself out to the public as a legal entity separate and distinct from any other entity (including any Affiliate, any constituent party of such Owner Party or any Guarantor), (ii) correct any known misunderstanding regarding its status as a separate entity, or (iii) conduct business in its own name;
(j) fail to (i) preserve and keep in full force and effect (A) its existence and good standing in the state in which it was incorporated or formed, and (B) good standing and qualification to do business in the state in which the Property is located or is otherwise required by Legal Requirements, (ii) observe all partnership, corporate or limited liability company formalities, as applicable, or (iii) hold its assets in its own name;
(k) fail to (i) maintain adequate capital and a sufficient number of employees, if required, for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, or (ii) pay the salaries of its own employees, if any;
(l) seek or consent to the dissolution or winding up, in whole or in part, of such Owner Party, (ii) merge with or be consolidated into any other entity or acquire by purchase or otherwise all or substantially all of the business assets of, or any stock or beneficial ownership in, any entity, or (iii) sell all or substantially all of the assets of such Owner Party;
 
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(m) except as contemplated by this Agreement, commingle the funds and other assets of such Owner Party with those of any Affiliate, any Guarantor, any constituent party of such Owner Party or any other person, or fail to pay its own liabilities out of its own funds and assets;
(n) Except as contemplated by this Agreement, fail to maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of (i) any constituent party of such Owner Party, (ii) any Guarantor, (iii) any Affiliate of such Owner Party or any Guarantor or (iv) any other person;
(o) assume, guarantee, become obligated for or hold itself out to be responsible for the debts or obligations of any other person or acquire obligations or securities of its partners, members or shareholders;
(p) except for Owner’s Ownership Interest in each of King’s Village Subsidiary and FF&E Subsidiary, own any subsidiary or make any investment in any person or entity;
(q) fail to be a limited liability company formed under the laws of (i) with respect to Owner and FF&E Subsidiary, the State of Delaware, and (ii) with respect to King’s Village Subsidiary, the State of Hawaii, with such Owner Party’s Organizational Documents in form and substance reasonably satisfactory to Lender;
(r) fail to allocate fairly and reasonably any overhead expenses that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate;
In addition, until the Debt has been paid in full:
(s) Such Owner Party shall provide in its (i) operating agreement, if it is a limited liability company, (ii) limited partnership agreement, if it is a limited partnership or (iii) certificate of incorporation, if it is a corporation, that for so long as the Loan is outstanding, it shall not file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization statute, or make an assignment for the benefit of creditors without the affirmative vote of the Independent Director and of all other general partners/managing members/directors;
(t) if such Owner Party is a limited liability company with a single economic member that complies with the requirements of Section 4.1.46(v) below, such Owner Party shall at all times have at least two independent directors or non-economic special members (collectively, “Owner Party’s Independent Director”), each of which is not and has not been for at least five (5) years:
 
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(a) a stockholder, director, officer, employee, partner, member, attorney or counsel of such Owner Party or of such Owner Party’s Principal or any Affiliate of either of them; (b) a customer, supplier or other Person who derives its revenues (other than any fee paid to such director as compensation for such director to serve as such Owner Party’s Independent Director) from its activities with such Owner Party, such Owner Party’s Principal or any Affiliate of either of them (an “Owner Party’s Business Party”); (c) a Person controlling or under common control with any such stockholder, partner, member, director, officer, attorney, counsel or such Owner Party’s Business Party; or (d) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, attorney, counsel or such Owner Party’s Business Party;
(u) if such Owner Party is a single member limited liability company that complies with the requirements of Section 4.1.46(v) below, such Owner Party shall not permit its members or its board of directors, as applicable, without the vote of such Owner Party’s Independent Director, to take any action which, under any applicable organizational documents, requires the unanimous vote of one hundred percent (100%) of the members of such Owner Party or members of the board, as applicable (including the Independent Director);
(v) in the event such Owner Party is a Delaware limited liability company that does not have a managing member which complies with the requirements for an Owner Party’s Principal under this Section 4.1.46(v), the limited liability company agreement of such Owner Party (the “Owner Party’s LLC Agreement”) shall provide that (A) upon the occurrence of any event that causes the last remaining member of such Owner Party (“Owner Party’s Member”) to cease to be the member of such Owner Party (other than (1) upon an assignment by such Owner Party’s Member of all of its limited liability company interest in such Owner Party and the admission of the transferee in accordance with the Loan Documents and such Owner Party’s LLC Agreement, or (2) the resignation of such Owner Party’s Member and the admission of an additional member of such Owner Party in accordance with the terms of the Loan Documents and such Owner Party’s LLC Agreement), any person acting as such Owner Party’s Independent Director shall, without any action of any other Person and simultaneously with such Owner Party’s Member ceasing to be the member of such Owner Party, automatically be admitted to such Owner Party as a special member (“Owner Party’s Special Member”) and shall continue such Owner Party without dissolution and (B) such Owner Party’s Special Member may not resign from such Owner Party or transfer its rights as such Owner Party’s Special Member unless (1) a successor Owner Party’s Special Member has been admitted to such Owner Party as such Owner Party’s Special Member in accordance with requirements of Delaware law and (2) such successor Owner Party’s Special Member has also accepted its appointment as such Owner Party’s Independent Director. Such Owner Party’s LLC Agreement shall further provide that (v) such Owner Party’s Special Member shall automatically cease to be a member of such Owner Party upon the admission to such Owner Party of a substitute Owner Party’s Member, (w) such Owner Party’s Special Member shall be a member of such Owner Party that has no interest in the profits, losses and capital of such Owner Party and has no right to receive any
 
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distributions of such Owner Party’s assets, (x) pursuant to Section 18-301 of the Act, such Owner Party’s Special Member shall not be required to make any capital contributions to such Owner Party and shall not receive a limited liability company interest in such Owner Party, (y) such Owner Party’s Special Member, in its capacity as such Owner Party’s Special Member, may not bind such Owner Party and (z) except as required by any mandatory provision of the Act, such Owner Party’s Special Member, in its capacity as such Owner Party’s Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, such Owner Party, including, without limitation, the merger, consolidation or conversion of such Owner Party; provided, however, such prohibition shall not limit the obligations of such Owner Party’s Special Member, in its capacity as such Owner Party’s Independent Director, to vote on such matters required by such Owner Party’s LLC Agreement. In order to implement the admission to such Owner Party of such Owner Party’s Special Member, such Owner Party’s Special Member shall execute a counterpart to such Owner Party’s LLC Agreement; provided that, prior to its admission to such Owner Party as such Owner Party’s Special Member, such Owner Party’s Special Member shall not be a member of such Owner Party.
Upon the occurrence of any event that causes such Owner Party’s Member to cease to be a member of such Owner Party, to the fullest extent permitted by law, the personal representative of such Owner Party’s Member shall, promptly after the occurrence of the event that terminated the continued membership of such Owner Party’s Member in such Owner Party, agree in writing (A) to continue such Owner Party and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of such Owner Party, effective as of the occurrence of the event that terminated the continued membership of such Owner Party’s Member in such Owner Party. Any action initiated by or brought against such Owner Party’s Member or such Owner Party’s Special Member under any Creditors Rights Laws shall not cause such Owner Party’s Member or such Owner Party’s Special Member to cease to be a member of such Owner Party and upon the occurrence of such an event, the business of such Owner Party shall continue without dissolution. Such Owner Party’s LLC Agreement shall provide that each of such Owner Party’s Member or such Owner Party’s Special Member waives any right it might have to agree in writing to dissolve such Owner Party upon the occurrence of any action initiated by or brought against such Owner Party’s Member or such Owner Party’s Special Member under any Creditors Rights Laws, or the occurrence of an event that causes such Owner Party’s Member or such Owner Party’s Special Member to cease to be a member of such Owner Party;
(w) If such Owner Party is a single member limited liability company that complies with the requirements of Section 4.1.34(v) above, such Owner Party shall deliver to Lender an opinion letter reasonably satisfactory to Lender, whereby the law firm opines (which opinion may be subject to standard assumptions, qualifications, limitations and exceptions acceptable to Lender), among other requirements of Lender, that: (1) the unanimous consent of such Owner Party’s Member and such Owner Party’s Independent Director is required in order for such Owner Party to file a voluntary bankruptcy petition; (2) the provision in such Owner Party’s Organizational Documents that requires unanimous consent as a condition to filing a voluntary bankruptcy petition is enforceable against such Owner Party’s Member; (3) the bankruptcy of such Owner Party’s Member will
 
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not cause such Owner Party to be dissolved; (4) no creditor of such Owner Party’s Member shall have the right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, such Owner Party’s property; and (5) Delaware law, not federal law, governs the determination of what persons or entities have the authority to file a voluntary bankruptcy petition on behalf of Borrower.
4.1.47 Foreign Assets Control Regulations, Etc .
(a) The use of the proceeds of the Loan by Borrower will not violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.
(b) Neither Borrower, any Owner Party nor any Guarantor: (i) is or will become a person or entity described by section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (12 C.F.R. 595), and neither engages in dealings or transactions with any such persons or entities; or (ii) is in violation of any applicable provisions of Title III (the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001) of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 of the United States of America.
4.1.48 Bank Holding Company .
Borrower is not a “bank holding company” or a direct or indirect subsidiary of a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
Section 4.2 Survival of Representations .
Borrower agrees that all of the representations and warranties of Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the other Loan Documents shall survive for so long as any portion of the Debt is outstanding. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.
 
 	V.	BORROWER COVENANTS	
Section 5.1 Affirmative Covenants .
From the date hereof and (i) so long as any portion of the Debt is outstanding or (ii) until the earlier release in full of Lender’s Lien encumbering the Collateral and the Property (and all related obligations) in accordance with the terms of this Agreement and the other Loan Documents, Borrower hereby covenants and agrees with Lender that:
 
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5.1.1 Existence; Compliance with Legal Requirements .
(a) Borrower shall at all times control and directly or indirectly own 100% of the Property and the Collateral, except for 500 shares of non-voting preferred stock of FF&E Subsidiary, which is owned by an Affiliate of Hyatt Guarantor. Borrower shall do or cause to be done, and shall cause the Owner Parties to do or to cause to be done, all commercially reasonable things necessary to preserve, renew and keep in full force and effect Borrower’s (or the Owner Parties’) existence, rights, licenses, permits and franchises material to the operations of the Property or to their respective continued separate existence, and comply, or cause the Owner Parties to comply, in all material respects, with all Legal Requirements applicable to Borrower, the Owner Parties, the Collateral (with respect to such Owner Party, to the extent applicable to it) and the Property. Borrower shall not commit, and Borrower shall not permit or cause any Owner Party to permit (with Borrower’s knowing acquiescence) any other Person in occupancy of or involved with the operation or use of the Property any act or omission affording the federal government or any State or local government the right of forfeiture against the Property or any part thereof or any monies paid in performance of Borrower’s or the Owner Parties’ obligations under any of the Loan Documents. Borrower shall or shall cause the Owner Parties to at all times use commercially reasonable efforts to maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and shall or shall cause Owner Parties to keep the Property in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, all as more fully provided in the Security Instruments. Borrower shall cause the Owner Parties to keep the Property insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Agreement.
(b) After prior written notice to Lender, Borrower, at its own or an Owner Party’s expense, as applicable, may or may permit such Owner Party to contest by appropriate legal proceeding promptly initiated and conducted in good faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal Requirement to Borrower, the Owner Parties, the Collateral or the Property or any alleged violation of any Legal Requirement, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any instrument to which Borrower or such Owner Party is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all Applicable Laws; (iii) neither the Property, nor the Collateral, nor any part thereof or interest therein will be in imminent danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall or shall cause such Owner Party to promptly upon final determination thereof comply with any such Legal Requirement determined to be valid or applicable or cure any violation of any Legal Requirement; (v) such proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower, the Owner Parties, the Collateral or the Property, as the case may be; and (vi) Borrower shall or shall cause such Owner Party to furnish such security as may be required in the proceeding,
 
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or as may be requested by Lender with respect to such proceeding, to insure compliance with such Legal Requirement, together with all interest and penalties payable in connection therewith. Lender may apply any such security or part thereof, as necessary to cause compliance with such Legal Requirement at any time when, in the judgment of Lender, the validity, applicability or violation of such Legal Requirement is finally established or the Property or the Collateral (or any part thereof or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost.
5.1.2 Taxes and Other Charges .
Borrower shall cause the Owner Parties to pay all Taxes and Other Charges now or hereafter levied or assessed or imposed against the Property or any part thereof as the same become due and payable except those Taxes and other charges paid in accordance with Section 7.2 hereof. Borrower shall furnish, or cause to be furnished, to Lender receipts, or other evidence for the payment of the Taxes and the Other Charges prior to the date the same shall become delinquent (provided, however, that Borrower is not required to furnish such receipts for payment of Taxes in the event that such Taxes have been paid by Lender pursuant to Section 7.2 hereof). Borrower shall not suffer and shall not permit the Owner Parties to suffer and shall promptly cause the Owner Parties to promptly pay and discharge any Lien or charge whatsoever which may be or become a Lien or charge against the Collateral or the Property, and shall cause the Owner Parties to promptly pay for all utility services provided to the Property.
After prior written notice to Lender, Borrower, at its own or any Owner Party’s expense, may or may permit such Owner Party to contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any Taxes, Other Charges or Liens, provided that (i) no Default or Event of Default has occurred and remains uncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower or such Owner Party is subject and shall not constitute a default thereunder and such proceeding shall be conducted in accordance with all Applicable Laws; (iii) neither the Collateral nor the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall, or shall cause such Owner Party to promptly upon final determination thereof pay the amount of any such Taxes, Other Charges or Liens, together with all costs, interest and penalties which may be payable in connection therewith; (v) such proceeding shall suspend the collection of such contested Taxes, Other Charges or Liens from the Property or any asset of Borrower or such Owner Party; and (vi) Borrower shall or shall cause such Owner Party to furnish such security as may be required in the proceeding, or as may be reasonably requested by Lender, to insure the payment of any such Taxes, Other Charges or Liens, together with all interest and penalties thereon. Lender may, upon reasonable notice to Borrower, apply such security or part thereof held by Lender at any time when, in the judgment of Lender, the validity or applicability of such Taxes, Other Charges or Liens is established or the Property or the Collateral (or part thereof or interest therein) shall be in imminent danger of being sold, forfeited, terminated, cancelled or lost or there shall be any danger of the Liens of the Security Instruments being primed by any related Lien.
 
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5.1.3 Litigation .
Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower, any Owner Party or any Guarantor which is reasonably likely to materially and adversely affect Borrower’s or any Owner Party’s condition (financial or otherwise) or business or the Property or the Collateral.
5.1.4 Access to the Property .
Borrower shall and shall cause the Owner Parties to permit agents, representatives and employees of Lender to inspect the Property or any part thereof (subject to the rights of tenants, occupants and licensees of the Property) at reasonable hours upon reasonable advance notice.
5.1.5 Notice of Default .
Borrower shall promptly advise Lender of the occurrence of any Default or Event of Default of which Borrower has knowledge.
5.1.6 Cooperate in Legal Proceedings .
Borrower shall cooperate, and shall cause each Loan Party to cooperate, fully with Lender with respect to any proceedings before any court, board or other Governmental Authority which may reasonably be expected to materially and adversely affect the rights of Lender hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection therewith, permit Lender, at its election, to participate in any such proceedings.
5.1.7 Award and Insurance Benefits .
Borrower shall cause the Owner Parties to cooperate with Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully or equitably payable in connection with the Property, and Lender shall be reimbursed for any reasonable expenses incurred in connection therewith (including attorneys’ fees and disbursements, and the payment by Borrower of the expense of an Appraisal on behalf of Lender in case of Casualty or Condemnation affecting the Property or any material part thereof) out of such Award or Insurance Proceeds.
5.1.8 Further Assurances .
Borrower shall and shall cause each Loan Party to, at Borrower’s or such Loan Party’s sole cost and expense:
(a) furnish to Lender all instruments, documents, boundary surveys, footing or foundation surveys, certificates, plans and specifications, Appraisals, title and other insurance reports and agreements, and each and every other document, certificate, agreement and instrument required to be furnished by Borrower pursuant to the terms of the Loan Documents or reasonably requested by Lender in connection therewith;
 
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(b) execute and deliver to Lender such documents, instruments, certificates, assignments and other writings, and do such other acts reasonably necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the obligations of Borrower, the Owner Parties and the Guarantors under the Loan Documents, as Lender may reasonably require including, without limitation, the authorization of Lender to execute and/or the execution by Borrower of UCC financing statements; and
(c) do and execute all and such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents, as Lender shall reasonably require from time to time.
5.1.9 Mortgage and Intangible Taxes .
Borrower shall pay all state, county and municipal recording, mortgage and intangible, and all other taxes imposed upon the execution, delivery, recordation and filing of the Security Instruments and the UCC Financing Statements and/or upon the execution and delivery of the Note.
5.1.10 Financial Reporting .
(a) Borrower will keep and maintain on a Fiscal Year basis, in accordance with GAAP (or such other accounting basis acceptable to Lender), proper and accurate books, records and accounts reflecting all of the financial affairs of Borrower and the Owner Parties both separately and on a consolidated basis. Borrower will cause each Owner Party to keep and maintain or will cause to be kept and maintained on a Fiscal Year basis, in accordance with GAAP (or such other accounting basis acceptable to Lender), proper and accurate books, records and accounts reflecting all of the financial affairs of such Owner Party. Lender shall have the right from time to time at all times during normal business hours upon reasonable notice to examine such books, records and accounts at the office of Borrower, each Owner Party or any other Person maintaining such books, records and accounts and to make such copies or extracts thereof as Lender shall desire. After the occurrence of an Event of Default, Borrower shall pay any costs and expenses incurred by Lender to examine Borrower’s or the Owner Parties’ accounting records with respect to the Collateral or the Property, as Lender shall determine to be necessary or appropriate in the protection of Lender’s interest.
(b) Borrower will furnish, or will cause to be furnished, to Lender annually, within one hundred twenty (120) days following the end of each Fiscal Year, a complete copy of Borrower’s consolidated annual financial statements (including the Owner Parties) audited by an Approved Accountant in accordance with GAAP (or such other accounting basis acceptable to Lender).
 
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(c) Borrower will cause each Owner Party to furnish to Lender annually, within one hundred twenty (120) days following the end of each Fiscal Year, (i) such Owner Party’s annual balance sheet and income statement which shall be prepared in accordance with GAAP (or such other accounting basis acceptable to Lender), (ii) schedules computing annual Net Cash Flow, Net Operating Income, Gross Income from Operations and Operating Expenses and (iii) a list of tenants, if any, occupying more than five percent (5%) of the total floor area of the Improvements. Such Owner Party’s annual statements shall be accompanied by a certificate executed by a Responsible Officer or other appropriate officer of such Owner Party or Owner Party’s Principal, as applicable, stating that each such annual financial statement presents fairly the financial condition and the results of operations of such Owner Party and its portion of the Property being reported upon and has been prepared in accordance with GAAP and certifying as of the date thereof whether any Default or Event of Default exists under the Loan Documents executed and delivered by, or applicable to, Borrower or any Loan Party, and if any Default or Event of Default exists, the nature thereof, the period of time it has existed and the action then being taken to remedy the same.
(d) Borrower will cause each Owner Party to furnish, or cause to be furnished, to Lender on or before twenty-five (25) days after the end of each calendar month the following items: (i) a report of occupancy for the subject month including an average daily rate, and any and all franchise inspection reports received by such Owner Party during the subject month; (ii) monthly and year-to-date operating statements (including Capital Expenditures) prepared for each calendar month, noting Net Operating Income, Gross Income from Operations, and Operating Expenses (not including any contributions to the FF&E Reserve Fund), and other information necessary and sufficient to fairly represent in all material respects the financial position and results of operation of such Owner Party’s portion of the Property during such calendar month, and containing a comparison of budgeted income and expenses and the actual income and expenses together with a detailed explanation by Borrower, Manager and/or King’s Village Manager of any significant variances between budgeted and actual amounts for such periods, all in form reasonably satisfactory to Lender. Borrower shall furnish to Lender on or before thirty (30) days after the end of each calendar month (i) a calculation reflecting the annual Debt Service Coverage Ratio for the immediately preceding twelve (12) month period as of the last day of such month; and (ii) a schedule computing Net Cash Flow. Borrower shall also furnish, or cause to be furnished, to Lender on or before thirty (30) days after the end of each Quarter, (i) a calculation reflecting the Debt Service Coverage Ratio as of the end of such Quarter; (ii) an Officer’s Certificate certifying to Lender that, as of the date thereof, there are no Defaults or Events of Default and there are no defaults or “events of default” under any of the Ground Leases or the Operating Lease, or if such Default, default, Event of Default or “event of default” exists, the nature thereof.
(e) For the partial year period commencing on the date hereof, and for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget for the Property not later than thirty (30) days prior to the commencement of such period or Fiscal Year. During the continuance of an Event of Default, the Annual Budget shall be subject to Lender’s written approval; otherwise, such Annual Budget shall not be subject to Lender’s approval and subject only to Lender’s review and consultation with Borrower (which shall not be binding on Borrower); provided, however, that any revisions or modifications to the Leasing
 
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Guidelines shall be subject to Lender’s reasonable approval (each such Annual Budget, after Lender has either approved it in writing or reviewed it and consulted with Borrower, as applicable, shall be hereinafter referred to as an “Approved Annual Budget”). In the event that Lender objects to a proposed Annual Budget submitted by Borrower with respect to which Lender has approval rights or the Leasing Guidelines, Lender shall advise Borrower of such objections within fifteen (15) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise such Annual Budget or Leasing Guidelines and resubmit the same to Lender. Lender shall advise Borrower of any objections to such revised Annual Budget within ten (10) days after receipt thereof (and deliver to Borrower a reasonably detailed description of such objections) and Borrower shall promptly revise the same in accordance with the process described in this subsection until Lender approves the Annual Budget or Leasing Guidelines. Until such time that Lender approves a proposed Annual Budget with respect to which Lender has approval rights, the most recently Approved Annual Budget shall apply; provided that such Approved Annual Budget shall be adjusted to reflect actual increases in Taxes, Insurance Premiums, Ground Rent, management fees and utilities expenses.
(f) Borrower shall furnish or cause the Owner Parties to furnish to Lender as promptly as practical but in no event later than ten (10) Business Days after request such further detailed information with respect to the operation of the Property and the financial affairs of Borrower or the Owner Parties as may be reasonably requested by Lender.
(g) Borrower shall promptly cause the Owner Parties to promptly send to Lender copies of all Quality Assurance Reports or other reports of inspection delivered by Hotel Company.
(h) Any reports, statements or other information required to be delivered under this Agreement shall be delivered (i) in paper form, (ii) on a diskette, and (iii) if requested by Lender and within the capabilities of Borrower’s or the Owner Parties’, as applicable, data systems without change or modification thereto, in electronic form and prepared using Microsoft Word for Windows files (which files may be prepared using a spreadsheet program and saved as word processing files).
(i) Borrower agrees that Lender may forward to each purchaser, transferee, assignee, servicer, participant, or investor in all or any portion of the Loan or any Securities (collectively, the “Investor”) or any Rating Agency rating such participations and/or Securities and each prospective Investor who, in each case, agrees in writing to maintain the confidentiality of such information in accordance with Section 9.9 hereof, all documents and information which Lender now has or may hereafter acquire relating to the Debt and to Borrower, any Guarantor, the Collateral and the Property, whether furnished by Borrower, any Guarantor, or otherwise, as Lender determines necessary or desirable. Subject to Section 9.9, Borrower irrevocably waives any and all rights it may have under any Applicable Laws to prohibit such disclosure, including, but not limited to, any right of privacy.
 
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(j) Upon Lender’s request, at the time one or more Disclosure Documents are being prepared for a Securitization, Borrower shall furnish to Lender (i) the selected financial data or, if applicable, Net Operating Income, required under Item 1112(b)(1) of Regulation AB with respect to Borrower, the relevant Affiliates of Borrower, the Collateral and the Property, if Lender expects that the principal amount of the Loan together with any Affiliated Loans as of the cut-off date for such Securitization may, or if the principal amount of the Loan together with any Affiliated Loans as of the cut-off date for such Securitization and at any time during which the Loan and any Affiliated Loans are included in a Securitization does, equal or exceed ten percent (10%) (but less than twenty percent (20%)) of the aggregate principal amount of all mortgage loans included or expected to be included, as applicable, in the Securitization or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB with respect to Borrower, the relevant Affiliates of Borrower, the Collateral and the Property, if Lender expects that the principal amount of the Loan together with any Affiliated Loans as of the cut-off date for such Securitization may, or if the principal amount of the Loan together with any Affiliated Loans as of the cut-off date for such Securitization and at any time during which the Loan and any Affiliated Loans are included in a Securitization does, equal or exceed twenty percent (20%) of the aggregate principal amount of all mortgage loans included or expected to be included, as applicable, in the Securitization. Such financial data or financial statements shall be furnished to Lender (A) within a reasonable period of time after notice from Lender in connection with the preparation of Disclosure Documents for the Securitization, (B) not later than forty-five (45) days after the end of each fiscal quarter of Borrower and (C) not later than one hundred twenty (120) days after the end of each Fiscal Year of Borrower; provided, however, that Borrower shall not be obligated to furnish financial data or financial statements pursuant to clauses (B) or (C) of this sentence with respect to any period for which an Exchange Act Filing is not required.
(k) If requested by Lender, Borrower shall provide Lender, promptly upon request, with summaries of the financial statements referred to in Section 5.1.10(j) hereof if, at the time a Disclosure Document is being prepared for a Securitization, it is expected that the principal amount of the Loan and any Affiliated Loans at the time of such Securitization may, or if the principal amount of the Loan and any Affiliated Loans at any time during which the Loan and any Affiliated Loans are included in a Securitization does, equal or exceed ten percent (10%) (but is less than twenty percent (20%)) of the aggregate principal amount of all mortgage loans included or expected to be included, as applicable, in a Securitization. Such summaries shall meet the requirements for “summarized financial information,” as defined in Section 210.1-02(bb) of Regulation S-X, or such other requirements as may be determined to be necessary or appropriate by Lender.
(l) All financial data and financial statements provided by Borrower and the Owner Parties hereunder pursuant to Section 5.1.10(j) hereof shall be prepared in accordance with GAAP (or other accounting principles acceptable to Lender), and shall meet the requirements of Regulation AB and such other applicable legal requirements as Lender may specify in its request to Borrower. All financial data and financial statements provided by Borrower and the Owner Parties under Section 5.1.10(j) shall be accompanied by an Officer’s Certificate from each of Borrower and the Owner Parties, which shall state that such financial statements meet the requirements set forth in the first sentence of this Section 5.1.10(l).
 
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(m) If requested by Lender, Borrower shall provide Lender, promptly upon request, with any other or additional financial statements, or financial, statistical or operating information, in each case relating to Borrower, any Affiliates of Borrower, the Collateral or the Property, as Lender shall reasonably determine to be required pursuant to Regulation AB or any amendment, modification or replacement thereto or other legal requirements in connection with any Disclosure Document or any Exchange Act Filing or as shall otherwise reasonably be requested by Lender.
(n) The term “Affiliated Loans” shall mean a loan made by Lender to a parent, subsidiary or such other entity affiliated with Borrower, any Guarantor and any other loan that is cross-collateralized with the Loan.
(o) If requested by Lender, Borrower shall provide, or shall cause the Owner Parties to provide, to Lender, promptly upon request, a list of tenants (including all affiliates of such tenants) that in the aggregate (1) occupy 10% or more (but less than 20%) of the total floor area of the improvements or represent 10% or more (but less than 20%) of aggregate base rent, and (2) occupy 20% or more of the total floor area of the improvements or represent 20% or more of aggregate base rent.
(p) Borrower shall, or shall cause the Owner Parties to, provide financial and other information with respect to the Collateral, the Property, Borrower, any Guarantor, Manager, King’s Village Manager and Hotel Company as needed by Lender to effect a Securitization, in accordance with Section 9.1 hereof.
(q) Borrower shall furnish, or shall cause to be furnished, within forty-five (45) days following the end of each quarter of the Fiscal Year, a complete copy of Borrower’s consolidated quarterly unaudited financial statements (including the Owner Parties) in accordance with GAAP (or such other accounting basis acceptable to Lender).
5.1.11 Business and Operations .
Borrower shall, and shall cause the Owner Parties to, continue to be engaged in the businesses contemplated to be conducted by it as and to the extent the same are necessary for the ownership, maintenance, management and operation of the Property and to engage in no other business. Borrower shall, and shall cause the Owner Parties to, remain in good standing under the laws of each jurisdiction to the extent required for the ownership, maintenance, management and operation of the Property and/or the Collateral, as the case may be.
 
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5.1.12 Costs of Enforcement .
In the event (a) that the Security Instruments are foreclosed in whole or in part or that such Security Instruments are put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to the Security Instruments which proceeding Lender is made a party, (c) Lender exercises any of its rights or remedies under any of the Pledge Agreements or any other Loan Document as and when permitted thereby, or (d) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors, Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of collection and defense, including attorneys’ fees and costs, incurred by Lender or Borrower in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, together with all required service or use taxes.
5.1.13 Estoppel Statement .
(a) After request by Lender, Borrower shall within ten (10) days furnish Lender with a statement, duly acknowledged, setting forth (i) the unpaid principal amount of the Note, (ii) that the Note, this Agreement, the Security Instruments, the Pledge Agreements and the other Loan Documents have not been modified or if modified, giving particulars of such modification, and (iii) that there are no Events of Default and, to the knowledge of Borrower, there have occurred no events which, with the giving of notice and/or the passage of time, would constitute an Event of Default, and if there has occurred any Default or Event of Default or such other event, the nature thereof.
(b) Borrower shall cause the Owner Parties to use commercially reasonable efforts to deliver to Lender upon request, tenant estoppel certificates from each commercial tenant under the Leases, in form and substance reasonably satisfactory to Lender, to the extent same is required by the terms of such tenant’s Lease.
(c) Borrower shall cause the Owner Parties, promptly upon request of Lender, to use commercially reasonable efforts to deliver an estoppel certificate from Hotel Company stating that (i) the Hotel Management Agreement is in full force and effect and has not been modified, amended or assigned; (ii) neither Hotel Company nor any Owner Party is in default under any of the terms, covenants or provisions of the Hotel Management Agreement and Hotel Company knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under the Hotel Management Agreement; (iii) neither Hotel Company nor any Owner Party has commenced any action or given or received any notice for the purpose of terminating the Hotel Management Agreement; and (iv) all sums due and payable to Hotel Company under the Hotel Management Agreement have been paid in full, to the extent same is required by the terms of the Hotel Management Agreement.
(d) Borrower shall cause the Owner Parties, promptly upon request of Lender, to use commercially reasonable efforts to deliver an estoppel certificate from the lessor under any Ground Lease or the Operating Lease, stating that (i) such agreement is in full force and effect and has not been modified, amended or assigned; (ii) neither the lessor nor the Owner Party under such agreement is in default under any of the terms, covenants or provisions of such agreement and the lessor knows of no event which, but for the passage of time or the giving of notice or both, would constitute an event of default under such agreement; and (iii) all sums due and payable to the lessor under such Ground Lease or the Operating Lease have been paid in full, to the extent same is required by the terms of such agreement.
 
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5.1.14 Loan Proceeds .
Borrower shall use the proceeds of the Loan received by it on the Closing Date only for the purposes set forth in Section 2.1.4 hereof.
5.1.15 Performance by Borrower and the Owner Parties .
(a) Borrower shall in a timely manner observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, Borrower, and, except as may be expressly provided by the provisions of the Loan Documents, shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, Borrower without the prior written consent of Lender.
(b) Borrower shall cause each Owner Party to, in a timely manner, observe, perform and fulfill each and every covenant, term and provision of each Loan Document executed and delivered by, or applicable to, such Owner Party. Except as may be expressly provided by the provisions of the Loan Documents, Borrower shall not cause, request or permit any Owner Party to enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Loan Document executed and delivered by, or applicable to, such Owner Party without the prior written consent of Lender.
(c) Borrower shall cause each Owner Party to provide Lender with a copy of any amendment, waiver, supplement, termination or other modification to any Security Instrument within ten (10) days after the execution thereof. Borrower shall not, and shall not permit any Owner Party to, amend or modify the Organizational Documents of Borrower or any Owner Party in any material respect, except as may be required by any Requirement of Law or any Rating Agency, without Lender’s prior written consent.
5.1.16 Confirmation of Representations .
Borrower shall deliver, in connection with any Securitization, (a) one or more Officer’s Certificates certifying as to the accuracy (or disclosing any inaccuracies, as applicable, provided that such disclosure shall not be deemed to be a waiver of a Default hereunder) of all representations made by Borrower or the Owner Parties in the Loan Documents as of the date of the closing of such Securitization in all relevant jurisdictions, and (b) certificates of the relevant Governmental Authorities in all relevant jurisdictions indicating the good standing and qualification of Borrower, the Owner Parties and Principal as of the date of the closing of such Securitization.
 
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5.1.17 Leasing Matters .
(a) Subject to subsection (d) below, Borrower may permit any Owner Party to enter into a proposed Lease (including the renewal or extension of an existing Lease (a “Renewal Lease”)) without the prior written consent of Lender, provided that such Lease (i) provides for rental rates and terms comparable to existing local market rates and terms (taking into account the type and quality of the tenant) as of the date such Lease is executed by such Owner Party (unless, in the case of a Renewal Lease, the rent payable during such renewal, or a formula or other method to compute such rent, is provided for in the original Lease) and is otherwise in compliance with the Leasing Guidelines, (ii) is an arms-length transaction with a bona fide, independent third party tenant, (iii) is subject and subordinate to the Security Instruments and the lessee thereunder agrees to attorn to Lender, (iv) is written on the standard form of lease approved by Lender and (v) is not a Major Lease. All proposed Leases which do not satisfy the requirements set forth in this Section 5.1.17(a) shall be subject to the prior written consent of Lender, which consent shall not be unreasonably withheld.
(b) Borrower shall cause the Owner Parties to (i) observe and perform in all material respects all the obligations imposed upon the lessors under the Leases; (ii) promptly send copies to Lender of all notices of default which Borrower shall send or receive with respect to the Leases; (iii) enforce all of the material terms, covenants and conditions contained in the Leases upon the part of the tenant thereunder to be observed or performed (except for termination of a Major Lease other than in accordance with its terms, which shall require Lender’s prior written consent, which consent shall not be unreasonably withheld); (iv) not collect any of the Rents more than one (1) month in advance (except Security Deposits shall not be deemed Rents collected in advance); (v) not execute any other assignment of the lessor’s interest in any of the Leases or the Rents; and (vi) not consent to any assignment of, release of or subletting under any Major Leases not in accordance with their terms, without the prior written consent of Lender.
(c) Borrower may permit any Owner Party to, without the consent of Lender, amend, modify or waive the provisions of any Lease or terminate, reduce rents under, accept a surrender of space under, or shorten the term of, any Lease (including any guaranty, letter of credit or other credit support with respect thereto) provided that such Lease is not a Major Lease, and provided that such Lease, as amended, modified or waived, is otherwise in compliance with the requirements of this Agreement. Any amendment, modification, waiver, termination, rent reduction, space surrender or term shortening which does not satisfy the requirements set forth in this Subsection shall be subject to the prior written consent of Lender, which consent shall not be unreasonably withheld. At Lender’s request, Borrower shall cause the Owner Parties to promptly deliver to Lender copies of all Leases, amendments, modifications and waivers which are entered into pursuant to this Section 5.1.17.
(d) Except as otherwise provided in this Section 5.1.17, Borrower shall not cause or permit Owner to, without the prior written consent of Lender, enter into, renew, extend, amend, modify, waive any provisions of, terminate, reduce rents under, accept a surrender of space under, or shorten the term of, any Major Lease or any instrument guaranteeing or providing credit support for any Major Lease.
 
