▇▇▇▇▇ FINANCIAL
PARENT AND AFFILIATES
COST ALLOCATION AND REIMBURSEMENT AGREEMENT
JANUARY 1, 1993
PARENT AND AFFILIATES
COST ALLOCATION AND REIMBURSEMENT AGREEMENT
This PARENT AND AFFILIATES COST ALLOCATION AND REIMBURSEMENT AGREEMENT (this
"Agreement") is entered into effective as of January 1, 1993 (the "Effective
Date"), by and among ▇▇▇▇▇ Financial (the "Parent"), and the following
entities, hereinafter referred to collectively as the "Affiliates," and each,
individually, as an "Affiliate": ▇▇▇▇▇ Insurance Company, ▇▇▇▇▇ Assurance
Company, Pan American Underwriters, Inc., Pan American Underwriters Insurance
Agents and Brokers, and Pan Pacific Benefit Administrators.
RECITALS
(A) ▇▇▇▇▇ Insurance Company, Pan American Underwriters, Inc., Pan American
Underwriters Insurance Agents and Brokers, and Pan Pacific Benefit
Administrators are a wholly-owned subsidiaries of ▇▇▇▇▇ Financial.
(B) ▇▇▇▇▇ Assurance Company is a wholly-owned subsidiary of ▇▇▇▇▇
Insurance Company.
(C) As described herein, the Parent desires to perform certain functions
on behalf of and provide certain services to each of the Affiliates. In
connection with performing such functions and providing such services, the
Parent will incur certain costs and
expenses that are allocable among the Affiliates.
(D) The Parent desires to be reimbursed by the Affiliates for the costs
and expenses that the Parent incurs in performing such functions and services,
and the Affiliates desire to reimburse the Parent for their allocable share of
the same.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. SERVICES PROVIDED
A. As described herein, the Parent desires to perform certain
functions on behalf of and provide certain services to the Affiliates,
including, but not limited to, services relating to such matters as general
office and corporate administration, human resources, auto rent, and other
related services.
B. All services rendered to the Affiliates hereunder will be
provided in compliance with all applicable laws, regulations and rulings issued
by the California Department of Insurance and governmental authorities in all
other jurisdictions in which the Parent and the Affiliates transact business.
2
C. Notwithstanding the services provided hereunder, each of the
Affiliates shall retain the ultimate responsibility for their own general
office administration, employees and other related matters.
2. COST ALLOCATION/REIMBURSEMENT BASIS
A. During the term of this Agreement, the services described in
Section 1 hereof shall be made available to the Affiliates on a cost
allocation/reimbursement basis, in accordance with generally accepted accounting
principles, as follows:
Services Basis/Method
Administration Proportionate employee population
Human resources Proportionate employee population
Auto Rent Purchase cost and related expenses
B. Additionally, an Affiliate shall reimburse the Parent within
thirty (30) days after the receipt by such Affiliate of an invoice for any
direct costs or expenses paid to any third party by the Parent in connection
with services provided to that Affiliate under this Agreement. Such amounts
shall not be included in determining the allocations contemplated by Section
2.A. hereof.
C. Payment for the services contemplated by this
3
Agreement shall commence as of the Effective Date and shall be paid to the
Parent as mutually agreed upon by the parties hereto; however, no less
frequently than quarterly after the Effective Date.
D. The basis for the cost allocation and reimbursements made
hereunder shall be reviewed by the parties hereto from time to time, but no less
frequently than annually, and, if required in order to comply with applicable
law, this Agreement shall be appropriately amended so as to ensure that the cost
allocation and reimbursements provided for hereunder are made in accordance with
generally accepted accounting principles. In addition, the books, accounts and
records of each of the parties hereto shall be maintained in such a manner so as
to evidence the reasonableness of the cost allocation and reimbursements made
hereunder.
E. The Parent and Affiliates agree that the Insurance Departments of
the State of California and Arizona may examine, audit and inspect the books
accounts and records of each of the parties hereto with regard to the services
provided hereunder
3. BOOKS AND RECORDS
A. All books of accounts, documents, vouchers, letters
4
and all other papers and records in the possession of the Parent and relating to
the business transacted under this Agreement shall be deemed to be the property
of the party to whom such items relate and shall be delivered, where practical,
to the home office of the appropriate Affiliate upon such affiliate ceasing to
be a party to this Agreement.
