Exhibit 1.1
HOST MARRIOTT CORPORATION
Common Stock
Underwriting Agreement
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August 11, 2003
Goldman, Sachs & Co.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Host Marriott Corporation, a Maryland corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of 27,500,000 shares (the "Shares") of Common Stock, $0.01 par value ("Stock"),
of the Company.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-61722) (the "Initial
Registration Statement") in respect of the Shares has been filed with the
Securities and Exchange Commission (the "Commission"); the Initial Registration
Statement and any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you for each
of the other Underwriters, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing the size of
the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement or any document incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a "Preliminary
Prospectus," the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including
(i) the information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial
Registration Statement at the time it was declared effective and (ii) the
documents incorporated by reference in the prospectus contained in the Initial
Registration Statement at the time such part of the Initial Registration
Statement became effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; and any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement.
(b) No order preventing or suspending the use of any Preliminary Prospectus
has been issued by the Commission, and each Preliminary Prospectus, at the time
of filing thereof, conformed in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder, and did not
contain an 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, in
the light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Goldman, Sachs &
Co. expressly for use therein.
(c) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents become effective or
are filed with the
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Commission, as the case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an 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;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through Goldman, Sachs &
Co. expressly for use therein.
(d) The Registration Statement conforms, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an 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; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through Goldman, Sachs & Co. expressly for use
therein.
(e) Each of the Company and its consolidated subsidiaries has been duly
organized, is validly existing as a corporation (in the case of the Company),
limited liability company or limited partnership in good standing under the laws
of its respective jurisdiction of organization and has the requisite power and
authority to carry on its business as it is currently being conducted, and to
own, lease and operate its properties; and, as applicable, has the requisite
power and authority to authorize the offering of the Shares, to execute, deliver
and perform this Agreement and to issue, sell and deliver the Shares; and each
of the Company and its consolidated subsidiaries is duly qualified and is in
good standing as a foreign corporation (or other entity) authorized to do
business in each jurisdiction where the operation, ownership or leasing of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified would not, singly or in the aggregate, have
a material adverse effect on the properties, business, results of operations,
condition (financial or otherwise), business affairs or prospects of the Company
and its consolidated subsidiaries taken as a whole (a "Material Adverse
Effect").
(f) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued. All of issued and
outstanding shares of capital stock of, or other ownership interests in, each
consolidated subsidiary of the Company have been duly and validly authorized and
issued, and all of the shares of capital stock of, or other ownership interests
in, each such subsidiary other than the subsidiaries set forth on Schedule II
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(which subsidiaries are so owned in the amounts listed thereon) is owned,
directly or through subsidiaries, by Host Marriott, L.P. ("Host LP"). All such
shares of capital stock owned by Host LP through its subsidiaries are fully paid
and nonassessable, and are owned free and clear of any security interest,
mortgage, pledge, claim, lien or encumbrance (each, a "Lien"), except for
security interests in shares of certain subsidiaries of the Company pursuant to
the Pledge and Security Agreement (the "Pledge and Security Agreement") relating
to the Company's 9 1/2% Senior Secured Notes due 2005, 9% Senior Notes due 2007,
8?% Senior Notes due 2007, 7?% Series A Senior Notes due 2005, 7?% Series B
Senior Notes due 2008, 8.45% Series C Senior Notes due 2008; 8?% Series E Senior
Notes due 2006, 9 1/4% Series G Senior Notes due 2007 and 9 1/2% Series I Senior
Notes due 2007 (collectively, the "Senior Notes"), borrowings under the Amended
and Restated Credit Agreement, dated as of June 6, 2002 as amended on May 14,
2003, among Host LP and certain subsidiaries, the banks party thereto from time
to time, and Bankers Trust Company, as administrative agent (the "Credit
Facility"). The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus. Except as may be described
in the Prospectus, there are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or Liens (other than
Liens pursuant to the Pledge and Security Agreement) related to or entitling any
person to purchase or otherwise to acquire any shares of the capital stock of,
or other ownership interest in, any subsidiary of the Company owned directly or
indirectly by the Company.
(g) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description of the Stock contained in the Prospectus; and all
of the issued shares of capital stock of each consolidated subsidiary of the
Company owned directly or indirectly by the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly
or indirectly by the Company, free and clear of any Lien, other than Liens
pursuant to the Pledge and Security Agreement.
(h) Neither the Company nor any of its consolidated subsidiaries has
received from any governmental authority notice of any condemnation of or zoning
change affecting their respective properties or any part thereof or of any
violation of any municipal, state or federal law, rule or regulation concerning
its properties or any part thereof which has not heretofore been cured or which
would have a Material Adverse Effect, or which could reasonably be expected to
have a Material Adverse Effect, and neither the Company nor any of its
consolidated subsidiaries knows of any such condemnation or zoning change which
is threatened on any of their properties or any such violation, which could
reasonably be expected to have a Material Adverse Effect. Neither the Company
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nor any of its consolidated subsidiaries is in violation of its respective
charter or bylaws or other similar organizational instrument or in default in
the performance of any bond, debenture, note or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or other contract, lease
or other instrument to which any of the Company or any of its consolidated
subsidiaries is a party or by which any of them is bound, or to which any of the
property or assets of the Company or any of its consolidated subsidiaries is
subject, except for such violations or defaults which would neither have a
Material Adverse Effect nor reasonably be expected materially and adversely to
affect the consummation of this Agreement or the transactions contemplated
hereby.
