Exhibit 10.14
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT, dated as of December ___, 1998, among Host Marriott
Corporation, a Delaware corporation, and any successor thereto ("Host
Marriott"), Crestline Capital Corporation, a Maryland corporation, as successor
by merger to Crestline Capital Corporation, a Delaware corporation, and any
successor thereto ("Crestline"), Host Marriott L.P., a Delaware limited
partnership, and any successor thereto (the "Operating Partnership"), and their
respective direct and indirect subsidiaries and affiliates. References herein
to a "party" (or "parties") to this Agreement shall refer to Host Marriott,
Crestline, the Operating Partnership and where appropriate and the context so
requires, their direct and indirect subsidiaries and affiliates.
WHEREAS, Host Marriott and its subsidiaries, including Crestline, have
joined in filing consolidated federal Tax Returns and certain consolidated,
combined or unitary state, local or foreign Tax Returns;
WHEREAS, on June 21, 1997, the predecessor to Crestline purchased all of
the stock of Forum Group, Inc. ("Forum") from Marriott Senior Living Services,
Inc. ("Services"), a subsidiary of Marriott International, Inc. ("MII"), and in
connection therewith, Host Marriott, MII, Services, the predecessor to
Crestline, and Forum and its subsidiaries entered into a Tax Matters Agreement
dated as of June 21, 1997 (the "Forum Tax Matters Agreement"), providing for
allocations of and indemnifications with respect to certain liabilities for
Taxes of Forum and its subsidiaries;
WHEREAS, Host Marriott and Crestline have entered into that certain
Distribution Agreement, dated as of ______________, 1998 (the "Distribution
Agreement"), pursuant to which Host Marriott will distribute approximately 82%
of the outstanding common stock in Crestline on a pro rata basis to Host
Marriott's stockholders (the "Distribution");
WHEREAS, pursuant to the Distribution, Crestline and its subsidiaries
(including Forum and its subsidiaries) will leave the Pre-Distribution Group (as
defined below); and
WHEREAS, the parties hereto wish to provide for (i) allocations of, and
indemnifications against, certain liabilities for Taxes, including Income Taxes
and Other Taxes, (ii) the preparation and filing of Tax Returns on a basis
consistent with prior practice and the payment of Taxes with respect thereto,
and (iii) certain related matters;
NOW THEREFORE, in consideration of their mutual promises, the parties
hereby agree as follows:
1. DEFINITIONS.
When used herein the following terms shall have the following meanings:
"Affiliate" -- with respect to any corporation, partnership, limited
liability company or other entity (the "given entity"), (i) each person,
corporation, partnership, limited liability company or other entity that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the given entity, provided that
none of MII, Services, or any subsidiary of either shall be considered an
Affiliate of Host Marriott (ii) each corporation, partnership, limited liability
company or other entity in which the given entity owns, directly or indirectly,
through one or more intermediaries, at least 50% of the value of all outstanding
equity interests, (iii) any partnership or limited liability company in which
the given entity is the sole general partner or the sole managing member, or
(iv) any successor of any of the above. For purposes of this definition,
"control" means the possession, directly or indirectly, of (i) 50% or more of
the voting power or value of outstanding voting interests, or (ii) the power to
direct or cause the direction of the management of an entity, whether by
contract or otherwise.
"Affiliated Group" -- an affiliated group of corporations within the
meaning of Code Section 1504(a) for the Taxable Period or, for purposes of any
state income tax matters, any consolidated, combined or unitary group of
corporations within the meaning of the corresponding provisions of tax law for
the state in question.
"Closing" -- the time at which the Distribution shall become effective on
the Closing Date, which will be 9:00 AM on the Closing Date.
"Closing Date" -- the date on which the Distribution is effected by Host
Marriott, which will be the first business day immediately following the record
date for the Distribution.
"Code" -- the Internal Revenue Code of 1986, as amended, or any successor
thereto, as in effect for the Taxable Year in question.
"Combined Jurisdiction" -- for any Taxable Period, any state, local or
foreign jurisdiction in which Host Marriott or a Host Marriott Affiliate is
included in a consolidated, combined, unitary or similar return with Crestline
or any Crestline Affiliate for state, local or foreign Tax purposes.
"Crestline" -- as defined in the preamble to this Agreement.
"Crestline Group" -- Crestline and each corporation that joins with
Crestline in filing a consolidated federal income tax return for any Post-
Closing Taxable Period. For purposes of this Agreement, the Crestline Group
shall exist from the beginning of the day immediately after the Closing Date.
"Crestline Member" -- a corporation that was a Pre-Distribution Member and
becomes a member of the Crestline Group at the beginning of the day immediately
after the Closing Date.
"Distribution" -- as defined in the Preamble to this Agreement.
"Distribution Agreement" -- as defined in the preamble to this Agreement.
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"Final Determination" -- (i) a decision, judgment, decree, or other order
by a court of competent jurisdiction, which has become final and unappealable;
(ii) a closing agreement or accepted offer in compromise under Code Sections
7121 or 7122, or comparable agreements under the laws of other jurisdictions;
(iii) any other final settlement with the IRS or other Taxing Authority; (iv)
the receipt of any refund; or (v) the expiration of an applicable statute of
limitations.
"Fixed Asset Records" such records as detailed in Section 2(b) of this
Agreement.
"Forum" as defined in the preamble to this Agreement.
"Forum Acquisition Date" June 21, 1997.
"Forum Entity" or "Forum Entities" each or all of Forum and every
Affiliate owned by Forum, including any subsidiaries of Forum.
"Forum Tax Matters Agreement" as defined in the preamble to this
Agreement.
"Forum Taxes" any Taxes imposed upon or with respect to any Forum Entity
for any Pre-Closing Taxable Period ending before, on or including the Forum
Acquisition Date, excluding all Taxes allocable to Host Marriott or to the
predecessor of Crestline under the terms of the Forum Tax Matters Agreement.
"Forum Tax Return(s)" any Tax Returns required to be filed by or with
respect to any Forum Entity for any Pre-Closing Taxable Period ending before, on
or including the Forum Acquisition Date, excluding all Tax Returns for which
Host Marriott or the predecessor of Crestline are responsible for preparing and
filing under the terms of the Forum Tax Matters Agreement
"Forum Tax Information" any information relating or pertaining to any
Forum Entity for any Pre-Closing Taxable Period ending before, on or including
the Forum Acquisition Date, but excluding (i) any such information in the
possession of Host Marriott or any Affiliate of Host Marriott on or before the
Closing Date, and (ii) any such information as may come into the possession of
Host Marriott or any Affiliate of Host Marriott at any time after the Closing
Date.
"Host Marriott" -- as defined in the preamble to this Agreement.
"Host Marriott Group" -- Host Marriott and each corporation that joins with
Host Marriott in filing a consolidated federal income tax return for any Post-
Closing Taxable Period. For purposes of this Agreement, the Host Marriott Group
shall exist from the beginning of the day immediately after the Closing Date.
