Exhibit 10.10
AMENDMENT NO. 4 DATED AS OF ____________, 1998 TO
DISTRIBUTION AGREEMENT DATED AS OF SEPTEMBER 15, 1993
BETWEEN HOST MARRIOTT CORPORATION
AND MARRIOTT INTERNATIONAL, INC.
Host Marriott Corporation (f/k/a Marriott Corporation, "Host
Marriott"), Marriott International, Inc. ("MII") and Host Marriott Services
Corporation desire to adopt this Amendment to the Distribution Agreement between
Host Marriott and MII dated as of September 15, 1993 (the "Original Agreement,"
and, as amended hereby and by that certain Amendment No. 1 to the Original
Agreement dated as of December 29, 1995, that certain Amendment No. 2 to the
Original Agreement dated as of June 21, 1997 and that certain Amendment No. 3 to
the Original Agreement dated as of March 3, 1998, the "Distribution Agreement").
WHEREAS, on or about December 29, 1998, (i) Host Marriott will
distribute approximately 82% of the outstanding common stock of Crestline
Capital Corporation, a Maryland corporation ("CCC"), to the shareholders of Host
Marriott and will contribute the remaining 18% of such CCC common stock to Host
Marriott, L.P. for delivery to The Blackstone Group and certain affiliated
entities thereof (or for return to CCC if not delivered to The Blackstone Group
and its affiliated entities) and (ii) Host Marriott will merge (the "Merger")
into HMC Merger Corporation, a Maryland corporation to be renamed "Host Marriott
Corporation" ("Host REIT"); and
WHEREAS, the parties hereto desire to amend the Distribution Agreement
in connection with such distribution and the Merger.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto hereby agree as follows:
1. Upon the effectiveness of the Merger, Section 6.07 of the
Distribution Agreement shall be amended by adding the following subsections (j)
and (k):
"(j) Notwithstanding anything to the contrary in this Agreement or
otherwise, MII's Right will be limited to the purchase and subsequent ownership
of only such number of shares, if any, as would not (i) cause MII, or any Person
in which MII owns a direct or indirect interest, to own or be deemed (taking
into account the attribution rules of Code Section 318(a), as modified by Code
Section 856(d)(5)) to own more than 9.9% (the "Disqualification Threshold") of
Host
Marriott if MII, or any such other Person in which MII owns a direct or indirect
interest, also owns or would be deemed to own (taking into account the
attribution rules of Code Section 318(a), as modified by Code Section
856(d)(5)), more than 9.9% of Crestline Capital Corporation, a Maryland
corporation ("CCC") (or any Subsidiary of CCC) or any other tenant of real
property leased by Host Marriott or any Subsidiary of Host Marriott [(other than
the Lease Agreement, dated October 24, 1984, between _________________ and
____________________ [for the Harbor Beach hotel]], (ii) cause any Person that
owns (or is deemed to own (taking into account the attribution rules of Code
Section 318(a), as modified by Code Section 856(d)(5))) a direct or indirect
interest in MII to exceed the Disqualification Threshold with respect to Host
Marriott if such Person owns or would be deemed to own (taking into account the
attribution rules of Code Section 318(a), as modified by Code Section 856(d)(5))
more than 9.9% of CCC (or any Subsidiary of CCC) or any other tenant of real
property leased by Host Marriott or any Subsidiary of Host Marriott, or (iii) in
the event that Host Marriott L.P. is or could be considered a "publicly traded
partnership" within the meaning of Code Section 7704, cause Host Marriott, L.P.
to own more than 9.9% of CCC (determined by taking into account (A) the
attribution rules of Code Section 318(a), as modified by Code Sections 856(d)(5)
and 7704(d)(3)(B) and (B) any stock of CCC that Host Marriott, L.P. is deemed to
own under these rules by reason of the ownership of an interest in Host
Marriott, L.P. by [Blackstone Real Estate Acquisitions L.L.C.] or any of its
affiliated entities). In the event that the Right would not be exercisable in
full solely by reason of clause (iii) of the preceding sentence (but not clause
(i) or clause (ii) thereof), MII shall, subject to the conditions set forth
below, have the right to assign that portion (but only such portion) of the
Right that is not exercisable by reason of such clause (iii) (the "Blocked
Portion of the Right"), subject to further reduction as set forth below, to a
Person whose exercise of the assigned Blocked Portion of the Right would not be
precluded by the preceding sentence (applied replacing the term "MII" each place
it appears in clauses (i) and (ii) of such sentence with the following: "MII
and/or any permitted assignee pursuant to the next sentence below"), subject to
the following conditions: (A) Host Marriott and MII shall have obtained from the
Internal Revenue Service, for the benefit of Host Marriott, a private letter
ruling (the user fees and legal fees related to which shall be shared equally by
Host Marriott and MII, provided, however, that in no event shall Host Marriott
be required to pay more than a total of $50,000 with respect to such fees) to
the effect that neither the existence of such assignment right nor the exercise
of such assignment right shall cause MII (or any Person that is considered
pursuant to Code Section 318(a) to own any stock of Host Marriott considered
owned by MII, actually or constructively pursuant to Code Section 318(a)) to be
considered for purposes of Code Sections 318(a), 856)(d)(2), and 7704(d)(1)(C)
and (d)(3)(B) to own all or any portion of the Host Marriott stock that is
subject to the Blocked Portion of the Right, (B) the proposed assignee shall not
be a Person who is engaged or affiliated with any Person who is engaged in the
business of owning (as opposed to operating) or, with respect to any assignment
made hereunder at any time following
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October 8, 2000, owning or operating full-service hotels consisting of, in the
aggregate, more than fifteen (15) full-service hotels, in competition with
full-service hotels owned by Host Marriott and (C) if, at the time of such
assignment, the proposed assignee or any of its Affiliates holds Voting Stock or
options, warrants or other rights (including conversion rights) to acquire
Voting Stock ("Acquisition Rights"), the portion of the Blocked Portion of the
Right which may be assigned to such proposed assignee shall be reduced such
that, immediately following such assignment, the aggregate number of shares of
Voting Stock which the proposed assignee and its Affiliates would own (assuming
for such purpose the exercise in full at such time of the assigned portion of
the Blocked Portion of the Right and the Acquisition Rights) would not execeed
twenty percent (20%) of the total outstanding shares of Voting Stock (assuming
for such purposes the exercise in full at such time of all outstanding
Acquisition Rights).