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(e) Manager and King’s Village Manager shall hold any and all monies representing security deposits under the Leases (the “Security Deposits”) received by either Manager and King’s Village Manager, as applicable, in accordance with the terms of the respective Lease, and shall only release the Security Deposits in order to return a tenant’s Security Deposit to such tenant if such tenant is entitled to the return of the Security Deposit under the terms of the Lease.
(f) For purposes of this Agreement, “Lease” shall not include rentals of guest rooms at the Property to transient guests in the ordinary course of business or the rental of meeting rooms, banquet halls or similar facilities at the Property in the ordinary course of business.
(g) With respect to required consent from Lender under this Section 5.17 with respect to any Lease or proposed Lease, Lender shall use good faith efforts to respond within ten (10) Business Days after Lender’s receipt of Borrower’s proposal. If Lender fails to respond to such request within ten (10) Business Days, and Borrower sends a second request for approval of such proposal containing a legend clearly marked in not less than fourteen (14) point bold face type, underlined, in all capital letters “REQUEST DEEMED APPROVED IF NO RESPONSE WITHIN 5 BUSINESS DAYS”, Lender’s approval shall be deemed given if no objection is made by Lender within five (5) Business Days after receipt thereof.
5.1.18 King’s Village Management Agreement; Hotel Management Agreement .
(a) The Improvements on King’s Village are operated under the terms and conditions of the King’s Village Management Agreement. In no event shall the management fees under the King’s Village Management Agreement exceed five percent (5%) of the gross income derived from King’s Village. Borrower shall cause King’s Village Subsidiary to (i) perform and observe in all material respects all of the terms, covenants and conditions of the King’s Village Management Agreement to be performed and observed by King’s Village Subsidiary and (ii) promptly notify Lender of the giving of any notice by King’s Village Manager to King’s Village Subsidiary of any default by King’s Village Subsidiary under the King’s Village Management Agreement and deliver to Lender a copy of each such notice. Borrower shall not cause or permit King’s Village Subsidiary to surrender, consent to the assignment by King’s Village Manager of its interest under, terminate, cancel, modify, change, supplement, alter or amend the King’s Village Management Agreement in any material respect, except to the extent King’s Village Subsidiary has the right to terminate the King’s Village Management Agreement in accordance with its terms. Borrower hereby assigns to Lender as further security for the payment of the Debt and for the performance and observance of the terms, covenants and conditions of this Agreement, all the rights, privileges and prerogatives of King’s Village Subsidiary to surrender, consent to the assignment by King’s Village Manager of its interest under, terminate, cancel, modify, change,
 
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supplement, alter or amend the King’s Village Management Agreement in any material respect, and any such surrender, consent, termination, cancellation, modification, change, supplement, alteration or amendment of the King’s Village Management Agreement, without the prior consent of Lender (not to be unreasonably withheld, conditioned or delayed) shall be void and of no force and effect . Notwithstanding the foregoing, Borrower may cause or permit King’s Village Subsidiary, without the prior consent of Lender, to terminate the King’s Village Management Agreement or take action to remove King’s Village Manager in circumstances where King’s Village Subsidiary has the right to terminate the King’s Village Management Agreement in accordance with its terms or at any other time, provided that, in each instance, a replacement King’s Village Management Agreement is entered into with a Qualified King’s Village Manager within thirty (30) days of such termination. Upon default by King’s Village Subsidiary under the King’s Village Management Agreement, Borrower shall cause Lender and any Person designated by Lender to have the right to enter upon King’s Village at any time and from time to time for the purpose of taking any action appropriate to cause all the terms, covenants and conditions of the King’s Village Management Agreement on the part of King’s Village Subsidiary to be performed. If King’s Village Manager shall deliver to Lender a copy of any notice sent to King’s Village Subsidiary of default under the King’s Village Management Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon. Borrower shall not permit King’s Village Subsidiary to permit King’s Village Manager to sub-contract any or all of its management responsibilities under the King’s Village Management Agreement to a third party without the prior written consent of Lender, which consent shall not be unreasonably withheld, or unless the sub-contract is with a Qualified King’s Village Manager. Borrower shall, or cause King’s Village Subsidiary to, from time to time, use commercially reasonable efforts to obtain from King’s Village Manager such certificates of estoppel with respect to compliance by King’s Village Subsidiary with the terms of the King’s Village Management Agreement as may be reasonably requested by Lender, to the extent same is required by the terms of the King’s Village Management Agreement. Borrower shall cause King’s Village Subsidiary to exercise each individual option, if any, to extend or renew the term of the King’s Village Management Agreement upon demand by Lender made at any time within one (1) year of the last day upon which any such option may be exercised, unless a replacement King’s Village Management Agreement is entered into with a Qualified King’s Village Manager within one (1) year of the last day upon which any such option may be exercised. Any sums expended by Lender pursuant to this paragraph (i) shall bear interest at the Default Rate from the date such cost is incurred to the date of payment to Lender, (ii) shall be deemed to constitute a portion of the Debt, (iii) shall be secured by the Liens of the Security Instruments, the Pledge Agreements and the other Loan Documents and (iv) shall be immediately due and payable upon demand by Lender therefor.
(b) Without limitation of the foregoing, Borrower, upon the request of Lender, shall cause King’s Village Subsidiary to terminate the King’s Village Management Agreement and replace King’s Village Manager, without penalty or fee, if at any time during the Loan: (i) King’s Village Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding, (ii) there exists an Event of Default, or (iii) there exist circumstances under which King’s Village Subsidiary has the right to
 
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terminate the King’s Village Management Agreement in accordance with its terms, subject to any SNDA agreement between King’s Village Manager and Lender, if any. At any time King’s Village Manager is removed, Borrower shall cause King’s Village Subsidiary to, as soon as practicable, hire a Qualified King’s Village Manager to assume management of King’s Village pursuant to a Replacement King’s Village Management Agreement.
(c) The Improvements on the Hotel are operated under the terms and conditions of the Management Agreement. In no event shall the management fees under the Management Agreement exceed five percent (5%) of the gross income derived from the Hotel. Borrower shall cause FF&E Subsidiary to (i) perform and observe in all material respects all of the terms, covenants and conditions of the Management Agreement to be performed and observed by FF&E Subsidiary and (ii) promptly notify Lender of the giving of any notice by Manager to FF&E Subsidiary of any default by FF&E Subsidiary under the Management Agreement and deliver to Lender a copy of each such notice. Borrower shall not cause or permit FF&E Subsidiary to surrender, consent to the assignment by Manager of its interest under, terminate, cancel, modify, change, supplement, alter or amend the Management Agreement in any material respect, except to the extent FF&E Subsidiary has the right to terminate the Management Agreement in accordance with its terms. Borrower hereby assigns to Lender as further security for the payment of the Debt and for the performance and observance of the terms, covenants and conditions of this Agreement, all the rights, privileges and prerogatives of FF&E Subsidiary to surrender, consent to the assignment by Manager of its interest under, terminate, cancel, modify, change, supplement, alter or amend the Management Agreement in any material respect, and any such surrender, consent, termination, cancellation, modification, change, supplement, alteration or amendment of the Management Agreement, without the prior consent of Lender shall be void and of no force and effect . Notwithstanding the foregoing, Borrower may cause or permit FF&E Subsidiary, without the prior consent of Lender, to terminate the Management Agreement or take action to remove Manager in circumstances where FF&E Subsidiary has the right to terminate the Management Agreement in accordance with its terms, provided that within thirty (30) days FF&E Subsidiary has entered into a Replacement Management Agreement with a Qualified Manager. Upon default by FF&E Subsidiary under the Management Agreement, Borrower shall cause Lender and any Person designated by Lender to have the right to enter upon the Hotel at any time and from time to time for the purpose of taking any action appropriate to cause all the terms, covenants and conditions of the Management Agreement on the part of FF&E Subsidiary to be performed. If Manager shall deliver to Lender a copy of any notice sent to FF&E Subsidiary of default under the Management Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon. Borrower shall not permit FF&E Subsidiary to permit Manager to sub-contract any or all of its management responsibilities under the Management Agreement to a third-party without the prior written consent of Lender, which consent shall not be unreasonably withheld. Borrower shall, or cause FF&E Subsidiary to, from time to time, use commercially reasonable efforts to obtain from Manager such certificates of estoppel with respect to compliance by FF&E Subsidiary with the terms of the Management Agreement as may be reasonably requested
 
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by Lender, to the extent same is required by the terms of the Management Agreement. Borrower shall cause FF&E Subsidiary to exercise each individual option, if any, to extend or renew the term of the Management Agreement upon demand by Lender made at any time within one (1) year of the last day upon which any such option may be exercised. Any sums expended by Lender pursuant to this paragraph (i) shall bear interest at the Default Rate from the date such cost is incurred to the date of payment to Lender, (ii) shall be deemed to constitute a portion of the Debt, (iii) shall be secured by the Liens of the Security Instruments, the Pledge Agreements and the other Loan Documents and (iv) shall be immediately due and payable upon demand by Lender therefor.
(d) Without limitation of the foregoing, Borrower, upon the request of Lender, shall cause the appropriate Owner Party to terminate the Management Agreement and replace Manager, without penalty or fee, if at any time during the Loan: (i) Manager shall become insolvent or a debtor in any bankruptcy or insolvency proceeding, (ii) there exists an Event of Default, or (iii) there exist circumstances under which FF&E Subsidiary has the right to terminate the Management Agreement in accordance with its terms, subject to any SNDA agreement between Manager or Hotel Manager and Lender, if any. At any time the Manager is removed, Borrower shall cause the appropriate Owner Party to, as soon as practicable, hire a Qualified Manager to assume management of the Hotel pursuant to a Replacement Management Agreement.
5.1.19 Environmental Covenants .
(a) Borrower covenants and agrees that so long as the Loan is outstanding (i) all uses and operations on or of the Property, whether by the Owner Parties or any other Person, shall be in compliance in all material respects with all Environmental Laws; (ii) there shall be no Releases of Hazardous Materials in, on, under or from the Property; (iii) there shall be no Hazardous Materials in, on, or under the Property, except those that are in compliance with all Environmental Laws; (iv) Borrower shall cause the Owner Parties to keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any act or omission of the Owner Parties or any other Person (the “Environmental Liens”); (v) Borrower shall and shall cause the Owner Parties to, at Borrower’s or the Owner Parties’ sole cost and expense, fully and expeditiously cooperate in all activities pursuant to paragraph (b) below, including but not limited to providing all relevant information and making knowledgeable persons available for interviews; (vi) Borrower shall cause the Owner Parties to, at the Owner Parties’ sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable written request of Lender, upon Lender’s reasonable belief that the Property is not in full compliance with all Environmental Laws, and share with Lender the reports and other results thereof, and Lender shall be entitled to rely on such reports and other results thereof; (vii) Borrower shall cause the Owner Parties to, at the Owner Parties’ sole cost and expense, comply with all reasonable written requests of Lender to (A) to the extent required by Environmental Law, reasonably effectuate remediation of any Hazardous Materials in, on, under or from the Property; and (B) comply with any Environmental Law; (viii) Borrower shall cause the Owner Parties to use commercially
 
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reasonable efforts, including, without limitation, the pursuit of appropriate legal proceedings, to not permit any tenant or other user of any of the Property to violate any Environmental Law; and (ix) Borrower shall, and cause the Owner Parties to, promptly notify Lender in writing after either Borrower or any Owner Party has become aware of (A) any Release or threatened Releases of Hazardous Materials in, on, under, from or migrating towards the Property; (B) any non-compliance with any Environmental Laws related in any way to the Property; (C) any actual Environmental Lien; (D) any required remediation of environmental conditions relating to the Property; and (E) any written communication from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to Hazardous Materials in, on or under the Property. If there is a Release of Hazardous Materials in, on, under or from the Property caused by a Person that is not Borrower, an Owner Party or an Affiliate or agent of any of the foregoing, Borrower shall not be in Default hereunder as long as Borrower or the applicable Owner Party promptly complies with all applicable Environmental Laws and all covenants hereunder relating to such Release of Hazardous Materials.
(b) Borrower shall cause the Owner Parties to permit Lender and any other Person designated by Lender, including but not limited to any representative of a Governmental Authority, and any environmental consultant, to have the right, but not the obligation, to enter upon the Property at all reasonable times (subject to the rights of tenants, occupants and licensees of the Property, except in an emergency or upon request by a Governmental Authority) to assess any and all aspects of the environmental condition of the Property and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in Lender’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing. Borrower shall cooperate with and provide, and shall cause the Owner Parties to, provide such reasonable access to Lender and any such Person designated by Lender.
5.1.20 Alterations .
Borrower shall obtain Lender’s prior written consent to any alterations to any Improvements, excluding decorative alterations and minor alterations not costing in excess of $1,500,000.00 and which do not adversely affect the structural components or building systems of the Improvements. Such consent shall not be unreasonably withheld or delayed except with respect to alterations that may have a material adverse effect on Borrower’s or the Owner Parties’ financial condition, the Property, the Collateral or the Net Operating Income.
5.1.21 Hotel Management Agreement .
The Hotel is currently operated under the terms and conditions of the Hotel Management Agreement. Borrower shall cause FF&E Subsidiary to (i) pay all sums required to be paid by FF&E Subsidiary under the Hotel Management Agreement, (ii) perform, observe and enforce in all material respects all of the terms, covenants and conditions of the Hotel Management Agreement on
 
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the part of FF&E Subsidiary to be performed, observed and enforced, (iii) promptly notify Lender of the giving of any notice to FF&E Subsidiary of any default by FF&E Subsidiary under the Hotel Management Agreement and deliver to Lender a true copy of each such notice, and (iv) promptly deliver to Lender a copy of each annual business plan prepared by Hotel Manager and such other information as Lender may reasonably request. Borrower shall not permit FF&E Subsidiary to, without the prior consent of Lender, surrender, terminate, cancel, modify, change, supplement, alter or amend the Hotel Management Agreement in any material respect. Borrower hereby assigns to Lender as further security for the payment of the Debt and for the performance and observance of the terms, covenants and conditions of this Agreement, all the rights, privileges and prerogatives of Borrower to surrender, terminate, cancel, modify, change, supplement, alter or amend the Hotel Management Agreement in any material respect, and any such surrender, termination, cancellation, modification, change, supplement, alteration or amendment of the Hotel Management Agreement without the prior consent of Lender shall be void and of no force and effect. Notwithstanding the foregoing, Borrower may cause or permit FF&E Subsidiary, without the prior consent of Lender, to terminate the Hotel Management Agreement in circumstances where FF&E Subsidiary has the right to terminate the Hotel Management Agreement in accordance with its terms. If FF&E Subsidiary shall default in the performance or observance of any material term, covenant or condition of the Hotel Management Agreement on the part of FF&E Subsidiary to be performed or observed, then, without limiting the generality of the other provisions of this Agreement, and without waiving or releasing Borrower from any of its obligations hereunder, Borrower shall permit Lender to pay any sums and to perform any act or take any action as may be appropriate to cause all the terms, covenants and conditions of the Hotel Management Agreement on the part of FF&E Subsidiary to be performed or observed to be promptly performed or observed on behalf of FF&E Subsidiary, to the end that the rights of FF&E Subsidiary in, to and under the Hotel Management Agreement shall be kept unimpaired and free from default; provided that Lender shall have no such obligation to perform any such action. Lender and any Person designated by Lender shall have, and are hereby granted, the right to enter upon the Property at any time and from time to time for the purpose of taking any such action. If Hotel Company shall deliver to Lender a copy of any notice sent to FF&E Subsidiary of default under the Hotel Management Agreement, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender in good faith, in reliance thereon. Borrower shall, from time to time, cause FF&E Subsidiary to use commercially reasonable efforts to obtain from Hotel Company such certificates of estoppel with respect to compliance by FF&E Subsidiary with the terms of the Hotel Management Agreement as may be requested by Lender, to the extent same is required by the terms of the Hotel Management Agreement. Borrower shall cause FF&E Subsidiary to exercise each individual option, if any, to extend or renew the term of the Hotel Management Agreement upon demand by Lender made at any time within one (1) year of the last day upon which any such option may be exercised. Any sums expended by Lender pursuant to this paragraph shall bear interest at the Default Rate from the date such cost is incurred to the date of payment to Lender, shall be deemed to constitute a portion of the Debt, shall be secured by the Liens of the Security Instruments, the Pledge Agreements and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.
 
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5.1.22 The Ground Leases .
With respect to the Ground Leases,
(a) Borrower shall cause the applicable Owner Party to (i) pay all rents, additional rents and other sums required to be paid by such Owner Party, as tenant under and pursuant to the provisions of each Ground Lease, including, without limitation, demolition reserves (collectively, the “Ground Rent”), (ii) diligently perform and observe in all material respects all of the terms, covenants and conditions of each Ground Lease on the part of such Owner Party, as tenant thereunder, (iii) promptly notify Lender of the giving of any written notice by the Fee Owner under the applicable Ground Lease to such Owner Party of any default by such Owner Party, as tenant thereunder, and promptly deliver to Lender a true copy of each such notice and (iv) promptly notify Lender of any bankruptcy, reorganization or insolvency of the Fee Owner under the applicable Ground Lease of which such Owner Party is aware or has received any written notice thereof, and promptly deliver to Lender a true copy of such notice, together with copies of all notices, pleadings, schedules and similar matters received by such Owner Party in connection with such bankruptcy, reorganization or insolvency within five (5) Business Days after receipt. Borrower shall not permit such Owner Party, without the prior consent of Lender, to (x) surrender the leasehold estate created by the applicable Ground Lease or terminate or cancel any Ground Lease or modify, change, supplement, alter or amend any Ground Lease, either orally or in writing, including, without limitation, agree to any resetting of the base rent due thereunder, provided, however, that Lender’s consent to any Owner Party’s agreement prior to July 31, 2009 to reset the base rent under a Ground Lease shall not be required if the rent per square foot is less than or equal to $718 per square foot, or (y) consent to, acquiesce in, or fail to object to, any known attempt by any Fee Owner, as debtor in possession or by a trustee for such Fee Owner, to sell or transfer the Fee Estate with respect to any Ground Lease free and clear of the Ground Lease under section 363(f) of the Bankruptcy Code or otherwise. Borrower shall cause such Owner Party to object to any such known attempt by such Fee Owner, as debtor in possession or by a trustee for such Fee Owner, to sell or transfer the Fee Estate with respect to any Ground Lease free and clear of the Ground Lease under section 363(f) of the Bankruptcy Code or otherwise, and in such event shall affirmatively assert and pursue its right to adequate protection under section 363(e) of the Bankruptcy Code. Borrower, on behalf of such Owner Party, hereby assigns to Lender all of its rights under Section 363 of the Bankruptcy Code to consent or object to any sale or transfer of such Fee Estate free and clear of the Ground Lease, and grants to Lender the right to object to any such sale or transfer on behalf of such Owner Party, and Borrower shall not permit such Owner Party to contest any pleadings, motions, documents or other actions filed or taken on Lender’s or such Owner Party’s behalf by Lender in the event that any Fee Owner, as debtor in possession or by a trustee for such Fee Owner, attempts to sell or transfer the Fee Estate with respect to any Ground Lease free and clear of the Ground Lease under section 363(f) of the Bankruptcy Code or otherwise.
 
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(b) If any Owner Party shall materially default in the performance or observance of any term, covenant or condition of any Ground Lease on the part of such Owner Party, as tenant thereunder, and such default shall continue beyond the period that is one-half of any applicable notice and cure period provided thereunder, Lender shall have the right, to the extent Lender has received notice of, or has otherwise become aware of any such default, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause such default to be remedied and to cause all of the terms, covenants and conditions of such Ground Lease on the part of such Owner Party to be performed or observed on behalf of such Owner Party. If the landlord under the applicable Ground Lease shall deliver to Lender a copy of any notice of default under such Ground Lease, such notice shall constitute full protection to Lender for any action taken or omitted to be taken by Lender, in good faith, in reliance thereon. Borrower shall cause such Owner Party to exercise each individual option, if any, to extend or renew the term of each Ground Lease prior to or within the period in which any such option may be exercised, and Borrower, on behalf of such Owner Party, hereby expressly authorizes and appoints Lender its attorney-in-fact to exercise any such option in the name of and upon behalf of such Owner Party, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest. Notwithstanding the foregoing, if Lender receives a written document, executed by the Ground Lessor under a Ground Lease, which gives Lender the right cure a default thereunder after the expiration of the applicable Owner Party’s notice and cure period therefore, then such Owner Party shall have the entire notice and cure period (not half) in which to cure a default before Lender may exercise its right to cure provided above.
(c) Notwithstanding anything contained in any Ground Lease to the contrary, Borrower shall not permit such Owner Party to further sublet any portion of the related Property (other than as permitted pursuant to Section 5.1.17 hereof) without prior written consent of Lender. Each sublease that is a Major Lease hereafter made shall provide that, (i) in the event of the termination of the Ground Lease, at the election of the Ground Lessor, the sublease shall not terminate or be terminable by the lessee thereunder; (ii) in the event of any action for the foreclosure of the Security Instruments the sublease shall not terminate or be terminable by the lessee thereunder by reason of the termination of the Ground Lease unless such lessee is specifically named and joined in any such action and unless a judgment is obtained therein against such lessee; and (iii) in the event that the Ground Lease is terminated as aforesaid, the lessee under the sublease, at the election of the Ground Lessor, shall attorn to the lessor under the Ground Lease or to the purchaser at the sale of the related Property on such foreclosure, as the case may be. In the event that any portion of such Property shall be sublet pursuant to the terms of this subsection, such sublease shall be deemed to be included in the Property.
5.1.23 OFAC .
At all times throughout the term of the Loan, Borrower, the Owner Parties, the Guarantors and Principal shall be in full compliance with all applicable orders, rules, regulations and recommendations of The Office of Foreign Assets Control of the U.S. Department of the Treasury.
 
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5.1.24 Notices .
Borrower shall give notice, or cause notice to be given, to Lender promptly upon the occurrence of any Default or Event of Default under the Security Instruments.
5.1.25 Ground Lessor Consents .
Borrower shall, and shall cause the Owner Parties to, cooperate fully with Lender to attempt to obtain written consent from each Ground Lessor for the purpose of recording (i) a first-lien leasehold mortgage on the portion of the Property covered by its Ground Lease for the benefit of Lender and (ii) SNDAs from all parties with interests superior to the mortgagors’ interest in the applicable portion of the Property (each such consent, a “Ground Lessor Consent”). Such cooperation by Borrower and the Owner Parties shall include commencing litigation, if necessary, to enforce the obligation of each Ground Lessor to be reasonable in granting consent to a leasehold mortgage, but shall not include the expenditure of commercially unreasonable amounts of time or money or the acceptance of commercially unreasonable risks, liabilities or obligations. Borrower and Lender agree and acknowledge that, so long as Borrower and the Owner Parties cooperate fully with Lender to attempt to obtain Ground Lessor Consents in accordance with the requirements set forth herein, the failure to obtain any Ground Lessor Consent shall not constitute a Default or Event of Default under this Agreement. Borrower shall, and shall cause the Owner Parties to, (i) deliver material consents, material notices, material requests or other material written correspondence among Borrower, the Owner Parties and the Ground Lessors with respect to such attempt to obtain such Ground Lessor Consents, and (ii) keep Lender apprised periodically of such attempt to obtain such Ground Lessor Consents. Upon the receipt of such Ground Lease Consent, Borrower shall cause the Owner Parties to promptly execute and deliver to Lender (for recordation) a Mortgage, substantially in the form attached hereto and made a part hereof as Schedule X , with respect to such ground leasehold interests (as security for the Debt Guaranty). Borrower shall also cause to be delivered to Lender, simultaneously with the delivery of each such Mortgage, (i) a Title Insurance Policy insuring the Lien of such Mortgage, subject only to Permitted Encumbrances, and in an amount equal to the principal balance of the Loan, with all title endorsements described in Schedule XI attached hereto and made a part hereof and any other title endorsements as Lender shall reasonably require and can be obtained for a commercially reasonable premium, together with the Survey already existing as of the date hereof read in; (ii) SNDAs in a form reasonably satisfactory to Lender; (iii) an assignment of leases and rents, substantially in the form attached hereto and made a part hereof as Schedule XII ; and (iv) a legal opinion on the enforceability of such Security Instrument and the assignment of leases and rents, similar in form to the enforceability opinion delivered at or around the Closing Date.
5.1.26 Owner Party Covenants .
Borrower shall cause the Owner Parties to comply with all obligations with which the Owner Parties have covenanted to comply under the Loan Documents.
 
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5.1.27 Maintenance of Personal Property .
Subject to the conditions set forth in Section 5.1.20 hereof, Borrower shall cause the Owner Parties to own, lease or license Personal Property adequate to maintain and operate the Hotel as a first-class, full-service hotel and King’s Village as an “upscale” shopping mall in accordance with the standards of this Agreement, the other Loan Documents, the King’s Village Management Agreement, the Management Agreement and the Hotel Management Agreement. Borrower shall not, and shall not directly or indirectly cause, request or permit the Owner Parties, King’s Village Manager or Manager to, lease, license, encumber or enter into any other financing arrangements with respect to any of the Personal Property, as the case may be, other than as may expressly be permitted hereunder or under the other Loan Documents.
5.1.28 U.S.A. Patriot Act .
Promptly after receipt of written request therefor, Borrower shall, or shall cause the Owner Parties and the Guarantors to, provide Lender with all information reasonably required by Lender to comply with the U.S.A. Patriot Act.
5.1.29 Licenses .
Borrower shall cause the Owner Parties to keep and maintain all Licenses necessary for the operation of the Hotel as a first-class, full-service hotel and King’s Village as an “upscale” shopping mall.
5.1.30 FF&E Reserve Fund – Performance of Replacements .
(a) Borrower shall cause the Owner Parties to make FF&E replacements when required in order to keep the Property in condition and repair consistent with other first-class, full-service hotels in the same market segment in the metropolitan area in which the Property is located. Borrower shall cause the Owner Parties to complete all FF&E replacements in a good and workmanlike manner as soon as practicable following the commencement of making each such FF&E replacement.
(b) Borrower shall cause the Owner Parties to permit Lender and Lender’s agents and representatives (including, without limitation, Lender’s engineer, architect, or inspector) or third parties making FF&E replacements pursuant to Section 7.4.2 to enter onto the Property during normal business hours (subject to the rights of tenants under their Leases and other occupants and licensees of the property) to inspect the progress of any FF&E replacements and all materials being used in connection therewith and, after the occurrence of and during the continuance of an Event of Default, to complete any FF&E replacements made pursuant to Section 7.4.2, provided that (i) the total cost of such FF&E replacements exceeds $200,000 or (ii) the absence of such FF&E replacements would have a material and adverse effect on the Property. Borrower shall cause all contractors and subcontractors to cooperate with Lender or Lender’s representatives or such other persons described above in connection with inspections described in this Section 5.1.30(b) or the completion of FF&E replacements pursuant to Section 7.4.2.
 
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(c) The FF&E replacements and all materials, equipment, fixtures, or any other item comprising a part of any FF&E replacement shall be constructed, installed or completed, as applicable, free and clear of all mechanic’s, materialmen’s or other Liens.
(d) All FF&E replacements and the making thereof shall comply with the Hotel Management Agreement, the King’s Village Management Agreement, the Management Agreement and all applicable Legal Requirements of all Governmental Authorities having jurisdiction over the Property and applicable insurance requirements including, without limitation, applicable building codes, special use permits, environmental regulations, and requirements of insurance underwriters.
(e) In addition to any insurance required under the Loan Documents, Borrower shall provide or cause to be provided workmen’s compensation insurance, builder’s risk, and public liability insurance and other insurance to the extent required under Applicable Law in connection with a particular FF&E replacement. All such policies shall be in form and amount reasonably satisfactory to Lender. All such policies which can be endorsed with standard mortgagee clauses making loss payable to Lender or its assigns shall be so endorsed. Certified copies of such policies shall be delivered to Lender.
5.1.31 Cash Reserve Under Acquisition Agreement .
Pursuant to the terms of the Acquisition Agreement, in connection with the closing thereunder, the Cash Reserve (as such term is defined in the Acquisition Agreement) will be used to pay for Ordinary Course Operational Claims (as such term is defined in the Acquisition Agreement). Borrower shall pursue its rights, and/or cause the purchaser under the Acquisition Agreement to pursue its rights, to apply such Cash Reserve to the payment of Operating Expenses, to the extent permitted under the Acquisition Agreement. In addition, if there should be any of the Cash Reserve or claims relating thereto still available or outstanding at the time Lender exercises any of its remedies hereunder or under any of the other Loan Documents in connection with an Event of Default, Borrower shall cooperate (at Lender’s expense) with Lender to enable it to make requests for payment from the Cash Reserve, as appropriate, or to pursue such outstanding claims.
Section 5.2 Negative Covenants .
From the date hereof and (i) so long as any portion of the Debt is outstanding or (ii) until the earlier release in full of Lender’s Liens encumbering the Collateral and the Property (and all related obligations) in accordance with the terms of this Agreement and the other Loan Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly, any of the following:
5.2.1 Liens .
Borrower shall not, and shall not permit or cause the Owner Parties or the Guarantors to, create, incur, assume or suffer to exist any Lien on any portion of the Property or the Collateral, except for Permitted Encumbrances.
 
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5.2.2 Dissolution .
Borrower shall not, and shall not permit or cause any Owner Party, to (a) engage in any dissolution, liquidation or consolidation or merger with or into any other business entity, (b) transfer, lease or sell, in one transaction or any combination of transactions, all or substantially all of the Property, the Collateral or assets of Borrower or any Owner Party except to the extent expressly permitted by the Loan Documents, (c) except as expressly permitted under the Loan Documents, modify, amend, waive or terminate its Organizational Documents in any material respect or its qualification and good standing in any jurisdiction or (d) permit or cause the Principal or any Owner Party to (i) dissolve, wind up or liquidate or take any action, or omit to take an action, as a result of which the Principal or any Owner Party would be dissolved, wound up or liquidated in whole or in part, or (ii) except as expressly permitted under the Loan Documents, amend, modify, waive or terminate the certificate of incorporation, bylaws or similar Organizational Documents of any Owner Party in any material respect, in each case, without obtaining the prior written consent of Lender. Nothing contained in this Section 5.2.2 is intended to expand the rights of Borrower contained in Section 5.2.10 hereof. An amendment or modification to the foregoing Organizational Documents shall be deemed material only if such modification or amendment (x) may reasonably be expected to result in (i) an impairment of or limitation on the ability of any Person to satisfy any of its obligations under the Loan Documents or (ii) a breach of any representation made in any of the Loan Documents, or (y) modifies any of the Organizational Documents of Borrower or any of the Owner Parties so as to modify the corresponding provisions of Section 4.1.34 or Section 4.1.46 hereof.
5.2.3 Change In Business .
Borrower shall not enter into any line of business other than the ownership of the Collateral, or make any material change in the scope or nature of its business purposes, or undertake or participate in activities other than the continuance of its present business.
Borrower shall not permit or cause any Owner Party to enter into any line of business other than the ownership and operation of the Property (including providing services in connection therewith) and the Collateral or make any material change in the scope or nature of its business objectives, purposes or operations or undertake or participate in activities other than the continuance of its present business.
5.2.4 Debt Cancellation .
Borrower shall not cancel or otherwise forgive or release any material claim or debt owed to Borrower by any Person, except for adequate consideration and in the ordinary course of Borrower’s business. In addition, Borrower shall not permit or cause any Owner Party to cancel or otherwise forgive or release any material claim or debt (other than termination of Leases in accordance with this Agreement) owed to any Owner Party by any Person, except for adequate consideration and in the ordinary course of any Owner Party’s business.
 
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5.2.5 Zoning .
Borrower shall not, and shall not permit or cause any Owner Party to, initiate or consent to any zoning reclassification of any portion of the Property or seek any variance under any existing zoning ordinance or use or permit the use of any portion of the Property in any manner that could result in such use becoming a non-conforming use under any zoning ordinance or any other Applicable Law, without the prior written consent of Lender.
5.2.6 No Joint Assessment .
Borrower shall not, and shall not cause or permit any Owner Party to, suffer, permit or initiate the joint assessment of (a) the Property with any other real property constituting a tax lot separate from any portion of the Property, or (b) any portion of the Property which may be deemed to constitute personal property, or any other procedure whereby the Lien of any taxes which may be levied against such personal property shall be assessed or levied or charged to any other portion of the Property.
5.2.7 Name, Identity, Structure, or Place of Organization .
Borrower shall not, and shall not permit any Loan Party to, change its name, identity (including its trade name or names), or place of organization, without, in each case, first giving Lender thirty (30) days’ prior written notice. Borrower shall not, and shall not cause, request or permit any Owner Party to, change its corporate, partnership or other structure, or the place of its organization as set forth in Section 4.1.33, without, in each case, the consent of Lender. Upon Lender’s request, Borrower shall or shall cause the Owner Parties to execute and deliver additional financing statements, security agreements and other instruments which may be necessary to effectively evidence or perfect Lender’s security interest in the Property as a result of such change of place of organization.
5.2.8 ERISA .
(a) During the term of the Loan or of any obligation or right hereunder, neither Borrower nor any other Loan Party shall be a Plan and none of the assets of Borrower or any Loan Party shall constitute Plan Assets.
(b) Borrower further represents and covenants that (A) no Loan Party is or will be, maintains or will maintain, or has or will have, any direct, indirect, or contingent liability with respect to an “employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA; (B) no Loan Party is or will be subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (C) one or more of the following circumstances is and shall continue to be true:
(i) Equity interests in such Loan Party are publicly offered securities, within the meaning of 29 C.F.R. §2510.3 101(b)(2);
 
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(ii) Less than twenty-five percent (25%) of each outstanding class of equity interests in such Loan Party are held by “benefit plan investors” within the meaning of 29 C.F.R. §2510.3 101(f)(2); or
(iii) Such Loan Party qualifies as an “operating company” or a “real estate operating company” within the meaning of 29 C.F.R. §2510.3 101(c) or (e).
The provisions of this Section 5.2.8 shall survive payment of the Note and the satisfaction of all other obligations of Borrower and the Loan Parties under this Agreement and the other Loan Documents with respect to all claims that arose prior to repayment of the Loan.
5.2.9 Affiliate Transactions .
(a) Borrower shall not enter into, or be a party to, any transaction with Principal, an Affiliate of Borrower or any entity owned by a Person or entity which owns 25% or more, directly or indirectly, of Borrower or an Affiliate of Borrower, except in the ordinary course of business and on terms which are fully disclosed to Lender in advance (if such transaction involves the payment by Borrower of more than $25,000.00 per annum individually, or $100,000.00 per annum in the aggregate) and are no less favorable to Borrower or such Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.
(b) Borrower shall not cause, request or permit any Owner Party to enter into, or be a party to, any transaction with such Owner Party’s Principal, an Affiliate of such Owner Party or any entity owned by a Person or entity which owns 25% or more, directly or indirectly, of such Owner Party’s Principal or an Affiliate of such Owner Party, except in the ordinary course of business and on terms which are fully disclosed to Lender in advance (if such transaction involves the payment by such Owner Party of more than $25,000.00 per annum individually, or $100,000.00 per annum in the aggregate) and are no less favorable to such Owner Party or such Affiliate than would be obtained in a comparable arm’s-length transaction with an unrelated third party.
5.2.10 Transfers .
(a) Borrower shall not, and shall not cause or permit any Owner Party to, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, grant options with respect to, or otherwise transfer or dispose of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record) the Property, the Collateral or any part thereof or any legal, beneficial or economic interest therein or permit a Sale or Pledge of an interest in any Restricted Party (collectively, a “Transfer”), other than pursuant to Leases of space in the Improvements to tenants in accordance with the provisions of Section 5.1.17 hereof, without (i) the prior written consent of Lender and (ii) if a Securitization has occurred, delivery to Lender of written confirmation from the Rating Agencies that the Transfer will not result in the downgrade, withdrawal or qualification of the then current ratings assigned to any Securities or the proposed rating of any Securities.
 