"Host Marriott Member" -- a corporation that was immediately before the
Distribution a Pre-Distribution Member and is a member of the Host Marriott
Group at the beginning of the day immediately after the Closing Date.
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"Income Tax(es) -- with respect to any entity, any and all taxes based upon
or measured by net income, gross income, gross receipts, alternative minimum
taxable income or equity, regardless of whether denominated as an "income tax,"
a "franchise tax," an "equity-based franchise tax" or otherwise, imposed by any
Taxing Authority, whether any such tax is imposed directly or through
withholding or otherwise, together with any interest and any penalty, addition
to tax or additional amount.
"Income Tax Attribute" any deduction, loss, adjustment, or other tax item
or attribute, other than an Income Tax Credit, that can be used by a taxpayer to
reduce its taxable income for purposes of determining its Income Tax liability
(assuming for these purposes that the taxpayer has sufficient taxable income to
fully utilize the deduction, loss or other tax attribute).
"Income Tax Credit" any credit, including without limitation any
investment tax credit, foreign tax credit, targeted jobs credit, research and
development credit, alternative minimum tax credit, or other credit, that can be
used by a taxpayer to reduce its Income Tax liability (assuming for these
purposes that the taxpayer has sufficient liability for Income Taxes to fully
utilize the credits).
"Information Return(s)" -- with respect to any entity, any and all reports,
returns, declarations or other filings (other than Tax Returns) required to be
supplied to any Tax Authority.
"IRS" -- the Internal Revenue Service.
"MII" as defined in the preamble to this Agreement.
"Operating Partnership" as defined in the preamble to this Agreement.
"Other Tax(es)" -- with respect to any entity, any license, business
privilege, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including under Code Section 59A), customs
duties, franchise, social security, unemployment, disability, real property,
personal property, intangibles, sales, use, transfer, registration, value added,
add-on minimum, or other tax of any kind whatsoever, whether any such tax is
imposed directly or through withholding or otherwise, together with any interest
and any penalty, addition to tax or additional amount, provided, however, that
the term "Other Tax(es)" shall not include Income Tax(es).
"Overdue Rate" -- a rate of interest per annum that equals the prime rate,
as reported in the Wall Street Journal for the period in which the Overdue Rate
is applicable, plus 2.00%.
"Post-Closing Straddle Period" -- with respect to any Straddle Period, the
period beginning on the day immediately after the Closing Date and ending on the
last day of the Taxable Year in which the Closing Date occurs.
"Post-Closing Taxable Period" -- a Taxable Year that begins on or after the
day immediately after the Closing Date.
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"Pre-Closing Straddle Period" -- with respect to any Straddle Period, the
period beginning on the first day of such Taxable Year and ending on the close
of business on the Closing Date.
"Pre-Closing Taxable Period" -- a Taxable Year that ends at or before the
close of business on the Closing Date.
"Pre-Distribution Affiliate" -- any Affiliate of any Pre-Distribution
Member.
"Pre-Distribution Group" -- Host Marriott and each corporation that joined
with Host Marriott in filing a consolidated federal income tax return for any
Pre-Closing Taxable Period. For purposes of this Agreement, the Pre-
Distribution Group shall terminate at the close of business on the Closing Date
(except as otherwise provided in this Agreement).
"Pre-Distribution Member" -- a corporation that was a member of the Pre-
Distribution Group.
"Related Transactions" -- those certain transactions in furtherance of Host
Marriott's plan to become a real estate investment trust, as described in the
Proxy Statement/Prospectus dated November [ ], 1998.
"Representative" -- with respect to any person or entity, any of such
person's or entity's directors, officers, employees, agents, consultants,
accountants, attorneys and other advisors.
"Services" -- as defined in the preamble to this Agreement.
"Straddle Period" -- any Taxable Year beginning before and ending after the
close of business on the Closing Date.
"Tax(es)" -- collectively, Income Tax(es) and Other Tax(es).
"Taxable Period" -- a Pre-Closing Taxable Period, a Post-Closing Taxable
Period or a Straddle Period.
"Taxable Year" -- a taxable year (which may be shorter than a full calendar
or fiscal year), year of assessment or similar period with respect to which any
Tax may be imposed.
"Tax Benefit(s)" -- (i) in the case of an Income Tax Attribute, the amount
of the Income Tax Attribute multiplied by the sum of the highest federal
corporate Income Tax rate and highest applicable state corporate Income Tax
rate, plus any interest received with respect to any related Tax refund or
otherwise credited to the party that used the Income Tax Attribute; (ii) in the
case of an Income Tax Credit, 100% of the amount of the Income Tax Credit, plus
any interest received with respect to any related Tax refund or otherwise
credited to the party that used the Income Tax Credit; and (iii) in the case of
any Other Tax, the amount by which the Tax liability of a corporation or other
entity is actually reduced for any Taxable Period, plus any interest received
with respect to any related Tax refund or otherwise credited to such corporation
or entity.
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"Taxing Authority" -- the IRS and any other domestic or foreign
governmental authority responsible for the administration of any Tax.
"Tax Practices" -- the most recently applied policies, procedures and
practices employed by Host Marriott or the Pre-Distribution Group in the
preparation and filing of, and positions taken on, any Tax Returns of Host
Marriott or any Pre-Distribution Member or Pre-Distribution Affiliate for any
Pre-Closing Taxable Period.
"Tax Return(s)" -- all returns, reports, estimates, information statements,
declarations and other filings relating to, or required to be filed in
connection with, the payments or refund of any Tax for any Taxable Period.