(k) In the event that Host Marriott shall be advised by outside tax
counsel in writing after December 29, 1998 that, as the result of a change in
law (including published interpretations by the Internal Revenue Service) after
such date, there is a significant risk to Host Marriott that the restrictions
set forth in the subsection (j) above, would not be effective to protect the
status of Host Marriott as a "real estate investment trust" (a "REIT") under the
applicable provisions of the Code, the parties to agree to negotiate in good
faith to develop a modification to subsection (j) in a manner that would protect
the interests of MII in being able to exercise the Right substantially as and to
the extent contemplated in subsection (j) while permitting Host Marriott to
continue to qualify as a REIT under the applicable provisions of the Code.
2. Upon the effectiveness of the Merger, the term "Voting Stock"
in Section 6.07(a) of the Distribution Agreement shall mean shares of common
stock, par value $.01 per share, of Host REIT and any other class of capital
stock having, or capable of having, general voting rights to elect the Directors
of Host REIT, whether or not now authorized or issued."
3. Upon the effectiveness of the Merger, Section 9.06 of the
Distribution Agreement shall be amended by adding the following sentence:
"The foregoing sentence is not intended to, and shall not, cause this
Agreement to bind or to inure to the benefit of CCC or to grant MI any rights
with respect to CCC."
4. Upon effectiveness of the Merger, the Distribution Agreement
shall be binding upon and inure to the benefit of Host REIT and Host REIT shall
assume all the rights and obligations of Host Marriott thereunder.
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5. Host REIT represents that, prior to the effectiveness of the
Merger, its Board of Directors shall have duly adopted a resolution and a bylaw
provision exempting the exercise by MII of the Right as to Host REIT, as set
forth in Paragraph 1 above, from the Maryland Business Combination Statute and
the Maryland Control Share Acquisition Statute, respectively, as well as a
resolution exempting certain other transactions between Host REIT and MII or
their respective subsidiaries and a resolution granting MII an irrevocable
exemption under Section 8.2.7 of the Amended and Restated Articles of
Incorporation of Host REIT from the Ownership Limit (as defined in Section 8.1
of the Amended and Restated Articles of Incorporation of Host REIT) to permit
MII to exercise the Right. A copy of such resolutions and bylaw provision are
attached as Annex A hereto. Host REIT covenants that, for as long as MII has the
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right to exercise the Right, Host REIT will not revoke or amend such resolutions
or amend, alter or repeal such bylaw provision without the prior written consent
of MII. Host REIT covenants that in the event it adopts a [shareholders' rights
plan], such plan shall provisions which are consistent with Section 6.07 of the
Distribution Agreement. Host REIT agrees that MII would suffer irreparable
damage in the event any of the foregoing provisions of this Paragraph 5 were not
to be performed in accordance with the terms hereof, and that, in such event,
MII's remedy at law would be inadequate. Host REIT agrees and consents that
temporary and permanent injunctive relief may be granted in favor of MII in any
proceeding which may be brought to enforce any provision of this Paragraph 5
without the necessity of proof of actual damage.
6. Except as specifically amended hereby, the Distribution
Agreement continues in full force and effect without modification and is hereby
ratified and confirmed in all respects.
7. This Amendment may be executed in any number of counterparts,
which, when taken together, shall constitute a single binding instrument.
[signatures appear on the following page]
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IN WITNESS WHEREOF, the parties have caused this Amendment No. 4 to be duly
executed and delivered as of _______________________________, 1998.
MARRIOTT INTERNATIONAL, INC.
By:
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Name:
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Title:
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HOST MARRIOTT CORPORATION
By:
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Name:
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Title:
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HOST MARRIOTT SERVICES CORPORATION
By:
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Name:
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Title:
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The undersigned is executing this Amendment solely for the purpose of
acknowledging and consenting to the provisions of Paragraphs 4 and 5 hereof.
HMC MERGER CORPORATION
By:
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Name:
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Title:
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