EXHIBIT 10.36
INTER-COMPANY AGREEMENT
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BETWEEN
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PAN AMERICAN GROUP, INC.,
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AND
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PAN AMERICAN BANK, FSB
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THIS INTER-COMPANY AGREEMENT (the "Agreement") is entered into as of August
1, 1994, by and between PAN AMERICAN GROUP, INC.("PA Group") a Delaware
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corporation, and PAN AMERICAN BANK, FSB, (the "Bank"), a federal savings bank.
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W I T N E S S E T H:
WHEREAS, in the ordinary course of the Bank's business, the Bank conducts
data processing services, general administrative and office support services,
personnel services, depository accounts and other bank type services, and has
available office space, office equipment and data processing time; and
WHEREAS, PA Group and the Bank are affiliated entities in that PA Group is
the parent and sole shareholder of Pan American Financial, Inc., the parent and
sole shareholder of the Bank; and
WHEREAS, PA Group desires to retain the Bank to render services as provided
below, and the Bank is willing to render such services:
NOW, THEREFORE, the parties agree as follows:
1. Effective Date and Term of Agreement.
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1.1 Term. This Agreement shall become effective, without further action,
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as of May 1, 1994 (the "Effective Date"). This Agreement shall remain in effect
until April 30, 1995, and shall thereupon be automatically renewed for
successive one-year terms until terminated in accordance with Section 4.
1.2 Survival of Certain Obligations. Expiration or earlier termination of
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this Agreement for any reason shall not terminate the obligations described in
subsection (a) below, Section 3.1 and any other sections which expressly so
provide.
(a) Obligations Arising Prior to Termination. Expiration or earlier
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termination of this Agreement for any reason shall not
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terminate either party's obligations or rights arising out of any act or
omission of such party occurring prior to such termination or expiration.
2. Administrative, Management and Other Services.
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2.1 Services To Be Rendered. Commencing on the Effective Date, and for
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the period provided in Section 1.1, the Bank shall provide administrative,
management and other services to PA Group, including but not limited to the
following services:
(a) Accounting, Financial and Bookkeeping. The Bank shall provide PA
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Group with accounting, financial and bookkeeping services to such extent as
mutually agreed from time to time between parties.
(i) Cooperation With Audits. The Bank shall provide for the
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inspection of the financial statements, books and records of PA Group at
all reasonable times during business hours of the Bank, by PA Group or its
representatives (including, without limitation, independent certified
public accountants engaged by PA Group to permit compliance with reporting
and disclosure requirements of federal and state regulatory agencies and
federal and state laws. Furthermore, the Bank shall coordinate and
cooperate with all internal audits of PA Group and with all independent
audits of PA Group by independent auditing firms.
(b) Office Support Services. The Bank shall provide PA Group with office
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space and clerical and technical support services to such extent as mutually
agreed from time to time between the parties. These services may include,
without limitation, the provision of:
(i) Space. The Bank shall provide PA Group with executive,
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administrative and clerical office space, and filing and records storage
space, to such extent as mutually agreed from time to time between the
parties.
(ii) Office Support. The Bank shall provide secretarial and other
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clerical support services, local and long distance telephone and other
telecommuni cations and data processing lines (including WATS lines), and
such other services as mutually agreed from time to time between the
parties.
(c) Banking Services. To the extent permitted by law, the Bank shall
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provide PA Group with depository accounts, access to
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the Bank's federal wire, and access to an Automated Clearing House. The Bank
shall provide other banking services as mutually agreed from time to time
between the parties.
(d) Regulatory Filings. The Bank shall provide PA Group with assistance
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in preparation and filing of regulatory filings as mutually agreed from time to
time between the parties.
(e) Human Resources. The Bank shall provide PA Group with personnel
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services to such extent as mutually agreed from time to time between the
parties. Services provided under this subsection (e) may include, without
limitation, the provision of executive and staff recruiting services, training
services, employee benefits management, and employee records management. In
providing training services to the employees of PA Group, the Bank shall educate
PA Group's employees as to the Policies and procedures described in Section
2.2(b) of this Agreement.
2.2 Employees of the Bank and PA Group.
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(a) Staff. In carrying out its obligations under this Agreement, each
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party shall at all times maintain, either in its employ or through contract
employees of another company, a staff of trained personnel sufficient to enable
the party to perform its obligations under this Agreement.