2. OBLIGATIONS, RESPONSIBILITIES AND RIGHTS OF HOST MARRIOTT AND CRESTLINE.
(a) Preparation and Filing of Tax Returns
(i) By Host Marriott. Except for any Forum Tax Return(s), Host
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Marriott shall prepare and timely file (or cause to be prepared
and timely filed):
(A) all Tax Returns and Information Returns of the Pre-
Distribution Group, any Pre-Distribution Member and any Pre-
Distribution Affiliate that are required to be filed on or
before the Closing Date;
(B) all Tax Returns and Information Returns of the Pre-
Distribution Group, any Pre-Distribution Member and any Pre-
Distribution Affiliate for all Pre-Closing Taxable Periods
that are not required to be filed on or before the Closing
Date;
(C) all Tax Returns and Information Returns of the Pre-
Distribution Group, any Pre-Distribution Member and any Pre-
Distribution Affiliate for all Taxable Years that include
any Pre-Closing Straddle Periods, provided that, in the
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event the Closing Date (i) does not occur on or before
January 1, 1999 and (ii) does occur on or before June 30,
1999, this Section 2(a)(i)(C) shall not include any such Tax
Returns or Information Returns that relate solely to one or
more Crestline Members or Crestline Affiliates each of which
are not Host Marriott Members nor Affiliates of Host
Marriott (such status as an Affiliate to be determined on
the first day immediately following the Closing Date);
(D) all state and local Tax Returns and state and local
Information Returns of the Pre-Distribution Group, any Pre-
Distribution Member and Any Pre-Distribution Affiliate for
all Straddle Periods (for these purposes, the Pre-
Distribution Group shall be deemed to exist for each such
Straddle Period and, to the extent not prohibited by
applicable law, such state and local Tax Returns and state
and local Information Returns shall be filed by treating
each such
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Straddle Period as a single Taxable Year), provided that,
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in the event the Closing Date (i) does not occur on or
before January 1, 1999 and (ii) does occur on or before June
30, 1999, this Section 2(a)(i)(D) shall not include any such
Tax returns or Information Returns that relate solely to one
or more Crestline Members or Crestline Affiliates each of
which are not Host Marriott Members nor Affiliates of Host
Marriott (such status as an Affiliate to be determined on
the first day immediately following the Closing Date);
(E) all Tax Returns and Information Returns of Host Marriott,
any Affiliate of Host Marriott, the Host Marriott Group, any
Host Marriott Member, and any Affiliate of any Host Marriott
Member for all Straddle Periods and all Post-Closing Taxable
Periods; and
(F) all Tax Returns and Information Returns not otherwise
required to be filed by Host Marriott pursuant to paragraphs
(A), (B), (C), (D) or (E) of this Section 2(a)(i) or by
Crestline pursuant to Section 2(a)(ii).
(ii) By Crestline. Crestline shall prepare and timely file (or cause
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to be prepared and timely filed):
(A) the federal Income Tax Return for Crestline and the
Crestline Group for the Post-Closing Taxable Period
beginning on the first day immediately following the Closing
Date;
(B) all other Tax Returns for Crestline, the Crestline Group,
any Crestline Member, any Affiliate of Crestline or any
Affiliate of any Crestline Member for any Post-Closing
Taxable Period beginning on the first day immediately
following the Closing Date;
(C) all Tax Returns and Information Returns of Crestline, the
Crestline Group, any Crestline Member, any Affiliate of
Crestline or any Affiliate of any Crestline Member for all
Post-Closing Taxable Periods (including without limitation
the Post-Closing Taxable Periods described in Sections
2(a)(ii)(A) and (B), above); and
(D) in the event the Closing Date (i) does not occur on or
before January 1, 1999 and (ii) does occur on or before June
30, 1999, any Tax Returns or Information Returns that relate
solely to Crestline, the Crestline Group and any Crestline
Member or any Affiliate of Crestline for any Straddle
Periods beginning on or after January 1, 1999, but only to
the extent, in each case, that such Returns fall within the
proviso exclusion to Section 2(a)(i)(C) or Section
2(A)(i)(D), above.
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(b) Provision of Filing Information. With respect to any matter directly
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related to Crestline, the Crestline Group or any Crestline Member, or
any matter directly related to any Affiliate controlled by Crestline
or a Crestline Member, each party to this Agreement shall cooperate
and assist the other party in connection with the preparation and
filing of all Tax Returns and Information Returns that are required to
be filed by a specified party pursuant to Section 2(a), including
providing the party required to file such Tax Returns and Information
Returns with (i) all necessary filing information in a manner
consistent with past Tax Practices (whether or not a Tax Return or
Information Return has previously been filed with respect to any of
Crestline, the Crestline Group, any Crestline Member or any Affiliate
of Crestline or any Crestline Member) and (ii) all other information
reasonably requested in connection with the preparation of such Tax
Returns and Information Returns by the party responsible for preparing
and filing such Returns, in each case promptly after such request
(which shall be within fourteen (14) days after such request).
Without limiting the foregoing in any respect, the cooperation and
assistance of Host Marriott shall include, for each of Crestline, any
Crestline Member or any Affiliate of Crestline or a Crestline Member,
with respect to (x) each Post-Closing Taxable Period described in
Sections 2(a)(ii)(A) and (B) and (y) any Straddle Periods with respect
to which Crestline is required to file any Tax Return pursuant to
Section 2(a)(ii)(D), the following information (in each case set forth
in adequate detail and provided by Host Marriott to Crestline not
later than sixty (60) days prior to the date the applicable Tax Return
with respect to the applicable Taxable Period is required to be
filed): (i) the electronic details of all tax and financial fixed
asset records and CIP records (to include detail ledger
reconciliations at the general ledger account level) and completed
Fixed Asset Records (as detailed below) for the applicable Taxable
Period or Straddle Period, as the case may be, and (ii) each item of
gross income and each deduction, expense, loss, credit or other tax
attribute included in the applicable Tax Period or Straddle Period
(which, if appropriate, may be presented on the basis of a pro rata
percentage allocation between Pre-Closing Taxable Periods and Post-
Closing Taxable Periods or Pre-Closing Straddle Periods and Post-
Closing Straddle Periods, as the case may be). Without limiting the
foregoing in any respect, the parties agree that the electronic
details and Fixed Asset Records shall include, with respect to each
asset owned by any of Crestline, the Crestline Group, any Crestline
Member, or any Affiliate of Crestline or a Crestline Member, during
any applicable Taxable Period or Straddle Period, (a) the original
cost, (b) acquisition date, (c) depreciation reserves, and (d)
depreciation lives and methods. In addition, without limiting the
foregoing in any respect, the Fixed Asset Records shall define the
assets by year of acquisition, by property class life, by operating
property unit, and by legal entity. All records provided by or on
behalf of Host Marriott pursuant to this Section 2(b) must be
sufficiently maintained to support, and reconcile to, (i) the
consolidated balance sheet of Crestline and the Affiliates of
Crestline as of the Closing Date, (ii) each entity's financial
accounting balance sheet as of the Closing Date and (iii) each
entity's financial accounting balance sheet as of the end of any
Taxable Period for which Host Marriott is required to file Tax Returns
pursuant to Section 2(a)(i). Host
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Marriott and Crestline Agree that (a) within 60 days after the Closing
Date, Host Marriott shall provide Crestline with all records,
schedules, data, work product and other information then in the
possession of Host Marriott (or any Affiliate) that represent work
done as such date relating to the preparation of entity-level tax
basis balance sheets for Crestline, any Crestline Member, the
Crestline Group, and any Affiliate of Crestline or any Crestline
Member as of the Closing Date, (b) from and after 60 days after the
Closing Date, Host Marriott shall provide Crestline, promptly upon
Crestline's request (which shall be within 14 days of such request),
any information in the possession of Host Marriott or its Affiliates
reasonably deemed necessary by Crestline (or Crestline's designee) to
complete such tax basis balance sheets, and (c) Host Marriott shall
assist, and cooperate with, Crestline (or Crestline's designee) during
the preparation of such tax basis balance sheets. Notwithstanding
anything in this Section 2(b) to the contrary, Host Marriott shall not
have any responsibility to provide to Crestline, the Crestline Group,
any Crestline Member, or any Crestline Affiliate any Forum Tax
Information, which information Crestline shall seek directly from MII
or Services to the extent provided for in the Forum Tax Matters
Agreement, provided, however, that at Crestline's written request,
Host Marriott agrees to use good faith efforts to jointly pursue such
Forum Tax Information from MII and Services pursuant to the terms of
the Forum Tax Matters Agreement.