(i) This Agreement has been duly authorized and validly executed and
delivered by the Company.
(j) The execution and delivery of this Agreement by the Company, the
issuance and sale of the Shares, the performance of this Agreement and the
transactions contemplated hereby and thereby will not (i) conflict with or
result in a breach or violation of any of the respective charter or bylaws or
other similar organizational instrument of the Company or any of its
consolidated subsidiaries or any of the terms or provisions thereof, (ii) result
in the suspension, termination or revocation of any Authorization (as defined
below) of the Company or any of its consolidated subsidiaries or other
impairment of the rights of the holder of any such Authorization, except for
suspensions, terminations or revocations or other impairments which would not
have a Material Adverse Effect, (iii) constitute a default or cause an
acceleration of any obligation under or result in the imposition or creation of
(or the obligation to create or impose) a Lien with respect to, any bond, note,
debenture or other evidence of indebtedness or any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any of its
consolidated subsidiaries is a party or by which it or any of them is bound, or
to which any properties of the Company or any of its consolidated subsidiaries
is or may be subject or (iv) contravene any order of any court or governmental
agency or body having jurisdiction over the Company or any of its consolidated
subsidiaries or any of their properties, or violate or conflict with any
statute, rule or regulation or administrative or court decree applicable to the
Company or any of its consolidated subsidiaries, or any of their respective
properties except in the case of clauses (ii), (iii) or (iv) above, for such
conflicts or violations which would neither have a Material Adverse Effect nor
reasonably be expected materially and adversely to affect the consummation of
this Agreement or the transactions contemplated hereby.
(k) Except as may be described in the Prospectus, there is no action, suit
or proceeding before or by any court or governmental agency or body, domestic or
foreign, pending against or affecting the Company or any of its consolidated
subsidiaries, or their respective properties, which is required to be disclosed
in the Prospectus and are not so described, or which would result, singly or in
the aggregate, in a Material Adverse Effect or which could reasonably be
expected to materially and adversely affect the consummation of this
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Agreement or the transactions contemplated hereby, and to the best of the
Company's knowledge, no such proceedings are contemplated or threatened. No
contract or document of a character required to be described in the Prospectus
in order to prevent the Prospectus as of its date from containing any untrue
statement of a material fact or omitting to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, is not so described.
(l) To the best knowledge of the Company (A) no action has been taken and
no statute, rule or regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the issuance of the Shares or
prevents or suspends the use of the Prospectus hereof and (B) no injunction,
restraining order or order of any nature by a Federal or state court of
competent jurisdiction has been issued with respect to the Company or any of its
consolidated subsidiaries which would prevent or suspend the issuance or sale of
the Shares or the use of the Prospectus. Every request of any securities
authority or agency of any jurisdiction for additional information (to be
included in the Prospectus) has been complied with in all material respects.
(m) Except as would not, singly or in the aggregate, have a Material
Adverse Effect, neither the Company nor any of its consolidated subsidiaries is
in violation of any environmental, safety or similar law or regulation
applicable to its business relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), lacks any permits, licenses or other
approvals required of them under applicable Environmental Laws or is violating
any terms and conditions of any such permit, license or approval.
(n) The Company is not aware of any existing or imminent labor disturbance
by the employees of any of its principal suppliers, manufacturers or
contractors, or of Marriott International or its consolidated subsidiaries)
which would have a Material Adverse Effect.
(o) Except with respect to the Hotel Trades Council and Hotel Association
Pension Fund and the Host International, Inc. Cleveland Retirement Benefit Plan,
neither the Company nor any of its consolidated subsidiaries has sponsored,
maintained or contributed to, directly or indirectly, within the last five
years, any employee benefit plan subject to Title IV of ERISA, including without
limitation "multiemployer plans" (as defined in Section 4001(a)(3) of ERISA).
(p) Neither the Company nor any of its consolidated subsidiaries has
violated any provisions of the Foreign Corrupt Practices Act or the rules and
regulations promulgated thereunder, except for such violations which, singly or
in the aggregate, would not have a Material Adverse Effect.
(q) Each of the Company and its consolidated subsidiaries have good and
marketable and insurable title, free and clear of all Liens, to all property and
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assets described in the Prospectus as being owned by it, except for Liens
described in the Prospectus (including, without limitation, all Liens relating
to mortgages reflected on the historical or pro forma financial statements or
described in the notes thereto included in the Prospectus) and Liens imposed
pursuant to the Pledge and Security Agreement or by the indentures relating to
the Senior Notes and the Credit Facility or Liens that would not have a Material
Adverse Effect and (ii) all liens, charges, encumbrances, claims or restrictions
on or affecting the properties and assets of the Company or its consolidated
subsidiaries that are required to be disclosed in the Prospectus are disclosed.