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(b) A Transfer shall include, but not be limited to: (i) an installment sales agreement wherein Borrower agrees to sell the Property, the Collateral or any part thereof for a price to be paid in installments; (ii) an agreement by any Owner Party leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, such Owner Party’s right, title and interest in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge of such corporation’s stock or the creation or issuance of new stock; (iv) if a Restricted Party is a limited or general partnership or joint venture, any merger or consolidation or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the partnership interest of any general partner or any profits or proceeds relating to such partnership interest, or the Sale or Pledge of limited partnership interests or any profits or proceeds relating to such limited partnership interests or the creation or issuance of new limited partnership interests; (v) if a Restricted Party is a limited liability company, any merger or consolidation or the change, removal, resignation or addition of a managing member or non-member manager (or if no managing member, any member) or the Sale or Pledge of the membership interest of a managing member (or if no managing member, any member) or any profits or proceeds relating to such membership interest, or the Sale or Pledge of non-managing membership interests or the creation or issuance of new non-managing membership interests; and (vi) if a Restricted Party is a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted Party or the creation or issuance of new legal or beneficial interests.
(c) Notwithstanding the provisions of Sections 5.2.10(a) and (b), the following transfers shall not be deemed to be a Transfer: (i) a transfer by devise or descent or by operation of law upon the death of a member, partner or shareholder of a Restricted Party or a Restricted Party itself, provided Lender receives notice thereof within a reasonable period of time thereafter; (ii) the Sale or Pledge, in one or a series of transactions, of not more than forty-nine percent (49%) of the stock, limited partnership interests or membership interests (as the case may be) in a Restricted Party (other than the Owner Parties), provided, however, no such transfers shall result in the change of voting control in the Restricted Party, and as a condition to each such transfer, Lender shall receive not less than thirty (30) days’ prior written notice of such proposed transfer; and (iii) the Sale or Pledge, in one or a series of transactions, of not more than forty-nine percent (49%) of the stock, limited partnership interests or membership interests (as the case may be) in any Restricted Party that is a shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of, Sponsor; provided, however, no such transfers shall result in the change of voting control in Borrower or any other Restricted Party, and as a condition to each such transfer, Lender shall receive not less than thirty (30) days prior written notice of such proposed transfer. Notwithstanding the foregoing restrictions in this Section 5.2.10, the following transfers shall be permitted without the consent of Lender: (i) transfers
 
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of ownership interests in Whitehall Street Global Real Estate Limited Partnership 2007 and/or Whitehall Parallel Global Real Estate Limited Partnership 2007, so long as after any such transfer, (x) such entities retain in the aggregate at least a 51% direct or indirect interest in Borrower, (y) WH Advisors, L.L.C. 2007 remains general partner of Whitehall Street Global Real Estate Limited Partnership 2007, and (z) no such transfers shall result in the change of voting control in Borrower or any other Restricted Party; (ii) transfers of ownership interests in Global Hyatt Corporation and/or Hyatt Corporation or their indirect interests in Borrower with respect to any transfer of such interest in connection with a merger, consolidation or sale of all or substantially all of its assets by either Global Hyatt Corporation or Hyatt Corporation; (iii) a one-time issuance of shares in the REIT, which shares shall have a value of not more than the greater of 1% of the value of the assets of the REIT and $125,000; (iv) the pledge by Mezzanine Borrower of its interest in Borrower, pursuant to the Mezzanine Loan Documents; and (v) a transfer of such interest in Borrower to a “Permitted Transferee” (as such term is defined in the Intercreditor Agreement) in accordance with the terms of the Intercreditor Agreement.
(d) Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon a Transfer in violation of this Section 5.2.10. This provision shall apply to every Transfer regardless of whether voluntary or not, or whether or not Lender has consented to any previous Transfer. Notwithstanding anything to the contrary contained in this Section 5.2.10, (a) no transfer (whether or not such transfer shall constitute a Transfer) shall be made to any Prohibited Person, (b) in the event of any transfer (whether or not such transfer shall constitute a Transfer) resulting in any Person and its Affiliates owning in excess of ten percent (10%) of the ownership interest in a Restricted Party (other than any shareholder, partner, member or non-member manager, or any direct or indirect legal or beneficial owner of, Sponsor), Borrower shall provide to Lender, not less than thirty (30) days prior to such transfer, the name and identity of each proposed transferee, together with the names of its controlling principals, the social security number or employee identification number of such transferee and controlling principals, and such transferee’s and controlling principal’s home address or principal place of business, and home or business telephone number, and (c) in the event any transfer (whether or not such transfer shall constitute a Transfer) results in any Person and its Affiliates owning in excess of forty-nine percent (49%) of the ownership interest in a Restricted Party, Borrower shall, prior to such transfer, deliver an updated Insolvency Opinion to Lender, which opinion shall be in form, scope and substance acceptable in all respects to Lender and the Rating Agencies.
(e) Notwithstanding anything herein to the contrary, for purposes of this Section 5.2.10, a “Transfer” shall not include (i) rentals of guest rooms at the Property to transient guests in the ordinary course of business, (ii) rental of meeting rooms, banquet halls or similar facilities at the Property in the ordinary course of business, (iii) disposition of Personal Property that is obsolete or removed or disposed in the ordinary course of business of owning and operating the Property.
 
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5.2.11 Limitation on Securities Issuances .
Neither Borrower nor any Owner Party shall issue any limited liability company interests or other securities other than those that have been issued as of the date hereof.
5.2.12 Distributions .
(a) Any and all dividends, including capital dividends, stock or liquidating dividends, distributions of property, redemptions or other distributions made by any Owner Party on or in respect of any interests in such Owner Party, and any and all cash and other property received in payment of the principal of or in redemption of or in exchange for any such interests (collectively, the “Distributions”), shall become part of the Collateral. Notwithstanding the foregoing, Lender expressly agrees that Borrower shall be permitted to distribute to its direct equity holders any Distributions Borrower receives only upon the express conditions that (i) no Event of Default has occurred and is continuing under the Loan, and (ii) no Trigger Event is then in existence.
(b) If any Distributions shall be received by Borrower, any Owner Party or any other Loan Party after the occurrence and during the continuance of an Event of Default or during the existence of a Trigger Event, Borrower shall hold, or shall cause the same to be held, in trust for the benefit of Lender. Any and all revenue derived from the Property paid directly by tenants, subtenants or occupants of the Property shall be held and applied in accordance with the terms and provisions of this Agreement and the other Loan Documents.
5.2.13 Material Agreements .
(a) Borrower shall not, and shall not permit any Owner Party to, enter into any Material Agreement without the consent of Lender, such consent not to be unreasonably withheld or delayed. Upon the request of Lender with respect to Material Agreements, Borrower shall cause the applicable Owner Party to deliver to Lender a recognition agreement from such service or material provider, among other things, providing for such Person’s continued performance should Lender become the owner of the Collateral or the Property.
(b) Except as specifically set forth herein, Borrower will not, and will not permit or cause any Owner Party to, amend, modify, supplement, rescind or terminate (except for a material “event of default” thereunder) any Material Agreement, without Lender’s prior written approval, including the identity of the party to perform services under such agreement, such consent not to be unreasonably withheld or delayed.
(c) Borrower shall and shall cause each Owner Party, as applicable, to (i) observe and perform, in all material respects, each and every term to be observed or performed by such Owner Party under the Material Agreements (except for termination of such Material Agreement, which shall require Lender’s prior written approval as provided in Section 5.2.13(b) hereof), and (ii) provide Lender with a copy of any written notice of default given to such Owner Party by the other party to a Material Agreement, promptly after such Owner Party receives same.
 
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5.2.14 Hyatt Corporation Shares of FF&E Subsidiary .
Borrower shall not permit FF&E Subsidiary to elect to redeem the 500 shares Hyatt Corporation owns in FF&E Subsidiary as of the date hereof, unless the redemption amount is paid from funds (i) unrelated to Property revenues and/or (ii) made available pursuant to Section 3.7(f)(ii) hereof.
 
 	VI.	INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS	
Section 6.1 Insurance .
(a) Borrower shall cause the Owner Parties (or, with respect to clause (v) below, Manager) to maintain at all times, during the term of the Loan, Policies for the Owner Parties and the Property providing at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and the Personal Property, in each case, (A) in an amount equal to 100% of the “Full Replacement Cost,” which for purposes of this Agreement shall mean actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation, except named windstorm where the limits are $300,000,000 and a deductible of 3% of the total insured value with Lender retaining the right to require Borrower to cause the Owner Parties to maintain additional named windstorm limits consistent with reasonable blanket policy considerations if commercially available at commercially reasonable rates and customarily maintained by owners of hotel properties in Hawaii of similar type, size and quality as the Property, (B) containing an agreed amount endorsement with respect to the Improvements and Personal Property waiving all co-insurance provisions; (C) providing for no deductible in excess of $10,000; and (D) providing coverage for contingent liability from Operation of Building Laws, Demolition Costs and Increased Cost of Construction Endorsements together with an “Ordinance or Law Coverage” or “Enforcement” endorsement if any of the Improvements or the use of the Property shall at any time constitute legal non-conforming structures or uses. The Full Replacement Cost shall be redetermined from time to time (but not more frequently than once in any twenty-four (24) calendar months) at the request of Lender by an appraiser or contractor designated and paid by the Owner Parties and approved by Lender, or by an engineer or appraiser in the regular employ of the insurer. After the first Appraisal, additional Appraisals may be based on construction cost indices customarily employed in the trade. No omission on the part of Lender to request any such ascertainment shall relieve the Owner Parties of any of their obligations under this Subsection;
 
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(ii) commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, including “Dram Shop” or other liquor liability coverage if alcoholic beverages are sold from or may be consumed at the Property, such insurance (A) to be on the so-called “occurrence” form with a combined single limit of not less than $100,000,000 per occurrence and $100,000,000 in the aggregate; (B) to continue at not less than the aforesaid limit until required to be changed by Lender in writing by reason of changed economic conditions making such protection inadequate; and (C) to cover at least the following hazards: (1) premises and operations; (2) products and completed operations on an “if any” basis; (3) independent contractors; (4) blanket contractual liability for all written and oral contracts; and (5) contractual liability covering the indemnities contained in the Security Instruments to the extent the same is available;
(iii) business interruption/loss of rents insurance (A) with loss payable to Lender; (B) covering all risks required to be covered by the insurance provided for in Section 6.1(a)(i); (C) in an amount equal to 100% of the projected gross income from the Property (on an actual loss sustained basis) for a period continuing until the Restoration of the Property is completed; the amount of such business interruption/loss of rents insurance shall be determined prior to the Closing Date and at least once each year thereafter based on the greatest of: (x) the Owner Parties’ reasonable estimate of the gross income from the Property and (y) the highest gross income received during the term of the Note for any full calendar year prior to the date the amount of such insurance is being determined, in each case for the succeeding twelve (12) month period and (D) containing an extended period of indemnity endorsement which provides that after the physical loss to the Improvements and the Personal Property has been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of twelve (12) months from the date that the Property is repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period; All insurance proceeds payable to Lender pursuant to this Section 6.1(a)(iii) shall be held by Lender and shall be applied to the obligations secured hereunder from time to time due and payable hereunder and under the Note and this Agreement; provided, however, that nothing herein contained shall be deemed to relieve the Owner Parties of their obligations to pay the obligations secured hereunder on the respective dates of payment provided for in the Note and this Agreement except to the extent such amounts are actually paid out of the proceeds of such business interruption/loss of rents insurance.
 
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(iv) at all times during which structural construction, repairs or alterations are being made with respect to the Improvements (A) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the insurance provided for in Section 6.1(c)(ii); and (B) the insurance provided for in Section 6.1(a)(i) shall be written in a so-called builder’s risk completed value form (1) on a non-reporting basis, (2) against all risks insured against pursuant to Section 6.1(a)(i), (3) shall include permission to occupy the Property, and (4) shall contain an agreed amount endorsement waiving co-insurance provisions;
(v) workers’ compensation, subject to the statutory limits of the state in which the Property is located, and employer’s liability insurance with a limit of at least $2,000,000.00 per accident and per disease per employee, and $2,000,000.00 for disease aggregate in respect of any work or operations on or about the Property, or in connection with the Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by Lender on terms consistent with the commercial property insurance policy required under Section 6.1(a)(i);
(vii) Lender agrees to allow Borrower to maintain $100,000,000 in flood coverage with a deductible of 5% of total insured value with Lender retaining the right to require Borrower to cause the Owner Parties to maintain additional named windstorm limits consistent with reasonable blanket policy considerations if commercially available at commercially reasonable rates and customarily maintained by owners of hotel properties in Hawaii of similar type, size and quality as the Property;
(viii) earthquake, and, if required by Lender, windstorm, sinkhole and mine subsidence insurance in amounts equal to two times (2x) the probable maximum loss of the Property as determined by Lender in its sole discretion and in form and substance satisfactory to Lender, provided that the insurance pursuant to this Section 6.1(a)(viii) hereof shall be on terms consistent with the all risk insurance policy required under Section 6.1(a)(i) hereof;
(ix) umbrella liability insurance in an amount not less than $10,000,000 on terms consistent with the commercial general liability insurance policy required under Section 6.1(a)(ii) hereof;
 
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(x) motor vehicle liability coverage for all owned and non-owned vehicles, including rented and leased vehicles containing minimum limits per occurrence, including umbrella coverage, of One Million and No/100 Dollars ($1,000,000.00);
(xi) a blanket fidelity bond and errors and omissions insurance coverage insuring against losses resulting from dishonest or fraudulent acts committed by (A) the Owner Parties’ personnel; (B) any employees of outside firms that provide appraisal, legal, data processing or other services for the Owner Parties or (C) temporary contract employees or student interns; and
(xii) such other insurance and in such amounts as are required pursuant to the Hotel Management Agreement or as Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Property located in or around the region in which the Property is located.
(b) All insurance provided for in Section 6.1(a) hereof shall be obtained under valid and enforceable policies (the “Policies” or in the singular, the “Policy”), in such forms and, from time to time after the date hereof, in such amounts as may be satisfactory to Lender, issued by financially sound and responsible insurance companies authorized to do business in the state in which the Property is located and approved by Lender. The insurance companies must have a claims paying ability/financial strength rating of “AA-” (or its equivalent) or better by at least two (2) Rating Agencies (one of which will be S&P if they are rating the Securities and one of which shall be Moody’s if they are rating the Securities), or if only one Rating Agency is rating the Securities, then only by such Rating Agency (each such insurer shall be referred to below as a “Qualified Insurer”), provided that such requirement shall be deemed satisfied if a reinsurer having the requisite rating issues a “cut-through” endorsement. Upon closing of the Loan, the Owner Parties will be required to maintain insurance against terrorism, terrorist acts (excluding bio-terrorism) or similar acts of sabotage (“Terrorism Insurance”) with amounts, terms and coverage consistent with those required under Sections 6.1(a)(i) and (iii). Thereafter, the Owner Parties will be required to maintain Terrorism Insurance so long as such insurance coverage is available at commercially reasonable rates (as determined by Lender in its sole discretion); provided, however, in the event such Terrorism Insurance is customarily maintained by owners of hotel properties in the United States or Hawaii of similar type, size and quality as the Property as part of the all risk coverage required pursuant to Section 6.1(a)(i) hereof, the Owner Parties shall maintain such Terrorism Insurance as a part thereof, regardless of the cost of the related Insurance Premiums. Not less than thirty (30) days prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to Section 6.1(a), the Owner Parties shall deliver certified copies of the Policies marked “premium paid” or accompanied by evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance Premiums”).
 
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(c) The Owner Parties shall not obtain (i) any umbrella or blanket liability or casualty Policy unless, in each case, Lender’s interest is included therein as provided in this Agreement and such Policy is issued by a Qualified Insurer, or (ii) separate insurance concurrent in form or contributing in the event of loss with that required in Section 6.1(a) to be furnished by, or which may be reasonably required to be furnished by, the Owner Parties. In the event the Owner Parties obtain separate insurance or an umbrella or a blanket policy, the Owner Parties shall notify Lender of the same and shall cause certified copies of the insurance certificate with respect to each Policy to be delivered as required in Section 6.1(a). Any blanket insurance Policy shall specifically allocate to the Property the amount of coverage from time to time required hereunder and shall otherwise provide the same protection as would a separate Policy insuring only the Property in compliance with the provisions of Section 6.1(a).
(d) All Policies provided for or contemplated by Section 6.1(a) hereof, except for the Policy referenced in Section 6.1(a)(v), shall name Lender and the Owner Parties as the insured or additional insured, as their respective interests may appear, and in the case of property damage, boiler and machinery, and flood insurance, shall contain a so-called New York standard non-contributing mortgagee clause in favor of Lender providing that the loss thereunder shall be payable to Lender.
(e) All Policies provided for in Section 6.1(a) hereof shall contain clauses or endorsements to the effect that:
(i) no act or negligence of any Owner Party, or anyone acting for such Owner Party, or failure to comply with the provisions of any Policy which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as Lender is concerned;
(ii) the Policy shall not be materially changed (other than to increase the coverage provided thereby) or cancelled without at least 30 days’ written notice to Lender and any other party named therein as an insured. Not less than thirty (30) days’ prior to the expiration dates of the Policies theretofore furnished to Lender pursuant to the terms hereof, certified copies of the Policies marked “premium paid” or accompanied by evidence reasonably satisfactory to Lender of payment of the premiums due thereunder shall be delivered by Borrower to Lender; provided, however, that in the case of renewal Policies, Borrower may furnish Lender with binders therefor to be followed by the original Policies when issued;
(iii) each Policy shall provide that the issuers thereof shall give written notice to Lender if the Policy has not been renewed thirty (30) days prior to its expiration; and
 
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(iv) Lender shall not be liable for any Insurance Premiums thereon or subject to any assessments thereunder.
(f) Borrower shall cause each Owner Party to furnish to Lender, on or before thirty (30) days after the close of each of such Owner Party’s fiscal years, a statement certified by such Owner Party or a duly authorized officer of such Owner Party of the amounts of insurance maintained in compliance herewith, of the risks covered by such insurance and of the insurance company or companies which carry such insurance and, if requested by Lender, verification of the adequacy of such insurance by an independent insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of written evidence that all insurance required hereunder is in full force and effect, Lender shall have the right, without notice to Borrower or the Owner Parties, to take such action as Lender deems necessary to protect its interest in the Collateral and the Property, including, without limitation, the obtaining of such insurance coverage as Lender in its sole discretion deems appropriate, and all expenses incurred by Lender in connection with such action or in obtaining such insurance and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be secured by the Security Instruments and shall bear interest at the Default Rate.
(h) In the event of a foreclosure of the Security Instruments, or other transfer of title to the Property in extinguishment in whole or in part of the Debt all right, title and interest of the Owner Parties in and to the Policies then in force and all proceeds payable thereunder shall thereupon vest in the purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of title.
Section 6.2 Casualty .
If the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall cause the Owner Parties to give prompt notice of such damage to Lender and to promptly commence and diligently prosecute the completion the Restoration of the Property so that the Property resembles, as nearly as possible, the condition the Property was in immediately prior to such Casualty, with such alterations as may be reasonably approved by Lender pursuant to Section 5.1.20 hereof and otherwise in accordance with Section 6.4 hereof. Borrower shall cause the Owner Parties to pay (or cause to be paid) all costs of such Restoration whether or not such costs are covered by insurance. Lender may, but shall not be obligated to, make proof of loss if not made promptly by the Owner Parties.
Section 6.3 Condemnation .
Borrower shall cause the Owner Parties to promptly give Lender notice of any actual or threatened commencement of any proceeding for the Condemnation of all or any part of the Property and shall cause the Owner Parties to deliver to Lender copies of any and all papers served in connection with such proceedings. Lender may participate in any such proceedings, and Borrower shall from time to time cause the Owner Parties to deliver to Lender all instruments requested by Lender to permit such participation.
 
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Borrower shall, at its own or the Owner Parties’ expense, cause the Owner Parties to diligently prosecute any such proceedings, and shall consult with Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings. Notwithstanding any taking by any public or quasi-public authority through Condemnation or otherwise (including, but not limited to, any transfer made in lieu of or in anticipation of the exercise of such taking), Borrower shall continue to pay the Debt at the time and in the manner provided for in the Note and in this Agreement and the Debt shall not be reduced until any Award shall have been actually received and applied by Lender, after the deduction of expenses of collection, to the reduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by the condemning Governmental Authority but shall be entitled to receive out of the Award interest at the rate or rates provided herein or in the Note. If the Property or any portion thereof is taken by a condemning Governmental Authority, Borrower shall cause the Owner Parties to promptly commence and diligently prosecute the Restoration of the Property and otherwise comply with the provisions of Section 6.4 hereof. If the Property is sold, through foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Award, or a portion thereof sufficient to pay the Debt.
Section 6.4 Restoration .
Lender shall, and Borrower shall cause the Owner Parties to, comply with the following provisions in connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than $2,500,000.00 and the costs of completing the Restoration shall be less than $2,500,000.00, the Net Proceeds will be disbursed by Lender to the Owner Parties upon receipt, provided that all of the conditions set forth in Section 6.4(b)(i) are met and the Owner Parties deliver to Lender a written undertaking to expeditiously commence and to satisfactorily complete with due diligence the Restoration in accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than $2,500,000.00 or the costs of completing the Restoration is equal to or greater than $2,500,000.00, Lender shall make the Net Proceeds available for the Restoration in accordance with the provisions of this Section 6.4. The term “Net Proceeds” shall mean: (i) the net amount of all insurance proceeds received by Lender pursuant to Section 6.1(a)(i), (iv), (vi), (vii), (viii) and (ix) as a result of such damage or destruction, after deduction of Lender’s reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award, after deduction of Lender’s reasonable costs and expenses (including, but not limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be.
 
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(i) The Net Proceeds shall be made available to the Owner Parties for Restoration provided that each of the following conditions are met:
(A) no Default with respect to which Lender has given Borrower written notice or Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds, less than forty percent (40%) of the total floor area of the Improvements on the Property has been damaged, destroyed or rendered unusable as a result of such Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of the land constituting the Property is taken, and such land is located along the perimeter or periphery of the Property, and no portion of the Improvements is located on such land;
(C) subject to excusable delays due to acts of God, governmental restrictions, stays, judgments, orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work stoppages, shortages of labor or materials or other cases beyond the reasonable control of Borrower or the Owner Parties other than lack of funds, the Owner Parties shall commence the Restoration as soon as reasonably practicable (but in no event later than thirty (30) days after such Casualty or Condemnation, whichever the case may be, occurs) and shall diligently pursue the same to satisfactory completion in compliance with all Applicable Laws and in accordance with the terms and conditions of the Hotel Management Agreement;
(D) Lender shall be reasonably satisfied that any operating deficits, including all scheduled payments of principal and interest under the Note, which will be incurred with respect to the Property as a result of the occurrence of any such Casualty or Condemnation, whichever the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance coverage referred to in Section 6.1(a)(iii), if applicable, or (3) by other funds of Borrower or the Owner Parties;
(E) Lender shall be satisfied that the Restoration will be completed on or before the earliest to occur of (1) six (6) months prior to the Maturity Date, (2) nine (9) months after the occurrence of such Casualty or Condemnation, (3) the date required for such completion pursuant to the Hotel Management Agreement, (4) such time as may be required under applicable Legal Requirements or (5) the expiration of the insurance coverage referred to in Section 6.1(a)(iii);
(F) the Property and the use thereof after the Restoration will be in compliance in all material respects with and permitted under the Hotel Management Agreement and all applicable Legal Requirements;
 
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(G) if the Net Proceeds are equal to or greater than $10,000,000.00, Lender shall be reasonably satisfied that the gross cash flow of the Property for the succeeding twelve (12) month period following the completion of the Restoration will be restored to a level sufficient to cover all carrying costs and operating expenses of the Property for such twelve (12) month period, including, without limitation, the debt service on the Note at a coverage ratio (after deducting all required reserves as required by Lender from net operating income) of at least 1.30 to 1.00;
(H) such Casualty or Condemnation, as applicable, does not result in the permanent total loss of access to the Property or the Improvements;
(I) the Owner Parties shall deliver, or cause to be delivered, to Lender a signed detailed budget approved in writing by the Owner Parties’ architect or engineer stating the entire estimated cost of completing the Restoration, which budget shall be reasonably acceptable to Lender;
(J) the Net Proceeds together with any Cash or Cash equivalent deposited by the Owner Parties or Borrower with Lender are sufficient in Lender’s reasonable discretion to cover the estimated cost of the Restoration, taking into account the budget delivered to Lender in accordance with clause (I) above;
(K) (i) the King’s Village Management Agreement in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall (1) remain in full force and effect during the Restoration and shall not otherwise terminate as a result of the Casualty or Condemnation or the Restoration or (2) if terminated, shall have been replaced with a Replacement King’s Village Management Agreement with a Qualified King’s Village Manager, prior to the opening or reopening of King’s Village for business with the public; and (ii) the Management Agreement in effect as of the date of the occurrence of such Casualty or Condemnation, whichever the case may be, shall (1) remain in full force and effect during the Restoration and shall not otherwise terminate as a result of the Casualty or Condemnation or the Restoration or (2) if terminated, shall have been replaced with a Replacement Management Agreement with a Qualified Manager, prior to the opening or reopening of the Hotel for business with the public; and
(L) the Hotel Management Agreement is not terminated as a result of such casualty.
 
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(ii) The Net Proceeds shall be held by Lender in an interest-bearing account and, until disbursed in accordance with the provisions of this Section 6.4(b), shall constitute additional security for the Debt and other obligations under the Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower or the Owner Parties from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to Lender that (A) all materials installed and work and labor performed (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other Liens of any nature whatsoever on the Property which have not either been fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully insured to the satisfaction of Lender by the title company issuing the Title Insurance Policy.
(iii) In the event the estimated cost of Restoration exceeds $2,500,000.00, all plans and specifications required in connection with the Restoration shall be subject to prior review and acceptance in all respects by Lender and by an independent consulting engineer selected by Lender (the “Casualty Consultant”). Lender shall have the use of the plans and specifications and all permits, licenses and approvals required or obtained in connection with the Restoration. The identity of the contractors, subcontractors and materialmen engaged in the Restoration the cost of which is greater than $500,000.00, as well as the contracts under which they have been engaged, shall be subject to prior review and acceptance by Lender and the Casualty Consultant. All costs and expenses incurred by Lender in connection with making the Net Proceeds available for the Restoration including, without limitation, reasonable counsel fees and disbursements and the Casualty Consultant’s fees, shall be paid by the Owner Parties. The Restoration shall be completed in a first-class workmanlike manner at least equivalent to the quality and character of the original work in the Improvements so that upon completion thereof the Property shall be at least equal in value and general utility to the Property prior to the damage or destruction; it being understood, however, that Borrower shall not be obligated to restore the Property to the precise condition of the Property prior to such Casualty provided the Property is restored, to the extent practicable, to be of at least equal value and of substantially the same character as prior to the Casualty.
(iv) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess of an amount equal to the costs actually incurred from time to time for work in place as part of the Restoration, as certified by the Casualty Consultant, minus the Casualty Retainage. The term “Casualty Retainage” shall mean, as to each contractor, subcontractor or materialman engaged in the Restoration, an amount equal to ten percent (10%), of the costs actually incurred for work
 
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in place as part of the Restoration, as certified by the Casualty Consultant, until the Restoration has been completed. The Casualty Retainage shall in no event, and notwithstanding anything to the contrary set forth above in this Section 6.4(b), be less than the amount actually held back by the Owner Parties from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty Retainage shall not be released until the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 6.4(b) and that all approvals necessary for the re-occupancy and use of the Property have been obtained from all appropriate Governmental Authorities, and Lender receives evidence satisfactory to Lender that the costs of the Restoration have been paid in full or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or materialman engaged in the Restoration as of the date upon which (A) the Casualty Consultant certifies to Lender that the contractor, subcontractor or materialman has satisfactorily completed all work and has supplied all materials in accordance with the provisions of the contractor’s, subcontractor’s or materialman’s contract, (B) the contractor, subcontractor or materialman delivers the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor or materialman as may be reasonably requested by Lender or by the title company issuing the Title Insurance Policy for the Property, and (C) Lender receives an endorsement to such Title Insurance Policy insuring the continued priority of the Liens of the Security Instruments and evidence of payment of any premium payable for such endorsement. If required by Lender, the release of any such portion of the Casualty Retainage shall be approved by the surety company, if any, which has issued a payment or performance bond with respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Lender in consultation with the Casualty Consultant, if any, be sufficient to pay in full the balance of the costs which are estimated by the Casualty Consultant to be incurred in connection with the completion of the Restoration, the Owner Parties or Borrower shall deposit the deficiency (the “Net Proceeds Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for costs actually incurred in connection with the Restoration on the same conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall constitute additional security for the Debt and other obligations under the Loan Documents.
 
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(vii) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that the Restoration has been completed in accordance with the provisions of this Section 6.4(b), and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection with the Restoration have been paid in full, shall be remitted by Lender to the Owner Parties, provided no Event of Default shall have occurred and shall be continuing.
(c) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be returned to the Owner Parties as excess Net Proceeds pursuant to Section 6.4(b)(vii), may be retained and applied by Lender toward the payment of the Debt whether or not then due and payable in such order, priority and proportions as Lender in its sole discretion shall deem proper until payment in full of all principal and interest on the Loan and all other amounts due and payable under the Loan Documents in accordance with the terms and provisions of the Note and this Agreement, or, at the discretion of Lender, the same may be paid, either in whole or in part, to the Owner Parties for such purposes as Lender shall approve, in its discretion. If Lender shall receive and retain Net Proceeds, the Lien of the Security Instruments shall be reduced only by the amount thereof received and retained by Lender and actually applied by Lender in reduction of the Debt.
(d) The provisions of subsection 4 of Section 254 of the New York Real Property Law covering the insurance of buildings against loss by fire shall not apply to this Agreement. In the event of any conflict, inconsistency or ambiguity between the provisions of Section 6.4 of this Agreement and the provisions of subsection 4 of Section 254 of the New York Real Property Law covering the insurance of buildings against loss by fire, the provisions of Section 6.4 of this Agreement shall control.
 