(c) Taxable Year. Crestline and Host Marriott agree that, for all Tax
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purposes, (i) for the Pre-Closing Taxable Period of Crestline and the
Crestline Members that ends at the close of business on the Closing
Date, for any Pre-Closing Taxable Periods of Forum and its
subsidiaries commencing after the Forum Acquisition Date, and for any
other Pre-Closing Taxable Periods of Crestline and the Crestline
Members (other than Forum and its subsidiaries), Crestline and the
Crestline Members (including, as applicable, Forum and its
subsidiaries) shall be included in the consolidated federal Income Tax
Return of the Pre-Distribution Group for the Taxable Year that
includes such Pre-Closing Taxable Period, subject to the "next day"
rule set forth in Treas. Reg. Sec. 1.1502-76(b)(1)(ii)(A) (and, to the
extent permitted by law, in all corresponding consolidated, combined
or unitary state or other Income Tax Returns of the Pre-Distribution
Group) and (ii) Crestline, the Crestline Group and each Crestline
Member shall begin a new Taxable Year for purposes of such federal
and, to the extent permitted by law, state Income Taxes on the day
immediately after the Closing Date. The parties further agree that, to
the extent permitted by applicable law, all federal, state or other
Tax Returns (including Income Tax Returns and Other Tax Returns) and
all Information Returns shall be filed consistently with this
position; provided, however, that with respect to any Affiliate of
Crestline or any Affiliate of any Crestline Member that is a
partnership or limited liability company, solely for purposes of
determining the Taxable Period to which the partnership's or the
limited liability company's items of income, deduction, expense, loss,
credit or other tax attributes are to be allocated, Crestline, any
Crestline Member or any Crestline Affiliate that owns an interest in
such partnership or limited liability company shall be treated as
selling or exchanging its entire interest in such
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partnership or limited liability company immediately before the
Closing and acquiring such interest at the beginning of the day
immediately following the Closing Date, under the principles set forth
in Treas. Reg. Sec. 1.1502-76(b)(2)(v)(A).
(d) Straddle Period Taxes.
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(i) For purposes of this Agreement, pursuant to Sections 2(a)(ii)
(A) and 2(c), federal Income Taxes for Crestline, the Crestline
Group, any Crestline Member will not be reported in any
Straddle Period or allocated pursuant to this Section 2(d).
(ii) For purposes of this Agreement, Taxes (other than federal
Income Taxes) for any Straddle Period shall be allocated
between the Pre-Closing Straddle Periods and Post-Closing
Straddle Periods in the following manner: (A) state and local
Income Taxes shall be allocated pro-rata between Pre-Closing
Straddle Periods and Post-Closing Straddle Periods based on a
fraction, the numerator of which shall be the number of days in
the Pre-Closing Straddle Period or the Post-Closing Straddle
Period, as the case may be, and the denominator of which shall
be the total number of days in the Straddle Period (provided,
however, that at the written request of either Host Marriott or
Crestline, state and local Income Taxes shall be allocated on
the basis of the actual taxable income for each such period,
determined by closing the books of the Pre-Distribution Group
and any Pre-Distribution Affiliate at the close of business on
the Closing Date, provided further that an allocation on the
basis of actual taxable income shall occur only if (a) such an
allocation would result in a reduction of the requesting
party's liability (including the liability of any Affiliates)
for state and local Income Taxes of at least 10% from the
allocation that would result under the pro rata allocation
method described above, (b) the requesting party is responsible
for preparing the allocation based on actual taxable income,
(c) such allocation shall be consented to by the other party
(which consent shall not be unreasonably withheld), and (d) the
requesting party shall pay all direct and indirect costs
associated with such revised allocation); and (B) Other Taxes
shall be allocated between Pre-Closing Straddle Periods and
Post-Closing Straddle Periods on the basis of the actual
transactions, events or activities that give rise to or create
liability for such Other Taxes.
(iii) Crestline shall pay to Host Marriott, within fourteen (14) days
after receipt of an executed Straddle Period Tax Return that
has been prepared and filed by or on behalf of Host Marriott
pursuant to Section 2(a)(i), the excess of any amount allocated
to Crestline or any Crestline Affiliate for the Post-Closing
Straddle Period (based on the amount of Tax shown on such Tax
Return, allocated as provided in Section 2(d)(ii)) over the
amount of any estimated Taxes previously paid by or on behalf
of any Pre-Distribution Member or Pre-Distribution Affiliate to
the relevant Taxing Authority
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with respect to such Tax with respect to the applicable Taxable
Period; Host Marriott shall pay to Crestline, within fourteen
(14) days after receipt of an executed Straddle Period Tax
Return that has been prepared and filed by or on behalf of
Crestline pursuant to Section 2(a)(ii), the excess of any
amount allocated to Host Marriott or any Host Marriott
Affiliate for the Pre-Closing Straddle Period (based on the
amount of Tax shown on such Tax Return, allocated as provided
in Section 2(d)(ii)) over the amount of any estimated Taxes
previously paid by or on behalf of any Pre-Distribution Member
or Pre-Distribution Affiliate to the relevant Taxing Authority
with respect to such Tax with respect to the applicable Taxable
Period.
(e) Payment of Taxes. Host Marriott shall pay (i) all Taxes (other than
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Forum Taxes) shown to be due and payable on all Tax Returns filed by
Host Marriott pursuant to Section 2(a)(i) hereof (except for any Taxes
that are allocable to Crestline or a Crestline Affiliate for a Post-
Closing Straddle Period under Sections 2(d)(ii) or (iii), which shall
be paid by Crestline), (ii) all Taxes (other than Forum Taxes) that
shall thereafter become due and payable with respect to all Tax
Returns filed pursuant to Sections 2(a)(i) or the applicable Taxable
Periods as a result of a Final Determination (except for any Taxes
that are allocable to Crestline or a Crestline Affiliate for a Post-
Closing Straddle Period under Sections 2(d)(ii) or (iii), which shall
be paid by Crestline), and (iii) all Taxes allocable to a Pre-Closing
Straddle Period under Sections 2(d)(ii) or (iii). Crestline shall pay
(i) all Taxes attributable to all Tax Returns filed by Crestline
pursuant to Section 2(a)(ii) hereof, including without limitation (a)
federal Income Taxes of Crestline, the Crestline Group and any
Crestline Member for the Post-Closing Taxable Period beginning on the
first day immediately following the Closing Date and (b) all other
Taxes of Crestline, the Crestline Group, any Crestline Member, any
Affiliate of Crestline or any Affiliate of any Crestline Member for
any Post-Closing Taxable Period beginning on the first day immediately
following the Closing Date, and (ii) all Taxes that are allocable to
Crestline or a Crestline Affiliate for a Post-Closing Straddle Period
under Sections 2(d)(ii) or (iii) (but excluding any Taxes that are
allocable to a Pre-Closing Straddle Period under Sections 2(d)(ii) or
(iii), which shall be paid by Host Marriott).