(r) Except as disclosed in the Prospectus (excluding any supplement or
amendment after the date hereof), subsequent to the date of the Prospectus and
up to the Closing Date, neither the Company nor any of its consolidated
subsidiaries has incurred any liabilities or obligations, direct or contingent,
which are material to the Company and its consolidated subsidiaries taken as a
whole, nor entered into any material transaction not in the ordinary course of
business and there has not been, singly or in the aggregate, any material
adverse change, or any development which would involve a material adverse
change, in the properties, business, results of operations, condition (financial
or otherwise), business affairs or prospects of the Company and its consolidated
subsidiaries taken as a whole (a "Material Adverse Change").
(s) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the registration
under the Act of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters.
(t) Neither the Company nor any of its respective affiliates is presently
doing business with the government of Cuba or with any person or affiliate
located in Cuba.
(u) (i) The Company and its consolidated subsidiaries have all
certificates, consents, exemptions, orders, permits, licenses, authorizations or
other approvals (each, an "Authorization") of and from, and has made all
declarations and filings with, all Federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, necessary or required to own, lease, license and use its properties
and assets and to conduct its business in the manner described in the Prospectus
and all such Authorizations are in full force and effect, except to the extent
that the failure to obtain or file or cause to remain in effect would not,
singly or in the aggregate, have a Material Adverse Effect, (ii) the Company and
its consolidated subsidiaries are in compliance in all material respects with
the terms and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities and governing bodies having
jurisdiction with respect
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thereto and (iii) neither the Company nor its consolidated subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any Authorization, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
(v) The Stock conforms in all material respects to the description thereof
set forth under the caption "Description of Host REIT Capital Stock" contained
in the Registration Statement.
(w) The statements in the Prospectus under the caption "Underwriting,"
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair;
(x) To the Company's knowledge, KPMG LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
(y) Neither the Company nor any of its consolidated subsidiaries is, and,
after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus, will be, an
"investment company" or a company "controlled" by an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(z) Each certificate signed by any officer of the Company and delivered to
the Underwriters or counsel for the Underwriters pursuant to Section 7 shall be
deemed to be a representation and warranty by the Company to the Underwriters as
to the matters covered thereby.
(aa) The Company and each of its consolidated subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with accounting
principles generally accepted in the United States, or GAAP, and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(bb) Neither the Company nor any of its consolidated subsidiaries is in
violation of any statute, law, ordinance, governmental rule or regulation or any
judgment, decree, rule or order of any court or governmental agency or authority
applicable to the Company or its consolidated subsidiaries or any of their
respective properties or assets or any applicable zoning laws, ordinances and
regulations, except such violations as would not, singly or in the aggregate,
have a Material Adverse Effect.
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(cc) The leases under which the Company or its consolidated subsidiaries
holds or uses real property or other material assets as a lessee ("Leases") are
in full force and effect; and each of the Company and its consolidated
subsidiaries has complied with its obligations under the Leases and its
franchise agreements other than any non-compliance which, individually or in the
aggregate would not result in a Material Adverse Effect; and neither the Company
nor any of its consolidated subsidiaries knows of any default by any other party
to the Leases and its franchise agreements which, alone or together with other
such defaults, would have a Material Adverse Effect.
(dd) Since January 1, 1999, the Company has operated, and currently intends
to continue to operate, in a manner so as to be qualified and to be subject to
tax as a REIT under section 856 et seq of the Internal Revenue Code of 1986, as
amended, on and after January 1, 1999.
(ee) All material Tax returns required to be filed by the Company and each
of its material consolidated subsidiaries have been filed and to the Company's
knowledge all such returns are true, complete, and correct in all material
respects. To the Company's knowledge, all material Taxes that are due from the
Company and each of its material consolidated subsidiaries have been paid other
than those (i) currently payable without penalty or interest or (ii) those that
have been or would be contested in good faith and by appropriate proceedings and
for which, in the case of both clauses (i) and (ii), adequate reserves have been
established on the books and records of the Company and its consolidated
subsidiaries in accordance with GAAP. For purposes of this Agreement, the term
"Tax" and "Taxes" shall mean all Federal, state, local and foreign income taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties applicable
thereto.
2. Subject to the terms and conditions herein set forth, (a) the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a purchase
price per share of $9.12, the number of Shares set forth opposite the name of
such Underwriter in Schedule I hereto.