 	VII.	SUBACCOUNT FUNDS	
Section 7.1 Ground Rent Escrow Fund .
Borrower shall pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date an amount (the “Monthly Ground Rent Amount”) that is estimated by Lender to be the total monthly Ground Rent due and payable under the Ground Leases (said amount, as so deposited, hereinafter called the “Ground Rent Escrow Fund”). Provided no Event of Default exists, Lender will apply the Ground Rent Escrow Fund to payments of Ground Rent required to be made by Borrower pursuant to Section 5.1.22 hereof. If the amount of the Ground Rent Escrow Fund shall exceed the amounts due for Ground Rent pursuant to Section 5.1.22 hereof, Lender shall return any excess to the Lockbox Account or credit such excess against future payments to be made to the Ground Rent Escrow Fund. If at any time Lender reasonably determines that the Ground Rent Escrow Fund is not or will not be sufficient to pay Ground Rent, Lender shall notify Borrower of such determination and
 
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Borrower shall increase its monthly payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency. The insufficiency of any balance in the Ground Rent Account shall not relieve Borrower and the Owner Parties from their obligations to fulfill all covenants in the Loan Documents with respect to the Ground Leases. Any amount remaining in the Ground Rent Escrow Fund after the Debt has been paid in full shall be returned to Borrower. Promptly after the execution and delivery hereof, Borrower shall cause there to be deposited into the Ground Rent Account an initial amount as reasonably determined by Lender.
Section 7.2 Tax and Insurance Escrow Fund .
Borrower shall pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date (a) one-twelfth of the Taxes (the “Monthly Tax Deposit”) that Lender estimates will be payable during the next ensuing twelve (12) months in order to accumulate in the Tax and Insurance Account sufficient funds to pay all such Taxes at least thirty (30) days prior to their respective due dates; and (b) at the option of Lender, if the liability or casualty Policy maintained by Borrower covering the Property shall not constitute an approved blanket or umbrella Policy pursuant to Section 6.1(c) hereof, or Lender shall require Borrower to obtain a separate Policy pursuant to Section 6.1(c) hereof, one-twelfth of the Insurance Premiums (the “Monthly Insurance Premium Deposit”) that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon the expiration thereof in order to accumulate in the Tax and Insurance Account sufficient funds to pay all such Insurance Premiums at least thirty (30) days prior to the expiration of the Policies (said amounts, deposited under (a) and (b) above, hereinafter called the “Tax and Insurance Escrow Fund”). In the event Lender shall elect to collect payments in escrow for Insurance Premiums pursuant to clause (b) above, Borrower shall pay to Lender an initial deposit to be determined by Lender, in its sole discretion, to increase the amounts in the Tax and Insurance Escrow Fund to an amount which, together with anticipated Monthly Insurance Premium Deposits, shall be sufficient to pay all Insurance Premiums as they become due. Provided no Event of Default exists, Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to Sections 5.1.2 and 6.1, respectively, hereof. In making any payment relating to the Tax and Insurance Escrow Fund, Lender may do so according to any bill, statement or estimate procured from the appropriate public office (with respect to Taxes) or insurer or agent (with respect to Insurance Premiums), without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to Sections 5.1.2 and 6.1, respectively, hereof, Lender shall return any excess to the Lockbox Account or credit such excess against future payments to be made to the Tax and Insurance Escrow Fund. If at any time Lender reasonably determines that the Tax and Insurance Escrow Fund is not or will not be sufficient to pay Taxes and Insurance Premiums by the dates set forth in (a) and (b) above, Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency at least thirty (30) days prior to delinquency of the Taxes and/or thirty (30) days prior to expiration of the Policies, as the case may be. The insufficiency of any balance in the Tax and Insurance Account shall not relieve Borrower and the Owner
 
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Parties from their obligations to fulfill all covenants in the Loan Documents with respect to Taxes and Insurance Premiums. Any amount remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in full shall be returned to Borrower. Promptly after the execution and delivery hereof, Borrower shall cause there to be deposited into the Tax and Insurance Account an initial amount as reasonably determined by Lender.
Section 7.3 Debt Service Fund .
Borrower shall pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date an amount (the “Monthly Debt Service Payment Amount”) that is estimated by Lender to be the monthly Debt Service due and payable under this Agreement (said amount, as so deposited, hereinafter called the “Debt Service Fund”). Provided no Event of Default exists, Lender will apply the Debt Service Fund to payments of Debt Service required to be made by Borrower pursuant to Section 2.2 hereof. If the amount of the Debt Service Fund shall exceed the amounts due for Debt Service pursuant to Section 2.2 hereof, Lender shall return any excess to the Lockbox Account or credit such excess against future payments to be made to the Debt Service Fund. If at any time Lender reasonably determines that the Debt Service Fund is not or will not be sufficient to pay Debt Service, Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to Lender by the amount that Lender estimates is sufficient to make up the deficiency. The insufficiency of any balance in the Debt Service Account shall not relieve Borrower from its obligation to fulfill all covenants in the Loan Documents with respect to Debt Service. Any amount remaining in the Debt Service Fund after the Debt has been paid in full shall be returned to Borrower.
Section 7.4 FF&E Reserve Fund .
If (i) FF&E Subsidiary fails to comply with the requirements for the “Capital Fund” as set forth in the Management Agreement, or (ii) Manager waives such requirements, Lender, in its sole and absolute discretion, may require Borrower to pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date an amount equal to the FF&E Reserve Monthly Deposit (said amounts, as so deposited, hereinafter called the “FF&E Reserve Fund”). The FF&E Reserve Fund, if established, shall be subject to the following provisions:
7.4.1 Disbursements from FF&E Reserve Account .
Lender shall disburse to Borrower the FF&E Reserve Fund from the FF&E Reserve Account from time to time upon satisfaction by Borrower of each of the following conditions: (a) Borrower shall submit a written request for payment to Lender at least ten (10) Business Days prior to the date on which Borrower requests such payment be made and specifies FF&E repairs to be paid, or to be reimbursed if Borrower has already paid; (b) on the date such request is received by Lender and on the date such payment is to be made, no Default or Event of Default shall exist and remain uncured; (c) Lender shall have received an Officers’ Certificate (i) stating that all FF&E repairs at the Property to be funded by the requested disbursement have been completed in good and workmanlike
 
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manner and, to the best of Borrower’s and the Owner Parties’ knowledge, in accordance with all Legal Requirements, such certificate to be accompanied by a copy of any license, permit or other approval by any Governmental Authority required to commence and/or complete the FF&E repairs, (ii) identifying each Person that supplied materials or labor in connection with the FF&E repairs performed at the Property with respect to the reimbursement to be funded by the requested disbursement, and (iii) stating that each such Person has been paid in full or will be paid in full upon such disbursement, such Officers’ Certificate to be accompanied by lien waivers for each contract or payment in excess of $10,000 or other evidence of payment satisfactory to Lender with respect to all disbursements from the FF&E Reserve Fund previously made by Lender; (d) at Lender’s option, a title search for the Property indicating that the Property is free from all Liens, claims and other encumbrances other than Permitted Encumbrances; and (e) Lender shall have received such other evidence as Lender shall reasonably request that the FF&E repairs to be funded by the requested disbursement have been completed and are paid for upon such disbursement to Borrower. Lender shall not be required to make disbursements from the FF&E Reserve Account unless such requested disbursement is in an amount greater than $25,000 (or a lesser amount if the total amount in the FF&E Reserve Account is less than $25,000, in which case only one disbursement of the amount remaining in the account shall be made). Lender shall not be obligated to make disbursements from the FF&E Reserve Account with respect to the Property in excess of the amount deposited by Borrower. Lender shall make disbursements from the FF&E Reserve Account to pay for or reimburse Borrower only for the costs of FF&E.
7.4.2 Additional Requirements .
(a) Lender reserves the right, at its option, to approve all contracts or work orders with materialmen, mechanics, suppliers, subcontractors, contractors or other parties providing labor or materials in connection with FF&E replacements costing, in the aggregate, in excess of $500,000.00. Upon Lender’s request, Borrower shall cause the Owner Parties to assign any contract or subcontract to Lender.
(b) In the event Lender determines in its reasonable discretion that any FF&E replacement is not being performed in a workmanlike or timely manner or that any replacement has not been completed in a workmanlike or timely manner, Lender shall have the option to withhold disbursement for such unsatisfactory replacement and, during the continuance of an Event of Default, to proceed under existing contracts or to contract with third parties to complete such replacement and to apply the FF&E Reserve Fund toward the labor and materials necessary to complete such replacement, without providing any prior notice to Borrower or the Owner Parties and to exercise any and all other remedies available to Lender upon an Event of Default hereunder.
(c) Upon the occurrence and continuance of an Event of Default hereunder, in order to facilitate Lender’s completion or making of the replacements pursuant to Section 7.4.2(b) above, Borrower, on behalf of the Owner Parties, grants Lender the right to enter onto the Property and perform any and all work and labor necessary to complete or make the replacements and/or employ watchmen to protect the Property from damage. All sums so expended by Lender, to the extent not from the FF&E Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower and secured by the FF&E Pledge
 
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Agreement. For this purpose, Borrower, on behalf of the Owner Parties, constitutes and appoints Lender the Owner Parties’ true and lawful attorney-in-fact with full power of substitution to complete or undertake the Replacements in the name of the Owner Parties. Such power of attorney shall be deemed to be a power coupled with an interest and cannot be revoked. Borrower, on behalf of the Owner Parties, empowers said attorney-in-fact as follows: (i) to use any funds in the FF&E Reserve Account for the purpose of making or completing FF&E replacements; (ii) to make such additions, changes and corrections to FF&E replacements as shall be necessary or desirable to complete the replacements; (iii) to employ such contractors, subcontractors, agents, architects and inspectors as shall be required for such purposes; (iv) to pay, settle or compromise all existing bills and claims which are or may become Liens against the Property, or as may be necessary or desirable for the completion of the replacements, or for clearance of title; (v) to execute all applications and certificates in the name of the Owner Parties which may be required by any of the contract documents; (vi) to prosecute and defend all actions or proceedings in connection with the Property or the rehabilitation and repair of the Property; and (vii) to do any and every act which the Owner Parties might do on their own behalf to fulfill the terms of this Agreement.
(d) Nothing in this Section 7.4.2 shall: (i) make Lender responsible for making or completing FF&E replacements; (ii) require Lender to expend funds in addition to the FF&E Reserve Fund to make or complete any replacement; (iii) obligate Lender to proceed with the replacements; or (iv) obligate Lender to demand from Borrower additional sums to make or complete any replacement.
(e) Lender may require an inspection of the Property at Borrower’s and the Owner Parties’ expense prior to making a monthly disbursement from the FF&E Reserve Account in order to verify completion of FF&E replacements for which reimbursement is sought. Lender may require that such inspection be conducted by an appropriate independent qualified professional selected by Lender and/or may require a copy of a certificate of completion by an independent qualified professional acceptable to Lender prior to the disbursement of any amounts from the FF&E Reserve Account. Borrower shall, and shall cause the Owner Parties to, pay the expense of the inspection as required hereunder, whether such inspection is conducted by Lender or by an independent qualified professional; provided, however, Borrower shall not be obligated to pay the cost of an independent qualified professional unless the inspection is of FF&E replacements costing, in the aggregate, in excess of $500,000.
(f) Before each disbursement from the FF&E Reserve Account, Lender may require Borrower to cause the Owner Parties to provide Lender with a search of title to the Property effective to the date of the disbursement, which search shows that no mechanic’s or materialmen’s Liens or other Liens of any nature have been placed against the Property since the date of recordation of the Security Instruments and that title to the Property is free and clear of all Liens (other than the Liens of the Security Instruments and other Permitted Encumbrances).
 
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7.4.3 Failure to Make Replacements .
(a) If Borrower fails to comply with any provision of this Section 7.4 and such failure, after notice and the expiration of cure periods, results in the occurrence of an Event of Default, Lender may use the FF&E Reserve Fund (or any portion thereof) for any purpose, including but not limited to completion of FF&E replacements as provided in Sections 7.4.2(b) and 7.4.2(c), or for any other repair or replacement to the Property or toward payment of the Debt in such order, proportion and priority as Lender may determine in its sole discretion. Lender’s right to withdraw and apply the FF&E Reserve Fund shall be in addition to all other rights and remedies provided to Lender under this Agreement and the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all or any portion of the FF&E Reserve Fund on account of an Event of Default to payment of the Debt or in any specific order or priority.
7.4.4 Balance in the FF&E Reserve Account .
The insufficiency of any balance in the FF&E Reserve Account shall not relieve Borrower and the Owner Parties from their obligations to fulfill all covenants in the Loan Documents with respect to preservation and maintenance.
7.4.5 Full Payment of Debt .
Any amount remaining in the FF&E Reserve Fund upon full payment of the Debt shall be returned to Borrower.
Section 7.5 Mezzanine Debt Service Fund .
Borrower shall pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date an amount (the “Monthly Mezzanine Debt Service Payment Amount”) that is estimated by Lender to be the monthly Mezzanine Debt Service due and payable under the Mezzanine Loan Documents (said amount, as so deposited, hereinafter called the “Mezzanine Debt Service Fund”). Provided no Event of Default exists, Lockbox Bank, on each Payment Date, shall cause the funds then in the Mezzanine Debt Service Fund to be disbursed to or at the direction of Borrower.
Section 7.6 Interest Reserve Fund .
If a Trigger Event has occurred and is continuing, Borrower shall pay to Lender, or cause the Lockbox Bank to make the appropriate deposit as provided in Article III hereof, on or prior to each Payment Date the amount remaining in the Lockbox Account, if any, after all deposits to Subaccounts other than the Interest Reserve Account have been made as provided in Article III hereof (said amount, as so deposited, hereinafter called the “Interest Reserve Fund”). Provided no Event of Default exists, Lender will apply the Interest Reserve Fund to any payments of Debt Service required to be made by Borrower pursuant to Section 2.2 hereof, in the event that the then existing Debt Service Fund was insufficient to pay the Monthly Debt Service Payment Amount. The insufficiency of any
 
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balance in the Interest Reserve Account shall not relieve Borrower from its obligation to fulfill all covenants in the Loan Documents with respect to Debt Service. Any amount remaining in the Interest Reserve Fund upon either (i) expiration of the Trigger Event or (ii) full payment of the Debt shall be returned to Borrower.
Upon the occurrence of an Event of Default, Lender may use the Interest Reserve Fund (or any portion thereof) for any purpose, including but not limited to payment of the Debt in such order, proportion and priority as Lender may determine in its sole discretion. Lender’s right to withdraw and apply the Interest Reserve Fund shall be in addition to all other rights and remedies provided to Lender under this Agreement and the other Loan Documents. Nothing in this Agreement shall obligate Lender to apply all or any portion of the Interest Reserve Fund on account of an Event of Default to payment of the Debt or in any specific order or priority.
Section 7.7 Reserve Funds, Generally .
(a) Borrower grants to Lender a first-priority perfected security interest in each of the Reserve Funds and the related Accounts and any and all monies now or hereafter deposited in each Reserve Fund and related Account as additional security for payment of the Debt. Until expended or applied in accordance herewith, the Reserve Funds and the related Accounts shall constitute additional security for the Debt.
(b) Upon the occurrence of an Event of Default, Lender may, in addition to any and all other rights and remedies available to Lender, apply any sums then present in any or all of the Reserve Funds to the payment of the Debt in any order in its sole discretion.
(c) The Reserve Funds shall not constitute trust funds and may be commingled with other monies held by Lender.
(d) The Reserve Funds shall be held in interest bearing accounts and all earnings or interest on a Reserve Fund shall be added to and become a part of such Reserve Fund and shall be disbursed in the same manner as other monies deposited in such Reserve Fund, except that earnings or interest on the Tax and Insurance Escrow Fund shall not be added to or become a part thereof and shall be the sole property of and shall be paid to Lender.
(e) Borrower shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant any security interest in any Reserve Fund or related Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto.
(f) Borrower shall indemnify Lender and hold Lender harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys fees and expenses) arising from or in any way connected with the Reserve Funds or the related Accounts or the performance of the
 
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obligations for which the Reserve Funds or the related Accounts were established, except to the extent arising from the gross negligence or willful misconduct of Lender, its agents or employees. Borrower shall assign to Lender all rights and claims Borrower may have against all Persons supplying labor, materials or other services which are to be paid from or secured by the Reserve Funds or the related Accounts; provided, however, that Lender may not pursue any such right or claim unless an Event of Default has occurred and remains uncured.
 
VIII.	DEFAULTS	
Section 8.1 Event of Default .
(a) Each of the following events shall constitute an event of default hereunder (an “Event of Default”):
(i) if Borrower fails to pay:
(A) any scheduled payment amount when the same is due under the Note, this Agreement, any of the Pledge Agreements or any other Loan Document, including without limitation monthly payments of interest, monthly deposits into Reserve Funds established hereunder and the final payment to pay all outstanding Debt on the Maturity Date; provided, however, that within any twelve (12) month period, Borrower shall be entitled to a two (2) Business Day cure period with respect to only two (2) such payments;
(B) any other monetary amount from time to time owing under the Note, this Agreement, any of the Pledge Agreements or any other Loan Document (other than amounts subject to the preceding clause (A)) within ten (10) days after written notice from Lender to Borrower that the same is due;
(ii) if any of the Taxes or Other Charges are not paid on or before the date that they shall become delinquent, subject to Borrower’s or the Owner Parties’ right to contest Taxes in accordance with Section 5.1.2 hereof, except to the extent sums sufficient to pay such Taxes and Other Charges have been deposited into the Tax and Insurance Account in accordance with Article III hereof;
(iii) if the Policies are not kept in full force and effect or if certified copies of the Policies are not delivered to Lender upon request, except to the extent Lender has elected to collect payments in escrow for Insurance Premiums pursuant to Section 7.2 and sums sufficient to pay Insurance Premiums as well as the required Tax escrows have been deposited into the Tax and Insurance Account in accordance with Article III hereof;
 
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(iv) if Borrower transfers (directly or indirectly) or encumbers any portion of the Collateral in violation of the provisions hereof or any Pledge Agreement, if any Owner Party transfers (directly or indirectly) or encumbers any portion of the Property in violation of the provisions hereof or the Security Instruments, or if any Transfer prohibited under Section 5.2.10 occurs;
(v) if any representation or warranty made by Borrower, Principal, any Owner Party or any Guarantor herein or in any other Loan Document, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender shall have been untrue in any material respect as of the date the representation or warranty was made; provided, however, that if the damages, if any, caused by such misstatement can be cured, or the cause of such misstatement can be corrected, and in either case, such misstatement was not intentional, it shall not be an Event of Default if such damages are cured or such cause is corrected within thirty (30) days after Borrower has knowledge (or is given notice) of same, and provided further that such 30-day cure period shall be reduced to five (5) days with respect to any misstatement under Section 4.1.8;
(vi) if Borrower, any Owner Party, Principal or any Guarantor shall make an assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower, any Owner Party, Principal or any Guarantor or if Borrower, any Owner Party, Principal or any Guarantor shall be adjudicated bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to the Bankruptcy Code, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, Borrower, any Owner Party, Principal or any Guarantor, or if any proceeding for the dissolution or liquidation of Borrower, any Owner Party, Principal or any Guarantor shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary, upon the same not being discharged, stayed or dismissed within sixty (60) days;
(viii) if Borrower attempts to assign its rights under this Agreement or any of the other Loan Documents or any interest herein or therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative covenants contained in Sections 5.2.2, 5.2.3, 5.2.4, 5.2.8, 5.2.9, 5.2.10, 5.2.11 or 5.2.12;
 
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(x) (A) if a default by King’s Village Subsidiary has occurred and continues beyond any applicable notice and cure period under the King’s Village Management Agreement (or any Replacement King’s Village Management Agreement) if such default permits King’s Village Manager thereunder to terminate or cancel the King’s Village Management Agreement (or any Replacement King’s Village Management Agreement), or (B) if a default by FF&E Subsidiary has occurred and continues beyond any applicable notice and cure period under the Management Agreement (or any Replacement Management Agreement) if such default permits Manager thereunder to terminate or cancel the Management Agreement (or any Replacement Management Agreement);
(xi) (A) if Borrower or Principal violates or does not comply with the provisions of Sections 4.1.34(a)-(e), (h), (l)-(q) or (s)-(w) hereof; (B) if Borrower or Principal violates or does not comply in any material respect with the provisions of Sections 4.1.34(f), (g), (i)-(k) or (r); (C) if any Owner Party or such Owner Party’s Principal violates or does not comply with the provisions of Sections 4.1.46(a)-(e), (h), (l)-(q) or (s)-(w) hereof; or (D) if any Owner Party or such Owner Party’s Principal violates or does not comply in any material respect with the provisions of Sections 4.1.46(f), (g), (i)-(k), or (r);
(xii) subject to Borrower’s right of contest as provided in this Agreement, if the Property or the Collateral becomes subject to any mechanic’s, materialman’s or other Lien other than a Lien for Taxes not then due and payable and the Lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of sixty (60) days;
(xiii) if any federal tax Lien or state or local income tax Lien is filed against Borrower, any Owner Party, Principal, any Guarantor, the Property or any Collateral and subject to Section 5.1.2 hereof, same is not discharged of record within thirty (30) days after same is filed;
(xiv) if Borrower fails to timely provide or cause Owner to timely provide any financial reports and statements required to be delivered under Section 5.1.10 within the time periods set forth therein, and such failures continue for a period of ten (10) Business Days after written notice from Lender to Borrower;
(xv) if any default occurs under any guaranty or indemnity executed in connection herewith (including, without limitation, the Guaranty, the Debt Guaranty and the Environmental Indemnity) and such default continues after the expiration of applicable notice and grace periods, if any;
 
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(xvi) if (i) the Interest Rate Cap Agreement is terminated for any reason by Borrower or the Counterparty, or (ii) the Counterparty defaults in the performance of its monetary obligations under the Interest Rate Cap Agreement or (iii) the rating of the Counterparty is subject to any downgrade, withdrawal or qualification by an Rating Agency, and Borrower does not within thirty (30) days (A) replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap Agreement in accordance with Section 2.4 hereof, and (B) deliver to Lender, in form and substance reasonably satisfactory to Lender (x) an Assignment of Interest Rate Cap, (y) a recognition letter from the Counterparty thereto acknowledging the assignment of the Replacement Interest Rate Cap Agreement and (z) the opinion of counsel from counsel for the Counterparty required pursuant to Section 2.4 hereof;
(xvii) with respect to any term, covenant or provision set forth herein which specifically contains a notice requirement or grace period, if Borrower shall be in default under such term, covenant or condition after the giving of such notice or the expiration of such grace period;
(xviii) if any Owner Party shall fail to pay the Ground Rent under any Ground Lease when said Ground Rent is due and payable, except to the extent sums sufficient to pay such Ground Rent have been deposited into the Ground Rent Account in accordance with Article III hereof;
(xix) if (A) there shall occur any default by any Owner Party, as tenant under one or more Ground Leases, in the observance or performance of any term, covenant or condition of any Ground Lease on the part of such Owner Party to be observed or performed, and said default is not cured following the expiration of any applicable grace and notice periods therein provided; provided, however, that if Lender has no independent right of cure and additional grace period beyond that which is given to the applicable Owner Party under such Ground Lease(s) or a related agreement, then Borrower shall be required hereunder to cure such default within one-half (1/2) of the applicable grace period; (B) the leasehold estate created by any Ground Lease shall be surrendered by any Owner Party; (C) any Ground Lease shall cease to be in full force and effect as a result of the applicable Owner Party’s act or failure to act; (D) any Ground Lease shall be terminated or canceled by any Owner Party; (E) there shall occur an event or condition that gives the Ground Lessor under a Ground Lease a right to terminate or cancel such Ground Lease; or (F) any of the terms, covenants or conditions of any Ground Lease shall in any manner be modified, changed, supplemented, altered, or amended without the consent of Lender;
(xx) if any of the material representations and warranties contained in any certificate delivered to counsel providing the Insolvency Opinion in connection with such counsel’s delivery of the Insolvency Opinion to Lender in connection with the Loan is or shall become untrue in any material respect;
 
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(xxi) if the Owner Parties (A) cease to operate the Hotel as a first-class, full-service hotel or King’s Village as an “upscale” shopping mall, or (B) terminate such business for any reason whatsoever (in each case, other than temporary cessation in connection with any renovations to the Property or Restoration of the Property after Casualty or Condemnation);
(xxii) if FF&E Subsidiary terminates or cancels the Hotel Management Agreement or operates the Property under the name of any hotel chain or system other than Hyatt in a manner that is not permitted hereunder, or Hotel Company terminates or cancels, by reason of a default which has occurred and continued beyond the applicable cure period, the Hotel Management Agreement, in either case, without Lender’s prior written consent;
(xxiii) if Borrower shall continue to be in Default under any of the other terms, covenants or conditions of this Agreement not specified in subsections (i) to (xxiii) above, for ten (10) days after notice to Borrower from Lender, in the case of any Default which can be cured by the payment of a sum of money, or for thirty (30) days after notice from Lender in the case of any other Default; provided, however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided further that Borrower shall have commenced to cure such Default within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such Default, such additional period not to exceed sixty (60) days, unless the ramifications of such Default do not cause a material adverse effect on the use, operations or value of the Property, in which event such additional period shall be extended an additional sixty (60) days (i.e., to a total of 120 days); or
(xxiv) if there shall be a default under the Security Instruments, the Pledge Agreements or any of the other Loan Documents beyond any applicable notice and cure periods contained in such documents, whether as to Borrower, any Owner Party, any Guarantor, the Collateral or the Property.
(b) Upon the occurrence of an Event of Default (other than an Event of Default described in clauses (vi) or (vii) above) and at any time thereafter, in addition to any other rights or remedies available to it pursuant to this Agreement and the other Loan
 
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Documents or at law or in equity, Lender may take such action, without notice or demand, that Lender deems advisable to protect and enforce its rights against Borrower, each Owner Party, each Guarantor, the Collateral, the Property and under the Loan Documents with respect to the Property, including, without limitation and with or without notice to Borrower, declaring the Debt to be immediately due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the Loan Documents and any or all of the Collateral and the Property and may exercise all the rights and remedies of a secured party under the Uniform Commercial Code against Borrower and any or all of the Collateral and the Property, including, without limitation, all rights or remedies available at law or in equity; and upon any Event of Default described in clauses (vi) or (vii) above, the Debt and all other obligations of Borrower hereunder and under the other Loan Documents shall immediately and automatically become due and payable, without notice or demand, and Borrower hereby expressly waives any such notice or demand, anything contained herein or in any other Loan Document to the contrary notwithstanding.
Section 8.2 Remedies .
(a) Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to Lender against Borrower under this Agreement or any of the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in equity may be exercised by Lender at any time and from time to time, whether or not all or any of the Debt shall be declared due and payable, and whether or not Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Loan Documents with respect to the Collateral and the Property. Any such actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by Applicable Law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by Applicable Law, equity or contract or as set forth herein or in the other Loan Documents. Without limiting the generality of the foregoing, Borrower agrees that if an Event of Default is continuing (i) Lender is not subject to any “one action” or “election of remedies” law or rule, and (ii) all Liens and other rights, remedies or privileges provided to Lender shall remain in full force and effect until Lender has exhausted all of its remedies against the Collateral and the Property and the Collateral and the Property have been foreclosed, sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has been paid in full.
(b) Upon the occurrence and during the continuance of an Event of Default, nothing contained herein or in any other Loan Document shall be construed as requiring Lender to resort to any part of the Collateral or the Property for the satisfaction of any of the Debt in preference or priority to any other part of the Collateral or the Property, and Lender may seek satisfaction out of the Collateral or the Property or any part thereof, in its absolute discretion in respect of the Debt. In addition, upon the occurrence and during the continuance of an Event of Default, to the extent permitted under Applicable Law, Lender shall have
 
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the right from time to time to partially foreclose upon the Collateral or the Property in any manner and for any amounts secured by the Security Instruments then due and payable as determined by Lender in its sole discretion including, without limitation, the following circumstances: (i) in the event Borrower defaults beyond any applicable grace period in the payment of one or more scheduled payments of principal and interest, Lender may foreclose upon the Collateral or the Property to recover such delinquent payments, or (ii) in the event Lender elects to accelerate less than the entire outstanding principal balance of the Loan, Lender may foreclose upon the Collateral or the Property to recover so much of the principal balance of the Loan as Lender may accelerate and such other sums secured by the Security Instruments as Lender may elect. Notwithstanding one or more partial foreclosures, the Collateral and the Property shall remain subject to the Security Instruments, respectively, to secure payment of sums secured by the Security Instruments and not previously recovered.
(c) Upon the occurrence and during the continuance of an Event of Default, in addition to other remedies or rights available to Lender, Lender shall have the right, from time to time, to sever the Note and the other Loan Documents into one or more separate notes, pledge agreements and other security documents (the “Severed Loan Documents”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until five (5) Business Days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power, unless Lender reasonably determines that the making or execution of such documents must occur sooner in order to protect Lender’s interest in the Collateral or the Property. The Severed Loan Documents shall not contain any representations, warranties or covenants not contained in the Loan Documents and any such representations and warranties contained in the Severed Loan Documents will be given by Borrower only as of the Closing Date.
(d) Any amounts recovered from the Collateral or the Property subsequent to the occurrence of an Event of Default may be applied by Lender toward the payment of any interest and/or principal of the Loan and/or any other amounts due under the Loan Documents in such order, priority and proportions as Lender in its sole discretion shall determine.
 
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Section 8.3 Remedies Cumulative; Waivers .
The rights, powers and remedies of Lender under this Agreement shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one or more Defaults or Events of Default with respect to Borrower shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or to impair any remedy, right or power consequent thereon.
Section 8.4 Right to Cure Defaults .
Upon the occurrence and during the continuance of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, make any payment or do any act required of Borrower hereunder in such manner and to such extent as Lender may deem reasonably necessary to protect the security hereof or of any other Loan Document. Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or the Collateral for such purposes, and the reasonable cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 8.4, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses paid by Lender in remedying such Event of Default or protecting the Collateral or the Property shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender.
Section 8.5 Power of Attorney .
For the purpose of carrying out the provisions and exercising the rights, powers and privileges granted in this Section 8, Borrower hereby irrevocably appoints the Lender as its true and lawful attorney-in-fact to execute, acknowledge and deliver any instruments and do and perform any acts such as are referred to in this subsection in the name and on behalf of Borrower. This power of attorney is a power coupled with an interest and cannot be revoked.
 
 	IX.	SPECIAL PROVISIONS	
Section 9.1 Sale of Notes and Securitization .
Lender may, at any time, sell, transfer, pledge or assign the Note, this Agreement, the Guaranties, the Security Instruments and the other Loan Documents or any portion thereof, and any or all servicing rights with respect thereto, or syndicate the loan or grant participations therein or issue mortgage pass-through certificates or other securities (the “Securities”) evidencing a beneficial interest in a rated or unrated public offering or private placement (a “Securitization”). At the request of Lender and, to the extent not already required to be provided by Borrower under this Agreement, Borrower, at Lender’s expense, shall, and shall cause Sponsor, Principal, each Owner Party and each Guarantor to, use reasonable efforts to provide information not in the possession of Lender or
 
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which may be reasonably required by Lender to satisfy market standards or which may be reasonably required by prospective investors or required by the Rating Agencies in connection with a Securitization or the sale of the Note or the participations or Securities, including, without limitation, using reasonable efforts to do (or cause to be done) the following (but Borrower will not in any event be required to incur, suffer or accept (except to a de minimis extent) (i) any lesser rights or greater obligations than as currently set forth in the Loan Documents and (ii) except as expressly set forth in this Article IX, any expense or liability):
(a) subject to the last paragraph of this Section 9.1, (i) provide such additional or updated financial and other information with respect to the Collateral, the Property, Borrower, each Owner Party, each Guarantor, Sponsor, Principal , Manager, King’s Village Manager and Hotel Company, (ii) provide budgets relating to the Property and (iii) to perform or permit or cause to be performed or permitted such site inspection, Appraisals, market studies, environmental reviews and reports (Phase I’s and, if appropriate, Phase II’s), engineering reports and other due diligence investigations of the Property, as may be reasonably requested by Lender or requested by the Rating Agencies or as may be necessary or appropriate in connection with the Securitization (the “Provided Information”), together, and as may be requested by the Rating Agencies, with appropriate verification and/or consents of the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) if requested by the Rating Agencies in connection with the Securitization, deliver (i) a revised Insolvency Opinion and (ii) revised opinions of counsel as to due execution and enforceability with respect to the Property, the Collateral, Borrower, each Owner Party, each Guarantor and Principal and the Loan Documents; provided that any such opinions of counsel that Borrower is required to cause to be delivered in connection with a Securitization other than those delivered at the original Loan closing, shall be delivered at Lender’s expense, it being agreed that in no event shall Borrower be obligated to deliver or pay for an opinion of counsel with respect to “true sale,” “no fraudulent conveyance” or “10b-5” matters, and (iii) if reasonably required by Lender or required by the Rating Agencies, revised Borrower’s Organizational Documents, which opinions of counsel and Borrower’s Organizational Documents shall be reasonably satisfactory to Lender and satisfactory to the Rating Agencies;
(c) if required by the Rating Agencies, use commercially reasonable efforts to deliver such additional tenant estoppel letters, subordination agreements or other agreements from parties to agreements that affect the Property, which estoppel letters, subordination agreements or other agreements shall be reasonably satisfactory to Lender and satisfactory to the Rating Agencies;
(d) without cost to Borrower, execute such amendments to the Loan Documents as may be reasonably requested by Lender or requested by the Rating Agencies or otherwise to effect the Securitization; provided, however, that Borrower shall not be required to modify or amend any Loan Document if such modification or amendment would (except for modifications and amendments required to be made pursuant to Section (e) below,) (i) change the interest rate, the stated maturity or the amortization of principal set forth in the Note, or (ii) modify or amend any other material economic term of the Loan;
 
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(e) if Lender elects, in its sole discretion, prior to or upon a Securitization, to split the Loan into two or more parts, or the Note into multiple component notes or tranches which may have different interest rates, amortization payments, principal amounts, payment priorities and maturities (and such new notes or modified notes shall have the same initial weighted average coupon as the original Note in the absence of a Default, but such new notes or modified notes may change the interest rate and amortization of the Loan), Borrower agrees to cooperate with Lender in connection with the foregoing and to execute the required modifications and amendments to the Note, this Agreement and the Loan Documents and to provide, at Lender’s expense, opinions necessary to effectuate the same; provided, however, that nothing contained in this Section 9.1(e) shall result in any economic or other material adverse change in the transaction contemplated by this Agreement or the other Loan Documents (unless Borrower is made whole by Lender) or result in any operational changes that are unduly burdensome to the Property or Borrower. Notwithstanding anything to the contrary contained herein, Borrower shall not be required to modify any Loan Document or Organizational Document of Borrower in a manner which would increase Borrower’s obligations or have any adverse effect whatsoever on Borrower (other than to a de minimis extent);
(f) make such representations and warranties as of the closing date of the Securitization with respect to the Collateral, the Property, Borrower, each Owner Party, Principal, each Guarantor and the Loan Documents as are customarily provided in securitization transactions and as may be reasonably requested by Lender or requested by the Rating Agencies and consistent with the facts covered by such representations and warranties as they exist on the date thereof, including the representations and warranties made in the Loan Documents; and
(g) supply to Lender such documentation, financial statements and reports as are reasonably required for Lender to comply with Regulation S-X and Regulation AB of the federal securities law, if applicable; provided, however, that Lender shall not deliver or disclose any detailed financial statement(s) of any of Hyatt Corporation, Hyatt Guarantor or Whitehall Guarantor to any third party unless such third party has executed a confidentiality agreement with Lender, or Lender’s successor, on Lender’s (or Lender’s successor’s) standard form at the time or another form reasonably satisfactory to Lender (or Lender’s successor).
Notwithstanding anything to the contrary contained herein, (i) in no event shall any private placement memorandum, prospectus, prospectus supplement or other Disclosure Document include financial information about any of Hyatt Corporation, Hyatt Guarantor or Whitehall Guarantor other than a brief statement of the total amount of assets and liabilities of such Guarantor, and (ii) all reasonable third party costs and expenses (including legal expenses) incurred by Borrower or Lender in connection with Borrower
 
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complying with requests made under this Section 9.1 (including, without limitation, the fees and expenses of the Rating Agencies) shall be paid by Lender. Notwithstanding the foregoing, the provisions of this paragraph shall in no way limit or affect any Borrower obligation to pay any costs expressly required to be paid by Borrower pursuant to any other Sections of this Agreement.
Section 9.2 Securitization Indemnification .
(a) Borrower understands that certain of the Provided Information may be included in disclosure documents in connection with the Securitization, including, without limitation, a prospectus supplement, private placement memorandum, offering circular or other offering document (each a “Disclosure Document”) and may also be included in filings (an “Exchange Act Filing”) with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to Investors or prospective Investors in the Securities, the Rating Agencies, and service providers relating to the Securitization. In the event that the Disclosure Document is required to be revised prior to the sale of all Securities, upon request, Borrower will reasonably cooperate with Lender in updating the Disclosure Document by providing reasonably current information necessary to keep the Disclosure Document accurate and complete in all material respects as it relates to the Property, the Collateral, Borrower, each Owner Party, each Guarantor and Principal.
(b) Borrower agrees to provide, upon Lender’s request in connection with the Securitization, an indemnification agreement (i) certifying that Borrower has carefully examined those portions of the Disclosure Documents reasonably designated in writing by Lender for Borrower’s review regarding the Property, the Collateral, Borrower, each Owner Party, each Guarantor, the Operating Lease, the Ground Leases, the Management Agreement, the Hotel Management Agreement and the King’s Village Management Agreement and Principal, including, without limitation, the sections entitled “Risk Factors,” “Special Considerations,” “Description of the Mortgage Loans and Mortgaged Property” (solely as it relates to Borrower or the Property themselves and not with respect to the Loan, the Loan Documents or any other matter), “The Manager,” and “The Borrower” (collectively with the Provided Information, the “Covered Disclosure Information”), and that the information provided in such portions of the Disclosure Documents does not (except to the extent specified by Borrower if Borrower does not agree with the statements contained therein), as of the date of such certificate, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (ii) indemnifying Lender, the Affiliate of Lender (the “Filer”) that has filed the registration statement relating to the Securitization (the “Registration Statement”), each of its directors, each of its officers who have signed the Registration Statement and each Person who controls the Affiliate within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the “Filer Group”), and the Filer, each of its directors and each Person who controls the Filer within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
 
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(collectively, the “Underwriter Group”) for any actual out-of-pocket losses, claims, damages (excluding lost profits, diminution of value or other consequential damages) or liabilities (collectively, the “Liabilities”) to which Lender, the Filer Group or the Underwriter Group may become subject to the extent the Liabilities arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Covered Disclosure Information, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated in the Covered Disclosure Information or necessary in order to make the statements in the Covered Disclosure Information, in light of the circumstances under which they were made, not misleading, and (iii) agreeing to reimburse Lender, the Filer Group and the Underwriter Group for any legal or other expenses reasonably incurred by Lender, the Filer Group and the Underwriter Group in connection with investigating or defending the Liabilities. Notwithstanding anything to the contrary contained herein or in any indemnification agreement, (x) Borrower’s obligation to indemnify in respect of any information contained in any Disclosure Document that is derived in part from information provided by Borrower and in part from information provided by others unrelated to or not employed by Borrower, shall be limited to any untrue statement or omission of material fact in the Covered Disclosure Information that results directly from an error in any information provided (or which should have been provided) by Borrower which Borrower has been given the opportunity to examine and reasonably approve and (y) Borrower shall have no responsibility for the failure of any member of the Securitization underwriting group to accurately transcribe written information supplied by Borrower or to include such portions of the Covered Disclosure Information); provided, however, that (1) Borrower will be liable in any such case under clause (ii) above only to the extent that any such Liabilities arise out of or are based upon any such untrue statement or omission made in the Covered Disclosure Information which the Indemnifying Persons have been given the opportunity to examine and reasonably approve. This indemnity agreement will be in addition to any liability that Borrower may otherwise have. Moreover, the indemnification provided for in clause (ii) above shall be effective whether or not a separate indemnification agreement described in clause (i) above is provided. Notwithstanding anything to the contrary contained in this Section 9.2, the indemnity, reimbursement and contribution obligations set forth in this Section 9.2 with respect to any preliminary private placement memorandum or preliminary prospectus shall not inure to the benefit of Lender or any of the Filer Group or Underwriter Group if the Person asserting any such Liability purchased any of the Securities which are the subject thereof and did not receive a copy of the final private placement memorandum or final prospectus (or the final private placement memorandum or final prospectus as supplemented) at or prior to the confirmation of the sale of such Securities to such Person in any case where such delivery is required and the untrue statement or omission of a material fact contained in such preliminary private placement memorandum or preliminary prospectus was corrected in the final private placement memorandum or final prospectus (or the final private placement memorandum or final prospectus as supplemented).
(c) Promptly after receipt by an indemnified party under this Section 9.2 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9.2,
 
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notify the indemnifying party in writing of the commencement thereof, but the omission to so notify the indemnifying party will not relieve the indemnifying party from any liability which the indemnifying party may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to the indemnifying party. In the event that any action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party under this Section 9.2 the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there are any legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party to parties. The indemnifying party shall not be liable for the expenses of more than one such separate counsel unless an indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to another indemnified party.
(d) In order to provide for just and equitable contribution in circumstances in which the indemnifications provided for in Section 9.2(b) is or are for any reason held to be unenforceable by an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.2(b), the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided , however , that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (i) the Filer’s and Borrower’s relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. Lender and Borrower hereby agree that it would not be equitable if the amount of such contribution were determined solely by pro rata or per capita allocation.
(e) The liabilities and obligations of both Borrower and Lender under this Section 9.2 shall survive the termination of this Agreement and the satisfaction and discharge of the Debt.
 