(f) Amendments to Tax Returns. No Tax Returns for any Pre-Closing Taxable
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Periods or Straddle Periods filed by Host Marriott may be amended
without the consent of Host Marriott and Crestline, which in each case
shall not be unreasonably withheld; provided, however, that (i) no
party shall be considered unreasonable in withholding such consent if
such amendment would result in an increase in a Tax liability for
which such party has responsibility under this Agreement (unless the
other party agrees to pay such party an amount equal to the amount of
such increase, in which case a failure to consent will be considered
unreasonable), and (ii) Host Marriott shall not be required to seek
the consent of Crestline if such amendment would not result in any
adjustment to any Income Tax Attributes or Income Tax Credits, and
such amendment would not result in any increase in the Tax liability,
of each of Crestline, the Crestline Group, any
11
Crestline Member and any Crestline Affiliate for each Post-Closing
Straddle Period and Post-Closing Taxable Period.
(g) Refunds of Taxes.
----------------
(i) Host Marriott shall be entitled to (a) any refund of Taxes and
any Tax Benefits realized as a result of a Final Determination
with respect to all Tax Returns filed by Host Marriott pursuant
to Section 2(a)(i) (except that Crestline shall be entitled to
any refund of, or Tax Benefit related to, any Taxes that are
allocable to Crestline or a Crestline Affiliate for a Post-
Closing Straddle Period under Sections 2(d)(ii) or (iii)) and
(b) any refund of, and any Tax Benefit related to, any Taxes
that are allocable to a Pre-Closing Straddle Period under
Sections 2(d)(ii) or (iii). Crestline shall be entitled to (a)
any refund with respect to all Tax Returns filed by Crestline
pursuant to Section 2(a)(ii) (except that Host Marriott shall
be entitled to any refund of, or Tax Benefit related to, any
Taxes that are allocable to any Pre-Closing Straddle Period
under Sections 2(d)(ii) or (iii)) and (b) any refund of, or Tax
Benefit related to, any Taxes that are allocable to Crestline
or a Crestline Affiliate for a Post-Closing Straddle Period
under Sections 2(d)(ii) or (iii). Any refunds attributable to a
Straddle Period shall be allocated between the Pre-Closing
Straddle Period and Post-Closing Straddle Period on a basis
consistent with the method used to allocate the Tax liability
for such Straddle Period. Notwithstanding the above, if and to
the extent any refund of Taxes or other Tax Benefit for any
Pre-Closing Taxable Period is required to be paid to MII or
Services pursuant to the Forum Tax Matters Agreement or
otherwise, neither Host Marriott nor Crestline (nor any
Affiliate of either) shall be entitled to such refund of Tax or
Tax Benefit.
(ii) If Host Marriott, any Host Marriott Affiliate, any Host
Marriott Member or Affiliate of a Host Marriott Affiliate
receives a Tax refund or Tax Benefit to which Crestline, any
Affiliate of Crestline, the Crestline Group, any Crestline
Member or any Affiliate of a Crestline Member is entitled
pursuant to this Agreement, Host Marriott shall pay (in
accordance with Section 4) the amount of such Tax refund or Tax
Benefit to Crestline within fourteen (14) days of the receipt
thereof.
(iii) If Crestline or any Crestline Member or Affiliate of Crestline
or a Crestline Member receives a Tax refund or Tax Benefit to
which Host Marriott, any Host Marriott Member or any Affiliate
of Host Marriott or any Host Marriott Member is entitled
pursuant to this Agreement, Crestline shall pay (in accordance
with Section 4) the amount of such Tax refund or Tax Benefit
(including any interest received thereon) to Host Marriott
within fourteen (14) days of the receipt thereof.
(h) Carrybacks. Neither Crestline nor Host Marriott shall file any
----------
carryback claim for federal Taxes or state, local or foreign Taxes in
a Combined Jurisdiction for the
12
Crestline Group or any Crestline Member or the Host Marriott Group or
any Host Marriott Member into a Pre-Closing Taxable Period without the
prior written consent of Host Marriott or Crestline, as applicable,
which shall not be unreasonably withheld, provided that Host Marriott
shall not be required to seek the consent of Crestline if such
carryback claim, if granted, would not result in any adjustment to any
Income Tax Attribute or Income Tax Credit or increase the liability
for Taxes of any of Crestline, the Crestline Group, any Crestline
Member or any Crestline Affiliate for any Post-Closing Straddle Period
or any Post-Closing Taxable Period.
3. INDEMNIFICATION.
(a) By Host Marriott
----------------
(i) Taxes. Host Marriott shall indemnify and hold Crestline, the
-----
Crestline Group, Crestline Members and Affiliates of Crestline
and Crestline Members harmless from and against any and all (A)
Taxes attributable to all Tax Returns filed (or required to be
filed) by Host Marriott pursuant to Section 2(a)(i) and the
related Taxable Periods (other than Taxes that are allocable to
Crestline or a Crestline Affiliate for a Post-Closing Straddle
Period under Sections 2(d)(ii) or (iii)), (B) all Taxes
attributable to or arising from the Distribution or the Related
Transactions, and (C) any Taxes that are allocable to any Pre-
Closing Straddle Period under Sections 2(d)(ii) or (iii).
(ii) Member Liability. Host Marriott shall indemnify and hold
----------------
Crestline, the Crestline Group, the Crestline Members and
Affiliates of Crestline and Crestline Members harmless against
each and every liability for (a) Income Taxes of the Pre-
Distribution Group and any other Affiliated Group in which
Crestline or any Crestline Affiliate have been members at any
time under Treasury Regulation Section 1.1502-6 or any similar
law, rule or regulation administered by any Taxing Authority and
(b) Other Taxes of the Pre-Distribution Group, Pre-Distribution
Members and Pre-Distribution Affiliates, provided that Host
Marriott shall not have any liability to Crestline, the Crestline
Group, the Crestline Members or any Affiliates of Crestline for
any Forum Taxes.
(b) By Crestline. Crestline shall indemnify and hold Host Marriott, Host
------------
Marriott Members and any Affiliates of Host Marriott or Host Marriott
Members harmless against (A) any and all Taxes attributable to all Tax
Returns filed (or required to be filed) by Crestline pursuant to
Section 2(a)(ii) (other than any Taxes that are allocable to Pre-
Closing Straddle Periods pursuant to Sections 2(d)(ii) or (iii)) and
(B) any Taxes that are allocable to Crestline or a Crestline Affiliate
for any Post-Closing Straddle Period under Sections 2(d)(ii) or (iii).