3. Upon the authorization by you of the release of the Shares, the several
Underwriters propose to offer the Shares for sale upon the terms and conditions
set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in definitive
form, and in such authorized denominations and registered in such names as
Goldman, Sachs & Co. may request upon at least forty-eight hours' prior notice
to the Company shall be delivered by or on behalf of the Company to Goldman,
Sachs & Co., through the facilities of the Depository Trust Company ("DTC"), for
the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day)
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funds to the account specified by the Company to Goldman, Sachs & Co. at least
forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on August 14, 2003 or such other time and date as Goldman, Sachs
& Co. and the Company may agree upon in writing. Such time and date are herein
called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(k) hereof, will be delivered at the offices of Latham &
Watkins, 555 11th Street, N.W., Washington D.C. 2004 (the "Closing Location"),
and the Shares will be delivered at the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 10:00 a.m., New York
City time, on the New York Business Day next preceding the Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make only those amendments or
supplements to the Registration Statement or Prospectus prior to the Time of
Delivery which shall be required by law or requested by the Commission; to
advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the Shares; to
advise you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or prospectus, of the suspension of the qualification
of the Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such
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purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus or suspending any
such qualification, promptly to use its reasonable best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Shares for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business Day
next succeeding the date of this Agreement and from time to time, to furnish the
Underwriters with written and electronic copies of the Prospectus in New York
City in such quantities as you may reasonably request, and, if the delivery of a
prospectus is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Shares and if at such time any event shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act or
the Exchange Act, to notify you and upon your request to file such document and
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many written and electronic copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance, and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Shares at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many written and
electronic copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its consolidated subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
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regulations thereunder (including, at the option of the Company, Rule 158); it
being understood that such delivery requirements shall be deemed met by the
Company's reporting requirement pursuant to the Exchange Act and Rules and
Regulations, to the extent set forth in Rule 158 of the Rules and Regulations
under the Securities Act;
(e) During the period beginning from the date hereof and continuing to and
including the date 60 days after the date of the Prospectus, not to offer, sell,
contract to sell or otherwise dispose of, except as provided hereunder, any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
your prior written consent; provided, however, the Company may issue up to
32,000,000 shares of Stock (on an as-converted basis) to a seller in connection
with an asset acquisition, provided, that each such seller executes an agreement
stating that its is receiving and holding such securities subject to the
remaining term of the restrictions contained in this Section 5(e);
(f) To obtain as soon as reasonably practical, executed copies of an
agreement from each member of the Company's board or directors, substantially to
the effect set forth in Subsection 5(e) hereof in form and substance
satisfactory to you;
(g) To furnish to its shareholders as soon as practicable after the end of
each fiscal year an annual report (including a balance sheet and statements of
income, shareholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each fiscal
year (beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its shareholders consolidated
summary financial information of the Company and its consolidated subsidiaries
for such quarter in reasonable detail;
(h) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies upon request of all reports or
other communications (financial or other) furnished to shareholders, and to
deliver to you upon request as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed;
(i) To use the net proceeds received by it from the sale of the Shares
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds";
12
(j) To use its best efforts to list, subject to notice of issuance, the
Shares on the New York Stock Exchange (the "Exchange"); and
(k) If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462(b) Registration Statement or give irrevocable instructions
for the payment of such fee pursuant to Rule 111(b) under the Act.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey (iv) all fees and
expenses in connection with listing the Shares on the Exchange; (v) the cost of
preparing stock certificates; (vi) the cost and charges of any transfer agent or
registrar; and (vii) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Shares by them, and any advertising expenses
connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at the Time of Delivery, shall be subject, in their discretion, to the
condition that all representations and warranties and other statements of the
Company herein are, at and as of the Time of Delivery, true and correct, the
condition that the Company shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by the
rules and regulations under the Act and in accordance with Section 5(a) hereof;
if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M.,
13
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel for the
Underwriters, shall have furnished to you such written opinion or opinions,
dated the Time of Delivery, in form and substance reasonably acceptable to you,
and such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Latham & Watkins LLP, special counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The execution and delivery of this Agreement and the issuance and sale
of the Shares by the Company to you pursuant to the Agreement at the Time
of Delivery do not require any consents, approvals or authorization to be
obtained by the Company or any or any registrations, declarations or
filings to be made by the Company, in each case, under any federal or New
York statute, rule or regulation applicable to the Company that have not
been obtained or made;
(ii) The Company is not an "investment company", as such term is defined in
the Investment Company Act; and
(iii) The Registration Statement, as of the date it was declared effective,
and the Prospectus, as of its date, complied as to form in all material
respects with the requirement for registration statements on Form S-3 of
the Act, and the rules and regulations of the Commission thereunder (other
than Regulation S-T or the financial statements, schedules, or other
financial and statistical data included in, incorporated by reference in,
or omitted from, the Registration Statement or the Prospectus and the
documents incorporated by reference therein, as to which such counsel need
express no opinion).
(iv) The execution and delivery of this Agreement and issue and sale of the
Shares by the Company to you pursuant to this Agreement on the Time of
Delivery do not violate any New York statute, rule or regulation applicable
to the Company.
14
(d) Venable, LLP, counsel for the Company, shall have furnished to you
their written opinion, dated the Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) (I) based solely on certificates of public officials, the Company is a
Maryland corporation, and is validly existing and in good standing under
the laws of Maryland and (II) the Company has the requisite power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus;
(ii) This Agreement has been duly authorized, executed and delivered by the
Company;
(iii) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not (i) conflict
with or result in a breach or violation of any of the respective charter or
bylaws or other similar organizational instrument of the Company, or (ii)
violate or conflict with any Maryland statute, rule or regulation
applicable to the Company or any of its consolidated subsidiaries, or any
of their respective properties; and
(iv) The Stock conforms in all material respects to the description thereof
set forth under the caption "Description of Host REIT Capital Stock"
contained in the Registration Statement.