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Section 9.3 Servicer .
At the option of Lender, the Loan may be serviced by a servicer/trustee (the “Servicer”) selected by Lender and Lender may delegate all or any portion of its responsibilities under this Agreement and the other Loan Documents to the Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and Servicer. Borrower shall be responsible for any reasonable set-up fees or any other initial costs relating to or arising under the Servicing Agreement, and for payment of the periodic servicing fees due to the Servicer under the Servicing Agreement (all such fees, costs and payments, collectively, the “Servicing Fee”).
Section 9.4 Full Recourse .
The repayment of the Loan and all of Borrower’s obligations hereunder and under all of the other Loan Documents are full recourse obligations of Borrower, but not of any direct or indirect member, shareholder, partner, principal, affiliate, employee, officer, director, agent or representative of Borrower, and none of such direct or indirect member, shareholder, partner, principal, affiliate, employee, officer, director, agent or representative of Borrower shall have any liability in its personal or individual capacity, but instead, all parties shall look solely to the property and the assets of Borrower for satisfaction of any obligation of any nature of Borrower under this Agreement; provided, however, the foregoing limitation on liability shall not affect the liability of any of the Guarantors under the Guaranty or the Debt Guaranty.
Section 9.5 Mezzanine Financing .
Lender shall have the right at any time to divide the Loan into two or more parts (the “Senior Mezzanine Option”): a mortgage loan (the “Senior Mortgage Loan”) and one or more mezzanine loans (the “Senior Mezzanine Loan(s)”). The principal amount of the Senior Mortgage Loan plus the principal amount of the Senior Mezzanine Loan(s) shall equal the outstanding principal balance of the Loan immediately prior to the creation of the Senior Mortgage Loan and the Senior Mezzanine Loan(s). In effectuating the foregoing, Lender will make a loan to one or more mezzanine borrowers (“Senior Mezzanine Borrower(s)”); Senior Mezzanine Borrower(s) will contribute the amount of the Senior Mezzanine Loan(s) to Borrower and Borrower will apply the contribution to pay down the Senior Mortgage Loan. The Senior Mortgage Loan and the Senior Mezzanine Loan(s) will be on the same terms and subject to the same conditions set forth in this Agreement, the Note, the Security Instruments and the other Loan Documents except as follows:
(a) Lender shall have the right to establish different interest rates and debt service payments for the Senior Mortgage Loan and the Senior Mezzanine Loan(s) and to require the payment of the Senior Mortgage Loan and the Senior Mezzanine Loan(s) in such order of priority as may be designated by Lender; provided, that (i) the total loan amounts for the Senior Mortgage Loan and the Senior Mezzanine Loan(s) shall equal the amount of the Loan immediately prior to the creation of the Senior Mortgage Loan and the Senior Mezzanine Loan(s), (ii) the initial weighted average interest rate of the Senior Mortgage Loan and the Senior Mezzanine Loan(s) shall initially on the date created equal the interest rate which was applicable to the Loan immediately prior to creation of the Senior Mortgage Loan and the Senior Mezzanine Loan(s) and (iii) the initial debt service payments on
 
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the Senior Mortgage Loan note and the Senior Mezzanine Loan note(s) shall initially on the date created equal the debt service payment which was due under the Loan immediately prior to creation of the Senior Mortgage Loan and the Senior Mezzanine Loan(s). The Senior Mezzanine Loan(s) will be made pursuant to Lender’s standard mezzanine loan documents. The Senior Mezzanine Loan(s) will be subordinate to the Senior Mortgage Loan and will be governed by the terms of an intercreditor agreement between the holders of the Senior Mortgage Loan and the Senior Mezzanine Loan(s).
(b) Senior Mezzanine Borrower(s) shall be a special purpose, bankruptcy remote entity pursuant to applicable Rating Agency criteria and shall own directly or indirectly one hundred percent (100%) of Borrower. The security for the Senior Mezzanine Loan shall be a pledge of one hundred percent (100%) of the direct ownership interests in Borrower and Principal, and such ownership interests must be “certificated securities” as defined in and governed by Article 8 of the Uniform Commercial Code in effect in the states in which the Borrower and Principal are organized.
(c) Senior Mezzanine Borrower(s) and Borrower shall cooperate with all reasonable requests of Lender in order to divide the Loan into a Senior Mortgage Loan and one or more Senior Mezzanine Loan(s) and shall execute and deliver such documents as shall reasonably be required by Lender and any Rating Agency in connection therewith, including, without limitation, (i) the delivery of non-consolidation opinions, (ii) the modification of organizational documents and Loan Documents, (iii) authorize Lender to file any UCC-1 Financing Statements reasonably required by Lender to perfect its security interest in the collateral pledged as security for the Senior Mezzanine Loan(s), (iv) execute such other documents reasonably required by Lender in connection with the creation of the Senior Mezzanine Loan(s), including, without limitation, guaranties substantially similar in form and substance to the Guaranties (if appropriate, as reasonably determined by Lender) delivered on the date hereof in connection with the Loan, an environmental indemnity substantially similar in form and substance to the Environmental Indemnity delivered on the date hereof in connection with the Loan, a conditional assignment of management agreement substantially similar in form and substance to the Assignment of King’s Village Management Agreement delivered on the date hereof in connection with the Loan, a conditional assignment of hotel management agreement substantially similar in form and substance to the Assignment of Hotel Management Agreement delivered on the date hereof in connection with the Loan, and a conditional assignment of management agreement substantially similar in form and substance to the Assignment of Management Agreement delivered on the date, if any, upon which the Hotel Management Agreement and the Management Agreement become separate documents, (v) deliver appropriate authorization, execution and enforceability opinions with respect to the Senior Mezzanine Loan(s) and amendments to the Senior Mortgage Loan, (vi) deliver the Owner’s Title Policy of Borrower together with a mezzanine endorsement issued to Lender, and (vii) deliver an “Eagle 9” or equivalent UCC Title Insurance Policy, satisfactory to Lender, insuring the perfection and priority of the lien on the collateral pledged as security for the Senior Mezzanine Loan.
 
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All reasonable third party costs and expenses incurred by Lender or Borrower (including attorneys’ fees) in connection with Borrower’s complying with requests made under this Section 9.5, including, without limitation, UCC insurance premiums, shall be paid by Lender.
It shall be an Event of Default under this Agreement, the Note, the Security Instruments and the other Loan Documents if Borrower, or Senior Mezzanine Borrower, fails to comply with any of the terms, covenants or conditions of this Section 9.5 after expiration of ten (10) Business Days after notice thereof.
Nothing contained in this Section 9.5 is intended to impose upon Borrower any duties, obligations or liabilities greater than or in addition to those owed by Borrower under the other provisions of this Agreement as a result of Lender’s exercise of the Senior Mezzanine Option.
Section 9.6 Certain Additional Rights of Lender .
Subject to the terms hereof, Lender shall have the right:
(a) to routinely consult with Borrower’s management regarding the significant business activities and business and financial developments of Borrower; provided, however, that such consultations shall not include discussions of environmental compliance programs or disposal of hazardous substances. Routine consultation meetings may occur no more frequently than quarterly, with Lender having the right to call special meetings at any reasonable time (but not more frequently than once per quarter) and upon reasonable advance notice. Borrower shall have no obligation to adhere to any advice proposed by Lender, except as the same may be otherwise specifically required elsewhere in the Loan Documents;
(b) in accordance with but subject to the terms of this Agreement, to examine the books and records of Borrower at any reasonable times upon reasonable notice;
(c) in accordance with but subject to the terms of this Agreement, to receive financial reports and other statements as provided in Section 5.1.10 hereof; and
(d) during the continuance of an Event of Default, in accordance with but subject to the terms of this Agreement, but without restricting any other right of Lender under this Agreement, to exercise certain approval rights with respect to the proposed annual operating budgets as provided in 5.1.10(e) hereof.
The rights described above may be exercised by any entity which owns and controls, directly or indirectly, substantially all of the interests in Lender. Nothing contained in this Section 9.6 is intended (i) to confer upon Lender any rights or privileges greater than those inuring to Lender under the other provisions of this Agreement, (ii) to impose upon Borrower any duties, obligations or liabilities greater than or in addition to those owed by Borrower under the other provisions of this Agreement, or (iii) to constitute Lender a partner or member of Borrower or a third-party beneficiary of Borrower’s Organizational Documents.
 
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Section 9.7 Intercreditor Agreement .
(a) Lender and Mezzanine Lender are parties to a certain intercreditor agreement dated as of the date hereof (the “Intercreditor Agreement”) memorializing their relative rights and obligations with respect to the Mezzanine Loan, the Loan, the Owner Parties, Borrower and the Property. Borrower hereby acknowledges and agrees that (i) such Intercreditor Agreement is intended solely for the benefit of Lender and Mezzanine Lender and (ii) neither Borrower nor any Owner Party is an intended third-party beneficiary of any of the provisions therein, and shall not be entitled to rely on any of the provisions contained therein. Lender and Mezzanine Lender shall have no obligation to disclose to Borrower the contents of the Intercreditor Agreement. Borrower’s obligations hereunder are independent of such Intercreditor Agreement and remain unmodified by the terms and provisions thereof.
(b) In the event the Lender is required pursuant to the terms of the Intercreditor Agreement to pay over any payment or distribution of assets, whether in cash, property or securities which is applied to the Debt, then Borrower agrees to indemnify Lender for any amounts so paid, and any amount so paid shall continue to be owing pursuant to the Loan Documents as part of the Debt notwithstanding the prior receipt of such payment by Lender.
Section 9.8 Third-Party Lender Refinancing .
(a) Borrower and Sponsor shall reasonably cooperate with Lender in connection with any proposed refinancing of the Loan or any portion thereof with any third-party lender. Such cooperation shall include, without limitation, using reasonable efforts in seeking to obtain or perform the following:
(i) an acceptable Phase I environmental report and a property condition report for the Property showing that Borrower and the Owner Parties have complied with the environmental, maintenance and repair obligations under this Agreement and the other Loan Documents;
(ii) evidence that (A) all zoning, entitlements and permits currently required for the Property are in place, (B) the Property and the Collateral comply with all Legal Requirements and (C) title to the Property is marketable and is as otherwise required under this Agreement and the other Loan Documents;
(iii) customary due diligence (legal, financial and accounting), including, but not limited to, diligence relating to any Guarantor, Sponsor, Borrower, any Owner Party, the Collateral and the Property;
(iv) an Appraisal in form reasonably acceptable to the proposed lender; and
 
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(v) an estoppel from each Ground Lessor reasonably acceptable to the proposed lender, including such Ground Lessor’s consent to a first-lien leasehold mortgage on the Property for the benefit of the proposed lender.
For the avoidance of doubt (without waiving any other Events of Default), it shall not be a Default or an Event of Default if (X) Borrower and Sponsor, despite reasonable efforts, fail to obtain or perform items (i) – (v) of this Section 9.8(a); or (Y) Lender is not satisfied with the state of facts for the Property and/or the Collateral, as revealed by these items.
(b) All costs and expenses incurred by Borrower, Sponsor and Lender in connection with this Section 9.8 shall be paid by Lender.
Section 9.9 Confidentiality .
Lender agrees to take normal and commercially customary and reasonable precautions to maintain the confidentiality of all non-public information provided to it by Borrower or by any other Person on Borrower’s behalf in connection with the Loan, the Property, the Collateral or relating to the Borrower or any Affiliates of the Borrower. In any event, Lender and any assignee or participant or prospective assignee or participant may disclose such information (1) at the request of any Governmental Authority with jurisdiction over Lender or any assignee or participant or prospective assignee or participant or in connection with an examination of such Person by any such Governmental Authority, (2) pursuant to subpoena or other process of a court or other Governmental Authority having jurisdiction over Lender or any assignee or participant or prospective assignee or participant, (3) when required to do so in accordance with the provisions of any applicable law, rule, order or regulation, (4) at the express direction of any Governmental Authority with jurisdiction over Lender or any assignee or participant or prospective assignee or participant, (5) to such Person’s independent auditors, attorneys and other professional advisors or any potential assignee or participant, in each case, which agrees to be bound by this Section 9.9, (6) if such information has become public other than through disclosure by such Person, (7) in connection with any litigation involving such Person, and (8) to any Affiliate of such Person which agrees in writing to be bound by this Section 9.9.
 
 	X.	MISCELLANEOUS	
Section 10.1 Survival .
This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall continue in full force and effect so long as all or any of the Debt is outstanding and unpaid unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the legal representatives, successors and assigns of such party. All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal representatives, successors and assigns of Lender.
 
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Section 10.2 Lender’s Discretion .
Whenever pursuant to this Agreement, Lender exercises any right given to it to approve or disapprove, or any arrangement or term is to be satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein provided) be in the sole discretion of Lender and shall be final and conclusive. Whenever this Agreement expressly provides that Lender may not unreasonably withhold its consent or its approval of an arrangement or term, such provisions shall also be deemed to prohibit Lender from unreasonably delaying or conditioning such consent or approval.
Section 10.3 Governing Law .
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
(b) WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS AGREEMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, BORROWER (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
Section 10.4 Modification, Waiver in Writing .
No modification, amendment, extension, discharge, termination or waiver of any provision of this Agreement, the Note, or of any other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in a writing signed by the party against whom enforcement is sought, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same, similar or other circumstances.
 
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Section 10.5 Delay Not a Waiver .
Neither any failure nor any delay on the part of Lender in insisting upon strict performance of any term, condition, covenant or agreement, or exercising any right, power, remedy or privilege hereunder, or under the Note or under any other Loan Document, or any other instrument given as security therefor, shall operate as or constitute a waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the exercise of any other right, power, remedy or privilege. In particular, and not by way of limitation, by accepting payment after the due date of any amount payable under this Agreement, the Note or any other Loan Document, Lender shall not be deemed to have waived any right either to require prompt payment when due of all other amounts due under this Agreement, the Note or the other Loan Documents, or to declare a default for failure to effect prompt payment of any such other amount.
Section 10.6 Notices .
All notices or other written communications hereunder shall be deemed to have been properly given (i) upon delivery, if delivered in person or by facsimile transmission with receipt acknowledged by the recipient thereof and confirmed by telephone by sender, (ii) one (1) Business Day after having been deposited for overnight delivery with any reputable overnight courier service, or (iii) three (3) Business Days after having been deposited in any post office or mail depository regularly maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Borrower:	  	W2007 WKH Senior Borrower, LLC
c/o Whitehall Street Global Real Estate Limited Partnership 2007
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attention: Whitehall Chief Financial Officer
Facsimile: (212) 357-5505	
		
With copies to:	  	Sullivan & Cromwell, LLP
125 Broad Street
New York, NY 10004
Attention: Anthony J. Colletta, Esq.
Facsimile: (212) 558-3588	
		
	  	Archon Group, LP
Attn: Director - Hotel Investment Accounting
6011 Connection Drive
Irving, TX 75039
Fax: (972) 368-7615	
 
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If to Lender:	  	SDI, Inc.
c/o Hyatt Corporation
71 South Wacker Drive
Chicago, Illinois 60606
12th Floor, Attention: General Counsel
Facsimile: (312) 780-5284	
		
With a copy to:	  	Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Attention: Richard Chadakoff, Esq.
Facsimile: (212) 751-4864	
or addressed as such party may from time to time designate by written notice to the other parties.
Either party by notice to the other may designate additional or different addresses for subsequent notices or communications.
Notice for any party may be given by its respective counsel, and notice for Lender may also be given by Servicer.
Section 10.7 Trial by Jury .
BORROWER AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND EACH WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH OF BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF BORROWER AND LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.
Section 10.8 Headings .
The Article and/or Section headings and the Table of Contents in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
Section 10.9 Severability .
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
 
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Section 10.10 Preferences .
Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender.
Section 10.11 Waiver of Notice .
Borrower hereby expressly waives, and shall not be entitled to, any notices of any nature whatsoever from Lender except with respect to matters for which this Agreement or the other Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower and except with respect to matters for which Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice.
Section 10.12 Remedies of Borrower .
In the event that a claim or adjudication is made that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted reasonably shall be determined by an action seeking declaratory judgment.
Section 10.13 Expenses; Indemnity .
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender within five (5) Business Days of receipt of written notice from Lender for all reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with (i) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without limitation any opinions requested by Lender as to any legal matters arising under this Agreement or the other Loan Documents with respect to the Collateral and the Property); (ii) Borrower’s ongoing performance of and compliance with Borrower’s respective agreements and covenants contained in
 
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this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date, including, without limitation, confirming compliance with environmental and insurance requirements; (iii) Lender’s ongoing performance and compliance with all agreements and conditions contained in this Agreement and the other Loan Documents on its part to be performed or complied with after the Closing Date; (iv) except as otherwise provided in this Agreement, the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Lender; (v) securing Borrower’s compliance with any requests made pursuant to the provisions of this Agreement; (vi) the filing and recording fees and expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all required legal opinions, and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents, the Collateral, the Property, or any other security given for the Loan; and (viii) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Collateral or the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy proceedings; provided, however, that Borrower shall not be liable for the payment of any such costs and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of Lender. Any costs and expenses due and payable to Lender shall be payable to Lender’s designee.
(b) Borrower shall indemnify, defend and hold harmless Lender from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for Lender in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not Lender shall be designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or (ii) the use or intended use of the proceeds of the Loan (collectively, the “Additional Indemnified Liabilities”); provided, however, that Borrower shall not have any obligation to Lender hereunder to the extent that such Liabilities arise from the gross negligence, illegal acts, fraud or willful misconduct of Lender. To the extent that the undertaking to indemnify, defend and hold harmless set forth in the preceding sentence may be unenforceable because it violates any law or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of all Additional Indemnified Liabilities incurred by Lender.
(c) Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless Lender and the Indemnified Parties from and against any and all losses (including, without limitation, reasonable attorneys’ fees and costs
 
- 140 -

incurred in the investigation, defense, and settlement of losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA, the Code, any state statute or other similar law that may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Sections 4.1.8 or 5.2.8 hereof.
(d) Subject to Section 9.1 as it relates to the costs incurred with respect to the initial Securitization, Borrower covenants and agrees to pay for or, if Borrower fails to pay, to reimburse Lender for, (i) any fees and expenses incurred by any Rating Agency in connection with any Rating Agency review of the Loan, the Loan Documents or any transaction contemplated thereby or (ii) any consent, approval, waiver or confirmation obtained from such Rating Agency pursuant to the terms and conditions of this Agreement or any other Loan Document and Lender shall be entitled to require payment of such fees and expenses as a condition precedent to the obtaining of any such consent, approval, waiver or confirmation.
Section 10.14 Schedules and Exhibits Incorporated .
The Schedules and Exhibits annexed hereto are hereby incorporated herein as a part of this Agreement with the same effect as if set forth in the body hereof.
Section 10.15 Offsets, Counterclaims and Defenses .
(a) The parties hereto acknowledge that Lender may be an Affiliate of Manager under the Management Agreement. Neither party shall set off any claims under or in connection with the Loan against amounts owing to or by Manager under the Management Agreement or with respect to Manager’s obligations therein. Borrower shall not assert any claims under the Management Agreement or with respect to Manager’s obligations therein as a defense or counterclaim of Borrower’s obligations under the Loan, and Borrower waives its rights to assert any or all such claims.
(b) The parties hereto acknowledge that Lender may be an Affiliate of King’s Village Manager under the King’s Village Management Agreement. In such event, neither party shall set off any claims under or in connection with the Loan against amounts owing to or by King’s Village Manager under the Management Agreement or with respect to King’s Village Manager’s obligations therein. Borrower shall not assert any claims under the King’s Village Management Agreement or with respect to King’s Village Manager’s obligations therein as a defense or counterclaim of Borrower’s obligations under the Loan, and Borrower waives its rights to assert any or all such claims.
(c) The parties hereto acknowledge that Lender may be an Affiliate of Hotel Company under the Hotel Management Agreement. In such event, neither party shall set off any claims under or in connection with the Loan against amounts owing to or by Hotel Company under the Hotel Management Agreement or with respect to Hotel Company’s obligations therein.
 
- 141 -

Borrower shall not assert any claims under the Hotel Management Agreement or with respect to Hotel Company’s obligations therein as a defense or counterclaim of Borrower’s obligations under the Loan, and Borrower waives its rights to assert any or all such claims.
(d) Any assignee of Lender’s interest in and to this Agreement, the Note and the other Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may otherwise have against any assignor of such documents, and no such unrelated counterclaim or defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such assignee upon such documents and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries .
(a) Borrower and Lender intend that the relationships created hereunder and under the other Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor to grant Lender any interest in the Collateral or the Property other than that of pledge, mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit of Lender and Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable to do so.
Section 10.17 Publicity .
All news releases, publicity or advertising by Borrower or their Affiliates through any media intended to reach the general public which refers to the Loan Documents or the financing evidenced by the Loan Documents, to Lender, Global Hyatt Corporation or Hyatt Corporation or any of their Affiliates (but with respect to Global Hyatt Corporation and Hyatt Corporation and their Affiliates, only until a Successful Syndication occurs) shall be subject to (i) the prior written approval of Lender, which shall not be unreasonably withheld; and (ii) the prior written approval of Global Hyatt Corporation or Hyatt Corporation with respect to use of the Global Hyatt or Hyatt name, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, disclosure required by any federal or state securities laws, rules or regulations, as determined by Borrower’s counsel, shall not be subject to the prior written approval of Lender, Global Hyatt Corporation or Hyatt Corporation.
 
- 142 -

Section 10.18 Waiver of Marshalling of Assets .
To the fullest extent permitted by Applicable Law, Borrower, for itself and its successors and assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and others with interests in Borrower, and of the Collateral and the Property, or to a sale in inverse order of alienation in the event of foreclosure of all or part of the Security Instruments, and agrees not to assert any right under any laws pertaining to the marshalling of assets, the sale in inverse order of alienation, homestead exemption, the administration of estates of decedents, or any other matters whatsoever to defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Collateral or the Property for the collection of the Debt without any prior or different resort for collection or of the right of Lender to the payment of the Debt out of the net proceeds of the Property in preference to every other claimant whatsoever.
Section 10.19 Waiver of Counterclaim .
Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents.
Section 10.20 Conflict; Construction of Documents; Reliance .
In the event of any conflict between the provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of the Loan Documents and that such Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on its own judgment and advisors in entering into the Loan without relying in any manner on any statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or remedies available to it under any of the Loan Documents or any other agreements or instruments which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably waives the right to raise any defense or take any action on the basis of the foregoing with respect to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in the business of real estate financings and other real estate transactions and investments which may be viewed as adverse to or competitive with the business of Borrower or its Affiliates.
Section 10.21 Brokers and Financial Advisors .
Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower hereby agrees to indemnify, defend and hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
 
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and expenses) in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower in connection with the transactions contemplated herein. The provisions of this Section 10.21 shall survive the expiration and termination of this Agreement and the payment of the Debt.
Section 10.22 Prior Agreements .
This Agreement and the other Loan Documents contain the entire agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and thereby, and all prior agreements among or between such parties, whether oral or written, relating to such subject matter are superseded by the terms of this Agreement and the other Loan Documents.
Section 10.23 Successors and Assigns .
All covenants, promises and agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the successors and assigns of Lender.
[NO FURTHER TEXT ON THIS PAGE]
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER :
 
W2007 WKH SENIOR BORROWER, LLC,
a Delaware limited liability company	
		
By:	 	/s/ Anthony Cacioppo	
	 	Name: Anthony Cacioppo	
	 	Title: Vice President	
	
LENDER :
 
SDI, INC.,
a Nevada corporation	
		
By: 	 	/s/ Stephen G. Haggerty	
	 	Name: Stephen G. Haggerty	
	 	Title: Senior Vice President	

SCHEDULE I
THE LAND
[1. Steiner Hotel Parcel]
TAX MAP KEY (1) 2-6-023-077
TAX MAP KEY (1) 2-6-023-009
TAX MAP KEY (1) 2-6-023-078
TAX MAP KEY (1) 2-6-023-080
TAX MAP KEY (1) 2-6-023-012
-FIRST:-
All of those certain parcels of land situate on the Northeast side of Kalakaua Avenue at Kapuni and Uluniu, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOTS:
2, area 9,350 square feet,
3, area 7,650 square feet,
4, area 40,000 square feet,
5, area 5,000 square feet,
6, area 5,000 square feet, and
7, area 5,000 square feet, more or less,
as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1840 of Harry Steiner and Hawaiian Trust Company, Limited, Trustees under the Will and of the Estate of James Steiner, deceased;
Being land(s) described in Transfer Certificate of Title No. 497,237 issued to 2424 KALAKAUA ASSOCIATES, a Hawaii limited partnership.
-SECOND:-
All of that certain parcel of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOT 47 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 5,000 square feet, more or less.
[2. Steiner Commercial Parcel]
TAX MAP KEY (1) 2-6-023-005
All of that certain parcel of land situate on the northeast side of Kalakaua Avenue at Kapuni and Uluniu, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOT 1, area 10,000 square feet, more or less, as shown on Map 1, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1840 of Harry Steiner and Hawaiian Trust Company, Limited, Trustees under the Will and of the Estate of James Steiner, deceased;
 
Sch. I-1

Being land(s) described in Transfer Certificate of Title No. 497,237 issued to 2424 KALAKAUA ASSOCIATES, a Hawaii limited partnership.
[3. C.K. Parcel]
TAX MAP KEY (1) 2-6-023-011
TAX MAP KEY (1) 2-6-023-010
All of those certain parcels of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, described as follows:
LOTS: C, area 16,804 square feet, and D, area 651 square feet, more or less,
as shown on Map 4, filed in the Office of the Assistant Registrar of the Land Court of the State of Hawaii with Land Court Application No. 1677 of Matson Navigation Company;
As to Lot C, together with access over Lot D to a public highway, as set forth by Land Court Order No. 13415, filed January 6, 1955.
Being land(s) described in Transfer Certificate of Title No. 404,048 issued to C.K. (NEVADA) LLC, a Nevada limited liability company.
-SECOND:-
All of those certain parcels of land situate at Kalia, Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOTS 45 and 54 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an aggregate area of 10,000 square feet, more or less.
[4. Okumoto Parcel]
TAX MAP KEY (1) 2-6-023-006
All of those certain parcels of land situate at the corner of Uluniu and Koa Avenues at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOTS 77, 78 and 79 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 15,000 square feet, more or less, said lots having a frontage on Koa Avenue of 150 feet, a frontage on Uluniu Avenue of 100 feet and a depth along Lot 80 of 100 feet and a width along Lots 84, 85 and 86 of 150 feet.
[5. Wong Parcel]
TAX MAP KEY (1) 2-6-023-041
All of that certain parcel of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOT NUMBER 33 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 4,538 square feet, more or less.
 
Sch. I-2

[6. Royal Grove Parcel]
Parcel 1:
TAX MAP KEY: (1) 2-6-023-029
All of that certain parcel of land (portion of the land described in and covered by Royal Patent Number 4493, Land Commission Award Number 104 F. L., Apana 5 to M. Kekuanaoa) situate, lying and being on the Southeast side of Kaiulani Avenue between Prince Edward Street and Koa Avenue at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being the WHOLE OF LOTS 25, 26, 27, 28, 35 and 36 and PORTIONS OF LOTS 24, 34 and 37 of the “ROYAL GROVE”, File Plan 149, and thus bounded and described as per survey of Marcellino P. Correa, Registered Land Surveyor, dated January 13, 1971, to-wit:
Beginning at the East corner of this parcel of land, on the Southwest side of Prince Edward Street, being also the East corner of Lot 28 and the North corner of Lot 29 of Royal Grove (File Plan 149), the coordinates of which referred to Government Survey Triangulation Station “LEAHI” being 6,183.96 feet North and 4,334.72 feet West, and running by azimuths measured clockwise from true South:
1.     48°       18’         82.50 feet along Lot 29 of Royal Grove (File Plan 149);
2.     138°     18’         53.00 feet along Lot 38 and the remainder of Lot 37 (37-B) of Royal Grove (File Plan 149);
3.     48°       18’         82.50 feet along remainder of Lot 37 (37-B) of Royal Grove (File Plan 149);
4.     138°     18’         184.49 feet along the Northeast side of Koa Avenue;
Thence along the East corner of Koa Avenue and Kaiulani Avenue, on a curve to the right with a radius of 20.00 feet, the chord azimuth and distance being:
5.     185°     28’         29.33 feet;
6.     232°     38’         120.71 feet along the Southeast side of Kaiulani Avenue;
Thence along the South corner of Kaiulani Avenue and Prince Edward Street, on a curve to the right with a radius of 25.00 feet, the chord azimuth and distance being:
7.     275°     28’         33.99 feet;
8.     318°     18’         223.38 feet along the Southwest side of Prince Edward Street, to the point of beginning and containing an area of 37,125 square feet, more or less.
Together with the rights-of-way and easements set out in the Deed of the Kapiolani Estate, Limited to Percy M. Pond, dated February 2, 1915, recorded in Liber 410 at Page 190.
-NOTE:- The parcel of land subject to rights-of-way and easements, in the above together with, was conveyed to the City and County of Honolulu.
Parcel 2:
Shops Nos. 10, 11, 11a, 12, 4, 9, 32, 32a, 30, 34, 24 and 21 (containing an aggregate of approximately 4,722.4 square feet on the “B” and “C” levels) of the “Kings Alley” buildings situated at 131 Kaiulani Avenue, Honolulu, Hawaii.
 
Sch. I-3

[7. Fee Owned Parcel]
TAX MAP KEY (1) 2-6-023-061
All of that certain parcel of land situate at Waikiki, Honolulu, City and County of Honolulu, State of Hawaii, being LOT NUMBER 17 of the “ROYAL GROVE TRACT”, as shown on File Plan Number 149, filed in the Bureau of Conveyances of the State of Hawaii, and containing an area of 4,125 square feet, more or less.
Together with an easement and right of foot passage to and from, between the makai line of Kalakaua Avenue and high water mark of the Pacific Ocean; said right of way being over a portion of Land Commission Award 7597, Royal Patent 5603 to Kamaukoli, and being the same easement and right of way mentioned in the Deed of the Kapiolani Estate, Limited, to Percy M. Pond dated February 2, 1915, recorded in Liber 410 at Page 190, said easement to be used in common with other owners of lots in said Royal Grove Tract.
-NOTE:- The parcel of land subject to easement and right of foot passage, in the above together with, was conveyed to the City and County of Honolulu.
 
Sch. I-4

SCHEDULE II
ORGANIZATIONAL CHART OF BORROWER

Sch. II-1

SCHEDULE III
GROUND LEASES AND OPERATING LEASE
[1. Steiner Hotel Parcel]
(A) SUBLEASE

SUBLESSOR:	  	BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation	
		
SUBLESSEE :	  	HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership	
		
DATED:	  	May 3, 1974	
FILED:	  	Land Court Document No. 678620	
RECORDED:	  	Liber 9879 Page 60	
CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated May 3, 1974, filed as Land Court Document No. 678628, recorded in Liber 9879 at Page 526, by and among HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and HARRY STEINER, Trustees under the Will and of the Estate of James Steiner, deceased, “Fee Owners”, BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Lessees”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Sublessee”, and HEMMETER CENTER CORP., a Hawaii corporation, “Sub-Sublessee”.
Said Sublease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789461, recorded in Liber 11803 at Page 219; Consent thereto filed as Land Court Document No. 789462, recorded in Liber 11803 at Page 228.
THE SUBLESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED

ASSIGNOR:	  	AZABU U.S.A. CORPORATION, a corporation formed under the laws of Hawaii	
		
ASSIGNEE:	  	AZABU BUILDINGS CO., LTD., a corporation formed under the laws of Japan	
		
DATED:	  	November 6, 1996	
FILED:	  	Land Court Document No. 2345946	
RECORDED:	  	Document No. 96-157550	
CONSENT thereto given by Hawaiian Trust Company, Limited, a Hawaii corporation, and Ernest Steiner and Keith J. Steiner, Trustees under the Will and of the Estate of James Steiner, deceased, by instrument dated October 30, 1996, filed as Land Court Document No. 2345953, recorded as Document No. 96-157561.
(B) SUB-SUBLEASE dated May 3, 1974, filed as Land Court Document No. 678621, recorded in Liber 9879 at Page 116, entered into by and between HEMMETER INVESTMENT COMPANY, as Sub-Sublessor, and HEMMETER CENTER CORP., as Sub-Sublessee.
 
Sch. III-1

Said Sub-Sublease was supplemented by CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated May 3, 1974, filed as Land Court Document No. 678628, recorded in Liber 9879 at Page 526, by and among HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and HARRY STEINER, Trustees under the Will and of the Estate of James Steiner, deceased, “Fee Owners”, BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Lessees”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Sublessee”, and HEMMETER CENTER CORP., a Hawaii corporation, “Sub-Sublessee”.
Said Sub-Sublease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789463, recorded in Liber 11803 at Page 231; Consents thereto filed as Land Court Document No. 789464, recorded in Liber 11803 at Page 239, and filed as Land Court Document No. 789465, recorded in Liber 11803 at Page 242.
The Sub-Sublessee’s interest was further assigned to AZABU BUILDINGS CO., LTD., a Japan corporation, duly registered and authorized to do business in the State of Hawaii, by instrument dated November 7, 1986, filed as Land Court Document No. 1413871, recorded in Liber 20024 at Page 587.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 3, 1986, filed as Land Court Land Court Document No. 1413872, recorded in Liber 20024 at Page 626, by Hawaiian Trust Company, Limited, a Hawaii corporation, and Ernest Steiner and Keith J. Steiner, Trustees under the Will and of the Estate of James Steiner, deceased.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Land Court Document No. 1413873, recorded in Liber 20024 at Page 641, by Business Men’s Assurance Company of America, a Missouri corporation, and Bankers Life Insurance Company of Nebraska, a Nebraska corporation.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Land Court Document No. 1413874, recorded in Liber 20024 at Page 651, by Hemmeter Investment Company, a Hawaii general partnership.
The Sub-Sublessor’s interest was assigned to AZABU U.S.A. CORPORATION, a Hawaii corporation, by instrument dated December 29, 1986, filed as Land Court Document No. 1459295, recorded in Liber 20620 at Page 385.
(-Note:- This assignment instrument in favor of AZABU U.S.A. CORPORATION was amended by instrument entitled Amendment (Correction) of Assignment dated June 1, 1987, filed as Land Court Document No. 1468492, recorded in Liber 20744 at Page 122, re: insertion of missing Page 13 of Exhibit “A”).
CONSENT TO ASSIGNMENT dated December 30, 1986, filed as Land Court Document No. 1459296, recorded in Liber 20620 at Page 412, by HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and ERNEST STEINER and KEITH J. STEINER, Trustees under the Will and of the Estate of James Steiner, deceased.
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 22, 1986), filed as Land Court Document No. 1459298, recorded in Liber 20620 at Page 484, by BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation.
 