13
(c) Certain Reimbursements. Crestline (or Host Marriott, as the case may
----------------------
be) shall notify Host Marriott (or Crestline) of any Taxes paid by
Crestline, the Crestline Group, any Crestline Member or any Affiliate
of Crestline or a Crestline Member (or Host Marriott, the Host
Marriott Group, any Host Marriott Member or any Affiliate of Host
Marriott or a Host Marriott Group Member) which are subject to
indemnification under this Section 3. To the extent not otherwise
provided in this Section 3, any notification contemplated by this
Section 3(c) shall include a detailed calculation (including, if
applicable, separate allocations of such Taxes between Pre-Closing
Taxable Periods and Post-Closing Taxable Periods and Pre-Closing
Straddle Periods and Post-Closing Straddle Periods and supporting work
papers) and a brief explanation of the basis for indemnification
hereunder. Whenever a notification described in this Section 3(c) is
given, the notified party shall pay the amount requested in such
notice to the notifying party in accordance with Section 4, but only
to the extent that the notified party agrees with such request. To the
extent the notified party disagrees with such request, it shall,
within thirty (30) days, so notify the notifying party, whereupon the
parties shall use their best efforts to resolve any such disagreement.
Any payment made after such thirty-day period shall include interest
at the Overdue Rate from the date such payment would have been made
under Section 4 based upon the original notice given by the notifying
party.
(d) Other Indemnifications. The terms of this Agreement, including
----------------------
without limitation the indemnification provisions set forth herein,
shall govern the matters described herein notwithstanding the scope,
limitations or other elements of any other indemnification provisions
between or among any of Host Marriott, any Host Marriott Member, any
Host Marriott Affiliate, Crestline, any Crestline Member or Crestline
Affiliate as set forth in any other intercompany agreements entered
into in connection with the Distribution or the Related Transactions
or otherwise. This Agreement shall not restrict the scope,
limitations or other elements of indemnifications provisions in such
other agreements that relate to matters other than those described
herein.
(e) Forum Tax Matters Agreement. Host Marriott and Crestline (i)
---------------------------
acknowledge that Crestline, as successor to HMC Senior Communities,
Inc., a Delaware corporation, and Host Marriott are each a party to,
and beneficiary of, the Forum Tax Matters Agreement, (ii) agree that,
with respect to any Post-Closing Taxable Period under this Agreement,
Crestline shall assume all rights and obligations under, and be
entitled to all payments made by MI or Services with respect to, the
Forum Tax Matters Agreement, and (iii) agree that with respect to Pre-
Closing Taxable Periods ending before, on, or including the Forum
Acquisition Date, Host Marriott assigns to Crestline the right to any
and all payments for or with respect to any Forum Taxes or any matter
related to or arising out of the filing (or failure to file) any Forum
Tax Return, and (iv) agree that notwithstanding any other provision of
this Agreement, Host Marriott shall not in any event have any
liability to Crestline, the Crestline Group, any Crestline Member or
any Crestline Affiliate for any Forum Taxes or for any matters
related to or arising out of the filing (or failure to file) Forum Tax
Returns or the provision (or accuracy of) any
14
Forum Tax Information, and that the sole recourse of Crestline, the
Crestline Group, the Crestline Members or any Crestline Affiliate with
respect to such matters shall be against MII and/or Services as and to
the extent provided in the Forum Tax Matters Agreement. Host Marriott
and Crestline agree to cooperate in good faith in asserting their
respective rights against MII and/or Services under the Forum Tax
Matters Agreement for the respective periods for which they are the
beneficiaries of such agreement.
4. METHOD, TIMING AND CHARACTER OF PAYMENTS REQUIRED BY THIS AGREEMENT.
(a) Payment in Immediately Available Funds; Interest. All payments made
------------------------------------------------
pursuant to this Agreement shall be made in immediately available
funds. Except as otherwise provided herein, any payment not made
within fourteen (14) days of when due shall thereafter bear interest
at the Overdue Rate from the date such payment was due.
(b) Characterization of Payments. Any payment (other than interest
----------------------------
thereon) made hereunder by Host Marriott to Crestline or by Crestline
to Host Marriott shall be treated by all parties for Tax purposes to
the extent permitted by law, and for accounting purposes to the extent
permitted by generally accepted accounting principles, as non-taxable
dividend distributions or capital contributions made prior to the
close of business on the Closing Date.
5. TAX RETURNS; COOPERATION; DOCUMENT RETENTION; CONFIDENTIALITY.
(a) Provision of Cooperation, Documents and Other Information. Upon the
---------------------------------------------------------
reasonable request of any party to this Agreement, Host Marriott and
Crestline agree that, with respect to any matter directly related to
Crestline, the Crestline Group or any Crestline Member, or any matter
directly related to any Affiliate controlled by Crestline or a
Crestline Member, they shall provide (and shall cause their Affiliates
to provide) the requesting party, promptly upon request, with such
cooperation and assistance, access to documents, and other
information, without charge, as may reasonably be requested by such
party in connection with (i) the preparation and filing of any
original or amended Tax Return, (ii) the conduct of any audit or other
examination or any judicial or administrative proceeding involving
Taxes or Tax Returns, or (iii) the verification by a party of an
amount payable hereunder to, or receivable hereunder from, another
party. Such cooperation and assistance shall include, without
limitation: (i) the prompt provision (which shall be within fourteen
(14) days after a request) of books, records, Tax Returns,
documentation or other information relating to any relevant Tax
Return; (ii) the execution of any document that may be necessary or
reasonably helpful in connection with the filing of any Tax Return, or
in connection with any audit, proceeding, suit or action of the type
generally referred to in the preceding sentence, including, without
limitation, the execution of powers of attorney and extensions of
applicable statutes of limitations, with
15
respect to Tax Returns which Host Marriott may be obligated to file on
behalf of Crestline Members pursuant to Section 2(a); (iii) the prompt
and timely filing of appropriate claims for refund; and (iv) the use
of reasonable efforts to obtain any documentation from a governmental
authority or a third party that may be necessary or helpful in
connection with the foregoing. Each party shall make reasonable
efforts to make available its employees and facilities available on a
mutually convenient basis to facilitate such cooperation.
Notwithstanding anything in this Section 5(a) to the contrary, Host
Marriott shall not have any responsibility to provide Crestline, the
Crestline Group, any Crestline Member or any Crestline Affiliate any
Forum Tax Information, which information Crestline and Host Marriott
shall jointly seek directly from MII and/or Services to the extent
provided for in the Forum Tax Matters Agreement.
(b) Retention of Books and Records. Host Marriott, each Host Marriott
------------------------------
Member, each Affiliate of a Host Marriott Member, Crestline, each
Crestline Member and each Affiliate of a Crestline Member shall retain
or cause to be retained all Tax Returns, and all books, records,
schedules, workpapers, and other documents relating thereto, until the
expiration of the later of (i) all applicable statutes of limitations
(including any waivers or extensions thereof), and (ii) any retention
period required by law or pursuant to any record retention agreement.
