Common use of Allocation Method Clause in Contracts

Allocation Method. In order to determine that portion of the Tax ----------------- liability (other than Restructuring Taxes) due with respect to any Consolidated Return which is the subject of this Agreement that is allocable to a Party, the Parties agree to determine and allocate such Tax liability among themselves in the following manner: (a) All Consolidated Return Tax liabilities of any member or members of the GCI Group for any taxable period (or portion thereof) ending on or before the Distribution Date shall be allocated to New GranCare and the other members of the New GranCare Group. (b) All Consolidated Return Tax liabilities for taxable periods that include but do not end on the Distribution Date ("Straddle Periods") shall be allocated between that portion of the period that ends on the Distribution Date and the subsequent portion of the period based upon a closing of the books and computations of separate hypothetical Tax liabilities for such portions. The Consolidated Return Tax liability for the relevant Straddle Period shall be allocated to the portions of the Straddle Period in the ratio of the portion's hypothetical Tax liability to the sum of the portions' hypothetical Tax liabilities, and then the portions allocated to each of such periods shall be further allocated among the Parties in accordance with the method described in Section 1552(a)(2) of the Code, except that all Consolidated Return Tax liabilities allocable under this Section 3.1(b) to any member or members of the GCI Group for any taxable period (or portion thereof) ending on the Distribution Date shall be allocated to New GranCare and the other members of the New GranCare Group. (c) If the Tax liability with respect to a Consolidated Return is adjusted for any taxable period, whether by means of an amended return, claim for refund, or assessment by a taxing authority, the liability of each Party shall be recomputed under this Section 3.1 of the Agreement to give effect to such adjustment. (d) New GranCare shall provide each Party with a computation (and such other workpapers and documentation supporting such computation) of the allocation to each Party of the Tax liability with respect to a Consolidated Return no later than 10 days prior to the filing of the Consolidated Return. GCI may object to such computation or allocation by presenting New GranCare with a written explanation of such objection(s) (which contains specific explanation of the reasons and support for their objections) within 30 days after receiving the computation and allocation from New GranCare. Any failure to provide such objection shall be considered acceptance by GCI of the allocation as prepared by New GranCare. If a written objection is made by GCI, the tax managers of GCI and New GranCare will meet and try in good faith to resolve all disagreements with respect to the allocation of Tax Liability. If the tax managers are unable to resolve all disagreements with respect to the allocation, then one of the "Big Six" certified public accounting firms will be chosen by GCI and New GranCare to advise as to the proper treatment of the Tax Item in dispute. (e) Notwithstanding any provision in this Section 3.1 to the contrary: (1) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to any persons other than ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible after the Closing Date by GCI, any of its Subsidiaries, or their successors but for the provisions of Section 280G, New GranCare shall pay to GCI or its successor an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by New GranCare to GCI or its successor within ten (10) days after GCI or its successor provides to New GranCare a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute payments." (2) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible on or before the Closing Date by GCI or any of its Subsidiaries but for the provisions of Section 280G, GCI or its successor shall pay to New GranCare an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by GCI or its successor to New GranCare within ten (10) days after New GranCare provides to GCI or its successor a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute payments." (3) If the Party obligated to make payment under subsection (1) or (2) above makes a written objection prior to the payment's due date, the tax managers of GCI or its successor and New GranCare will meet and try in good faith to resolve all disagreements with respect to the characterization and amount of such payment as an "excess parachute payment" within five (5) days of the receipt of the written objection. If the tax managers are unable to resolve all disagreements, then one of the "Big Six" certified public accounting firms will be chosen by GCI or its successor and New GranCare to determine the proper characterization and amount of such payment as an "excess parachute payment" which determination shall be final and payment shall be made within ten (10) days of such determination.