(b) Employee Policies. Each party shall adopt such appropriate policies
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(the "Policies") to maintain the integrity and security of both parties'
records, data and separate office areas in accordance with Section 2.3 of this
Agreement. The Policies shall require employees of each party to abide by the
regulations and policies of the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation. Both parties shall educate and require their
employees to abide by the Policies.
(c) Dual Employees. The parties acknowledge that the performance of
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obligations under this Agreement may entail from time to time the employment of
individuals who are joint employees of both the Bank and PA Group ("Dual
Employees"). Dual Employees shall abide by the policies and procedures of the
Bank when acting as employees of the Bank, and shall abide by the policies and
procedures of PA Group when acting as employees of PA Group. Dual employees
shall be subject to the provisions of subsection (b) above to the same extent as
other employees of the parties when acting as an employee of such party.
2.3 Access and Security of Each Party's Premises and Property. The Bank
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shall implement adequate controls to assure the integrity of its records,
computers, currency, checks, safes
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and vaults. Employees of PA Group (other than Dual Employees performing services
for the Bank) shall have no access to the Bank's restricted office areas without
the consent of an executive officer of the Bank (i.e., vaults and teller
counters) or records or equipment for which no security controls have been
provided, unless such access is also available to the general public. Each party
shall have the unconditional right to make security inspections of the other
party's operations related to the services discussed herein at any time with
reasonable notice to the other party. If a party shall request any additional
security provisions, the other party shall not unreasonably delay or refuse to
implement the same, provided they are reasonable in scope. Any additional costs
incurred by the Bank pursuant to requests by PA Group under the preceding
sentence shall be borne by PA Group.
(a) Access and Security of Records. The Bank shall main tain separate
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records of the Bank and, to the extent that the Bank prepares or maintains
records for PA Group. The parties shall not commingle those records with the
records of the other party. Each party will implement reasonable security
measures and procedures to protect its records and other documents from
unauthorized access by the other party's employees (other than Dual Employees)
and third parties; provided, however, that employees of each party shall have
authorized access to the records and documents of the other party as required
for the performance of services for the other party.
(b) Access and Security of Premises. Each party shall maintain premises
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separate and distinct from the premises of the other party.
(c) Access and Security of Equipment. Each party will implement
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reasonable security controls for its equipment which is commingled with the
equipment of the other party or which is utilized by the other party.
3. Limitation of Liability.
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3.1 Indemnification of the Bank. PA Group agrees (i) not to hold the Bank
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or any of its directors, officers or employees liable for, and (ii) to indemnify
or insure the Bank and its directors, officers and employees ("Indemnified
Parties") from and against, any costs and liabilities the Indemnified Parties
may incur as a result of any claim against the Indemnified Parties arising from
the good faith exercise of their duties hereunder (excepting matters as to which
the Indemnified Parties shall be finally adjudged to have been guilty of willful
misconduct or gross negligence, or in violation of applicable
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law). PA Group further agrees to indemnify the Indemnified Parties from and
against all costs and liabilities arising from the negligence, recklessness, or
intentional misconduct of PA Group, or its employees or agents. PA Group's
obligation to indemnify any Indemnified Party will survive the expiration or
termination of this Agreement by either party for any reason.
4. Termination.
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4.1 Termination by Mutual Agreement: Termination Without Cause. This
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Agreement shall be terminated:
(a) immediately upon mutual agreement of the parties; or
(b) by either party without cause upon thirty (30) days' written
notice to the other party.
4.2 Termination Upon Default. The occurrence of any breach by either
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party of a material term or condition of this Agreement shall constitute an
Event of Default. If an Event of Default specified in this Section 4.2 is not
cured by the defaulting party within fifteen (15) days after delivery of written
notice describing the Event of Default, then the nondefaulting party shall be
entitled, at its sole election, to terminate this Agreement upon not less than
fifteen (15) days' written notice to the other party. Notwithstanding the
foregoing, if the Event of Default in question is neither knowing, intentional
nor willful, and if the cure of such Event of Default cannot be completed within
fifteen (15) days using best efforts, then either party shall have such
additional time to cure such Event of Default as shall be reasonably necessary.
4.3 Termination by Reason of Bankruptcy. In the event of the occurrence
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of any of the following events, a party shall have the right to terminate this
Agreement immediately upon providing written notice to the other party:
(a) the commencement of any bankruptcy, insolvency, reorganization,
readjustment of debt, dissolution, liquidation of debt, Federal Deposit
Insurance Corporation or Office of Thrift Supervision conservatorship or
receivership proceeding or other proceeding under federal or state
bankruptcy, debtors relief or other law by or against the other party; or
(b) the suspension or termination of business or dissolution of, or
the appointment of a receiver, conservator, trustee or similar officer to
take charge
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of, a substantial part of the property of the other party.