The parties hereto shall notify each other in writing of any waivers,
extensions or expirations of applicable statutes of limitations. The
parties shall provide written notice of any intended destruction of
the documents referred to in this subsection at least fourteen (14)
days prior to the date of intended destruction. A party giving such a
notification shall not dispose of any of the foregoing materials
without first offering to transfer possession thereof to all notified
parties. The parties agree that (i) Crestline shall be deemed to own
all Tax Returns and Information Returns relating to Crestline, the
Crestline Group, any Crestline Member, and any Affiliate of Crestline
or a Crestline Member, and all books, records, schedules, workpapers,
and other documents relating thereto, and (ii) Host Marriott shall own
all other Tax Returns and Information Returns, and the other related
books, records, schedules, workpapers, and other documents relating
thereto.
(c) Status and Other Information Regarding Audits and Litigation. Each
------------------------------------------------------------
party shall use reasonable best efforts to keep the other party
advised, as to the status of Tax audits and litigation involving any
issue relating to any Taxes, Tax Returns or Tax Benefits subject to
indemnification under this Agreement. To the extent relating to any
such issue, each party shall promptly furnish the other party copies
of any inquiries or requests for information from any Taxing Authority
or any other administrative, judicial or other governmental authority,
as well as copies of any revenue agent's report or similar report,
notice of proposed adjustment or notice of deficiency.
(d) Confidentiality of Documents and Information. Except as required by
--------------------------------------------
law or with the prior written consent of the other party, all Tax
Returns, documents, schedules, work papers and similar items and all
information contained therein, which Tax Returns and other materials
are within the scope of this Agreement,
16
shall be kept confidential by the parties hereto and their
Representatives, shall not be disclosed to any other person or entity
and shall be used only for the purposes provided herein.
6. CONTESTS AND AUDITS.
(a) Notification of Audits or Disputes. Upon the receipt by a party of
----------------------------------
notice of any pending or threatened Tax audit or assessment which may
affect the liability for Taxes that are subject to indemnification
hereunder, such party shall notify the other party in writing within
fourteen (14) days of the receipt of such notice. The failure of any
party to make such notification to another party shall not affect in
any respect the first party's right to indemnification hereunder
unless, and only to the extent that, such other party can demonstrate
that it was materially prejudiced by such failure.
(b) Control and Settlement. Except as otherwise provided in this
----------------------
paragraph, Host Marriott shall have the right and obligation, at its
own expense, to control, and to represent the interests of all
affected taxpayers in, any Tax audit or administrative, judicial or
other proceeding relating, in whole or in part, to any Pre-Closing
Taxable Period or any other Taxable Period for which Host Marriott is
responsible, in whole or in part, for Taxes pursuant to Section 2(e),
and to employ counsel of its choice, at Host Marriott's expense;
provided, however, that, (a) with respect to such issues that may
impact Crestline, the Crestline Group, any Crestline Member or any
Affiliate of Crestline or a Crestline Member for any Taxable Period,
Host Marriott (i) shall in good faith consult with Crestline and
Crestline's counsel of choice as to the handling and disposition of
such issues and (ii) shall not enter into any settlement that impacts
Crestline, the Crestline Group, any Crestline Member, or any Affiliate
of Crestline or a Crestline Member without the prior written consent
of Crestline, which shall not be unreasonably withheld, and (b) Host
Marriott shall not enter into any settlement for any Taxable Period
that impacts or changes the accounting methods adopted or used with
respect to (including without limitation the useful lives of) any
property of Crestline, the Crestline Group, any Crestline Member or
any Affiliate of Crestline placed in service in 1997 or 1998, unless
Host Marriott shall have obtained the prior written consent of
Crestline, which shall not be unreasonably be withheld. Crestline's
Senior Vice President Taxes shall deliver to Host Marriott's Tax
Director a written response to any written notification by Host
Marriott of a proposed settlement within fourteen (14) days of the
receipt by the Crestline Senior Vice President Taxes of such
notification. If the Crestline Senior Vice President Taxes fails to
so respond within such fourteen (14) day period, Crestline shall be
deemed to have consented to the proposed settlement. Host Marriott
shall have no obligation with respect to any proceeding involving any
Forum Taxes or Forum Tax Returns except (and only to the extent) Host
Marriott, in its sole and absolute discretion, elects to take control
of any such proceeding, provided, however, that if Host Marriott does
not elect to take control of any such proceeding, Crestline shall be
entitled to elect to control any such proceeding under the Forum Tax
Matters Agreement.
17
(c) Delivery of Powers of Attorney and Other Documents. Crestline shall
--------------------------------------------------
execute and deliver to Host Marriott, promptly upon request, powers of
attorney authorizing Host Marriott to extend statutes of limitations,
receive refunds, negotiate settlements and take such other actions
that are reasonably appropriate in the exercise of Host Marriott's
control rights pursuant to Section 6(b), and any other documents
reasonably necessary to effect the exercising of such control rights,
consistent with Crestline's rights of consultation and consent as set
forth in Section 6(b).
7. OTHER AGREEMENTS. To the extent any provision in this Agreement conflicts
----------------
with any other provision in any other agreement to which Crestline and Host
Marriott are parties, the parties agree that, except as contemplated in the
provisions of this Agreement addressing the Forum Tax Matters Agreement,
the provisions of this Agreement shall govern.
8. MISCELLANEOUS.
(a) Effectiveness. This Agreement shall have no force or effect if the
-------------
Distribution does not occur. If the Distribution occurs, this
Agreement shall be effective from and after the Closing on the Closing
Date and shall survive until the expiration of any applicable statute
of limitations (including any waivers and extensions thereof).
(b) Entire Agreement. This Agreement contains the entire agreement among
----------------
the parties hereto with respect to the subject matter hereof. This
Agreement terminates and supercedes any and all other sharing or
allocation agreements with respect to Taxes in effect at the time of
the Distribution that relate solely to the Pre-Distribution Group and
the Crestline Members, but shall not affect any such agreement to the
extent applicable only among Host Marriott Members.