Allocation Method. In order to determine that portion of the Tax ----------------- liability (other than Restructuring Taxes) due with respect to any Consolidated Return which is the subject of this Agreement that is allocable to a Party, the Parties agree to determine and allocate such Tax liability among themselves in the following manner: (a) All Consolidated Return Tax liabilities of any member or members of the GCI Group for any taxable period (or portion thereof) ending on or before the Distribution Date shall be allocated to New GranCare GCI Properties and the other members of the New GranCare GCI Properties Group. (b) All Consolidated Return Tax liabilities for taxable periods that include but do not end on the Distribution Date ("Straddle Periods") shall be allocated between that portion of the period that ends on the Distribution Date and the subsequent portion of the period based upon a closing of the books and computations of separate hypothetical Tax liabilities for such portions. The Consolidated Return Tax liability for the relevant Straddle Period shall be allocated to the portions of the Straddle Period in the ratio of the portion's hypothetical Tax liability to the sum of the portions' hypothetical Tax liabilities, and then the portions allocated to each of such periods shall be further allocated among the Parties in accordance with the method described in Section 1552(a)(2) of the Code, except that all Consolidated Return Tax liabilities allocable under this Section 3.1(b) to any member or members of the GCI Group for any taxable period (or portion thereof) ending on the Distribution Date shall be allocated to New GranCare GCI Properties and the other members of the New GranCare GCI Properties Group. (c) If the Tax liability with respect to a Consolidated Return is adjusted for any taxable period, whether by means of an amended return, claim for refund, or assessment by a taxing authority, the liability of each Party shall be recomputed under this Section 3.1 of the Agreement to give effect to such adjustment. (d) New GranCare GCI Properties shall provide each Party with a computation (and such other workpapers and documentation supporting such computation) of the allocation to each Party of the Tax liability with respect to a Consolidated Return no later than 10 days prior to the filing of the Consolidated Return. GCI may object to such computation or allocation by presenting New GranCare GCI Properties with a written explanation of such objection(s) (which contains specific explanation of the reasons and support for their objections) within 30 days after receiving the computation and allocation from New GranCareGCI Properties. Any failure to provide such objection shall be considered acceptance by GCI of the allocation as prepared by New GranCareGCI Properties. If a written objection is made by GCI, the tax managers of GCI and New GranCare GCI Properties will meet and try in good faith to resolve all disagreements with respect to the allocation of Tax Liability. If the tax managers are unable to resolve all disagreements with respect to the allocation, then one of the "Big Six" certified public accounting firms will be chosen by GCI and New GranCare GCI Properties to advise as to the proper treatment of the Tax Item in dispute. (e) Notwithstanding any provision in this Section 3.1 to the contrary: (1) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to any persons other than ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible after the Closing Date by GCI, any of its Subsidiaries, or their successors but for the provisions of Section 280G, New GranCare GCI Properties shall pay to GCI or its successor an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by New GranCare GCI Properties to GCI or its successor within ten (10) days after GCI or its successor provides to New GranCare GCI Properties a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute payments." (2) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible on or before the Closing Date by GCI or any of its Subsidiaries but for the provisions of Section 280G, GCI or its successor shall pay to New GranCare GCI Properties an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by GCI or its successor to New GranCare GCI Properties within ten (10) days after New GranCare GCI Properties provides to GCI or its successor a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute payments." (3) If the Party obligated to make payment under subsection (1) or (2) above makes a written objection prior to the payment's due date, the tax managers of GCI or its successor and New GranCare GCI Properties will meet and try in good faith to resolve all disagreements with respect to the characterization and amount of such payment as an "excess parachute payment" within five (5) days of the receipt of the written objection. If the tax managers are unable to resolve all disagreements, then one of the "Big Six" certified public accounting firms will be chosen by GCI or its successor and New GranCare GCI Properties to determine the proper characterization and amount of such payment as an "excess parachute payment" which determination shall be final and payment shall be made within ten (10) days of such determination.

Allocation Method. In order to determine that the portion of the Tax ----------------- liability (other than Restructuring Taxes) due with respect to any Consolidated Return which is the subject of filed by an Affiliated Group under this Agreement that which is allocable to an individual Member and/or to determine the amount to which a PartyMember of such Affiliated Group is entitled as compensation for the use of deductions, a net operating loss, or tax credits that have been utilized in arriving at the Consolidated Return Tax liability of such Affiliated Group, the Parties Members agree to determine and allocate such Tax the tax liability of the Affiliated Group among themselves in the following manner: (a) All The separate return Tax liability or Tax Benefit of each Member shall be computed by first determining the separate taxable income or loss, tax credits, alternative minimum taxable income and such other tax items of such Member that otherwise are taken into account in determining the Consolidated Return Tax liabilities of any member liability or members Tax Benefit of the GCI Affiliated Group, except that, in determining such separate taxable income, loss or other tax item of a Member, gains, losses, deductions, tax credits, and all other items taken into account in the determination of such Tax liability or Tax Benefit that are deferred, limited, eliminated, or otherwise adjusted under any rule or regulation relating to the filing of such Consolidated Return shall be computed in accordance with such Consolidated Return rule or regulation. Thus, for example, a net operating loss of a Member shall not be carried forward and utilized in the calculation of separate company taxable income or loss of the Member unless such net operating loss has not been utilized in a prior Consolidated Return of the Affiliated Group and is otherwise available for carryover to the Consolidated Return of the Affiliated Group for any taxable period (or portion thereof) ending on or before which the Distribution Date Tax liability is being allocated. Likewise, for example, depreciation for each of the Members shall be allocated to New GranCare and calculated using the other members of conventions, if any, adopted