4.4 Termination by Reason of Regulatory Action. If action by a federal or
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state regulator materially affects the obliga tions hereunder, either party
shall have the right to terminate this Agreement upon written notice to the
other party.
5. Consideration.
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5.1 Fees. PA Group shall pay the Bank for the services rendered, and
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associated expenses incurred, under this Agreement by the Bank, including
overhead, at the Bank's cost as determined in accordance with the Bank's
internal accounting principles (the "Cost Factor") plus an additional amount
equal to a mutually agreed upon percentage of the Cost Factor.
5.2 Expenses. Except as otherwise provided in this Agreement, PA Group
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shall reimburse the Bank for expenses incurred by the Bank pursuant to this
Agreement in rendering services to PA Group, including, without limitation, the
following:
(a) Fees and costs of independent auditors and income tax
preparation;
(b) Fees and costs of outside legal counsel and any legal counsel
directly employed by PA Group;
(c) Costs (including postage) of printing and mailing;
(d) Data transmission expenses; and
(e) Costs for telephone WATS lines.
5.3 Payment. Within thirty (30) days after the end of each month, the
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Bank shall provide PA Group with an itemized report (in a form reasonably
satisfactory to PA Group), setting forth for that month all services provided
and associated charges and expenses therefor. All payments due pursuant to such
report shall be remitted by PA Group within thirty (30) days of receipt by PA
Group of such report.
6. Taxes.
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6.1 Reimbursement of Taxes. PA Group shall reimburse the Bank for all
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taxes, however designated and levied, upon the fees under this Agreement, or
upon the services or materials provided
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hereunder, or their use, including state and local privilege or excise taxes
based on gross revenue, and any taxes or amounts in lieu thereof paid by the
Bank in respect of the foregoing, exclusive of franchise taxes based on the net
income of the Bank.
7. Miscellaneous.
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7.1 Notices. Any written notice required or permitted to be given to the
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parties hereunder shall be addressed as follows:
If to the Bank: ▇▇▇▇▇▇▇▇ ▇. Grill
President
Pan American Bank, FSB
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to PA Group: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Chairman of the Board
Pan American Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All written notices shall be delivered in person or shall be sent by certified
mail, return receipt requested, and shall be effective, except as otherwise
provided herein, when deposited with the United States Postal Service, postage
pre-paid and addressed and posted as above. The parties to this Agreement, by
notice in writing, may designate another to whom notices shall be given pursuant
to this Agreement.
7.2 Independent Contractor Status of the Bank. The relationship of the
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Bank to PA Group under this Agreement is that of independent contractor.
Nothing herein contained shall be construed as constituting a partnership, joint
venture or agency between the parties hereto.
7.3 Assignment. This Agreement shall not be assignable in whole or in
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part by the Bank or PA Group without the other party's prior written consent,
which consent shall not unreason ably be withheld, and any attempted assignment
without such consent shall be void; except that the Bank, upon notice to PA
Group, may assign this Agreement to any subsidiary or affiliate of the Bank
which will provide the services under this Agreement, except the Bank shall
remain secondarily liable under this Agreement after any such assignment.
7.4 Authority. Each party to this Agreement hereby represents and
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warrants to the other that it has the full right, power and authority to enter
into and perform this Agreement in
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accordance with all the terms, provisions, covenants and conditions hereof, and
that the execution and delivery of this Agreement have been duly authorized by
proper corporate action.
7.5 Waiver. No term or provision hereof will be deemed waived, and no
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variation of terms or provisions hereof shall be deemed consented to, unless
such waiver or consent shall be in writing and signed by the party against whom
such waiver or consent is sought to be enforced. Any delay, waiver or omission
by the Bank or PA Group to exercise any right or power arising from any breach
or default of the other party in any of the terms, provisions or covenants of
this Agreement shall not be construed to be a waiver by the Bank or PA Group of
any subsequent breach or default of the same or other terms, provisions or
covenants on the part of the other party.
7.6 Successors. Subject to the restrictions on assignment contained
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herein, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
7.7 Compliance with Laws and Regulations. Each party agrees that it will
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obtain all licenses and other governmental authorizations and approvals required
for the performance of its obligations under this Agreement and will perform its
obligations hereunder in accordance with all applicable federal, state and local
laws, rules and regulations now or hereafter in effect.