(e) Hogan & Hartson, LLP, special tax counsel to the Company, shall have
furnished to you their written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company was organized and has operated in conformity with the
requirements for qualification and taxation as a real estate investment
trust ("REIT") under the Code, effective for its taxable years ended
December 31, 1999, December 31, 2000, December 31, 2001 and December 31,
2002, and the Company's current organization and intended method of
operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code for taxable year 2003
and thereafter;
(ii) The discussion in the Form 8-K filed with the Securities and Exchange
Commission on August 11, 2003 and captioned "Material Federal Income Tax
Considerations," which discussion is incorporated by reference into the
Prospectus, to the extent that it describes provisions of federal income
tax law, is correct in all material respects.
15
(f) Elizabeth A. Abdoo, Executive Vice President and General Counsel for
the Company, shall have furnished to you their written opinion, dated the Time
of Delivery, in form and substance satisfactory to you, to the effect that:
(i) Each significant subsidiary (as defined in Rule 1-02(w) of Regulation
S-X) of the Company has been duly organized and is validly existing as a
limited liability company or limited partnership in good standing under the
laws of its jurisdiction of organization; and all of the issued equity
interests of each such subsidiary have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for the OP Units)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and in respect to matters of fact upon certificates of officers of
the Company or its consolidated subsidiaries, provided that such counsel
shall state that they believe that both you and they are justified in
relying upon such opinions and certificates);
(ii) The Company and its consolidated subsidiaries have good and marketable
and insurable title to all real property owned by them, in each case free
and clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be
made of such property by the Company and its consolidated subsidiaries; and
any real property and buildings held under lease by the Company and its
consolidated subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its consolidated subsidiaries (in giving the
opinion in this clause, such counsel may state that no examination of
record titles for the purpose of such opinion has been made, and that they
are relying upon a general review of the titles of the Company and its
consolidated subsidiaries, upon opinions of local counsel and abstracts,
reports and policies of title companies rendered or issued at or subsequent
to the time of acquisition of such property by the Company or its
consolidated subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect to matters of fact, upon certificates of officers
of the Company or its consolidated subsidiaries, provided that such counsel
shall state that they believe that both you and they are justified in
relying upon such opinions, abstracts, reports, policies and certificates);
(iii) To the best of such counsel's knowledge, there is no legal or
governmental proceeding, pending or threatened or against
16
the Company or any of its consolidated subsidiaries, or their respective
properties, which is required to be disclosed in the Prospectus and are not
so described;
(iv) The issue and sale of the Shares by the Company and the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not (i) conflict
with or result in a breach or violation of any of the respective charter or
bylaws or other similar organizational instrument of any of the Company's
subsidiaries, (ii) to such counsel's knowledge, result in the suspension,
termination or revocation of any material Authorization (as defined below)
of the Company or any of its consolidated subsidiaries or, (iii) constitute
a default or cause an acceleration of any obligation under or result in the
imposition or creation of (or the obligation to create or impose) a Lien
with respect to, any bond, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other agreement
or instrument to which the Company or any of its consolidated subsidiaries
is a party or by which it or any of them is bound, or to which any
properties of the Company or any of its consolidated subsidiaries is or may
be subject or (iv) contravene any order of any court or governmental agency
or body having jurisdiction over the Company or any of its subsidiaries or
any of their properties;
(v) Neither the Company nor any of its consolidated subsidiaries is in
violation of its Articles of Incorporation or By-laws, or similar
organizational documents, or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of its
properties may be bound; and
(vi) The documents incorporated by reference to the Prospectus and any
further amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related schedules
therein and other financial and statistical data, as to which such counsel
need express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder.
(g) In addition, each of Latham & Watkins and Elizabeth A. Abdoo shall also
confirm, in a separate letter, that subject to customary qualifications as to
17
such counsel's participation, review and reliance, no facts came to such
counsel's attention that caused such counsel to believe that the Registration
Statement, at the time it became effective, together with the documents
incorporated by reference therein as of that date, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, as of its date, as of the date of the Prospectus Supplement or as of
the Time of Delivery, together with the documents incorporated by reference
therein as of each such date, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, it being
understood that such counsel will express no belief with respect to the
financial statements, schedules or other financial data included or incorporated
by reference in, or omitted from the Registration Statement or the Prospectus or
the documents incorporated therein by reference.
(h) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at the Time of Delivery, KPMG LLP shall have
furnished to you a letter in the form set forth in Annex I hereto;
(i) Neither the Company nor any of its consolidated subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock or
long-term debt of the Company or any of its consolidated subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, shareholders' investment or
results of operations of the Company and its consolidated subsidiaries,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at the Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(j) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act; provided, that, such securities may be
downgraded to B1 by Moody's Investors Service or B Standard & Poor's Ratings
Services without creating a termination right under this Section 7(j), and (ii)
other than the review for possible downgrade by Moody's Investors
18
Service announced on August 06, 2003, no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
(k) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the Exchange; (ii) a suspension or material limitation in trading
in the Company's securities on the Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by the
United States of a national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event specified in
clause (iv) or (v) in the judgment of the Representatives makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at the Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(l) The Shares to be sold at the Time of Delivery shall have been duly
listed, subject to notice of issuance, on the Exchange;
(m) The Company has obtained and delivered to the Underwriters executed
copies of an agreement from each of the Company's executive officers,
substantially to the effect set forth in Subsection 5(e) hereof in form and
substance satisfactory to you; and
(n) The Company shall have furnished or caused to be furnished to you at
the Time of Delivery certificates of officers of the Company satisfactory to you
as to the accuracy of the representations and warranties of the Company herein
at and as of the Time of Delivery, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to the Time of
Delivery, as to the matters set forth in subsections (a) and (h) of this Section
and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or
19
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Goldman,
Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party,
20
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount
21
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the Shares
which it has agreed to purchase hereunder at a Time of Delivery, you may in your
discretion arrange for you or another party or other parties to purchase such
Shares on the terms contained herein. If within thirty-six hours after such
default by any Underwriter you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at the Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
shares which such Underwriter agreed to purchase hereunder at the Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase
22
its pro rata share (based on the number of Shares which such Underwriter agreed
to purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at the Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
23
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., and if to the Company shall be delivered or sent by mail to the address of
the Company set forth in the Registration Statement, Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Underwriters, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the term
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
16. 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 counterparts shall together constitute one and the same instrument.