Sch. III-2

CONSENT TO ASSIGNMENT dated ----- (acknowledged December 29, 1986), filed as Land Court Document No. 1459300, recorded in Liber 20620 at Page 510, by AZABU BUILDINGS CO., LTD., a Japan corporation.
[2. Steiner Commercial Parcel]
(A) LEASE
 
LESSOR:	HAWAIIAN TRUST COMPANY, LIMITED, a Hawaiian corporation and HARRY STEINER, Trustees under the Will of James Steiner, deceased,	
 
LESSEE:	HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership	
 
DATED:	October 9, 1975	
FILED:	Land Court Document No. 737643	
THE LESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED:
 
ASSIGNOR:	AZABU U.S.A. CORPORATION, a corporation formed under the laws of Hawaii	
 
ASSIGNEE:	AZABU BUILDINGS CO., LTD., a corporation formed under the laws of Japan	
 
DATED:	November 6, 1996	
FILED:	Land Court Document No. 2345946	
RECORDED:	Document No. 96-157550	
Consent thereto given by HAWAIIAN TRUST COMPANY, LIMITED, a Hawaiian corporation and ERNEST STEINER and KEITH J. STEINER, Trustees under the Will and of the Estate of James Steiner, deceased, by instrument dated October 30, 1996, filed as Land Court Document No. 2345953, recorded as Document No. 96-157561.
(B) SUB-SUBLEASE, dated October 9, 1975, field as Land Court Document No. 737647, entered into by and between BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, “Sub-Sublessor”, and HEMMETER CENTER CORP., “Sub-Sublessee”.
Said Sub-Sublease was supplemented by CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated October 9, 1975, filed as Land Document No. 737650, by and among HAWAIIAN TRYST COMPANY, LIMITED, a Hawaii corporation, and HARRY STEINER, Trustees under the Will and of the Estate of James Steiner, DECEASED, “Fee Owners”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Lessee”. BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Sublessees”, and HEMMETER CENTER CORP., a Hawaii corporation, “Sub-Sublessee”.
The Sub-Sublessee’s interest was further assigned to AZABU BUILDINGS CO., LTD., a Japan corporation, duly registered and authorized to do business in the State of Hawaii, by instrument dated November 7, 1986, filed as Land Court Document No. 1413871, recorded in Liber 20024 at Page 587.
 
Sch. III-3

CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 3, 1986, filed as Land Court Document No. 1413872, recorded in Liber 20024 at Page 626, by HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and ERNEST STEINER and KEITH J. STEINER, Trustees under the Will and of the Estate of James Steiner, deceased.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413873, recorded in Liber 20024 at Page 641, by BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413874, recorded in Liber 20024 at Page 651, by HEMMETER INVESTMENT COMPANY, a Hawaii general partnership.
[3. C.K. Parcel]
(A) LEASE
 
LESSOR:	BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation	
 
LESSEE:	HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership	
 
DATED:	May 3, 1974	
FILED:	Land Court Document No. 678622	
RECORDED:	Liber 9879 Page 324	
Said above Lease was amended by instrument dated November 16, 1976, filed as Land Court Document No. 789469, recorded in Liver 11803 at Page 264.
THE LESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED:
 
ASSIGNOR:	AZABU U.S.A. CORPORATION, a corporation formed under the laws of Hawaii	
 
ASSIGNEE:	AZABU BUILDINGS CO., LTD., a corporation formed under the laws of Japan	
 
DATED:	November 6, 1996	
FILED:	Land Court Document No. 2345946	
RECORDED:	Document No. 96-157550	
Consent thereto given by C.K. CORPORATION, a Nevada corporation, by instrument dated October 23, 1996, filed as Land Court Document No. 2345954, recorded as Document No. 96-157563.
(B) SUBLEASE, dated May 3, 1974, filed as Land Court Document No. 678623, recorded in Liber 9879 at Page 361, entered into by and between HEMMETER INVESTMENT COMPANY, “Sublessor”, and HEMMETER CENTER CORP., “Sublessee”.
 
Sch. III-4

Said Sublease was supplemented by CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT, dated May 3, 1974, field as Land Court document No. 678629, recorded in Liber 9879 at Page 568, by and among BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Fee Owners”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Lessee”, and HEMMETER CENTER CORP., a Hawaii corporation “Sublessee”.
The Sublessee’s interest was assigned to HEMMETER CENTER COMPANY, a registered Hawaii limited partnership, by instrument dated November 16, 1976, filed as Land Court Document No. 789453, recorded in Liber 11803 at Page 130.
Said Sublease was further supplemented by CONSENT TO ASSIGNMENT OF SUBLEASE AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated November 16, 1976, filed as Land Court Document No. 789456, recorded in Liber 11803 at Page 177, by and among BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Fee Owners”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Lessee”, and HEMMETER CENTER CORP., a Hawaii corporation “Sublessee”, and HEMMETER CENTER COMPANY, a registered Hawaii limited partnership, “Assignee”.
Said Sublease was amended and supplemented by instrument dated November 16, 1976, filed as Land Court Document No. 789470, recorded in Liber 11803 at Page 274; Consent thereto filed as Land Court Document No. 789471, recorded in Liber 11803 at Page 284.
The Sublessee’s interest by mesne assignments assigned to AZABU Buildings CO., LTD., a Japan corporation, duly registered and authorized to do business in the State of Hawaii. By instrument dated November 7, 1986, filed as Land Court Document No. 1413871, recorded in Liber 20024 at Page 587.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413873, recorded in Liber 20024 at Page 641, by BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413874, recorded in Liber 20024 at Page 651, by HEMMETER INVESTMENT COMPANY, a Hawaii general partnership.
The Sublessor’s interest was assigned to AZABU U.S.A. Corporation, a Hawaii corporation by instrument dated December 29, 1986, filed as Land Court Document No. 1459295, recorded in Liber 20620 at Page 385.
Note: This assignment instrument in favor of AZABU U.S.A. Corporation was amended by instrument entitled Amendment (Correction) of Assignment dated June 1, 1987, field as Land Court Document No. 1468492, recorded in Liber 20744 at Page 122, re: insertion of missing Page 13 of Exhibit “A.”
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 22, 1986), filed as Land Court Document No. 1459298, recorded in Liber 20620 at Page 484, by BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation.
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 29, 1986), filed as Land Court Document No. 1459300, recorded in Liber 20920 at Page 510, by AZABU BUILDINGS CO., LTD., a Japan corporation.
 
Sch. III-5

The Sublessor’s interest was further assigned to AZABU BUILDINGS CO., LTD., a corporation formed under the laws of Japan, by instrument dated November 6, 1996, filed as Land Court Document No. 2345946, and recorded as Document No. 96-157550.
[4. Okumoto Parcel]
(A) SUBLEASE
 
SUBLESSOR:	BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation	
 
SUBLESSEE:	HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership	
 
DATED:	May 3, 1974	
RECORDED:	Liber 9879 Page 223	
Said Sublease was amended by instrument dated November 16, 1976, recorded in Liber 11803 at Page 245; Consent thereto recorded in Liber 11803 at Page 251.
CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated May 3, 1974, recorded in Liber 9879 at Page 548, by and among MASAO OKUMOTO and DOROTHY MITSUE OKUMOTO, husband and wife, “Fee Owners”, BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Lessees”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Sublessee”, and HEMMETER CENTER CORP., a Hawaii corporation, “Sub-Sublessee”.
THE SUBLESSEE’S INTEREST BY MESNE ASSIGNMENTS ASSIGNED
 
ASSIGNOR:	AZABU U.S.A. CORPORATION, a corporation formed under the laws of Hawaii	
 
ASSIGNEE:	AZABU BUILDINGS CO., LTD., a corporation formed under the laws of Japan	
 
DATED:	November 6, 1996	
FILED:	Land Court Document No. 2345946	
RECORDED:	Document No. 96-157550	
CONSENT thereto given by Hawaiian Trust Company, Limited, a Hawaii corporation, Successor Trustee under the Irrevocable Living Trust known as the “Okumoto Joint Irrevocable Trust” dated April 6, 1981, recorded in Liber 15487 at Page 134, by instrument dated October 30, 1996, recorded as Document No. 96-157562.
(B) SUB-SUBLEASE dated May 3, 1974, recorded in Liber 9879 at Page 277, entered into by and between HEMMETER INVESTMENT COMPANY, “Sub-Sublessor”, and HEMMETER CENTER CORP., “Sub-Sublessee”.
 
Sch. III-6

Said Sub-Sublease was supplemented by CONSENT TO SUBLEASES AND NON-DISTURBANCE AND ATTORNMENT AGREEMENT dated May 3, 1974, recorded in Liber 9879 at Page 548, by and among MASAO OKUMOTO and DOROTHY MITSUE OKUMOTO, husband and wife, “Fee Owners”, BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri insurance corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska insurance corporation, “Lessee”, HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Sublessee”, and HEMMETER CENTER CORP., a Hawaii corporation, “Sub-Sublessee”.
Said Sub-Sublease was amended by instrument dated November 16, 1976, recorded in Liber 11803 at Page 253; Consents thereto recorded in Liber 11803 at Page 259 and in Liber 11803 at Page 261.
The Sub-Sublessee’s interest, by mesne assignments, was assigned to AZABU BUILDINGS CO., LTD., a Japan corporation, duly registered and authorized to do business in the State of Hawaii, by instrument dated November 7, 1986, filed as Land Court Document No. 1413871, recorded in Liber 20024 at Page 587.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated October 1, 1986, recorded in Liber 20024 at Page 635, by Bishop Trust Company, Limited, Trustee under that certain Irrevocable Living Trust known as the “Okumoto Joint Irrevocable Trust” dated April 6, 1981, recorded in Liber 15487 at Page 134.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413873, recorded in Liber 20024 at Page 641, by Business Men’s Assurance Company of America, a Missouri corporation, and Bankers Life Insurance Company of Nebraska, a Nebraska corporation.
CONSENT TO ASSIGNMENT, ESTOPPEL CERTIFICATE dated November 7, 1986, filed as Land Court Document No. 1413874, recorded in Liber 20024 at Page 651, by Hemmeter Investment Company, a Hawaii general partnership.
The Sublessor’s interest was assigned to AZABU U.S.A. CORPORATION, a Hawaii corporation, by instrument dated December 29, 1986, filed as Land Court Document No. 1459295, recorded in Liber 20620 at Page 385.
(-Note:- This assignment instrument in favor of AZABU U.S.A. CORPORATION was amended by instrument entitled Amendment (Correction) of Assignment dated June 1, 1987, filed as Land Court Document No. 1468492, recorded in Liber 20744 at Page 122, re: insertion of missing Page 13 of Exhibit “A”).
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 30, 1986), filed as Land Court Document No. 1459297, recorded in Liber 20620 at Page 464, by BISHOP TRUST COMPANY, LIMITED, a Hawaii corporation, Trustee under the Irrevocable Living Trust known as the “Okumoto Joint Irrevocable Trust” dated April 6, 1981, recorded in Liber 15487 at Page 134.
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 22, 1986), filed as Land Court Document No. 1459298, recorded in Liber 20620 at Page 484, by BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation.
CONSENT TO ASSIGNMENT dated ----- (acknowledged December 29, 1986), filed as Land Court Document No. 1459300, recorded in Liber 20620 at Page 510, by AZABU BUILDINGS CO., LTD., a Japan corporation.
 
Sch. III-7

[5. Wong Parcel]
UNRECORDED LEASE
 
LESSOR:	WAH HIN WONG, also known as GET CHUN, and KIM OI WONG, also known as KIM OI CHUN, husband and wife	
 
LESSEE:	HEMMETER DEVELOPMENT CORPORATION, a Hawaii corporation	
 
DATED:	June 6, 1973	
TERM:	75 years commencing on May 1, 1973	
A SHORT FORM of said Lease is dated June 6, 1973, effective May 1, 1973, recorded in Liber 9236 at Page 60.
Said Lease was assigned to AZABU U.S.A. CORPORATION, a Hawaii corporation, by HEMMETER DEVELOPMENT CORPORATION, a Hawaii corporation, by instrument dated May 19, 1987, recorded in Liber 20728 at Page 74.
Consent given by WAH HIN WONG and KIM OI WONG, husband and wife, as Trustees under that certain unrecorded Revocable Trust dated March 22, 1979, made by Wah Hin Wong and Kim Oi Wong, as Settlors and Trustees, by instrument dated May 26, 1987, recorded in Liber 20728 at Page 81.
[6. Royal Grove Parcel]
Parcel 1:
 
UNRECORDED	LEASE	
 
LESSOR:	LESLIE VINCENT FULLARD-LEO, unmarried	
 
LESSEE:	ASSOCIATED INNKEEPERS, INCORPORATED, a Hawaii corporation	
 
DATED:	November 15, 1968	
TERM:	54 years commencing on January 1, 1969 and ending on December 31, 2025	
A SHORT FORM of said Lease is dated March 12, 1971, recorded in Liber 7458 at Page 25.
Said Lease was amended by instrument dated March 12, 1971, recorded in Liber 7458 at Page 18.
Said Lease was further amended by instrument dated March 31, 1987, recorded in Liber 20532 at Page 663.
Said Lease was further amended by instrument dated April 27, 1987, recorded in Liber 20728 at Page 17.
ABOVE LEASE, AS AMENDED, BY MESNE ASSIGNMENTS ASSIGNED
 
ASSIGNOR:	KING’S ALLEY COMPANY, a Hawaii limited partnership	
 
ASSIGNEE:	AZABU U.S.A. CORPORATION, a Hawaii corporation	
 
Sch. III-8

DATED:	May 19, 1987	
RECORDED:	Liber 20728 Page 27	
CONSENT:	Given by Leslie Vincent Fullard-Leo, unmarried, general partner of and for ELDA, a registered Hawaii limited partnership, by instrument dated April 22, 1987, recorded in Liber 20728 at Page 46	
Parcel 2:
UNRECORDED SUBLEASE
 
SUBLESSOR:	KING’S ALLEY COMPANY	
 
SUBLESSEE:	HEMMETER INVESTMENT COMPANY	
 
DATED:	December 6, 1979	
ABOVE SUBLEASE WAS ASSIGNED
 
ASSIGNOR:	HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership	
 
ASSIGNEE:	AZABU U.S.A. CORPORATION, a Hawaii corporation	
 
DATED:	May 19, 1987	
RECORDED:	Liber 20728 Page 48	
[7. Operating Lease (“Hotel Lease”)]
 
LESSOR:	W2007 WKH OWNER, LLC	
 
LESSEE:	W2007 WKH HOTEL TRS, INC.	
 
DATED:	July 16, 2008	
 
Sch. III-9

SCHEDULE IV
HOTEL MANAGEMENT AGREEMENT
Hotel Management Agreement (Waikiki, Hawaii), by and among W2007 WKH Hotel TRS, Inc., W2007 WKH King’s Village TRS, Inc., and Hyatt Corporation, dated July 16, 2008.
 
Sch. IV-1

SCHEDULE V
MEZZANINE LOAN DOCUMENTS
1. Loan Agreement between Eurohypo AG, New York Branch, as Administrative Agent for one or more lenders (“Mezzanine Lender”) and W2007 WKH Mezzanine Borrower, LLC, a Delaware limited liability company (“SPE Borrower”), W2007 Finance Sub, LLC, a Delaware limited liability company (“Finance Sub”), Whitehall Street Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“Whitehall Street” and, together with SPE Borrower and Finance Sub, the “Mezzanine Borrowers”);
2. Promissory Note in the original amount of $70,300,000 made by Mezzanine Borrowers in favor of Mezzanine Lender;
3. Pledge and Security Agreement made by SPE Borrower to Mezzanine Lender;
4. Assignment, Pledge and Security Agreement (Hedge Agreement), made by Mezzanine Borrowers to Mezzanine Lender;
5. Interest Rate Hedge Agreement (with opinion from provider);
6. Environmental Indemnity Agreement, made by Mezzanine Borrowers and Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership (“Whitehall Parallel”) to Mezzanine Lender;
7. Preferred Shares Guaranty, made by Whitehall Street and Hyatt Corporation, a Delaware corporation (“Hyatt”) to Mezzanine Lender;
8. Guaranty of Payment made by Whitehall Parallel to Mezzanine Lender;
9. Borrower’s Certification made by Mezzanine Borrowers to Mezzanine Lender;
10. Agency and Administrative Fee Letter from Mezzanine Lender to Mezzanine Borrowers;
11. Subordination, Non-Disturbance and Attornment Agreement (Mezzanine Loan) between Mezzanine Lender and Hyatt and acknowledged by W2007 WKH Hotel TRS, Inc., a Delaware corporation;
12. Irrevocable Payment Direction Letter from W2007 WKH Senior Borrower, LLC, a Delaware limited liability company (“Senior Borrower”) to SDI, Inc., a Nevada corporation (“Senior Lender”);
13. Springing Payment Direction Letter from Senior Borrower to Senior Lender;
14. Assignment of Membership Interest (in blank) from SPE Borrower;
15. Acknowledgment of Pledge from Senior Borrower to Mezzanine Lender;
 
Sch. V-1

16. Title Company Escrow Closing Letter by and between Mezzanine Borrowers, Title Guaranty Escrow Services, Inc., Title Guaranty of Hawaii, Inc., Commonwealth Land Title Insurance Company, Commonwealth Land Title Insurance Company-UCC Division;
17. Delaware form UCC-1 Financing Statement, with Mezzanine Borrowers, as debtor and Mezzanine Lender as secured party; and
18. Post Closing Letter from Mezzanine Borrowers to Mezzanine Lender.
 
Sch. V-2

SCHEDULE VI
PERMITTED ENCUMBRANCES
[As to Steiner Hotel Parcel, Steiner Commercial Parcel, C.K. Parcel and Okumoto Parcel]
 
1.	Real Property Taxes for the Fiscal Year July 1, 2008 - June 30, 2009, a lien not yet due and payable.	
First Installment payable on or before August 20, 2008.
Second Installment payable on or before February 20, 2009.
CK Parcel (Lots C and D) is covered by Tax Key (1) 2-6-023-011.
CK Parcel (Lots 45 and 54) is covered by Tax Key (1) 2-6-023-010.
Steiner Commercial Parcel (Lot 1) is covered by Tax Key (1) 2-6-023-005.
Steiner Hotel Parcel (Lot 2) is covered by Tax Key (1) 2-6-023-077.
Steiner Hotel Parcel (Lots 3 and 4) is covered by Tax Key (1) 2-6-023-009.
Steiner Hotel Parcel (Lot 5) is covered by Tax Key (1) 2-6-023-078.
Steiner Hotel Parcel (Lots 7 and 7) is covered by Tax Key (1) 2-6-023-080.
Steiner Hotel Parcel (Lot 47) is covered by Tax Key (1) 2-6-023-012.
Steiner Hotel Parcel (Lots 77, 78 & 79) is covered by Tax Key (1) 2-6-023-006.
 
2.	IMPROVEMENT ASSESSMENT(S), WAIKIKI BUSINESS IMPROVEMENT - Fiscal Year July 1, 2008 - June 30, 2009, a lien not yet due and payable.	
 
3.	Reservation in favor of the State of Hawaii of all mineral and metallic mines.	
 
4.	The terms and provisions contained in Unrecorded MANAGEMENT AGREEMENT dated                      , by and between Hemmeter Center Corp. and Hyatt Corporation, as amended from time to time.	
 
5.	The terms and provisions contained in MUTUAL RELEASE dated December 16, 1992, filed as Land Court Document No. 1980301, and recorded as Document No. 92-204612, by and among S COUT DEVELOPMENT CORPORATION, AMERITAS LIFE INSURANCE CORP., BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, SEAFIELD CAPITAL CORPORATION, AZABU U.S.A. CORPORATION, AZABU BUILDINGS CO., LTD., THE MITSUI TRUST & BANKING CO., LTD., and C. K. CORPORATION.	
 
6.	Unrecorded SUBLEASE dated February 4, 1976, by and between HEMMETER CENTER CORP., a Hawaii corporation, “Sublessor” and E. R. GELFO ENTERPRISES, INC., a Hawaii corporation, “Sublessee”, leasing and demising that certain retail shop space number 105, area approximately 1171 square feet on the street level of the building know as the Hemmeter Center located at 2424 Kalakaua Avenue, Honolulu, Hawaii, a memorandum of which is recorded in MEMORANDUM OF SUBLEASE dated February 4, 1976, filed as Land Court Document No. 777872, recorded as Liber 11618 Page 409.	
Said Sublease is subject to any matters arising from or affecting the same.
 
7.	Unrecorded SUBLEASE dated December 4, 1974, by and between HEMMETER CENTER CORP., a Hawaii corporation, “Sublessor” and THE HERTZ CORPORATION, a Delaware corporation, “Sublessee”, a short form of which is recorded in SUBLEASE (SHORT FORM) dated December 4, 1974, filed as Land Court Document No. 778132, recorded as Liber 11623 Page 363, for a term of thirty (30) years commencing on the date that Sublessee takes possession of the demised premises.	
 
Sch. VI-1

Said Sublease is subject to any matters arising from or affecting the same.
 
8.	Unrecorded SUBLEASE dated July 14, 1976, by and between HEMMETER CENTER CORP., a Hawaii corporation, “Sublessor” and HEMMETER INVESTMENT COMPANY, a Hawaii general partnership, “Sublessee”, leasing and demising those certain shops 101, 118, 118A, 121, 122, 125 and 214, for a term to commence on or about July 24, 1976, and ending midnight on December 28, 2047, a short form of which is recorded in HEMMETER CENTER SHORT FORM SUBLEASE dated July 14, 1976, filed as Land Court Document No. 780799, recorded as Liber 11667 Page 578.	
Said Sublease is subject to any matters arising from or affecting the same.
Said Sublease is subject to the following:
Unrecorded SUBLEASE dated March 15, 1983, by and between HEMMETER INVESTMENT COMPANY, a general partnership, “Landlord” and KALAMA BEACH CORPORATION, a Hawaii corporation, “Tenant”, leasing and demising that certain Space No. 101, consisting of approximately 3,502 square feet of floor area on the street level of the building known as the Hemmeter Center located at 2424 Kalakaua Avenue, Honolulu, Hawaii, for a term of thirty (30) years, commencing on March 15, 1983 and terminating on March 14, 2013, a memorandum of which is recorded in MEMORANDUM OF SUBLEASE dated April 11, 1983, filed as Land Court Document No. 1166422.
Said Sublease is subject to any matters arising from or affecting the same.
 
9.	Unrecorded SUBLEASE dated May 9, 1989 and effective as of March 1, 1989, as amended by that certain unrecorded Amendment of Sublease dated July 19, 1989, by and between AZABU BUILDINGS CO., LTD., a Japan corporation, “Landlord” and INTERNATIONAL FURUSATO, INC., a Hawaii corporation, “Tenant”, leasing and demising that certain Space No. 120, containing an area of 5,921 square feet located on the Street and Basement Levels of the “Hyatt Regency, Waikiki” situated at 2424 Kalakaua Avenue, Honolulu, Hawaii 96815, for a term of eighteen (18) years and seven (7) months commencing March 1, 1989 and continuing through September 30, 2007, together with an option to extend the term of said Sublease for an additional five (5) years, a short form of which is recorded in SHORT FORM SUBLEASE dated November 17, 1989, filed as Land Court Document No. 1738719, recorded as Document No. 90-090179.	
Said Sublease is subject to any matters arising from or affecting the same.
 
10.	Any rights or interests, which may exist or arise by reason of the following facts shown on survey map prepared by Wayne M. Teruya with ParEn, Inc. dba Park Engineering dated January 30, 2007, revised March 12, 2007:	
(A) HT box extends onto Lot 6 by 0.6 feet.
(B) HE box extends onto Lot D by 0.3 feet.
(C) Six inch concrete wall extends onto Koa Avenue by a maximum of 0.1 feet for approximately 37 feet.
 
Sch. VI-2

(D) Concrete curb extends onto Uluniu Avenue by a maximum of 0.1 feet for approximately 38 feet.
(E) HT box extends onto Lot 1 by 1.2 feet.
(F) HT box extends onto Lot 1 by 0.7 feet.
(G) Eight inch concrete wall extends onto Uluniu Avenue by 0.1 feet.
(H) Eight inch concrete wall extends onto Uluniu Avenue by 0.2 feet.
(I) Six inch concrete header extends onto Koa Avenue by a maximum of 0.1 feet for approximately 53 feet.
(J) Six inch header extends onto Koa Avenue by a maximum of 0.1 feet for approximately 5 feet.
(K) Six inch header extends onto Koa Avenue by a maximum of 0.1 feet for approximately 34 feet.
(L) Eight inch concrete wall extends onto Koa Avenue by 0.2 feet.
(M) Eight inch concrete wall extends onto Koa Avenue by 0.1 feet.
(N) Portion of wheelchair ramp is situated on Lot 77.
 
11.	Any rights or interests, which may exist or arise out of any unrecorded easements for water, gas, electric, telephone, storm sewer and sanitary sewer services, as disclosed to the Company.	
 
12.	Rights of tenants, as tenants only, under unrecorded leases and agreements shown in Schedule “1” (certified rent roll) attached hereto, with no rights of first refusal or options to purchase, and any matters arising from or affecting the same.	
[1. Steiner Hotel Parcel]
LEASE dated August 17, 1953, recorded in Liber 2743 at Page 200, entered into by and between HAWAIIAN TRUST COMPANY, LIMITED, a Hawaii corporation, and HARRY STEINER, Trustees under the Will and of the Estate of James Steiner, deceased, “Lessor”, and BELLE HAVEN REALTY COMPANY, a California corporation, “Lessee”, for a term of twenty-five (25) years thence next ensuing to and including July 31, 1978, subject to extension for an additional period of thirty (30) years.
Said Lease was amended by instruments dated May 1, 1969, filed as Land Court Document No. 590461, dated January 17, 1974, filed as Land Court Document No. 678617, recorded in Liber 9879 at Page 4, dated August 5, 1974, filed as Land Court Document No. 694356, recorded in Liber 10108 at Page 376, and dated October 9, 1975, filed as Land Court Document No. 737644, recorded in Liber 10955 at Page 132; Consent thereto filed as Land Court Document No. 737645, recorded in Liber 10955 at Page 176.
The Lessee’s interest, by mesne assignments, was assigned to C. K. CORPORATION, a Nevada corporation, by instrument dated December 16, 1992, filed as Land Court Document No. 1980297, recorded as Document No. 92-204607.
 
Sch. VI-3

[2. As to Steiner Commercial Parcel]
SUBLEASE dated October 9, 1975, filed as Land Court Document No. 737646, entered into by and between HEMMETER INVESTMENT COMPANY, a registered Hawaii general partnership, “Sublessor”, and BUSINESS MEN’S ASSURANCE COMPANY OF AMERICA, a Missouri corporation, and BANKERS LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska corporation, “Sublessee”, for a term of seventy-two (72) years, commencing October 9, 1975, and terminating midnight, December 30, 2047.
The Sublessee’s interest, by mesne assignments, was assigned to C. K. CORPORATION, a Nevada corporation, by instrument dated December 16, 1992, filed as Land Court Document No. 1980297, recorded as Document No. 92-204607.
[3. As to C.K. Parcel]
None.
[4. As to Okumoto Parcel]
LEASE dated December 1, 1953, recorded in Liber 2893 at Page 81, entered into by and between NORMAN KAZUMA KANEO and AYAKO KANEO, husband and wife, and MASAO OKUMOTO and DOROTHY MITSUE OKUMOTO, husband and wife, “Lessor”, and G. J. WATUMULL and ELLEN J. WATUMULL, husband and wife, “Lessee”, for a term of sixty (60) years commencing December 1, 1953, and ending on November 30, 2013.
Said Lease was amended by instrument dated May 2, 1974, recorded in Liber 9879 at Page 175.
The Lessee’s interest, by mesne assignments, was assigned to C. K. CORPORATION, a Nevada corporation, by instrument dated December 16, 1992, filed as Land Court Document No. 1980297, recorded as Document No. 92-204607.
[As to Wong Parcel, Royal Grove Parcel and Fee Owned Parcel]
 
1.	Real Property Taxes for the Fiscal Year July 1, 2008 - June 30, 2009, a lien not yet due and payable.	
First Installment payable on or before August 20, 2008.
Second Installment payable on or before February 20, 2009.
Royal Grove Parcel is covered by Tax Key (1) 2-6-023-029.
Wong Parcel is covered by Tax Key (1) 2-6-023-041.
Fee Owned Parcel is covered by Tax Key (1) 2-6-023-061.
 
2.	Improvement Assessment(s), WAIKIKI BUSINESS IMPROVEMENT DISTRICT—Fiscal Year July 1, 2008—June 30, 2009, a lien not yet due and payable.	
 
3.	Reservation in favor of the State of Hawaii of all mineral and metallic mines.	
 
4.	SETBACK (15 feet wide)	
ALONG: Prince Edward Street
SHOWN: File Plan No. 149
 
Sch. VI-4

[5. Wong Parcel]
Any rights or interests which may exist or arise by reason of the following facts shown on survey map prepared by Wayne M. Teruya with ParEn, Inc. dba Park Engineering dated January 29, 2007, last revised March 12, 2007:
(1) Six feet high chain link fence extends onto Lot 33 by a maximum of 0.5 feet for approximately 41 feet.
(2) Eight inch tile wall extends onto Lot 32 by a maximum of 0.2 feet for approximately 57 feet.
(3) Three feet high chain fence extends onto Prince Edward Street by a maximum of 3.4 feet for approximately 53 feet.
(4) Fifteen feet building setback line along Uluniu Avenue.
[6. Royal Grove Parcel]
Rights of First Refusal, in favor of the lessee, contained in that certain unrecorded Lease dated November 15, 1968, a Short Form of which is dated March 12, 1971, recorded in Liber 7458 at Page 25.
(A) Unrecorded LEASE dated July 19, 2001, by and between AZABU U.S.A., corporation, “Landlord” and SUBWAY REAL ESTATE CORP., a Delaware corporation, “Tenant”, leasing and demising that certain Tenant Store Number 24184, area approximately 868 square feet, located at 131 Kaiulani Avenue, Honolulu, Hawaii 96815, with a term of 5 years to commence on August 1, 2001 and terminate on July 31, 2006, with renewal (option) period of 1 period of 5 years, a memorandum of which is recorded in MEMORANDUM OF LEASE dated March 4, 2003, recorded as Document No. 2003-077730.
Said Sublease is subject to any matters arising from or affecting the same.
(B) Unrecorded LEASE dated October 31, 2002, by and between AZABU U.S.A. CORPORATION, a Hawaii corporation, “Landlord” and KAZI FOODS CORP. OF HAWAII, a Hawaii corporation, “Tenant”, leasing and demising those certain Store Nos. 7 and 8, area approximately 1,052 square feet within the retail shopping center know as “King’s Village”, located at 131 Kaiulani Avenue, Honolulu, Hawaii, for a term of fifteen 15 years and four (4) months commencing on December 1, 2002 through and including March 31, 2018, a short form of which is recorded in SHORT FORM LEASE dated June 9, 2003, recorded as Document No. 2003-118738.
Said Sublease is subject to any matters arising from or affecting the same.
(C) Unrecorded LEASE dated November 8, 2002, by and between AZABU U.S.A. CORPORATION, a Hawaii corporation, “Landlord” and KAZI RESTAURANTS OF HAWAII, INC., a Hawaii corporation, “Tenant”, leasing and demising those certain Store Nos. 11 and 12, area approximately 2,082 square feet within the retail shopping center know as “King’s Village”, located at 131 Kaiulani Avenue, Honolulu, Hawaii, for a term of fifteen 15 years and four (4) months commencing on December 1, 2002 through and including March 31, 2018, a short form of which is recorded in SHORT FORM LEASE dated November 26, 2002, recorded as Document No. 2003-123780.
 
Sch. VI-5

Said Sublease is subject to any matters arising from or affecting the same.
(D) Unrecorded LEASE dated October 20, 2005, effective November 1, 2005, by and between AZABU U.S.A. CORPORATION, a Hawaii corporation, “Landlord”, and MARUEI RESTAURANTS LTD. dba TANAKA OF TOKYO EAST, a Hawaii corporation, “Tenant”, leasing and demising those certain Space Nos. D-1 and D-2, floor area of approximately 6,312 square feet, within the Shopping Center, as outlined in red on Exhibit A of that certain unrecorded Indenture of Lease dated October 20, 2005, effective November 1, 2005, for a term commencing November 1, 2005 and expiring October 31, 2010, subject to an option to extend the lease term for an additional five years.
A SHORT FORM LEASE is dated February 7, 2007, recorded as Document No. 2007-033747.
Said Sublease is subject to any matters arising from or affecting the same.
(E) Unrecorded SPACE LEASE dated August 17, 2004, by and between AZABU U.S.A. CORPORATION, a Hawai’i corporation, “Lessor”, and PACIFIC OCEAN OF HAWAII CO. dba ODORIKO RESTAURANT, a Hawai’i corporation, “Lessee”, leasing and demising that certain Space No. 5A within the retail shopping center known as “King’s Village” consisting of approximately 5,600 square feet, as outlined in red on Exhibit “A” attached thereto, for a term expires on August 31, 2007, with a first option to extend until August 31, 2010 and a second option to extend until August 31, 2013.
Said Sublease was amended by unrecorded First Amendment dated April 24, 2006.
A MEMORANDUM OF LEASE is dated March 19, 2007, recorded as Document No. 2007-051739.
Said Sublease is subject to any matters arising from or affecting the same.
(F) Rights of tenants, as tenants only, under unrecorded leases and agreements shown in Schedule “1” (certified rent roll) attached hereto, with no rights of first refusal or options to purchase, and any matters arising from or affecting the same.
(G) Any rights or interests, which may exist or arise by reason of the following facts shown on survey map prepared by Wayne M. Teruya with ParEn, Inc. dba Park Engineering dated January 17, 2007, last revised March 12, 2007:
(1) Corner of twelve inch concrete wall extends onto Kaiulani Avenue by 0.3 feet.
(2) Building into Prince Edward Street setback by a maximum of four feet ten inches.
(3) Fifteen feet building setback line along Koa Avenue.
(4) Building into Koa Street setback by a maximum of six feet six inches.
(H) Any rights or interests, which may exist or arise out of any unrecorded easements for water, gas, electric, telephone, storm sewer and sanitary sewer services, as disclosed to the Company.
 