(c) Guarantees of Performance. Host Marriott hereby guarantees the
-------------------------
complete and prompt performance by the Host Marriott Group, each Host
Marriott Member, the Pre-Distribution Group, and all Affiliates of
Host Marriott or any Host Marriott Member, of all of their obligations
and undertakings pursuant to this Agreement. Crestline hereby
guarantees the complete and prompt performance by the Crestline Group,
any Crestline Member, and any Affiliate of Crestline or any Crestline
Member, of all of their obligations and undertakings pursuant to this
Agreement. If, subsequent to the close of business on the Closing
Date, either Host Marriott or Crestline shall be acquired by another
entity such that 50% or more of its common stock is in common control,
such acquirer shall, by making such acquisition, simultaneously agree
to jointly and severally guarantee the complete and prompt performance
by the acquired corporation and any Affiliate of the acquired
corporation of all of their obligations and undertakings pursuant to
this Agreement. The Operating Partnership and Host Marriott agree
that, without limiting in any respect Host Marriott's obligations or
liabilities under, or undertakings pursuant to, this Agreement,
including without limitation Host Marriott's obligations to pay Taxes
to any Tax Authority or to any party to this
18
Agreement, the Operating Partnership (i) hereby assumes all of Host
Marriott's obligations, liabilities and undertakings set forth in this
Agreement and agrees to pay any amounts that Host Marriott is
obligated to pay to any Tax Authority or to any party pursuant to this
Agreement, (ii) hereby guarantees the complete and prompt performance
by Host Marriott, the Host Marriott Group, each Host Marriott Member,
the Pre-Distribution Group, each Pre-Distribution Member, and all
Affiliates of Host Marriott or any Host Marriott Member, of all of
their obligations, liabilities and undertakings made under or pursuant
to this Agreement, and (iii) hereby indemnifies and holds harmless
Host Marriott and any Affiliate of Marriott from and against any
obligation hereunder including without limitation any obligation to
pay Taxes to any Tax Authority or any party pursuant to this
Agreement.
(d) Severability. In case any one or more of the provisions contained in
------------
this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions hereof without
including any of such which may hereafter be declared invalid, void or
unenforceable. In the event that any such term, provision, covenant or
restriction is hereafter held to be invalid, void or unenforceable,
the parties hereto agree to use their best efforts to find and employ
an alternate means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction.
(e) Indulgences, etc. Neither the failure nor any delay on the part of
-----------------
any party hereto to exercise any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise
of any right preclude any other or further exercise of the same or any
other right, nor shall any waiver of any right with respect to any
occurrence be construed as a waiver of such right with respect to any
other occurrence.
(f) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Maryland without
regard to the conflict of law principles thereof, except with respect
to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or subject of this Agreement, and
as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
(g) Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement that are routine in nature
shall be made in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the
designated representative of the tax department of each party and
confirmed by a way thereof directed to the general counsel of each
party.
19
(h) Modification or Amendment. This Agreement may be amended at any time
-------------------------
by written agreement executed and delivered by duly authorized
officers of Crestline and Host Marriott.
(i) Successors and Assigns. A party's rights and obligations under this
----------------------
Agreement may not be assigned without the prior written consent of the
other party. All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and permitted assigns, and shall survive any acquisition,
disposition or other corporate restructuring or transaction involving
either party.
(j) No Third-Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of the parties to this Agreement and their respective
Affiliates and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without this Agreement.
(k) Other. This Agreement may be executed in any number of counterparts,
-----
each such counterpart being deemed to be an original instrument, and
all of such counterparts shall together constitute one and the same
instrument. The section numbers and captions herein are for
convenience of reference only, do not constitute part of this
Agreement, and shall not be deemed to limit or otherwise affect any
of the provisions hereof.
(l) Predecessors and Successors. To the extent necessary to give effect
---------------------------
to the purposes of this Agreement, any reference to any corporation,
partnership, limited liability company, Affiliated Group, member of an
Affiliated Group or other entity shall also include any predecessors
or successors thereto, by operation of law or otherwise.
(m) Tax Elections. Except as provided in Section 6(b) or this paragraph,
-------------
(i) nothing in this Agreement is intended to change or otherwise
affect any previous tax election made by or on behalf of the Pre-
Distribution Group (including the election with respect to the
calculation of earnings and profits under Code Section 1552 and the
regulations thereunder), and (ii) Host Marriott shall continue to have
discretion, reasonably exercised, to make any and all elections with
respect to all members of the Pre-Distribution Group for all Pre-
Closing Taxable Periods or other Tax Periods for which it is obligated
to file Tax Returns or Information Returns under Section 2(a)(i).
Notwithstanding anything to the contrary in this Agreement, (i) Host
Marriott agrees that it shall consult with Crestline regarding, and
shall obtain Crestline's written consent (which shall not be
unreasonably withheld) with respect to, all accounting methods adopted
or used (including without limitation with respect to useful lives) in
connection with any property of Crestline, the Crestline Group, any
Crestline Member, or any Crestline Affiliate that is placed in service
in 1998, (ii) Host Marriott agrees to provide to Crestline's Senior
Vice President - Taxes, not later than January 30, 1999 (or, if later,
30 days following the Closing Date), a report detailing all property
placed in service in 1998 (based on the information reasonably
available to Host Marriott at the time such report is
20
prepared), and the accounting methods proposed to be adopted or used
with respect to such property, and to provide an update of such report
not later than the last business day of every month thereafter, and to
provide a final report, not later than July 31, 1999 (the "Final
Report"), detailing all property of Crestline, the Crestline Group,
any Crestline member or any Crestline Affiliate that is placed in
service in 1998 and the accounting methods proposed to be adopted or
used with respect to such property. If Crestline does not respond in
writing to the Final Report within twenty-one (21) days of receipt of
the Final Report by Crestline's Senior Vice-President Taxes, Crestline
shall be deemed to have consented to the proposed accounting methods
contained in the Final Report.
(n) Injunctions. The parties acknowledge that irreparable damage would
-----------
occur in the event that any of the provisions of this Agreement were
not performed in accordance with its specific terms or were otherwise
breached. The parties hereto shall be entitled to an injunction or
injunctions to prevent breaches hereto and to enforce specifically the
terms and provisions hereof in any court having jurisdiction; such
remedy shall be in addition to any other remedy available at law or in
equity.
(o) Further Assurances. Subject to the provisions hereof, the parties
------------------
hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be
reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
Subject to the provisions hereof, each party shall, in connection with
entering into this Agreement, performing its obligations hereunder and
taking any and all actions relating hereto, comply with all applicable
laws, regulations, orders and decrees, obtain all required consents
and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or
similar authority and promptly provide the other party with all such
information as it may reasonably request in order to be able to comply
with the provisions of this sentence.
(p) Setoff. All payments to be made by any party under this Agreement
------
shall be made without setoff, counterclaim or withholding, all of
which are expressly waived.
(q) Costs and Expenses. Unless otherwise specifically provided herein,
------------------
each party agrees to pay its own costs and expenses resulting from the
fulfillment of its respective obligations hereunder.
(r) Rules of Construction. Any ambiguities shall be resolved without
---------------------
regard to which party drafted the Agreement.
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed on their respective behalf by their
respective officers thereunto duly authorized, as of the day and year above
written.
HOST MARRIOTT CORPORATION AND
SUBSIDIARIES AND AFFILIATES
By: ________________________________
Name: ________________________________
Title: ________________________________
CRESTLINE CAPITAL CORPORATION
AND SUBSIDIARIES AND AFFILIATES
By: ________________________________
Name: ________________________________
Title: ________________________________
HOST MARRIOTT, L.P.
By: Host Marriott Corporation, its General Partner
By:____________________________________
Name: _________________________________
Title: __________________________________
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