Common use of Tax Deduction and Allocation of Tax Benefit Clause in Contracts

Tax Deduction and Allocation of Tax Benefit. The employer of an ------------------------------------------- employee exercising a stock option, or making a disqualifying disposition of stock acquired upon exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement shall be entitled to claim any and all deductions, to the extent permitted, on any Tax Return for the income recognized by such employee as a result of such exercise or disqualifying disposition. Not later than ninety (90) days after the end of each calendar year during which a stock option is exercised, or a disqualifying disposition of stock acquired upon exercise of any incentive stock option occurs, which is covered by the Employee Benefits Matters Agreement, the Post-Distribution GCI Group and the GCI Properties Group shall each compute, and shall provide a schedule to the other Party showing such computation, the total amount of income included in its employees' annual wage statements or other payroll tax reporting forms for the calendar year with respect to stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement which have been exercised or for which there has been a disqualifying disposition during that calendar year for which no member of the respective group (or another corporation which has become the common parent that includes such group) is the issuer of such stock. If, for such calendar year, the total amount of income included in the annual wage statements or other payroll tax reporting forms of the employees of the Post-Distribution GCI Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the Post-Distribution GCI Group (or another corporation which has become the common parent that includes the Post-Distribution GCI Group) is the issuer of such stock exceeds the total amount of income included in the annual wage statements or other payroll tax reporting forms of the employees of the GCI Properties Group as a result of the exercise of stock options or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option covered by the Employee Benefits Matters Agreement for which no member of the GCI Properties Group (or another corporation which has become the common parent that includes the GCI Properties Group) is the issuer of such stock, then GCI shall pay to GCI Properties, not later than ten (10) days after the exchange of such computations, an amount equal to such excess times the sum of the highest federal income tax rate under Code Section 11 (or any successor provision thereto) applicable to a corporation that is in effect for the calendar year for which such computation is being made plus five percent (5%). If, for such calendar year, the total amount of income included in annual wage statements or other payroll tax reporting forms of the employees of the GCI Properties Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the GCI Properties Group (or another corporation which has become the common parent that includes the GCI Properties Group) is the issuer of such stock exceeds the total amount of income included in annual wage statements or other payroll tax reporting forms of the employees of the Post-Distribution GCI Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the Post-Distribution GCI Group (or another corporation which has become the common parent that includes the Post- Distribution GCI Group) is the issuer of such stock, then GCI Properties shall pay to GCI, not later than ten (10) days after the exchange of such computations, an amount equal to such excess times the sum of the highest federal income tax rate under Code Section 11 (or any successor provision thereto) applicable to a corporation that is in effect for the calendar year for which such computation is being made plus five percent (5%). In addition, each Party shall reimburse the other Party for the payroll Taxes imposed on such other Party under Code Section 3111(a) and (b) in respect of any income recognized by its employees to the extent that such income was taken into account in determining the payment to be made under either of the two previous sentences. In determining the amount of such reimbursement payable to the other Party, it shall be assumed that such income was the last item of income earned by the employee during the applicable year. In the event that it is determined as a result of a challenge by a Taxing Authority that a member of one of the groups claiming a deduction as a result of an exercise of an option or a disqualifying disposition of stock covered by this Article VIII is not entitled to such deduction, and a member of the other group is entitled to claim such deduction and receives a refund of or reduction in Taxes as a result of claiming such deduction, then no payment with respect to such deduction shall be due under this Section 8.2 (including any payment for reimbursement of payroll Taxes paid as an employer) or, if a payment has already been made with respect to such deduction, then such payment (net of any reimbursement for payroll Taxes) shall be returned to the Party who originally made such payment. For purposes of this Article VIII, a person whose employment has terminated prior to the time an option covered by the Employee Benefits Matters Agreement is exercised shall be treated as an employee of the group by which he or she was last employed.