B. Copies of purchases and sales invoices shall be retained by the
Parent at its home office in California.
C. Upon the request of an Affiliate, the Parent will provide the
requesting Affiliate (or any third party-authorized by such parties) with any
documentation or information regarding the services provided to such Affiliate
by the Parent hereunder.
4. TERM
A. The term of this Agreement shall be for a one year period
commencing immediately upon the Effective Date. This Agreement shall
automatically renew thereafter for successive like periods.
B. This Agreement may be terminated as follows: (1) at any time by
the mutual written consent of each of the parties hereto; (2) by the Parent
upon ninety (90) days' written notice to
5
each of the Affiliates; (3) any Affiliate may terminate its participation in
this Agreement at any time upon ninety (90) days' written notice to the other
parties hereto.
5. GENERAL PROVISIONS
(a) This Agreement constitutes an integration, (b) any amendment
hereto must be in writing, (c) in the event of any dispute hereunder, the
prevailing party shall be entitled to attorneys' fees, (d) this Agreement shall
inure to the benefit of and be binding upon the parties and their successors and
assigns, (e) California law shall apply to the interpretation of the provisions
hereof, and (f) this Agreement and the documents referred to herein constitute
the entire understanding and agreement of the parties, and supersede all prior
or contemporaneous agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
6
Parent; Affiliates
▇▇▇▇▇ Financial Pan American Underwriters, Inc
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------- -------------------------------
Title: Chairman/CEO Title: President
------------------------ ----------------------------
Pan American Underwriters
Insurance Agents & Brokers
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President
----------------------------
▇▇▇▇▇ Insurance Company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
▇▇▇▇▇ Assurance Company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Title: President
----------------------------
Attest: Pan Pacific Benefit Administrators
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ -------------------------------
Title: President
----------------------------
7
AMENDMENT NO 1
Attached to and made a part of
Parent and Affiliates
Cost Allocation and Reimbursement Agreement
This Amendment No. l is entered into effective as of December 9, 1994, by and
among the parties to that certain Parent and Affiliates Cost Allocation and
Reimbursement Agreement dated as of January 1, 1993 (the "Agreement").
WHEREAS, on December 8, 1994 Oregon Risk Management, Inc., an Oregon corporation
("ORM"), a wholly-owned subsidiary of ▇▇▇▇▇ Financial, purchased substantially
all of the assets of three Oregon corporations involved in the business of
placing workers' compensation and other insurance coverage with insurance
carriers and commenced business as an insurance agency;
WHEREAS, it is anticipated that the Parent (as defined in the Agreement) will
from time to time perform certain functions on behalf of and provide certain
services to ORM;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree that the Agreement
shall be amended as follows:
1. The terms "Affiliates" and "Affiliate" as defined in the introductory
paragraph of the Agreement, shall henceforth include ORM as well as ▇▇▇▇▇
Insurance Company, ▇▇▇▇▇ Assurance Company, Pan American Underwriters, Inc. Pan
American Underwriters Insurance Agents and Brokers, Inc. and Pan Pacific Benefit
Administrators, Inc.
2. Paragraph 2. E. shall be amended and restated to read in full as follows:
"E. The Parent and Affiliates agree that the Insurance Departments of the
States of California, Arizona and Oregon may examine, audit and inspect the
books, accounts and records of each party hereto with regard to the services
provided hereunder."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
first date written above.
Affiliates: Parent:
▇▇▇▇▇ INSURANCE COMPANY ▇▇▇▇▇ FINANCIAL
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------------- --------------------------------
Its: President/CEO Its: President/CEO
-------------------------- -------------------------------
PAN AMERICAN INSURANCE
AGENTS AND BROKERS, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Its: President/CEO
--------------------------
(Signatures Continue on Next Page)
OREGON RISK MANAGEMENT, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Its: President/CEO
--------------------------
▇▇▇▇▇ ASSURANCE COMPANY
By /s/ [ILLEGIBLE]
---------------------------
Its: President/CEO
--------------------------
PAN PACIFIC BENEFIT
ADMINISTRATORS, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Its: President/CEO
--------------------------
PAN AMERICAN UNDERWRITERS, INC.
By: /s/ [ILLEGIBLE]
---------------------------
Its: President/CEO
--------------------------