17. The Company is authorized, subject to applicable law, to disclose any and
all aspects of this potential transaction that are necessary to support any U.S.
federal income tax benefits expected to be claimed with respect to such
transaction, and all materials of any kind (including tax opinions and other tax
analyses) related to those benefits, without the Underwriters imposing any
limitation of any kind.
24
18. If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Host Marriott Corporation
By: /s/ W. Edward Walter
__________________________________
Name: W. Edward Walter
Title: Executive Vice President
and Chief Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
By: /s/ Goldman, Sachs & Co.
_________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
25
SCHEDULE I
Total Number of
Shares to be
Purchased
-----------------
Underwriter
Goldman, Sachs & Co. 19,250,000
Citigroup Global Markets Inc. 5,500,000
Bear, Stearns & Co. Inc. 2,750,000
Total --------------
27,500,000
==============
Schedule II
-----------
Subsidiaries Not Wholly Owned
by
HOST MARRIOTT CORPORATION
-------------------------
Percentage Owned By
Host Marriott, L.P.
Name of Non-Wholly Owned Subsidiary Indirectly or Directly)
- ---------------------------------------------------- ------------------------
HMC Park Ridge II LLC 99%
HMC Park Ridge LP 99.99%
HMC RTZ Loan Limited Partnership 99.99%
Atlanta II Limited Partnership 99.99%
Ivy Street Hotel Limited Partnership 99.992%
Ivy Street MPF LLC 99.992%
HMC Burlingame II LLC 99%
Host DSM Limited Partnership 99.99%
HMC Diversified American Hotels, L.P. 99.99%
HMC East Side LLC 99%
Potomac Hotel Limited Partnership 99.99%
CHLP Finance LP 95%
HMA-GP LLC 98.992%
HMA Realty Limited Partnership 99.982%
HTKG Development Associates Limited Partnership 99.99%
HMC Burlingame Hotel LLC 99.99%
Mutual Benefit Chicago Suite Hotel Partners, L.P. 99.99%
HMC DSM LLC 99.99%
DS Hotel LLC 99.99%
East Side Hotel Associates, L.P. 99.99%
Pacific Gateway, Ltd. 90.19%
Host Hanover Limited Partnership 99.99%
IHP Holdings Partnership, L.P. 97.5231%
Philadelphia Market Street HMC Hotel Limited Partnership 86.75%
HMC Hotel Properties Limited Partnership 99.99%
Lauderdale Beach Association 50.495%
HMC MHP II LLC 99%
HMC Hotel Properties II Limited Partnership 99.99%
Santa Clara Host Hotel Limited Partnership 99.985%
Times Square HMC Hotel, L.P. 99.99939%
HMC Times Square Hotel LLC 99.99939%
Philadelphia Airport Hotel Limited Partnership 89%
Hopewell Associates, L.P. 99.99%
Timewell Group, Ltd. 99.99%
Timeport, L.P. 99.99%
HMC Times Square Partner LLC 99%
HMC Partnership Properties LLC 99%
ANNEX I
FORM OF COMFORT LETTER
August 11, 2003
The Board of Directors
Host Marriott Corporation
6903 Rockledge Drive, Suite 1500
Bethesda, MD 20817
Goldman, Sachs & Co.
Citigroup Global Markets Inc.
Bear, Stearns & Co. Inc.
c/o Goldman, Sachs & Co.
85 Broad Street, 11th Floor
New York, NY 10004
Dear Sirs:
We have audited the consolidated balance sheets of Host Marriott Corporation
(the Company) and subsidiaries as of December 31, 2002 and 2001, and the
consolidated statements of operations, shareholders' equity and comprehensive
income and cash flows for each of the years in the three-year period ended
December 31, 2002, and the related financial statement schedule, all of which
are included in the Company's annual report on Form 10-K for the year ended
December 31, 2002, and incorporated by reference in the registration statement
(no. 333-61722) on Form S-3 filed by the Company under the Securities Act of
1933 (the Act); our report with respect thereto (which contains an explanatory
paragraph that indicates that the Company adopted Statement of Financial
Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long
Lived Assets," on January 1, 2002, as discussed in note 1 to the consolidated
financial statements of the Company) is also incorporated by reference in that
registration statement. The registration statement, as amended on August 11,
2003, is herein referred to as the "Registration Statement." Also, we have
reviewed the unaudited condensed consolidated financial statements as of June
20, 2003, March 28, 2003, June 14, 2002 and March 22, 2002 and for the
thirteen-week periods ended March 28, 2003 and March 22, 2002 and the
thirteen-week and twenty six-week periods ended June 20, 2003 and June 14, 2002.