Sch. VI-6

[7. Fee Owned Parcel]
Any rights or interests which may exist or arise by reason of the following facts shown on survey map prepared by Wayne M. Teruya with ParEn, Inc. dba Park Engineering dated January 31, 2007, last revised March 12, 2007:
A. Six feet high chain link fence extends onto T.M.K. 2-6-23:64 by a maximum of 0.2 feet for approximately 6 feet.
B. Six feet high chain link fence extends onto T.M.K. 2-6-23:64 by a maximum of 0.2 feet for approximately 50 feet.
 
Sch. VI-7

SCHEDULE VII
CURRENT MATERIAL AGREEMENTS
None.
 
Sch. VII-1

SCHEDULE VIII
QUALIFIED KING’S VILLAGE MANAGERS
To be agreed upon post-closing.
 
Sch. VIII-1

SCHEDULE IX
QUALIFIED MANAGERS
To be agreed upon post-closing.
 
Sch. IX-1

SCHEDULE X
FORM OF MORTGAGE
See attached.
 
Sch. X-1

					
LAND COURT SYSTEM	  	REGULAR SYSTEM	
			
After Recordation Return by Mail To:	  	Pickup (    )	  	To:	
			
Latham & Watkins LLP	  		  		
885 Third Avenue	  		  		
New York, New York 10022	  		  	Total Pages:	
Attn: Tamara Katz, Esq.	  		  		
TYPE OF DOCUMENT:
LEASEHOLD MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND LEASES, AND FINANCING STATEMENT

PARTIES TO THE DOCUMENT:	 		
		
MORTGAGOR:	 	ADDRESS:	
[____________________________]	 	[____________________________]	
		
MORTGAGEE:	 	ADDRESS:	
SDI, INC.	 	[____________________________]	
		
TAX MAP KEY NOS.:	 		
[____________________________]	 		

THIS LEASEHOLD MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES, AND FINANCING STATEMENT (this “ Security Instrument ”) is made as of the      day of June, 2008, by [MORTGAGOR] , a [                                           ] , having its principal place of business at [                                           ] , as mortgagor (“ Mortgagor ”) to SDI, INC., a Nevada corporation, having its place of business at c/o Hyatt Corporation, 71 South Wacker Drive, Chicago, Illinois 60606, 12th Floor, Attention: General Counsel, as mortgagee (“ Lender ”).
WITNESSETH:
WHEREAS, reference is made to the Senior Loan Agreement, dated as of the date hereof (as it may be amended, supplemented or otherwise modified, the “ Loan Agreement ”; all capitalized terms used herein and not defined herein, shall have the meanings ascribed to them in the Loan Agreement) entered into by and among W2007 WKH SENIOR BORROWER, LLC , a Delaware limited liability company (“ Borrower ”) and Lender;
WHEREAS, pursuant to the Loan Agreement, Lender this day made a loan to Borrower the principal sum of Two Hundred Seventy Seven Million Five Hundred Thousand and No/100 Dollars ($277,500,000.00) (the “ Loan ”), the Loan being evidenced by that certain Promissory Note, dated as of the date hereof, made by Borrower in favor of Lender (such Promissory Note, together with all extensions, renewals, replacements, restatements, amendments, supplements, severances or modifications thereof being hereinafter referred to as the “ Note ”) (the Loan Agreement, the Note, this Security Instrument, and all other documents evidencing or securing the Debt (including all additional mortgages, deeds to secure debt and assignments of rents and leases) or executed or delivered in connection therewith pursuant to which any obligation is assumed or incurred to or for the benefit of Lender, are hereinafter referred to collectively as the “ Loan Documents ”);
WHEREAS, Borrower directly owns a controlling interest in Mortgagor, as a result of which Mortgagor is a direct or indirect beneficiary of the Loan under the Loan Agreement whether or not Mortgagor is a party to the Loan Agreement;
WHEREAS, in order to induce Lender to make the Loan to Borrower, Mortgagor and certain other parties have delivered to Lender the Debt Guaranty, dated as of the date hereof, pursuant to which Mortgagor guarantees to Lender the performance by Borrower of all of Borrower’s obligations under the Loan Documents (the “Debt Guaranty”);
WHEREAS, in order to secure Mortgagor’s obligations and agreements under the Debt Guaranty, Mortgagor has agreed to deliver to Lender a mortgage on Mortgagor’s leasehold interest in the Property (as defined below), each and every term of the Debt Guaranty, including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Security Instrument;
WHEREAS, Mortgagor is the holder of a leasehold estate in and to all of the real estate located in the City and County of Honolulu and State of Hawaii (the “ State ”), and more fully described in Exhibit A attached hereto, pursuant to the Lease Agreements described on Exhibit B attached hereto and made a part hereof;
 
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WHEREAS, in consideration of the making of the Loan and other accommodations of Lender as set forth in the Loan Agreement, Mortgagor has agreed, subject to the terms and conditions hereof and each other Loan Document, to secure its obligations under the Debt Guaranty as set forth herein.
NOW, THEREFORE , in consideration of Ten Dollars ($10) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, and the promises and agreements contained in this Security Instrument, the parties covenant and agree as follows:
GRANTS OF SECURITY
Property Mortgaged. Mortgagor does hereby irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to and grant WITH POWER OF SALE a security interest to Lender and its successors and assigns all of Mortgagor’s right, title and interest in, to and under the following property, rights, interests and estates now leased, or hereafter acquired by Mortgagor (collectively, the “ Property ”):
Land . The leasehold estates in the real property described in Exhibit A created by the Subject Leases (as defined below), together with any greater or additional estate therein as hereafter may be acquired by Mortgagor (the “ Land ”);
Subject Leases . Those certain Leases described on Exhibit B , as the same may be amended, restated, renewed or extended in the future in compliance with this Security Instrument, including any options to purchase, extend or renew provided for in such Leases (collectively, the “ Subject Leases ”) and any non-disturbance, attornment and recognition agreement benefiting Mortgagor with respect to each of the Subject Leases, together with all credits, deposits, privileges, rights, estates, title and interest of Mortgagor as tenant under each of the Subject Leases (including all rights of Mortgagor to treat each of the Subject Leases as terminated under Section 365(h) (a “ 365(h) Election ”)) of the Bankruptcy Code, or any other state or federal insolvency, reorganization, moratorium or similar law for the relief of debtors (a “ Bankruptcy Law ”), or any comparable right provided under any other Bankruptcy Law, together with all rights, remedies and privileges related thereto, and all books and records that contain records of payments of rent or security made under each of the Subject Leases and all of Mortgagor’s claims and rights to the payment of damages that may arise from Lessor’s failure to perform under each of the Subject Leases, or rejection of each of the Subject Leases under any Bankruptcy Law (a “ Lease Damage Claim ”), Lender having the right, at any time and from time to time, to notify Lessor of the rights of Lender hereunder;
Additional Land . All additional lands, estates and development rights hereafter acquired by Mortgagor for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Security Instrument;
 
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Improvements . The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (the “ Improvements ”);
Easements . All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Mortgagor of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto;
Fixtures and Personal Property . All machinery, furnishings, equipment, fixtures, inventory and articles of personal property and accessions thereof and renewals, replacements thereof and substitutions therefor (including, but not limited to, beds, bureaus, chiffonniers, chests, chairs, desks, lamps, mirrors, bookcases, tables, rugs, carpeting, drapes, draperies, curtains, shades, venetian blinds, screens, paintings, hangings, pictures, divans, couches, luggage carts, luggage racks, stools, sofas, chinaware, linens, pillows, blankets, glassware, silverware, foodcarts, cookware, dry cleaning facilities, dining room wagons, keys or other entry systems, bars, bar fixtures, liquor and other drink dispensers, icemakers, radios, television sets, intercom and paging equipment, electric and electronic equipment, dictating equipment, private telephone systems, medical equipment, potted plants, heating, lighting and plumbing fixtures, fire prevention and extinguishing apparatus, cooling and air-conditioning systems, elevators, escalators, fittings, plants, apparatus, stoves, ranges, refrigerators, laundry machines, tools, machinery, engines, dynamos, motors, boilers, incinerators, switchboards, conduits, compressors, vacuum cleaning systems, floor cleaning, waxing and polishing equipment, call systems, brackets, electrical signs, bulbs, bells, ash and fuel, conveyors, cabinets, lockers, shelving, spotlighting equipment, dishwashers, garbage disposals, washers and dryers), other customary hotel equipment and other tangible property of every kind and nature whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, and usable in connection with the present or future operation and occupancy of the Land and the Improvements and all building equipment, materials and supplies of any nature whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter located upon the Land and the Improvements, or appurtenant thereto, or usable in connection with the present or future operation and occupancy of the Land and the Improvements (collectively, the “ Personal Property ”), and the right, title and interest of Mortgagor in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the State or States where any of the Property is located (the “ Uniform Commercial Code ”), superior in lien to the lien of this Security Instrument and all proceeds and products from the disposition or use of the above;
 
4

Leases and Rents . All leases, tenancies, licenses, subleases, rental agreements, registration cards and agreements, if any, and other agreements, whether or not in writing, providing for the use, enjoyment or occupancy of the Land and/or the Improvements heretofore or hereafter entered into and all extensions, amendments and modifications thereto, whether before or after the filing by or against Mortgagor of any petition for relief under Title 11 U.S.C.A. § 101 et seq. and the regulations adopted and promulgated thereto (as the same may be amended from time to time, the “ Bankruptcy Code ”) (the “ Tenant Leases ”) and all right, title and interest of Mortgagor, its successors and assigns therein and thereunder, including, without limitation, any guaranties of the lessees’ obligations thereunder, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, payments in connection with any termination, cancellation or surrender of any Tenant Lease, revenues, issues, registration fees, if any, and profits (including all oil and gas or other mineral royalties and bonuses) from the Land, the Improvements, all income, rents, room rates, issues, profits, revenues, deposits, accounts and other benefits from the operation of the hotel on the Land and/or the Improvements, including, without limitation, all revenues and credit card receipts collected from guest rooms, restaurants, bars, mini-bars, meeting rooms, banquet rooms and recreational facilities and otherwise, all receivables, customer obligations, installment payment obligations and other obligations now existing or hereafter arising or created out of sale, lease, sublease, license, concession or other grant of the right of the possession, use or occupancy of all or any portion of the Land and/or Improvements, or personalty located thereon, or rendering of services by Mortgagor or any operator or manager of the hotel or the commercial space located in the Improvements or acquired from others including, without limitation, from the rental of any office space, retail space, commercial space, guest room or other space, halls, stores or offices, including any deposits securing reservations of such space, exhibit or sales space of every kind, license, lease, sublease and concession fees and rentals, health club membership fees, food and beverage wholesale and retail sales, service charges, vending machine sales and proceeds, if any, from business interruption or other loss of income insurance relating to the use, enjoyment or occupancy of the Land and/or the Improvements whether paid or accruing before or after the filing by or against Mortgagor of any petition for relief under the Bankruptcy Code and all proceeds from the sale or other disposition of the Tenant Leases (the “ Rents ”) and the right to receive and apply the Rents to the payment of the Debt;
Condemnation Awards . All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including but not limited to any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property;
Insurance Proceeds . All proceeds of and any unearned premiums on any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property;
Tax Certiorari . All refunds, rebates or credits in connection with a reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction;
 
5

Conversion . All proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims;
Rights . The right, in the name and on behalf of Mortgagor, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property;
Agreements . To the extent assignable, all agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Mortgagor therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Mortgagor thereunder;
Intangibles . All trade names, trademarks, servicemarks, logos, copyrights, goodwill, books and records, tenant or guest lists, advertising materials, telephone exchange numbers identified in such materials and all other general intangibles relating to or used in connection with the operation of the Property;
Accounts . All Accounts, Account Collateral, reserves, escrows and deposit accounts maintained by Mortgagor with respect to the Property including, without limitation, the Lockbox Account, and all securities, investment property and financial assets held therein from time to time and all proceeds, products, distributions or dividends or substitutions thereon and thereof;
Causes of Action . All causes of action and claims (including, without limitation, all causes of action or claims arising in tort, by contract, by fraud or by concealment of material fact) against any Person for damages or injury to the Property or in connection the Property (“ Cause of Action ”);
Accounts Receivables . All right, title and interest of Mortgagor arising from the operation of the Land and the Improvements in and to all payments for goods or property sold or leased or for services rendered, whether or not yet earned by performance, and not evidenced by an instrument or chattel paper (hereinafter referred to as “ Accounts Receivable ”) including, without limiting the generality of the foregoing, (i) all accounts, contract rights, book debts, and notes arising from the operation of a hotel on the Land and the Improvements or arising from the sale, lease or exchange of goods or other property and/or the performance of services, (ii) Mortgagor’s rights to payment from any consumer credit/charge card organization or entities which sponsor and administer such cards as the American Express Card, the Visa Card and the MasterCard, (iii) Mortgagor’s rights in, to and under all purchase orders for goods, services or other property, (iv) Mortgagor’s rights to any goods, services or other property represented by any of the foregoing, (v) monies due to or to become due to Mortgagor under all contracts for the sale, lease or exchange of goods or other property and/or the performance of services including the right to payment of any interest or finance charges in respect thereto (whether or not yet earned by performance on the part of Mortgagor) and (vi) all collateral security and guaranties of any kind given
 
6

by any person or entity with respect to any of the foregoing. Accounts Receivable shall include those now existing or hereafter created, substitutions therefor, proceeds (whether cash or non-cash, movable or immovable, tangible or intangible) received upon the sale, exchange, transfer, collection or other disposition or substitution thereof and any and all of the foregoing and proceeds therefrom; and
Other Rights . Any and all other rights of Mortgagor in and to the items set forth in Subsections (a) through (r) above.
Assignment of Rents and Leases. Mortgagor hereby absolutely and unconditionally assigns to Lender, Mortgagor’s right, title and interest in and to all current and future Tenant Leases and Rents; it being intended by Mortgagor that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 1.2, Section 9.1(h) herein and the Loan Agreement, Lender grants to Mortgagor a revocable license to collect and receive the Rents. Mortgagor shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.
Security Agreement. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Mortgagor in the Property. By executing and delivering this Security Instrument, Mortgagor hereby grants to Lender, as security for the Obligations, (as herein defined) a security interest in the Personal Property, the Accounts, and the Account Collateral to the full extent that the Personal Property, the Accounts and the Account Collateral may be subject to the Uniform Commercial Code.
Pledge of Monies Held. Mortgagor hereby pledges to Lender any and all monies now or hereafter held by Lender, including, without limitation, any sums deposited in the Reserve Funds, the Accounts, Net Proceeds and Awards, as additional security for the Obligations until expended or applied as provided in the Loan Agreement or this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto and to the use and benefit of Lender and its successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note and this Security Instrument, shall well and truly perform the Other Obligations (as herein defined) as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein, in the Note and in the Loan Agreement, these presents and the estate hereby granted shall cease, terminate and be void.
 
7

DEBT AND OBLIGATIONS SECURED
Debt. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing all of Mortgagor’s obligations and agreements under the Debt Guaranty (directly), and all of Borrower’s obligations and agreements under the Loan Agreement, with respect to the Debt, including without limitation,
the payment of the indebtedness evidenced by the Note in lawful money of the United States of America;
the payment of interest, default interest, late charges and other sums, as provided in the Note, the Loan Agreement, this Security Instrument or the other Loan Documents;
the payment of the Breakage Costs;
the payment of all other moneys agreed or provided to be paid by Borrower in the Note, the Loan Agreement, this Security Instrument and the other Loan Documents;
the payment of all moneys agreed or provided to be paid by Mortgagor under the Debt Guaranty, this Security Instrument and the Loan Documents;
the payment of all sums advanced pursuant to the Loan Agreement or this Security Instrument to protect and preserve the Property and the lien and the security interest created hereby; and
the payment of all sums advanced and costs and expenses incurred by Lender in connection with the Debt or any part thereof, any modification, amendment, renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Mortgagor, Borrower or Lender.
Other Obligations. This Security Instrument and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (the “ Other Obligations ”):
the performance of all other obligations of Mortgagor contained herein;
the performance of all other obligations of Mortgagor contained in the Debt Guaranty;
the performance of each obligation of Mortgagor contained in any other Loan Document; and
the performance of each obligation of Mortgagor contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Debt Guaranty, Note, the Loan Agreement, this Security Instrument or the other Loan Documents.
 
8

Debt and Other Obligations. Mortgagor’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively below as the “ Obligations .”
MORTGAGOR COVENANTS
Mortgagor covenants and agrees that:
Payment of Debt. Mortgagor will pay the Debt at the time and in the manner provided in the Debt Guaranty, the Note, the Loan Agreement and in this Security Instrument.
Incorporation by Reference. All the covenants, conditions and agreements contained in the Debt Guaranty, the Loan Agreement, the Note and all and any of the other Loan Documents, are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein.
Insurance. Mortgagor shall obtain and maintain, or cause to be maintained, insurance in full force and effect at all times with respect to Mortgagor and the Property as required pursuant to the Loan Agreement.
Payment of Taxes, etc. Mortgagor shall pay all Taxes and Other Charges in accordance with the terms of the Loan Agreement.
Maintenance and Use of Property. Mortgagor shall cause the Property to be maintained in a good and safe condition and repair in accordance with the terms of the Loan Agreement. Subject to the terms of the Loan Agreement, the Improvements and the Personal Property shall not be removed, demolished or materially altered or expanded (except for normal replacement of the Personal Property) without the consent of Lender. Subject to the terms of the Loan Agreement, Mortgagor shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any Casualty, or become damaged, worn or dilapidated or which may be affected by any Condemnation and shall complete and pay for any structure at any time in the process of construction or repair on the Land. Subject to the terms of the Loan Agreement, Mortgagor shall not initiate, join in, acquiesce in, or consent to any change in any private restrictive covenant, zoning law or other public or private restriction, limiting or defining the uses which may be made of the Property or any part thereof. If under applicable zoning provisions the use of all or any portion of the Property is or shall become a nonconforming use, Mortgagor will not cause or permit the nonconforming use to be discontinued or the nonconforming Improvement to be abandoned without the express written consent of Lender, such consent not to be unreasonably withheld or delayed.
Waste. Mortgagor shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Security Instrument. Mortgagor will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof.
 
9

Payment For Labor and Materials. Mortgagor will promptly pay when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with the Property and never permit to exist in respect of the Property or any part thereof, beyond the due date hereof or, in the case of Taxes, beyond the delinquency date thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof, except for the Permitted Encumbrances and other liens permitted pursuant to the Loan Documents, if any; provided that, after prior written notice to Lender, Mortgagor, at its own expense, may contest such bills or costs by appropriate legal proceeding in accordance with the terms of the Loan Agreement.
Performance of Other Agreements. Mortgagor shall observe and perform each and every term to be observed or performed by Mortgagor pursuant to the terms of the Debt Guaranty, any Loan Documents and any agreement or recorded instrument affecting or pertaining to the Property.
Change of Name, Identity or Structure. Except as may be permitted under the Loan Agreement, Mortgagor will not change Mortgagor’s name, identity (including its trade name or names) or corporate, partnership or other structure without first obtaining the prior written consent of Lender. Mortgagor hereby authorizes Lender, prior to or contemporaneously with the effective date of any such change, to file any financing statement or financing statement change required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, Mortgagor shall execute a certificate in form satisfactory to Lender listing the trade names under which Mortgagor intends to operate the Property, and representing and warranting that Mortgagor does business under no other trade name with respect to the Property.
Property Use. The Property shall be used only for a hotel, shopping center and any ancillary uses relating thereto, including, but not limited to, retail, restaurants and lounges and convention center and parking facilities, and for no other uses without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion.
REPRESENTATIONS AND WARRANTIES
Mortgagor represents and warrants to Lender that:
Warranty of Title. Mortgagor has good title to the Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey the same and that Mortgagor leases the Property free and clear of all liens, encumbrances and charges whatsoever except for the Permitted Encumbrances, and such other liens as are permitted by the Loan Documents. The Permitted Encumbrances do not and will not materially adversely affect or interfere with the value (as encumbered by this Security Instrument and the Permitted Encumbrances), or materially adversely affect or interfere with the current use or operation, of the Property, or the
 
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security intended to be provided by this Security Instrument or the ability of Mortgagor to pay any amount owing under the Debt Guaranty, this Security Instrument or the Loan Documents or to perform its obligations thereunder. This Security Instrument, when properly recorded in the appropriate records, together with the Assignment of Leases and any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, perfected first priority lien on that part of the Property constituting real property, subject only to Permitted Encumbrances and (ii) to the extent that a security interest therein may be perfected by the filing of financing statements under the Uniform Commercial Code, perfected security interests in and to, and perfected collateral assignments of, all personalty (including the Tenant Leases, to the extent that they constitute personalty subject to the Uniform Commercial Code), all in accordance with the terms thereof, subject only to Permitted Encumbrances. The Assignment of Leases, when properly recorded in the appropriate records, creates a valid first priority assignment of, or a valid first priority security interest in, certain rights under the related Tenant Leases, subject only to a license granted to Mortgagor to exercise certain rights and to perform certain obligations of the lessor under such Tenant Leases, including the right to operate the Property. No Person other than Mortgagor owns any interest in any payments due under such Tenant Leases that is superior to or of equal priority with the Lender’s interest therein. Mortgagor shall forever warrant, defend and preserve the title and the validity and priority of the lien of this Security Instrument and shall forever warrant and defend the same to Lender against the claims of all persons whomsoever.
OBLIGATIONS AND RELIANCES
Relationship of Mortgagor and Lender. The relationship between Mortgagor and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Mortgagor, and no term or condition of any of the Debt Guaranty, the Loan Agreement, the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Mortgagor and Lender to be other than that of debtor and creditor.
No Reliance on Lender. The members, general partners, principals and (if Mortgagor is a trust) beneficial owners of Mortgagor are experienced in the ownership and operation of properties similar to the Property, and Mortgagor and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property. Mortgagor is not relying on Lender’s expertise, business acumen or advice in connection with the Property.
No Lender Obligations. (a) Notwithstanding the provisions of Section 1.1(g), (m) and (n) or Section 1.2 hereof, Lender is not undertaking the performance of (i) any obligations under the Tenant Leases; or (ii) any obligations under such agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents referenced therein.
By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Security Instrument, the Debt Guaranty, the Loan Agreement, the Note or the other Loan Documents, including without limitation, any officer’s certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender.
 
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FURTHER ASSURANCES
Recording of Security Instrument, etc. Mortgagor forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Mortgagor will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, the Debt Guaranty, the Loan Agreement, this Security Instrument, the other Loan Documents, and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Instrument, the other Loan Documents, or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do.
Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the Property and rights hereby deeded, mortgaged, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Mortgagor may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Legal Requirements. Mortgagor hereby authorizes Lender to file one or more financing statements and, promptly following demand, will execute and deliver, and, if Mortgagor fails to do so within ten (10) days after written request by Lender, Mortgagor hereby authorizes Lender to, execute in the name of Mortgagor to the extent Lender may lawfully do so, one or more chattel mortgages or other instruments, to evidence more effectively the security interest of Lender in the Property or any Collateral. Mortgagor grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity, including without limitation such rights and remedies available to Lender pursuant to this Section 6.2.
Changes in Tax, Debt Credit and Documentary Stamp Laws.
 
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If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property (other than the inclusion of such amounts as income for income tax purposes or taxes on Lender’s capital), Mortgagor will pay the tax, with interest and penalties thereon, if any. If Lender is advised by counsel chosen by it that the payment of tax by Mortgagor would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury, then Lender shall have the option, exercisable by written notice of not less than one hundred twenty (120) days to declare the Debt immediately due and payable, without premium or penalty.
Mortgagor will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, exercisable by written notice of not less than ninety (90) days, to declare the Debt immediately due and payable.
If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, the Debt Guaranty, the Loan Agreement, this Security Instrument, or any of the other Loan Documents or impose any other tax or charge on the same, Mortgagor will pay for the same, with interest and penalties thereon, if any.
Replacement Documents. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Documents, Borrower and / or Mortgagor, as applicable, will issue, in lieu thereof, a replacement Note or other Loan Documents, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Documents in the same principal amount thereof and otherwise of like tenor.
Performance at Borrower’s Expense. Borrower acknowledges and confirms that Lender shall impose certain customary and reasonable administrative processing and/or commitment fees in connection with (a) the release or substitution of collateral, (b) obtaining certain consents, waivers and approvals with respect to the Property, or (c) the review of any Tenant Lease or proposed Tenant Lease or the preparation or review of any subordination, non-disturbance agreement (the occurrence of any of the above shall be called an “ Event ”). Borrower further acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of the Property or any part thereof, whether required by law, regulation, Lender or any governmental or quasi-governmental authority, provided that, if requested by Lender, Borrower shall not be required to pay for such reappraisal more than once every year unless an Event of Default exists. Borrower hereby acknowledges and agrees to pay, within ten (10) Business Days after demand, all such reasonable fees (as the same may be increased or decreased from time to time), and any reasonable additional fees of a similar type or nature which may be imposed by Lender from time to time, upon the occurrence of any Event. Wherever it is provided for herein that Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, all reasonable legal fees and disbursements of Lender.
 
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Legal Fees. Mortgagor shall pay to Lender on demand any and all expenses, including reasonable legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Property or in collecting any amount payable hereunder or in enforcing its rights hereunder with respect to the Property (including commencing any foreclosure action), whether or not any legal proceeding is commenced hereunder or thereunder, together with interest thereon at the Default Rate from the date paid or incurred by Lender until such expenses are paid by Mortgagor.
DUE ON SALE/ENCUMBRANCE
No Sale/Encumbrance. Neither Mortgagor nor any Restricted Party shall Transfer the Property or any part thereof or any interest therein or permit or suffer the Property or any part thereof or any interest therein to be Transferred other than as expressly permitted pursuant to the terms of the Debt Guaranty and the Loan Agreement.
PREPAYMENT
Prepayment. The Debt may not be prepaid in whole or in part except in accordance with the express terms and conditions of the Loan Agreement.
RIGHTS AND REMEDIES
Remedies. Upon the occurrence and during the continuation of any Event of Default, Mortgagor agrees that subject to the provisions of the Loan Documents, Lender may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Mortgagor and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender:
declare the entire unpaid Debt or Guarantors’ Obligations (as defined in the Debt Guaranty) to be immediately due and payable;
institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner;
with or without entry, to the extent permitted and pursuant to the procedures provided by Applicable Law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority;
sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Mortgagor therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, in one or more parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law;
 
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institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Debt Guaranty or in the Loan Documents;
recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the other Loan Documents;
apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Mortgagor, the Borrower, any Guarantor or of any person, firm or other entity liable for the payment of the Debt;
subject to any Applicable Law, the license granted to Mortgagor under Section 1.2 hereof shall automatically be revoked and Lender may enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Mortgagor and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Mortgagor and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Mortgagor agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct business thereon; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Mortgagor with respect to the Property, whether in the name of Mortgagor or otherwise, including, without limitation, the right to make, cancel, enforce or modify Tenant Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v) require Mortgagor to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Mortgagor; (vi) require Mortgagor to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Mortgagor may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, Insurance Premiums and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees;
exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of any Collateral (including, without limitation, the Personal Property) or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral (including without limitation, the Personal Property), and (ii) request Mortgagor at its
 
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expense to assemble the Collateral, including without limitation, the Personal Property, and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral, including without limitation, the Personal Property, sent to Mortgagor in accordance with the provisions hereof at least ten (10) days prior to such action, shall constitute commercially reasonable notice to Mortgagor;
apply any sums then deposited in the Accounts and any other sums held in escrow or otherwise by Lender in accordance with the terms of this Security Instrument, the Loan Agreement, or any other Loan Documents to the payment of the following items in any order in its sole discretion:
Taxes and Other Charges;
Insurance Premiums;
interest on the unpaid principal balance of the Note;
amortization of the unpaid principal balance of the Note; or
all other sums payable pursuant to the Debt Guaranty, this Security Instrument and the Loan Documents, including without limitation advances made by Lender pursuant to the terms of this Security Instrument;
after completion of foreclosure (by power of sale or otherwise) surrender the Policies, collect the unearned Insurance Premiums and apply such sums as a credit on the Debt in such priority and proportion as Lender in its discretion shall deem proper, and in connection therewith, Mortgagor hereby appoints Lender as agent and attorney-in-fact (which is coupled with an interest and is therefore irrevocable) for Mortgagor to collect such Insurance Premiums;
apply the undisbursed balance of any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its discretion;
foreclose by power of sale or otherwise and apply the proceeds of any recovery to the Debt in accordance with Section 9.2 or to any deficiency under this Security Instrument;
exercise all rights and remedies under any Causes of Action, whether before or after any sale of the Property by foreclosure, power of sale, or otherwise and apply the proceeds of any recovery to the Debt in accordance with Section 9.2 or to any deficiency under this Security Instrument; or
pursue such other remedies as Lender may have under Applicable Law.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority.
 
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Application of Proceeds. The purchase money, proceeds and avails of any disposition of the Property, or any part thereof, or any other sums collected by Lender pursuant to the Note, this Security Instrument, the Loan Agreement, or the other Loan Documents, may be applied by Lender to the payment of the Debt as provided in Section 8.2(d) of the Loan Agreement.
Right to Cure Defaults. Upon the occurrence and during the continuation of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Mortgagor and without releasing Mortgagor from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose this Security Instrument or collect the Debt. The cost and expense of any cure hereunder (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided below, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default shall bear interest at the Default Rate for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender and shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor.
Actions and Proceedings. After the occurrence and during the continuance of an Event of Default, Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Mortgagor, which Lender, in its discretion, decides should be brought to protect its interest in the Property. Prior to the occurrence of an Event of Default, Mortgagor will give Lender notice of any action or proceeding which could have a material adverse effect on the value or use of the Property.
Recovery of Sums Required To Be Paid. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for an Event of Default or Events of Default by Borrower existing at the time such earlier action was commenced.
Other Rights, etc. (a) The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Mortgagor shall not be relieved of Mortgagor’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Mortgagor or Borrower to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, the Loan Agreement, this Security Instrument or the other Loan Documents.
 
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It is agreed that the risk of loss or damage to the Property is on Mortgagor, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to the Property or any other Collateral not in Lender’s possession.
Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to foreclose this Security Instrument. The rights of Lender under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity.
Right to Release Any Portion of the Property. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property.
Violation of Laws. Mortgagor shall cause the Property to be in compliance with all applicable Legal Requirements, to the extent required by the Loan Agreement.
Right of Entry. Subject to the terms of the Loan Agreement, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times.
Subrogation. If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, and the performance and discharge of the Obligations.
 
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INDEMNIFICATIONS
General Indemnification. Mortgagor shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following, except, in each case, to the extent arising out of any Indemnified Party’s gross negligence or willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (b) any use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (c) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (d) any failure of the Property to be in compliance with any Legal Requirements; (e) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Tenant Lease; or (f) the payment of any commission, charge or brokerage fee to anyone which may be payable (other than by reason of a contract with Lender) in connection with the funding of the Loan evidenced by the Note and secured by this Security Instrument. Any amounts payable to Lender by reason of the application of this Section 10.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid.
Mortgage and/or Intangible Tax. Mortgagor shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Security Instrument, the Debt Guaranty, the Loan Agreement, the Note or any other Loan Document, but excluding any income, franchise or other similar taxes.
Environmental Indemnity. Simultaneously with this Security Instrument, Mortgagor, Borrower and Guarantor have executed and delivered the Environmental Indemnity.
WAIVERS
Waiver of Counterclaim. Mortgagor hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Debt Guaranty, any of the Loan Documents, or the Obligations.
Marshalling and Other Matters. Mortgagor hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Mortgagor hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Mortgagor, and on behalf of each Person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by Legal Requirements.
 