under or otherwise required by the New GranCare GroupConsolidated Return rules or regulations. (b) All The separate return Tax liability or Tax Benefit of each Member shall than be computed by multiplying the Member's separate return taxable income or loss, alternative minimum taxable income or loss, or such other item (determined in accordance with 2.3(a) above) by the highest marginal tax rate applicable to the Affiliated Group's Consolidated Return Tax liabilities for taxable periods that include but do not end on income, Consolidated Return alternative minimum taxable income, or such other determination, as the Distribution Date case may be, and then subtracting or adding, as the case may be, such Member's separate tax credits or other separate items ("Straddle Periods"again, determined in accordance with 2.3(a) shall be allocated between that portion of above) which are taken into account in determining the period that ends on the Distribution Date and the subsequent portion of the period based upon a closing of the books and computations of separate hypothetical Tax liabilities for such portions. The Affiliated Group's Consolidated Return Tax liability for or Tax Benefit. (c) In the relevant Straddle Period event that any item (whether gain, loss, income, deduction, credit, or otherwise) used in the determination of the Affiliated Group's Consolidated Return Tax liability or Tax Benefit is limited and such limitation affects the computation of more than one Member's separate return Tax liability or Tax Benefit, the limitation shall be allocated among the affected Members based upon ratios of the amount of each affected Member's item subject to limitation to the total of all affected Members' items subject to limitation or, in the event it is not possible to make an allocation in such manner, the limitation shall be allocated among the affected Member's in an equitable manner as determined by ▇▇▇▇▇▇▇▇ or RTI. (d) In the event that, after making the computations in accordance with 2.3(a)-(c) above, the Affiliated Group's Consolidated Return Tax liability is greater than the total of all Members' separate return Tax liabilities and Tax Benefits, then the excess of such Consolidated Return Tax liability over the total of all Members' separate return Tax liabilities and Tax Benefits shall be allocated to the portions of the Straddle Period in the Members possessing separate return Tax liabilities based upon a ratio of the portion's hypothetical Tax liability to the sum of the portions' hypothetical such separate return Tax liabilities. (e) In the event that, and then after making the portions allocated to each of such periods shall be further allocated among the Parties computations in accordance with 2.3(a)-(c) above, the method described in Section 1552(a)(2) of the Code, except that all Affiliated Group's Consolidated Return Tax liability is less than the total of all Members' separate return Tax liabilities allocable under this Section 3.1(b) to any member or members and Tax Benefits, then the excess of the GCI Group for any taxable period (or portion thereof) ending on the Distribution Date total of all Members' separate return Tax liabilities and Tax Benefits over such Consolidated Return Tax liability shall be allocated (as a Tax Benefit) to New GranCare and the other members Members possessing separate return Tax liabilities based upon a ratio of the New GranCare Groupsuch separate return Tax liabilities. (cf) If the Tax liability with respect to a Consolidated Return is adjusted for any taxable period, whether by means of an amended return, claim for refund, ▇▇▇▇▇▇▇▇ or assessment by a taxing authority, the liability of each Party shall be recomputed under this Section 3.1 of the Agreement to give effect to such adjustment. (d) New GranCare RTI shall provide each Party the Members with a computation (and such other workpapers and documentation supporting such computation) of the allocation to Affiliated Group's consolidated federal income tax liability and each Party Member's allocable share of the Tax such liability with respect to a Consolidated Return no later than 10 days prior to after the filing of the Consolidated Returnconsolidated federal income tax return for such taxable year. GCI A Member may object to such computation or allocation by presenting New GranCare ▇▇▇▇▇▇▇▇ with a written explanation of such objection(s) (which contains specific explanation of the reasons and support for their objections) within 30 5 days after receiving the computation and allocation from New GranCare. Any failure to provide such objection shall be considered acceptance by GCI of the allocation as prepared by New GranCare. If a written objection is made by GCI, the tax managers of GCI and New GranCare will meet and try in good faith to resolve all disagreements with respect to the allocation of Tax Liability. If the tax managers are unable to resolve all disagreements with respect to the allocation, then one of the "Big Six" certified public accounting firms will be chosen by GCI and New GranCare to advise as to the proper treatment of the Tax Item in dispute. (e) Notwithstanding any provision in this Section 3.1 to the contrary: (1) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to any persons other than ▇▇▇▇ ▇▇▇▇▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible after shall revise the Closing Date by GCI, any of its Subsidiaries, or their successors but for the provisions of Section 280G, New GranCare shall pay computation and allocation in response to GCI or its successor an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by New GranCare to GCI or its successor within ten (10) days after GCI or its successor provides to New GranCare a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute paymentsobjection when appropriate." (2) In the event that the Merger results in any "excess parachute payments" within the meaning of Section 280G of the Code to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ that would be deductible on or before the Closing Date by GCI or any of its Subsidiaries but for the provisions of Section 280G, GCI or its successor shall pay to New GranCare an amount in cash equal to the amount of such "excess parachute payments" multiplied by the sum of (i) 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 year of the "excess parachute payment" and (ii) five percent (5%). Such payment shall be made by GCI or its successor to New GranCare within ten (10) days after New GranCare provides to GCI or its successor a written statement that such "excess parachute payments" have been made together with a calculation of the amount of such "excess parachute payments." (3) If the Party obligated to make payment under subsection (1) or (2) above makes a written objection prior to the payment's due date, the tax managers of GCI or its successor and New GranCare will meet and try in good faith to resolve all disagreements with respect to the characterization and amount of such payment as an "excess parachute payment" within five (5) days of the receipt of the written objection. If the tax managers are unable to resolve all disagreements, then one of the "Big Six" certified public accounting firms will be chosen by GCI or its successor and New GranCare to determine the proper characterization and amount of such payment as an "excess parachute payment" which determination shall be final and payment shall be made within ten (10) days of such determination.