In connection with the Registration Statement:
1. We are independent certified public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder adopted by the Securities and Exchange Commission (SEC).
2. In our opinion, the consolidated financial statements and financial
statement schedule audited by us and incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Securities Exchange
Act of 1934 and the related rules and regulations adopted by the SEC.
3. We have not audited any financial statements of the Company as of any date
or for any period subsequent to December 31, 2002; although we have
conducted an audit for the year ended December 31, 2002, the purpose (and
therefore the scope) of the audit was to enable us to express our opinion
on the consolidated financial statements as of December 31, 2002, and for
the year then ended, but not on the consolidated financial statements for
any interim period within that year. Therefore, we are unable to and do not
express any opinion on the unaudited condensed consolidated balance sheets
as of June 20, 2003 or March 28, 2003, and the unaudited condensed
consolidated statements of operations and cash flows for the thirteen-week
periods ended March 28, 2003 and March 22, 2002 and the thirteen-week and
twenty six-week periods ended June 20, 2003 and June 14, 2002, included in
the Company's quarterly report on Form 10-Q for the quarters ended March
28, 2003 and June 20, 2003, incorporated by reference in the Registration
Statement, or on the financial position, results of operations, or cash
flows as of any date or for any period subsequent to December 31, 2002.
4. For purposes of this letter, we have read the 2003 minutes of the meetings
of the shareholders, the board of directors, and compensation and audit
committees of the Board of Directors of the Company and its subsidiaries as
set forth in the minute books at August 11, 2003, officials of the Company
having advised us that the minutes of all such meetings through that date
were set forth therein; we have carried out other procedures to August 11,
2003, as follows (our work did not extend to the period from August 9, 2003
to August 11, 2003, inclusive):
a. With respect to the periods ended June 20, 2003, June 14, 2002, March
28, 2003 and March 22, 2002, we have:
(i) Performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 100, Interim Financial
Information, on the unaudited condensed consolidated financial
statements for these periods, described in 3, included in the
Company's quarterly report on Form 10-Q for the quarters ended
March 28, 2003 and June 20, 2003, incorporated by reference in
the Registration Statement.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited condensed consolidated financial statements of the
Company comply as to form in all material respects with the
applicable accounting requirements of the Securities Exchange Act
of 1934 as it applies to Form 10-Q and the related rules and
regulations adopted by the SEC.
b. With respect to the period from June 21, 2003, to July 18, August 11,
2003, we have:
(i) Read the unaudited condensed consolidated financial statements of
the Company and subsidiaries as of and for the four week periods
ended July 18,
2
2003 and July 12, 2002 furnished us by the Company. The financial
information for the four week periods ended July 18, 2003 and
July 12, 2002 is incomplete in that the financial statements omit
the statements of shareholders' equity and cash flows and
footnote disclosures required under accounting principles
generally accepted in the United States of America. Company
officials have also advised us that no such financial statements
as of any date or for any period subsequent to those specified,
were available.
(ii) Inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited condensed consolidated financial statements referred to
in 4b(i) are stated on a basis substantially consistent with that
of the audited consolidated financial statements incorporated by
reference in the Registration Statement.
The foregoing procedures do not constitute an audit conducted in accordance with
auditing standards generally accepted in the United States of America. Also,
they would not necessarily reveal matters of significance with respect to the
comments in the following paragraph. Accordingly, we make no representations
about the sufficiency of the foregoing procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
a. (i) Any material modifications should be made to the unaudited
condensed consolidated financial statements described in 3,
incorporated by reference in the Registration Statement, for them to
be in conformity with accounting principles generally accepted in the
United States of America.
(ii) The unaudited condensed consolidated financial statements
described in 3 do not comply as to form in all material respects
with the applicable accounting requirements of the Securities
Exchange Act of 1934 as it applies to Form 10-Q and the related
rules and regulations adopted by the SEC.
b. (i) At July 18, 2003, there was any change in the capital stock,
increase in long-term debt, or any decreases in consolidated total
assets or shareholders' equity of the consolidated Company as compared
with amounts shown in the June 20, 2003 unaudited condensed
consolidated balance sheet incorporated by reference in the
Registration Statement or (ii) for the period from June 20, 2003
through July 18, 2003 , there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated total
revenues, income from continuing operations or of net income, except
in all instances for changes, increases, or decreases that the
Registration Statement discloses have occurred or may occur except as
follows: Total assets decreased by approximately $44 million,
primarily as a result of the Company selling three hotel properties
during July 2002. Total revenues, income from continuing operations
and consolidated net income decreased by approximately $34 million, $9
million and $7 million, respectively.