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Waiver of Notice. Mortgagor shall not be entitled to any notices of any nature whatsoever from Lender except (a) with respect to matters for which this Security Instrument, the Debt Guaranty, or any Loan Document, specifically and expressly provides for the giving of notice by Lender to Mortgagor, and (b) with respect to matters for which Lender is required by any Applicable Law to give notice, and, to the extent permitted by law, Mortgagor hereby expressly waives the right to receive any notice from Lender with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender to Mortgagor.
Waiver of Statute of Limitations. Mortgagor hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its Other Obligations.
Sole Discretion of Lender. Wherever pursuant to this Security Instrument (a) Lender exercises any right given to it to approve or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender in the exercise of its good faith business judgment, except as may be otherwise expressly and specifically provided herein or in any of the other Loan Documents.
SUBMISSION TO JURISDICTION
Submission to Jurisdiction. WITH RESPECT TO ANY CLAIM OR ACTION ARISING HEREUNDER OR UNDER THIS SECURITY INSTRUMENT, THE NOTE, OR THE OTHER LOAN DOCUMENTS, MORTGAGOR (A) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM ANY THEREOF, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING ON VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS SECURITY INSTRUMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS INSTRUMENT WILL BE DEEMED TO PRECLUDE LENDER FROM BRINGING AN ACTION OR PROCEEDING WITH RESPECT HERETO IN ANY OTHER JURISDICTION.
APPLICABLE LAW
CHOICE OF LAW. THIS SECURITY INSTRUMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
 
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STATE OF NEW YORK; PROVIDED, HOWEVER, THAT MATTERS AFFECTING TITLE TO OR INTEREST IN THE PROPERTY, INCLUDING THE CREATION, PERFECTION AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS THEREIN AND HEREIN GRANTED AND THE ENFORCEMENT OF REMEDIES WITH RESPECT TO ANY LIEN ON THE PROPERTY SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF HAWAII.
Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any Legal Requirements.
DEFINITIONS
General Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Mortgagor” shall mean “each Mortgagor and any subsequent owner or owners of a leasehold interest in the Property or any part thereof,” the word “Lender” shall mean “Lender and any subsequent holder of the Note,” the word “Note,” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “Property” shall include any portion of the Property and any interest therein, and the phrases “legal fees”, “attorneys’ fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Tenant Leases and the Rents and enforcing its rights hereunder.
Headings, etc. The headings and captions of various Articles and Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
MISCELLANEOUS PROVISIONS
No Oral Change. This Security Instrument and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Mortgagor or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
Section 10.24 Remedies Cumulative; Waivers. The rights, powers and remedies of Lender under this Security Instrument shall be cumulative and not exclusive of any other right, power or remedy which Lender may have against Borrower, Mortgagor or any other party to any Loan Document, pursuant to this Security Instrument or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise, at such time and in such order as Lender may determine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing
 
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upon an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one or more Defaults or Events of Default with respect to Borrower, Mortgagor or any other party to any Loan Document, shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower, Mortgagor or any other party to any Loan Document, or to impair any remedy, right or power consequent thereon.
Liability. If Mortgagor consists of more than one person, the obligations and liabilities of each such person hereunder shall, except to the extent otherwise expressly provided in the Loan Documents, be joint and several. This Security Instrument shall be binding upon and inure to the benefit of Mortgagor and Lender and their respective successors and assigns forever.
Inapplicable Provisions. If any term, covenant or condition of this Security Instrument or any other Loan Document, is held to be invalid, illegal or unenforceable in any respect, the Note and this Security Instrument or the other Loan Documents, as the case may be, shall be construed without such provision.
Duplicate Originals; Counterparts. This Security Instrument may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Security Instrument may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Security Instrument. The failure of any party hereto to execute this Security Instrument, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
Notices. All notices required or permitted under this Security Instrument shall be given and be effective in accordance with Section 10.6 of the Loan Agreement.
Fixture filing. This Security Instrument shall also constitute a “fixture filing” for the purposes of the Uniform Commercial Code against all of the Property that is or is to become fixtures. Information concerning the security interest herein granted may be obtained at the addresses of “Debtor” (Mortgagor) and “Secured Party” (Lender) as set forth in the first paragraph of this Security Instrument.
leasehold provisions
Mortgagor represents, warrants and agrees as follows:
Mortgagor has delivered to Lender a true, correct and complete copy of the Subject Lease, including all amendments and modifications, written or oral, existing as of the date hereof;
 
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Mortgagor hereby reaffirms the representations made in Section 4.1.41 of the Loan Agreement; and
Mortgagor shall comply with the provisions of Section 5.1.22 of the Loan Agreement, as they relate to each of the Subject Leases.
Treatment of Lease in Bankruptcy.
(a) If the Lessor rejects or disaffirms, or seeks or purports to reject or disaffirm, any Subject Lease pursuant to any Bankruptcy Law, then Mortgagor shall not exercise the 365(h) Election except as otherwise provided in this paragraph. To the extent permitted by law, Mortgagor shall not suffer or permit the termination of any Subject Lease by exercise of the 365(h) Election or otherwise without Lender’s consent. Mortgagor acknowledges that because each of the Subject Leases is a primary element of Lender’s security for the Obligations secured hereunder, it is not anticipated that Lender would consent to termination of any Subject Lease. If Mortgagor makes any 365(h) Election in violation of this Security Instrument, then such 365(h) Election shall be void and of no force or effect.
(b) Mortgagor hereby assigns to Mortgagee the 365(h) Election with respect to each of the Subject Leases until the Obligations secured hereunder have been satisfied in full. Mortgagor acknowledges and agrees that the foregoing assignment of the 365(h) Election and related rights is one of the rights that Mortgagee may use at any time to protect and preserve Mortgagee’s other rights and interests under this Security Instrument. Mortgagor further acknowledges that exercise of the 365(h) Election in favor of terminating any Subject Lease would constitute waste prohibited by this Security Instrument. Mortgagor acknowledges and agrees that the 365(h) Election is in the nature of a remedy available to Mortgagor under each of the Subject Leases, and is not a property interest that Mortgagor can separate from each of the Subject Leases as to which it arises. Therefore, Mortgagor agrees and acknowledges that exercise of the 365(h) Election in favor of preserving the right to possession under each of the Subject Leases shall not be deemed to constitute Mortgagee’s taking or sale of the Land (or any element thereof) and shall not entitle Mortgagor to any credit against the Obligations secured hereunder or otherwise impair Mortgagee’s remedies.
(c) Mortgagor acknowledges that if the 365(h) Election is exercised in favor of Mortgagor’s remaining in possession under any Subject Lease, then Mortgagor’s resulting occupancy rights, as adjusted by the effect of Section 365 of the Bankruptcy Code, shall then be part of the Property and shall be subject to the lien of this Security Instrument.
Rejection of Lease by Lessor. I F THE L ESSOR REJECTS OR DISAFFIRMS ANY S UBJECT L EASE OR PURPORTS OR SEEKS TO DISAFFIRM ANY SUCH S UBJECT L EASE PURSUANT TO ANY B ANKRUPTCY L AW , THEN :
Mortgagor shall remain in possession of the Land demised under any such Subject Leases and shall perform all acts necessary for Mortgagor to remain in such possession for the unexpired term of any such Subject Lease (including all renewals), whether the then existing terms and provisions of any such Subject Lease require such acts or otherwise; and
 
23

All the terms and provisions of this Security Instrument and the lien created by this Security Instrument shall remain in full force and effect and shall extend automatically to all of Mortgagor’s rights and remedies arising at any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of Mortgagor’s rights to remain in possession of the Land.
Assignment of Claims to Lender. M ORTGAGOR , IMMEDIATELY UPON LEARNING THAT THE L ESSOR HAS FAILED TO PERFORM THE TERMS AND PROVISIONS UNDER ANY S UBJECT L EASE ( INCLUDING BY REASON OF A REJECTION OR DISAFFIRMANCE OR PURPORTED REJECTION OR DISAFFIRMANCE OF ANY SUCH S UBJECT L EASE PURSUANT TO ANY B ANKRUPTCY L AW ), SHALL NOTIFY L ENDER OF ANY SUCH FAILURE TO PERFORM . M ORTGAGOR UNCONDITIONALLY ASSIGNS , TRANSFERS , AND SETS OVER TO L ENDER ANY AND ALL L EASE D AMAGE C LAIMS . T HIS ASSIGNMENT CONSTITUTES A PRESENT , IRREVOCABLE , AND UNCONDITIONAL ASSIGNMENT OF THE L EASE D AMAGE C LAIMS , AND SHALL CONTINUE IN EFFECT UNTIL THE O BLIGATIONS SECURED HEREUNDER HAVE BEEN SATISFIED IN FULL .
Offset by Mortgagor. I F PURSUANT TO S ECTION  365( H )(2) OF THE B ANKRUPTCY C ODE OR ANY OTHER SIMILAR B ANKRUPTCY L AW , M ORTGAGOR SEEKS TO OFFSET AGAINST ANY RENT UNDER ANY S UBJECT L EASE THE AMOUNT OF ANY L EASE D AMAGE C LAIM , THEN M ORTGAGOR SHALL NOTIFY L ENDER OF ITS INTENT TO DO SO AT LEAST 20 DAYS BEFORE EFFECTING SUCH OFFSET . S UCH NOTICE SHALL SET FORTH THE AMOUNTS PROPOSED TO BE SO OFFSET AND THE BASIS FOR SUCH OFFSET . I F L ENDER REASONABLY OBJECTS TO ALL OR ANY PART OF SUCH OFFSET , THEN M ORTGAGOR SHALL NOT EFFECT ANY OFFSET OF THE AMOUNTS TO WHICH L ENDER REASONABLY OBJECTS . I F L ENDER APPROVES SUCH OFFSET , THEN M ORTGAGOR MAY EFFECT SUCH OFFSET AS SET FORTH IN M ORTGAGOR ’ S NOTICE . N EITHER L ENDER ’ S FAILURE TO OBJECT , NOR ANY OBJECTION OR OTHER COMMUNICATION BETWEEN L ENDER AND M ORTGAGOR THAT RELATES TO SUCH OFFSET , SHALL CONSTITUTE L ENDER ’ S APPROVAL OF ANY SUCH OFFSET . M ORTGAGOR SHALL INDEMNIFY L ENDER AGAINST ANY OFFSET AGAINST THE RENT RESERVED IN EACH OF THE S UBJECT L EASES .
Mortgagor’s Acquisition of Interest in Leased Parcel. I F M ORTGAGOR ACQUIRES THE FEE OR ANY OTHER INTEREST IN ANY L AND OR I MPROVEMENTS ORIGINALLY SUBJECT TO ANY S UBJECT L EASE , THEN , SUCH ACQUIRED INTEREST SHALL IMMEDIATELY BECOME SUBJECT TO THE LIEN OF THIS S ECURITY I NSTRUMENT AS FULLY AND COMPLETELY , AND WITH THE SAME EFFECT , AS IF M ORTGAGOR NOW OWNED IT AND AS IF THIS S ECURITY I NSTRUMENT SPECIFICALLY DESCRIBED IT , WITHOUT NEED FOR THE DELIVERY AND / OR RECORDING OF A SUPPLEMENT TO THIS S ECURITY I NSTRUMENT OR ANY OTHER INSTRUMENT . I N THE EVENT OF ANY SUCH ACQUISITION , THE FEE AND LEASEHOLD INTERESTS IN SUCH L AND OR I MPROVEMENTS , UNLESS L ENDER ELECTS OTHERWISE IN WRITING , REMAIN SEPARATE AND DISTINCT AND SHALL NOT MERGE , NOTWITHSTANDING ANY PRINCIPLE OF LAW TO THE CONTRARY .
New Lease Issued to Agent. I F ANY S UBJECT L EASE IS FOR ANY REASON WHATSOEVER TERMINATED BEFORE THE EXPIRATION OF ITS TERM AND , PURSUANT TO ANY PROVISION OF ANY SUCH S UBJECT L EASE , L ENDER OR ITS DESIGNEE SHALL ACQUIRE FROM L ESSOR A NEW LEASE OF THE RELEVANT LEASED PREMISES , THEN M ORTGAGOR SHALL HAVE NO RIGHT , TITLE OR INTEREST IN OR TO SUCH NEW LEASE OR THE ESTATE CREATED THEREBY .
 
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STATE SPECIFIC PROVISIONS
Power of Sale. I F AN E VENT OF D EFAULT UNDER THE D EBT G UARANTY SHALL HAVE OCCURRED AND IS CONTINUING , L ENDER MAY , EITHER WITH OR WITHOUT ENTRY OR TAKING POSSESSION OF THE P ROPERTY , AND WITHOUT REGARD TO WHETHER THE O BLIGATIONS SHALL BE DUE , AND WITHOUT PREJUDICE TO THE RIGHT OF L ENDER THEREAFTER TO BRING AN ACTION FOR FORECLOSURE OR ANY OTHER ACTION FOR ANY D EFAULT OR E VENT OF D EFAULT EXISTING AT THE TIME SUCH EARLIER ACTION WAS COMMENCED , ELECT TO TREAT ALL OF THE P ROPERTY AS REAL PROPERTY AND IMMEDIATELY SELL ALL SUCH P ROPERTY , EITHER IN WHOLE OR IN PART , AT PUBLIC AUCTION IN THE S TATE OF H AWAII , AT SUCH PLACE AS MAY BE REQUIRED BY LAW , HAVING FIRST GIVEN NOTICE OF SUCH SALE BY PUBLICATION AND POSTING AS PROVIDED IN C HAPTER 667, H AWAII R EVISED S TATUTES , AS AMENDED FROM TIME TO TIME , OR SUCH OTHER NOTICE AS MAY BE REQUIRED BY APPLICABLE LAW , AND MAY ADJOURN SUCH SALE FROM TIME TO TIME BY ANNOUNCEMENT OF THE TIME AND PLACE APPOINTED FOR SUCH SALE OR ADJOURNED SALE . U PON SUCH SALE L ENDER MAY MAKE AND DELIVER TO ANY PURCHASER A GOOD AND SUFFICIENT CONVEYANCE , DEED , ASSIGNMENT OR BILL OF SALE , AND GOOD AND SUFFICIENT RECEIPTS FOR THE PURCHASE MONEY , AND DO AND PERFORM ALL OTHER ACTS AS MAY BE NECESSARY FULLY TO CARRY INTO EFFECT THIS POWER OF SALE .
Miscellaneous. M ORTGAGOR AGREES THAT THIS S ECURITY I NSTRUMENT , UPON RECORDING OR REGISTRATION IN THE REAL ESTATE RECORDS OF THE PROPER OFFICE , SHALL CONSTITUTE A “ FIXTURE FILING ” WITHIN THE MEANING OF S ECTIONS 490:9-334 AND 490:9-502 OF THE U NIFORM C OMMERCIAL C ODE WITH RESPECT TO THE PORTION OF THE P ROPERTY WHICH CONSTITUTES “ FIXTURES ” ( WITHIN THE MEANING OF S ECTION  490:9-334 OF THE U NIFORM C OMMERCIAL C ODE ).
Written Notice . T HIS S ECURITY I NSTRUMENT CONSTITUTES , AND THE M ORTGAGOR HEREBY ACKNOWLEDGES WRITTEN NOTICE FROM THE M ORTGAGEE THAT THE MORTGAGEE MAY NOT MAKE THE GRANTING OF THE LOAN EVIDENCED BY THE NOTE CONTINGENT ON THE MORTGAGOR PROCURING ANY REQUIRED INSURANCE WITH AN INSURANCE COMPANY DESIGNATED BY THE MORTGAGEE.
[The remainder of this was intentionally left blank; signatures of Borrower and Lender follow on the next page.]
 
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day and year first above written.

MORTGAGOR :	
		
By:	 	 	
	 	Name:	
	 	Title:	
	
LENDER :	
		
By:	 	SDI, INC.,	
	 	a Nevada corporation	
	 	Name:	
	 	Title:	

ACKNOWLEDGMENTS

STATE OF                              	  	)	  		
	  	)	  	ss.:	
COUNTY OF                          	  	)	  		
	  		  		
On the      day of                      2008, before me, the undersigned, a Notary Public in and for said State, personally appeared                                          , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individuals, or the persons upon behalf of which the individual acted, executed the instrument.

	
   	
Notary Public	

STATE OF                              	  	)	  		
	  	)	  	ss.:	
COUNTY OF                          	  	)	  		
	  		  		
On the      day of                      2008, before me, the undersigned, a Notary Public in and for said State, personally appeared                                          , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individuals, or the persons upon behalf of which the individual acted, executed the instrument.

	
   	
Notary Public	

EXHIBIT A

EXHIBIT B

SCHEDULE XI
TITLE ENDORSEMENTS
1. ALTA Loan – Improved Land – Restrictions, Encroachments, Minerals (as to Items I and II, Parcels First Second and Third)
2. CLTA 116.1 – Survey – Multiple Lots (as to Item I)
3. CLTA 116.1 – Survey (as to Item II, Parcels First, Second and Third)
4. ALTA 3.1 / CLTA 123.2 – Zoning – Completed Structure with Parking (as to Items I and II)
5. ALTA Loan – Uusry
6. ALTA Loan – Doing Business
7. ALTA 17 / CLTA 103.11 – Access and Entry (as to Items I and II, Parcels First Second and Third)
8. CLTA 116.7 – Subdivision
9. CLTA 116.4 – Contiguity, No Gaps or Gores – Multiple Lots (as to Item I)
10. ALTA Loan – Deleting from Exclusions from Coverage of Creditor’s Rights ( subject to Title Company Underwriter’s Review and Approval )
11. First Loss
12. Last Dollar
13. ALTA 8.1 / CLTA 110.9 – ALTA Loan – Environmental Protection Lien
14. ALTA Loan – Arbitration Deletion
15. CLTA 100.29 – Mineral Extraction
16. CLTA 116 – Address (as to Items I and II)
17. CLTA 101.3 – ALTA Loan – Mechanic’s Lien
18. ALTA 13.1 – Leasehold Loan (as to Items I and II, Parcels First and Second)
19. Tax Deed Wiping Out
 
Sch. XI-1

20. CLTA 114 – Co-Insurance
21. ALTA 16 / CLTA 128 – Mezzanine
 
Sch. XI-2

SCHEDULE XII
FORM OF ASSIGNMENT OF LEASES AND RENTS
See attached.
 
Sch. XII-1

					
LAND COURT SYSTEM	  	REGULAR SYSTEM	
After Recordation Return by Mail To:	  	Pickup  (    )	  	To:	
			
Latham & Watkins LLP	  		  		
885 Third Avenue	  		  		
New York, New York 10022	  		  	Total Pages:	
Attn: Tamara Katz, Esq.	  		  		
TYPE OF DOCUMENT:
ASSIGNMENT OF LEASES AND RENTS

PARTIES TO THE DOCUMENT:	  		
		
MORTGAGOR:	  	ADDRESS:	
[                                                           ]	  	[                                                           ]	
		
MORTGAGEE:	  	ADDRESS:	
SDI, INC.	  	[                                                           ]	

TAX MAP KEY NOS.:	  		
[                                                           ]	  		

THIS ASSIGNMENT OF LEASES AND RENTS (this “ Assignment ”) made as of the          day of July, 2008, by [W2007 WKH KING’S VILLAGE TRS, INC.] , a [Hawaii corporation], having its principal place of business at c/o Whitehall Street Global Real Estate Limited Partnership 2007, c/o Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, Attention: Whitehall Chief Financial Officer, as assignor (“ Assignor ”) to SDI, INC. , a Nevada corporation, having its place of business at c/o Hyatt Corporation, 71 South Wacker Drive, Chicago, Illinois 60606, 12th Floor, Attention: General Counsel, as assignee (“ Lender ”).
RECITALS:
This Assignment is given in connection with a loan in the principal sum of TWO HUNDRED SEVENTY SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($277,500,000.00) (the “ Loan ”) made by Lender to W2007 WKH SENIOR BORROWER, LLC, a Delaware limited liability company (“ Assignor ”), pursuant to that certain Senior Loan Agreement, dated as of the date hereof (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Loan Agreement ”; all capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement) and evidenced by the Note.
Assignor, as an affiliate of Borrower, desires to secure the performance of all of its obligations under the Debt Guaranty and the other Loan Documents.
This Assignment is given pursuant to the Loan Agreement, and payment, fulfillment, and performance by Assignor of its obligations under the Debt Guaranty and the other Loan Documents are secured hereby, and each and every term and provision of the Loan Agreement and the Note, including each of the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties therein, is hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Assignment.
XI. ASSIGNMENT
Section 11.1 P ROPERTY A SSIGNED . Assignor hereby absolutely and unconditionally assigns and grants to Lender all of Assignor’s right, title and interest in, to and under the following property, rights, interests and estates, now owned, or hereafter acquired by Assignor:
11.1.1 Leases . All existing and future leases providing for the use, enjoyment, or occupancy of all or any part of King’s Village, more particularly described in [ Exhibit A ] annexed hereto and made a part hereof, together with the buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter located thereon (collectively, the “ Property ”) and the right, title and interest of Assignor, its successors and assigns, therein and thereunder.
11.1.2 Other Leases and Agreements . All other leases, subleases and other related agreements, whether or not in writing, affecting the use, enjoyment or occupancy of the Property or any portion thereof now or hereafter made, whether made before or after the filing by or against Assignor of any petition for relief under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship, arrangement, adjustment, winding-up, liquidation, composition or

other relief with respect to its debts or debtors (“ Creditors Rights Laws ”) together with any extension, renewal or replacement of the same, this Assignment of other present and future leases and present and future agreements being effective without further or supplemental assignment. The leases described in Section 1.1(a) and the leases and other agreements described in this Section 1.1(b) , together with all other present and future leases and present and future agreements and any extension or renewal of the same are collectively referred to as the “ Leases .”
11.1.3 Rents . All rents, additional rents, payments in connection with any termination, cancellation or surrender of any Lease, revenues, income, issues and profits arising from the Leases, and renewals and replacements thereof and any cash or security deposited in connection therewith and together with all rents, revenues, income, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the use, enjoyment and occupancy of the Property, whether paid or accruing before or after the filing by or against Assignor of any petition for relief under Creditors Rights Laws (collectively, the “ Rents ”).
11.1.4 Bankruptcy Claims . All of Assignor’s claims and rights (the “ Bankruptcy Claims ”) to the payment of damages arising from any rejection by a lessee of any Lease under Creditors Rights Laws.
11.1.5 Lease Guaranties . All of Assignor’s right, title and interest in and claims under any and all lease guaranties, letters of credit and any other credit support given by any guarantor in connection with any of the Leases (individually, a “ Lease Guarantor ” and, collectively, the “ Lease Guarantors ”) to Assignor (individually, a “ Lease Guaranty ” and, collectively, the “ Lease Guaranties ”).
11.1.6 Proceeds . All proceeds from the sale or other disposition of the Leases, the Rents, the Lease Guaranties and the Bankruptcy Claims.
11.1.7 Other . All rights, powers, privileges, options and other benefits of Assignor as lessor under the Leases and beneficiary under the Lease Guaranties, including without limitation the immediate and continuing right to make claim for, receive, collect and receipt for all Rents payable or receivable under the Leases and all sums payable under the Lease Guaranties or pursuant thereto (and to apply the same to the payment of the Debt or Assignor’s other obligations under the Debt Guaranty and the other Loan Documents), and to do all other things which Assignor or any lessor is or may become entitled to do under the Leases or the Lease Guaranties.
11.1.8 Entry . The right, at Lender’s option, upon revocation of the license granted herein, to enter upon the Property in person, by agent or by court-appointed receiver, to collect the Rents.
11.1.9 Power of Attorney . Assignor’s irrevocable power of attorney, coupled with an interest, to take any and all of the actions set forth in Section 3.1 of this Assignment and any or all other actions designated by Lender for the proper management and preservation of the Property.
 
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11.1.10 Other Rights and Agreements . Any and all other rights of Assignor in and to the items set forth in subsections (a) through (i) above, and all amendments, modifications, replacements, renewals and substitutions thereof.
Section 11.2 C ONSIDERATION . This Assignment is made in consideration of that certain loan made by Lender to Borrower evidenced by the Loan Agreement and the Note and secured by the Security Instruments. The principal sum, interest and all other sums due and payable under the Loan Agreement, the Note, the Security Instruments, this Assignment and the other Loan Documents are collectively referred to as the “ Debt ”.
Section 11.3 T ERMINATION OF A SSIGNMENT . Upon payment in full of the Debt and the delivery and recording of a satisfaction or discharge of the Security Instruments duly executed by Lender, this Assignment shall become null and void and shall be of no further force and effect.
XII. TERMS OF ASSIGNMENT
Section 12.1 P RESENT A SSIGNMENT AND L ICENSE B ACK . It is intended by Assignor that this Assignment constitute a present, absolute assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not an assignment for additional security only. Nevertheless, subject to the terms of this Section 2.1 and the Loan Agreement, Lender grants to Assignor a revocable license to collect and receive the Rents and other sums due under the Lease Guaranties. Assignor shall hold the Rents and all sums received pursuant to any Lease Guaranty, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums.
Section 12.2 N OTICE TO L ESSEES . Assignor hereby agrees to authorize and direct the lessees named in the Leases or any other or future lessees or occupants of the Property and all Lease Guarantors to pay over to Lender or to such other party as Lender directs all Rents and all sums due under any Lease Guaranties in accordance with the Loan Agreement or upon receipt from Lender of written notice to the effect that Lender is then the holder of the Security Instruments and that a Default (defined below) exists, and to continue so to do until otherwise notified by Lender.
Section 12.3 I NCORPORATION BY R EFERENCE . All representations, warranties, covenants, conditions and agreements contained in the Loan Agreement and the Security Instruments as same may be modified, renewed, substituted or extended are hereby made a part of this Assignment to the same extent and with the same force as if fully set forth herein.
XIII. REMEDIES
Section 13.1 R EMEDIES OF L ENDER . Upon or at any time after the occurrence and during the continuation of a an Event of Default (a “ Default ”), the license granted to Assignor in Section 2.1 of this Assignment shall automatically be revoked, and Lender shall immediately be entitled to possession of all Rents and sums due under any Lease Guaranties, whether or not Lender enters upon or takes control of the Property. In addition, Lender may, at its option, without waiving such Default, without notice and without regard to the adequacy of the security for the Debt, either in person or by agent, nominee or attorney, with or without bringing any action or proceeding, or by a receiver appointed by a court, dispossess Assignor and its agents and servants from the Property, without
 
3

liability for trespass, damages or otherwise and exclude Assignor and its agents or servants wholly therefrom, and take possession of the Property and all books, records and accounts relating thereto and have, hold, manage, lease and operate the Property on such terms and for such period of time as Lender may deem proper and either with or without taking possession of the Property in its own name, demand, sue for or otherwise collect and receive all Rents and sums due under all Lease Guaranties, including those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to Lender and may apply the Rents and sums received pursuant to any Lease Guaranties to the payment of the following in such order and proportion as Lender in its sole discretion may determine, any law, custom or use to the contrary notwithstanding: (a) all expenses of managing and securing the Property, including, without being limited thereto, the salaries, fees and wages of a managing agent and such other employees or agents as Lender may deem necessary or desirable and all expenses of operating and maintaining the Property, including, without being limited thereto, all taxes, charges, claims, assessments, water charges, sewer rents and any other liens, and premiums for all insurance which Lender may deem necessary or desirable, and the cost of all alterations, renovations, repairs or replacements, and all expenses incident to taking and retaining possession of the Property; and (b) the Debt, together with all costs and reasonable attorneys’ fees. In addition, upon the occurrence and during the continuation of a Default, Lender, at its option, may (1) complete any construction on the Property in such manner and form as Lender reasonably deems advisable, (2) exercise all rights and powers of Assignor, including, without limitation, the right to negotiate, execute, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents from the Property and all sums due under any Lease Guaranties, and (3) either require Assignor to (x) pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupancy of such part of the Property as may be in possession of Assignor or (y) vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Assignor may be evicted by summary proceedings or otherwise.
Section 13.2 O THER R EMEDIES . Nothing contained in this Assignment and no act done or omitted by Lender pursuant to the power and rights granted to Lender hereunder shall be deemed to be a waiver by Lender of its rights and remedies under the Loan Agreement, the Note, the Security Instruments, or the other Loan Documents and this Assignment is made and accepted without prejudice to any of the rights and remedies possessed by Lender under the terms thereof. The right of Lender to collect the Debt and to enforce any other security therefor held by it may be exercised by Lender either prior to, simultaneously with, or subsequent to any action taken by it hereunder. Assignor hereby absolutely, unconditionally and irrevocably waives any and all rights to assert any setoff, counterclaim or crossclaim of any nature whatsoever with respect to the obligations of Assignor under this Assignment, the Loan Agreement, the Note, the Security Instruments, the other Loan Documents or otherwise with respect to the loan secured hereby in any action or proceeding brought by Lender to collect same, or any portion thereof, or to enforce and realize upon the lien and security interest created by this Assignment, the Loan Agreement, the Note, any Security Instrument, or any of the other Loan Documents (provided, however, that the foregoing shall not be deemed a waiver of Assignor’s right to assert any compulsory counterclaim if such counterclaim is compelled under local law or rule of procedure, nor shall the foregoing be deemed a waiver of Assignor’s right to assert any claim which would constitute a defense, setoff, counterclaim or crossclaim of any nature whatsoever against Lender in any separate action or proceeding).
 
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Section 13.3 O THER S ECURITY . Lender may take or release other security for the payment of the Debt, may release any party primarily or secondarily liable therefor and may apply any other security held by it to the reduction or satisfaction of the Debt without prejudice to any of its rights under this Assignment.
Section 13.4 N ON -W AIVER . The exercise by Lender of the option granted it in Section 3.1 of this Assignment and the collection of the Rents and sums due under the Lease Guaranties and the application thereof as herein provided shall not be considered a waiver of any default by Assignor under the Loan Agreement, the Note, the Security Instruments, the Leases, this Assignment or the other Loan Documents. The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Assignment. Assignor shall not be relieved of Assignor’s obligations hereunder by reason of (a) the failure of Lender to comply with any request of Assignor or any other party to take any action to enforce any of the provisions hereof or of the Loan Agreement, the Note, the Security Instruments or the other Loan Documents, (b) the release regardless of consideration, of the whole or any part of the Property, or (c) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of this Assignment, the Loan Agreement, the Note, the Security Instruments or the other Loan Documents. Lender may resort for the payment of the Debt to any other security held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may take any action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender thereafter to enforce its rights under this Assignment. The rights of Lender under this Assignment shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision.
Section 13.5 B ANKRUPTCY . 13.5.1 Upon or at any time after the occurrence and during the continuation of a Default, Lender shall have the right to proceed in its own name or in the name of Assignor in respect of any claim, suit, action or proceeding relating to the rejection of any Lease, including, without limitation, the right to file and prosecute, to the exclusion of Assignor, any proofs of claim, complaints, motions, applications, notices and other documents, in any case in respect of the lessee under such Lease under Creditors Rights Laws. Any amounts received by Lender as damages arising out of rejection of any Lease as aforesaid shall be applied first to all costs and expenses of Lender (including, without limitation, reasonable attorneys’ fees and disbursements) incurred in connection with the exercise of any of its rights or remedies under this Section 3.5.
13.5.2 If there shall be filed by or against Assignor a petition under Creditors Rights Laws, and Assignor, as lessor under any Lease, shall determine to reject such Lease pursuant to any applicable provision of any Creditors Rights Law, then Assignor shall give Lender not less than ten (10) days’ prior notice of the date on which Assignor shall apply to the bankruptcy court for authority to reject the Lease. Lender shall have the right, but not the obligation, to serve upon Assignor within such ten-day period a notice stating that (i) Lender demands that Assignor assume and assign the Lease to Lender pursuant to any applicable provision of any Creditors Rights Law, and (ii) Lender covenants to cure or provide adequate assurance of future performance under the Lease. If Lender serves
 
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upon Assignor the notice described in the preceding sentence, Assignor shall not seek to reject the Lease and shall comply with the demand provided for in clause (i) of the preceding sentence within thirty (30) days after the notice shall have been given, subject to the performance by Lender of the covenant provided for in clause (ii) of the preceding sentence.
XIV. NO LIABILITY, FURTHER ASSURANCES
Section 14.1 N O L IABILITY OF L ENDER . This Assignment shall not be construed to bind Lender to the performance of any of the covenants, conditions or provisions contained in any Lease or Lease Guaranty or otherwise impose any obligation upon Lender. Lender shall not be liable for any loss sustained by Assignor resulting from Lender’s failure to let the Property after a Default or from any other act or omission of Lender in managing the Property after a Default. Lender shall not be obligated to perform or discharge any obligation, duty or liability under the Leases or any Lease Guaranties or under or by reason of this Assignment and Assignor shall, and hereby agrees, to indemnify Lender for, and to hold Lender harmless from, any and all liability, loss or damage which may or might be incurred under the Leases, any Lease Guaranties or under or by reason of this Assignment and from any and all claims and demands whatsoever, including the defense of any such claims or demands which may be asserted against Lender by reason of any alleged obligations and undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in the Leases or any Lease Guaranties. Should Lender incur any such liability, the amount thereof, including costs, expenses and reasonable attorneys’ fees, shall be secured by this Assignment and by the Security Instruments and the other Loan Documents and Assignor shall reimburse Lender therefor immediately upon demand and upon the failure of Assignor so to do Lender may, at its option, declare all sums secured by this Assignment and by the Security Instruments and the other Loan Documents immediately due and payable. This Assignment shall not operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor for the carrying out of any of the terms and conditions of the Leases or any Lease Guaranties; nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other parties, or for any dangerous or defective condition of the Property, including without limitation the presence of any Hazardous Materials, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger. Notwithstanding the foregoing, Lender shall be liable for the liabilities, losses or damages described in this Section 4.1 to the extent such liability, loss or damage is caused by (i) the gross negligence of Lender, (ii) the willful misconduct of Lender, (iii) the breach by Lender to its obligations under this Assignment, (iv) illegal acts of Lender or (v) fraud on the part of Lender.
Section 14.2 N O M ORTGAGEE IN P OSSESSION . Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession” in the absence of the taking of actual possession of the Property by Lender. In the exercise of the powers herein granted Lender, no liability shall be asserted or enforced against Lender, all such liability being expressly waived and released by Assignor.
 
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Section 14.3 F URTHER A SSURANCES . Assignor will, at the cost of Assignor, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, conveyances, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require for the better assuring, conveying, assigning, transferring and confirming unto Lender the property and rights hereby assigned or intended now or hereafter so to be, or which Assignor may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Assignment or for filing, registering or recording this Assignment and, on demand, will execute and deliver and hereby authorizes Lender to file one or more financing statements or execute in the name of Assignor to the extent Lender may lawfully do so, one or more chattel mortgages or other instruments, to evidence more effectively the lien and security interest hereof in and upon the Leases.
XV. MISCELLANEOUS PROVISIONS
Section 15.1 C ONFLICT OF T ERMS . In case of any conflict between the terms of this Assignment and the terms of the Loan Agreement, the terms of the Loan Agreement shall prevail.
Section 15.2 N O O RAL C HANGE . This Assignment and any provisions hereof may not be modified, amended, waived, extended, changed, discharged or terminated orally, or by any act or failure to act on the part of Assignor or Lender, but only by an agreement in writing signed by the party against whom the enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.
Section 15.3 C ERTAIN D EFINITIONS . Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Assignment may be used interchangeably in singular or plural form and the word “Assignor” shall mean “each Assignor and any subsequent owner or owners of a fee interest in (or, with respect to Leased Units, a leasehold interest in) the Property or any part thereof,” the word “Lender” shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Security Instruments,” the word “person” shall include an individual, corporation, partnership, limited liability company, trust, unincorporated association, government, governmental authority, and any other entity, the word “Property” shall include any portion of the Property and any interest therein, the phrases “attorneys’ fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder, and the word “Debt” shall mean the principal balance of the Note with interest thereon as provided in the Loan Agreement, the Note and the Security Instruments and all other sums due pursuant to the Note, the Security Instruments this Assignment and the other Loan Documents; whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
Section 15.4 I NAPPLICABLE P ROVISIONS . If any term, covenant or condition of this Assignment is held to be invalid, illegal or unenforceable in any respect, this Assignment shall be construed without such provision.
 
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Section 15.5 D UPLICATE O RIGINALS ; C OUNTERPARTS . This Assignment may be executed in any number of duplicate originals and each such duplicate original shall be deemed to be an original. This Assignment may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Assignment. The failure of any party hereto to execute this Assignment, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.
Section 15.6 CHOICE OF LAW . THIS ASSIGNMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 15.7 N OTICES . All notices or other written communications required or permitted hereunder shall be given and shall become effective in accordance with Section 10.6 of the Loan Agreement.
Section 15.8 WAIVER OF TRIAL BY JURY . ASSIGNOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS ASSIGNMENT, THE NOTE, THE SECURITY INSTRUMENTS OR THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
Section 15.9 S UBMISSION TO J URISDICTION . With respect to any claim or action arising hereunder, Assignor covenants and agrees (a) that the Supreme Court of the State of New York for the County of New York, or, in a case involving diversity of citizenship, the United States District Court for the Southern District of New York, shall have exclusive jurisdiction of any such action or proceeding and (b) that service of any summons and complaint or other process in any such action or proceeding may be made by registered or certified mail directed to Assignor at Assignor’s address set forth above, Assignor waiving personal service thereof. Nothing in this Assignment will be deemed to preclude Lender from bringing an action or proceeding with respect hereto in any other jurisdiction.
Section 15.10 L IABILITY . If Assignor consists of more than one person, the obligations and liabilities of each such person hereunder shall (except to the extent otherwise expressly provided in the Loan Documents) be joint and several. This Assignment shall be binding upon and inure to the benefit of Assignor and Lender and their respective successors and assigns forever.
Section 15.11 H EADINGS , ETC . The headings and captions of various paragraphs of this Assignment are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.
Section 15.12 N UMBER AND G ENDER . Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.
 
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Section 15.13 No Limitation on Liability . Assignor’s liability hereunder shall be fully recourse to Assignor.
THIS ASSIGNMENT, together with the covenants and warranties therein contained, shall inure to the benefit of Lender and shall be binding upon Assignor, its heirs, executors, administrators, successors and assigns and any subsequent owner of the Property.
[NO FURTHER TEXT ON THIS PAGE]
 
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IN WITNESS WHEREOF, Assignor has executed this instrument the day and year first above written.

[W2007 WKH KING’S VILLAGE TRS, INC.] , a [Hawaii corporation] 	
		
By:	 	 	
	 	Name:	
	 	Title:	

ACKNOWLEDGMENTS

STATE OF                                      	  	)	  		
	  	)	  	ss.:	
COUNTY OF                                  	  	)	  		
On the          day of July 2008, before me, the undersigned, a Notary Public in and for said State, personally appeared                          , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individuals, or the persons upon behalf of which the individual acted, executed the instrument.

	
 	
Notary Public	

EXHIBIT A
(DESCRIPTION OF LAND)
See attached.

Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Amendment No. 3 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. October 14, 2009 to reflect the retrospective effect of the reverse stock split, as disclosed in Note 21) 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
October 15, 2009