Tax Deduction and Allocation of Tax Benefit. The employer of an ------------------------------------------- employee exercising a stock option, or making a disqualifying disposition of stock acquired upon exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement shall be entitled to claim any and all deductions, to the extent permitted, on any Tax Return for the income recognized by such employee as a result of such exercise or disqualifying disposition. Not later than ninety (90) days after the end of each calendar year during which a stock option is exercised, or a disqualifying disposition of stock acquired upon exercise of any incentive stock option occurs, which is covered by the Employee Benefits Matters Agreement, the Post-Distribution GCI Group and the GCI Properties New GranCare Group shall each compute, and shall provide a schedule to the other Party showing such computation, the total amount of income included in its employees' annual wage statements or other payroll tax reporting forms for the calendar year with respect to stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement which have been exercised or for which there has been a disqualifying disposition during that calendar year for which no member of the respective group (or another corporation which has become the common parent that includes such group) is the issuer of such stock. If, for such calendar year, the total amount of income included in the annual wage statements or other payroll tax reporting forms of the employees of the Post-Post- Distribution GCI Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the Post-Distribution GCI Group (or another corporation which has become the common parent that includes the Post-Distribution GCI Group) is the issuer of such stock exceeds the total amount of income included in the annual wage statements or other payroll tax reporting forms of the employees of the GCI Properties New GranCare Group as a result of the exercise of stock options or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option covered by the Employee Benefits Matters Agreement for which no member of the GCI Properties New GranCare Group (or another corporation which has become the common parent that includes the GCI Properties New GranCare Group) is the issuer of such stock, then GCI shall pay to GCI PropertiesNew GranCare, not later than ten (10) days after the exchange of such computations, an amount equal to such excess times the sum of the highest federal income tax rate under Code Section 11 (or any successor provision thereto) applicable to a corporation that is in effect for the calendar year for which such computation is being made plus five percent (5%). If, for such calendar year, the total amount of income included in annual wage statements or other payroll tax reporting forms of the employees of the GCI Properties New GranCare Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the GCI Properties New GranCare Group (or another corporation which has become the common parent that includes the GCI Properties New GranCare Group) is the issuer of such stock exceeds the total amount of income included in annual wage statements or other payroll tax reporting forms of the employees of the Post-Distribution GCI Group as a result of the exercise of stock options, or disqualifying dispositions of stock acquired upon the exercise of any incentive stock option, covered by the Employee Benefits Matters Agreement for which no member of the Post-Distribution GCI Group (or another corporation which has become the common parent that includes the Post- Distribution GCI Group) is the issuer of such stock, then GCI Properties New GranCare shall pay to GCI, not later than ten (10) days after the exchange of such computations, an amount equal to such excess times the sum of the highest federal income tax rate under Code Section 11 (or any successor provision thereto) applicable to a corporation that is in effect for the calendar year for which such computation is being made plus five percent (5%). In addition, each Party shall reimburse the other Party for the payroll Taxes imposed on such other Party under Code Section 3111(a) and (b) in respect of any income recognized by its employees to the extent that such income was taken into account in determining the payment to be made under either of the two previous sentences. In determining the amount of such reimbursement payable to the other Party, it shall be assumed that such income was the last item of income earned by the employee during the applicable year. In the event that it is determined as a result of a challenge by a Taxing Authority that a member of one of the groups claiming a deduction as a result of an exercise of an option or a disqualifying disposition of stock covered by this Article VIII is not entitled to such deduction, and a member of the other group is entitled to claim such deduction and receives a refund of or reduction in Taxes as a result of claiming such deduction, then no payment with respect to such deduction shall be due under this Section 8.2 (including any payment for reimbursement of payroll Taxes paid as an employer) or, if a payment has already been made with respect to such deduction, then such payment (net of any reimbursement for payroll Taxes) shall be returned to the Party who originally made such payment. For purposes of this Article VIII, a person whose employment has terminated prior to the time an option covered by the Employee Benefits Matters Agreement is exercised shall be treated as an employee of the group by which he or she was last employed.