3
6. As mentioned in 4b, Company officials have advised us that no consolidated
financial statements of the Company as of any date or for any period
subsequent to July 18, 2003, are available; accordingly, the procedures
carried out by us with respect to changes in financial statement items
after July 18, 2003, have, of necessity, been even more limited than those
with respect to the periods referred to in 4. We have inquired of certain
officials of the Company who have responsibility for financial and
accounting matters whether (a) at August 11, 2003, there was any decrease
in total assets or shareholders' equity or any increase in long-term debt
of the Company as compared with amounts shown on the June 20, 2003,
unaudited condensed consolidated balance sheet incorporated by reference in
the Registration Statement or (b) for the period from July 19, 2003 to
August 11, 2003, there was any decrease, as compared with the corresponding
period in the preceding year, in total revenues, income from continuing
operations or consolidated net income of the Company. On the basis of these
inquiries and our reading of the minutes as described in 4, nothing came to
our attention that caused us to believe that there was any such change,
increase or decrease, except in all instances for changes, increases or
decreases that the Registration Statement discloses have occurred or may
occur.
7. For purposes of this letter, we have also read the items identified by you
on the attached pages of Forms 10-Q and Form 10-K, incorporated by
reference in the Registration Statement and have performed the following
procedures, which were applied as indicated with respect to the symbols
explained below:
Compared the amount to the Company's audited consolidated
financial statements and notes for the period indicated and
noted agreement.
Compared the amount to the Company's unaudited condensed
consolidated financial statements for the period indicated and
noted agreement.
Compared the amount to a schedule or report prepared by the
Company which has been derived directly from the Company's
accounting records and subjected to the internal control
policies and procedures of the accounting system and noted
agreement. The amount was recalculated for mathematical
accuracy, where applicable.
Recalculated the percentage, ratio or amount and verified
arithmetical accuracy from information in the aforementioned
audited consolidated financial statements and notes thereto,
unaudited condensed consolidated financial statements and
notes thereto, and/or schedule or report prepared by the
Company, and noted agreement. Where applicable, we make no
comment as to the appropriateness of the Company's definition
of EBITDA, Funds From Operations (FFO), REVPAR, ADR and
comparable hotel-level results.
Compared the amount to a schedule or report prepared by the
Company, recalculated for mathematical accuracy, where
applicable, and noted agreement. However, we make no comment
as to the appropriateness of the Company's methodology in
calculating weighted average rates nor as to its determination
of the expected maturity dates or amounts.
4
We compared the information included under the heading
"Selected Financial Data" with the requirements of item 301 of
Regulation S-K. We also inquired of certain officials of the
Company who have responsibility for financial and accounting
matters whether this information conforms in all material
respects with the disclosure requirements of item 301 of
Regulation S-K. Nothing came to our attention as a result of
the foregoing procedures that caused us to believe that this
information does not conform in all material respects with the
disclosure requirements of item 301 of Regulation S-K.
Footed
It should be understood that our procedures with respect to the
information contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) included in the
Registration Statement were limited to applying the procedures stated
above and therefore we make no representations regarding the accuracy
of the discussions contained therein, whether any facts have been
omitted, or regarding the adequacy of the disclosures in MD&A, other
than with respect to the results of the procedures performed as
described in the symbols above. Additionally, we make no comment as to
the appropriateness or completeness of the Company's classification of
its market risk-sensitive instruments into market risk categories as
disclosed in item 7 of the Form 10-K and Item 3 of the Forms 10-Q,
"Quantitative and Qualitative Disclosures About Market Risk".
8. For the purpose of performing the procedures indicated in 7, in those
instances in which one or both of the compared amounts were rounded to some
degree, and the amounts were in agreement except that they were not rounded
to the same degree, we have nevertheless stated that we found the compared
amounts to be in agreement. With respect to the marked items referred to in
7, we make no comment as to the appropriateness of the Company's
determination to select these items to appear under the captions so
presented and we make no comment as to the determination as to their
completeness or appropriateness for purposes of the Registration Statement.
9. Our audit of the consolidated financial statements for the periods referred
to in the introductory paragraph of this letter comprised audit tests and
procedures deemed necessary for the purpose of expressing an opinion on
such financial statements taken as a whole. For none of the periods
referred to therein, or any other period, did we perform audit tests for
the purpose of expressing an opinion on individual balances of accounts or
summaries of selected transactions such as those enumerated above, and,
accordingly, we express no opinion thereon.
10. It should be understood that we make no representations regarding questions
of legal interpretation or regarding the sufficiency for your purposes of
the procedures enumerated in 7; also, such procedures would not necessarily
reveal any material misstatement of the amounts or percentages referred to
above. Further, we have addressed ourselves solely to the foregoing data as
5
set forth in the Registration Statement and make no representations
regarding the adequacy of disclosure or regarding whether any material
facts have been omitted.
11. This letter is solely for the information of the addressees and to assist
the underwriters in conducting and documenting their investigation of the
affairs of the Company in connection with the offering of the securities
covered by the Registration Statement, and it is not to be used,
circulated, quoted, or otherwise referred to within or without the
underwriting group for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with
or referred to in whole or in part in the Registration Statement or any
other document, except that reference may be made to it in the underwriting
agreement or in any list of closing documents pertaining to the offering of
the securities covered by the Registration Statement.
Very truly yours,
6