Exhibit 10.12
TAX SHARING AGREEMENT
BY AND AMONG
NCRIC GROUP, INC.,
NCRIC, INC.,
NCRIC MSO, INC.,
COMMONWEALTH MEDICAL LIABILITY INSURANCE COMPANY,
NATIONAL CAPITAL INSURANCE BROKERAGE, LTD.,
NCRIC INSURANCE AGENCY, INC.,
NCRIC PHYSICIANS ORGANIZATION, INC.,
HCI VENTURES, LLC,
HEALTHCARE COMPLIANCE PURCHASING GROUP, LLC,
AND
AMERICAN CAPTIVE CORPORATION
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TAX SHARING AGREEMENT
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THIS TAX
SHARING AGREEMENT (the "Agreement") is entered into as of the
1st
day of January, 2002 by and among NCRIC
Group, Inc., a stock holding company
organized under the laws of the District of
Columbia ("Holding Company"); and
its subsidiaries, NCRIC, Inc., a stock
insurance company organized under the
laws of the District of Columbia
("Reorganized Stock Company"); NCRIC MSO, Inc.,
a corporation organized under the laws of
the State of Delaware ("NCRIC MSO");
Commonwealth Medical Liability Insurance
Company, a stock insurance company
organized under the laws of the
Commonwealth of Virginia ("CML"); National
Capital Insurance Brokerage, Ltd., an
insurance brokerage organized under the
laws of the District of Columbia ("NCIB");
NCRIC Insurance Agency, Inc., an
insurance agency organized under the laws
of the District of Columbia ("NIA");
and NCRIC Physicians Organization, Inc., a
physicians organization organized
under the laws of the District of Columbia
("NCRIC PO"); and HCI Ventures, LLC,
a limited liability company organized under
the laws of Virginia; and HealthCare
Compliance Purchasing Group, LLC, a limited
liability company organized under
the laws of the District of Columbia; and
American Captive Corporation, a
corporation organized under the laws of the
District of Columbia (collectively,
the "Subsidiaries"). NCRIC Group Inc. and
all Subsidiaries sometimes hereinafter
are referred to as "Member Companies" and,
collectively, as the "Affiliated
Group."
RECITALS:
1.
Pursuant to a Plan of Reorganization dated July 24, 1998, NCRIC
reorganized (the "Reorganization") into
Reorganized Stock Company with NCRIC
Group, Inc. as a stock holding company. As
a result of the Reorganization, NCRIC
Group, Inc. owns directly or indirectly
100% of the issued and outstanding
capital stock of each of the
Subsidiaries.
2. The
Member Companies are members of an affiliated group within the
definition of section 1504(a) of the
Internal Revenue Code of 1986, as amended
(the "Code").
3. The
Affiliated Group will file a consolidated federal income tax
return
for the year commencing January 1, 2002 and
subsequent years.
4. It is
the intention of the Member Companies that each Member Company
should contribute its fair and equitable
share to the income and similar tax
liabilities payable by the Affiliated
Group.
5. The
Member Companies, by execution of this Agreement, intend to set
forth in writing the manner in which the
Member Companies share in the
allocation of such taxes and to use the
method described in this Agreement as
the method for (i) allocating the
consolidated tax liability of the Affiliated
Group among the Member Companies; (ii)
reimbursing NCRIC Group, Inc. for the
payment of such tax liability; and (iii)
providing for the allocation and
payment of any tax refunds.
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NOW,
THEREFORE, in consideration of the premises and the mutual
covenants
contained herein, the undersigned parties
hereto agree as follows:
1.
Computation of Member Shares. For each taxable period, the
Member
Companies' respective shares of tax
liability shall be determined as follows:
(a) Computation of Consolidated Tax. On or before the date provided
by
law for payment of any federal income or
similar tax by the Affiliated Group, a
computation shall be made of the Affiliated
Group's consolidated tax liability,
including alternative minimum tax. The
amount so computed is hereinafter
referred to as the "Consolidated Tax."
(b) Separate Member Tax. If a Member generates a loss for a
taxable
year, or credit that cannot be utilized to
reduce such Member's separate return
tax liability ("Separate Tax") in the year
that the loss or credit arises, such
loss or credit shall first be utilized to
the extent it results in an actual
cash reduction in the Consolidated Tax
liability for the taxable year in which
the loss or credit was generated or for
prior taxable years during the covered
period to which such loss or credit could
be carried under the applicable
carryback provisions of the Code (the
carryback years).
(c) Allocation. The Consolidated Tax shall be apportioned among
the
Member Companies, under Treasury Regulation
1.1552-1(a)(2), based upon the ratio
of each Member Company's Separate Tax to
the total of the Member Companies'
Separate Taxes. Accordingly, the amount of
Consolidated Tax allocable to any
Member Company will be equal to the
Consolidated Tax multiplied by a fraction,
the numerator of which is the Member
Company's Separate Tax and the denominator
of which is the sum of the Separate Taxes
for all Member Companies.
(d) Entitlement to Payment or Credit . Notwithstanding that one or
more
Member Companies may, in a particular tax
period, realize losses, credits or
other tax benefits which, on a consolidated
basis, reduce the Consolidated Tax,
such Member Company or Companies shall be
entitled to payment or credit
therefor.
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2.
Payments by Member Companies. If for any taxable period there is
a
Separate Tax with reference to a Member
Company, then such Member Company shall
promptly pay to NCRIC Group, Inc. an amount
equal to the Member Company's share
of the Consolidated Tax, and NCRIC Group,
Inc. shall promptly pay to each loss
Company the allocated tax benefit.
3.
Estimated Tax Payments. In NCRIC Group, Inc.'s discr