7.8 Arbitration. Except as otherwise provided herein, any dispute between
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the Bank and PA Group which cannot be amicably settled shall be resolved by
binding arbitration in accordance with the commercial arbitration rules of the
American Arbitration Association. Such disputes shall be heard by a board of
three arbitrators selected as provided herein, and the decision of any two such
arbitrators on any issue shall be final. The arbitration proceedings shall be
held in San Francisco, California.
(a) Notice and Selection of Arbitrators. Either party may request such
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arbitration by written notice to the other, specifying the name and address of
the arbitrator selected by the requesting party and a brief description of the
dispute which such party wishes to have arbitrated. The other party shall, by
written notice to the requesting party, within twenty (20) days of receipt of
such request, specify the name and address of the arbitrator selected by such
other party. If the other party does not do so within such twenty (20)-day
period, the requesting party may, upon notice to the other party, select a
second arbitrator. The two arbitrators appointed shall select a third
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arbitrator within twenty (20) days of the appointment of the second arbitrator.
If they fail to do so within a twenty (20)-day period, the third arbitrator
shall be selected by the American Arbitration Association.
(b) Conduct of Arbitration. Until such time as three arbitrators are
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appointed, either party shall have the right, by written notice to the other and
to the arbitrators selected, to specify further disputes under this Agreement to
be determined through such arbitration. The arbitration shall interpret this
Agreement in accordance with the ordinary meaning of language and commercial
customs, usage, and practices as they may be applicable. The arbitrators in
hearing and deciding any matter presented pursuant to this Agreement shall have
no power to amend, modify, or ignore any portion of this Agreement, and the
arbitrators shall render any decision strictly in accordance with the terms of
this Agreement. The parties shall be entitled to such discovery as the
arbitrators deem appropriate to permit a party to properly present its case.
(c) Arbitration Awards. Awards made pursuant to such arbitration shall be
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in writing, setting forth findings of fact and conclusions of law, and may
include costs, and reasonable attorneys' fees, and judgment may be entered on
any award made in any court having jurisdiction.
(d) Legal Proceedings In the event that the amount of claims involved in
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such unsettled disputes exceeds, in the aggregate for all events of alleged
violations, one million dollars, either party may institute legal proceedings,
notwithstanding this Section 7.8. Upon the commencement of such legal
proceedings, any arbitration of the subject dispute shall be canceled.
7.9 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California, except where federal law is
applicable.
7.10 Headings Not Controlling. Headings used in this Agreement are for
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reference purposes only and shall not be deemed a part of this Agreement.
7.11 Entire Agreement. This Agreement constitutes the only agreement
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between the parties hereto relating to the subject matter hereof, and all prior
negotiations, agreements and understandings, whether oral or written, are
superseded or canceled hereby.
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7.12 Arm's Length Agreement. The parties hereto acknowledge that the terms
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of this Agreement are substantially the same as, or at least as favorable to the
Bank, as those prevailing as of the Effective Date for comparable transactions
with or involving other nonaffiliated companies and, in the absence of
comparable transactions, on terms that the parties in good faith would offer to
nonaffiliated companies.
7.13 Modification. No modifications or amendments of this Agreement shall
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be effective unless and until set forth in writing and signed by duly authorized
representatives of both parties.
7.14 Severability. If any provision of this Agreement is declared or found
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to be illegal, unenforceable or void, this Agreement shall be construed as if
not containing that provision, the rest of the Agreement shall remain in full
force and effect, and the rights and obligations of the parties hereto shall be
construed and enforced accordingly.
7.15 Force Majeure. Neither party shall be liable for a delay in
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performance or failure to perform any obligation under this Agreement to the
extent such delay is due to causes beyond the control of that party and is
without its fault (with respect to PA Group, as determined in accordance with
the standard of care specified in Section 3.1), including, but not limited to,
acts of God, labor disputes, governmental regulations or orders, civil
disturbance, war conditions, fires, or due to a failure by the other party to
satisfy its obligations under this Agreement.
Any dispute as to the cause of any delay shall be submitted to arbitration
pursuant to Section 7.8 of this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed and delivered by its duly authorized officer, all as of the date
indicated above.
PAN AMERICAN GROUP, INC., a Delaware corporation
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Title Chairman
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PAN AMERICAN BANK, FSB, a federal savings bank
By /s/ ▇▇▇▇▇▇▇▇ ▇. GRILL
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Title Pres.
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