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EXHIBIT 10.1
COST SHARING AGREEMENT
The Cost Sharing Agreement (the Agreement)
is between PEMCO MUTUAL INSURANCE
COMPANY ("PMIC") a corporation with its
principal office at 325 Eastlake Ave E,
Seattle, WA 98109, and EVERGREENBANK ("the
Company"), a corporation with its
principal office at 301Eastlake Ave E,
Seattle, WA 98109, and is effective as of
JANUARY 1, 2005.
1. PURPOSE
The
Agreement is designed to recover direct and department costs
incurred
by PMIC on
behalf of the Company. PMIC has been identified as the provider
of
corporate shared services for those services currently performed
by
PMIC.
Unless restricted by regulation, PMIC will directly pay the
employees
providing the shared services.
The
Agreement does not create profit for PMIC, but is, instead, a
cooperative model designed to equitably recover costs.
2. TERM AND
TERMINATION
The
Agreement shall take effect as of the date first written above
and
shall
remain in force for an initial term of one year. Thereafter,
upon
each
anniversary this Agreement shall automatically renew for
successive
one-year
terms until terminated as provided herein.
Termination at Will. Either party may terminate the Agreement, or
any
service
hereunder, for any or no reason by providing the other party no
less than
six months advance written notice. Both parties shall make good
faith
reasonable efforts to facilitate an orderly and mutually
satisfactory cessation of the affected service(s).
Termination by Mutual Agreement. The Agreement or any service
hereunder
may be
terminated at any time with the express consent of both
parties.
Termination for Cause. Either party may terminate the Agreement
upon
notice to
the other in the event the non-terminating party: 1) materially
breaches
its obligations under this Agreement (including, without
limiting
the
foregoing, all obligations of payment) and such breach
continues
uncured
for a period of 90 days following written notice of such breach
by
the
non-breaching party; or 2) becomes the subject of bankruptcy,
assignment
for the benefit of creditors, or similar proceedings or
otherwise
ceases to do business as a going concern.
3. SERVICES OF PMIC TO
THE COMPANY
PMIC will initially provide these specific services to the
Company:
Human Resources
Marketing
Training and Resource Center
PMIC - EvergreenBank Cost Sharing Agreement - Page 1
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Security
Mail Services
Print Management
Forms Management
Reception
Document Management
Copy Services
Motor Pool
Desktop Publishing
Design Services
Writing Services
Word Processing
Business Analysts
Internal Audit or Consulting
Purchasing
Corporate Legal
Real Estate
Telecom
In
addition to these services, PMIC may provide other services as
requested
by the Company and appended to the Agreement in writing signed
by both
parties. Specific service descriptions, services to be provided
during the
current term, and applicable cost allocations and their bases
will be
set forth in Attachment A hereto and incorporated herein by
reference.
PMIC
reserves the right to discontinue any service, if they
discontinue
providing
that service generally, with 30 days notice.
4. ALLOCATION OF
COSTS
Each PMIC
department that provides shared services (Cost Centers) has
determined
the direct and department costs incurred by the Cost Centers to
provide
services to the Company. Direct and department costs represent
those
costs incurred by PMIC for services extended to the Company.
Cost
recovery is based on the following methods:
-
Department allocation
-
Percentage of usage
-
Fee based
-
Flat fee
Certain
Cost Centers have been able to determine the standard cost of
providing
a specific service to the Company and, as such, have provided a
usage fee
for these services. However, where standard cost models are
impractical to develop, a standard cost allocation methodology has
been
developed.
PMIC - EvergreenBank Cost Sharing Agreement - Page 2
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Costs for
the following shared services shall initially be allocated as
indicated:
-
Human Resources - relative number of employees of the Company
-
Marketing - relative time spent on the company
-
Training and education - by class
-
Security - physical security based on PFS Square Footage subject
to
Surveillance ( properties occupied by, or remotely viewed by,
PMIC
Security); other security based on relative number of employees
of
the Company
-
Mail
Services - based on actual monthly time studies
-
Print Management - based on actual monthly time studies
-
Forms Management - based on actual monthly time studies
-
Reception - based on actual monthly time studies
-
Document Management - based on actual monthly time studies
-
Copy
Services - per hour or per unit basis
-
Motor Pool - per hour or per unit basis
-
Desktop Publishing - per hour or per unit basis
-
Design Services - per hour or per unit basis
-
Writing Services - per hour or per unit basis
-
Word
Processing - per hour or per unit basis
-
Business Analysts - per hour or per unit basis
-
Internal Audit or Consulting - per hour basis
-
Purchasing - per purchase order basis
-
Corporate Legal - based on time studies
-
Real
Estate - per hour basis
-
Telecom - based on actual usage
Any other
services provided by PMIC to the Company shall be allocated in
accordance
with customary insurance accounting practices or generally
accepted
accounting principles.
Costs that
are directly incurred by the Company (Direct Charges) and paid
by PMIC
are not included in the cost allocation. Instead, these costs
are
billed
directly to the Company for reimbursement.
All
matters relating to cost and payment under this Agreement will
be
reviewed
annually and adjusted as necessary in accordance with the
principles
set forth herein.
5. EXPENSES PAID BY EACH
COMPANY
Expenses
billed directly to either company or directly allocated to each
company
shall be paid directly by that company out of its own funds to
the
extent
this is practical. Any expenses or portion thereof paid directly
by
one
company that are properly allocable to the other company shall be
paid
to the
company that pays the expense within thirty (30) days of
billing.
6. SETTLEMENT OF
INTERCOMPANY BALANCES
PMIC - EvergreenBank Cost Sharing Agreement - Page 3
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Expenses
allocable to the Company, and Direct Charges, shall be invoiced
to the
Company one month in arrears. Invoices are due when received.
7. BOOKS AND RECORDS
The books
and records of each company, as they pertain to this agreement,
shall be
maintained in accordance with the uniform accounting
instructions
of the
National Association of Insurance Commissioners or generally
accepted
accounting principles and shall be available for audit and
review
by the
other company and by the insurance commissioner of the state of
Washington.
8. PROPRIETARY RIGHTS
The
Company retains exclusive rights of ownership to all work
products
produced
solely and exclusively for the Company by PMIC under this
Agreement.
PMIC retains exclusive rights to ownership of all other work
products
produced hereunder, except to the extent that such rights are
owned by
third parties. "Work product" shall include all documents,
presentation materials, files, input materials, output materials,
the
media upon
which they are located, and all software programs or packages
(together
with any related documentation, source codes, object codes,
upgrades,
revisions, modifications, and any other related materials)
which
are
utilized or developed in the performance of the services
contracted
for under
the Agreement.
9. CONFIDENTIALITY
Each party
shall hold in trust and confidence all of the other party's
Confidential Information to which it is exposed based on
activities
related to
the Agreement, and shall not disclose such information to third
parties
except as may be authorized by the owning party. "Confidential
Information" means all information not in the public domain that
belongs
to or is
the responsibility of each party, including but not limited to
information about the party's business affairs, software and
hardware
systems
and related documentation, existing or future research and
development, work products, customers and employees, and the
entities with
whom the
party conducts business. The provisions in this Section shall
survive
the termination of this Agreement.
10. INDEMNITY
It is the
intention of the parties that PMIC is an independent contractor
under this
Agreement. All employees of PMIC who provide services hereunder
shall
remain employees of PMIC and not employees of the Company,
regardless
of whether their salaries are considered in determining the
amount
charged to the Company for their services. Notwithstanding the
foregoing,
in the event a governmental agency determines that social
security,
withholding, or other tax or assessment should have been paid
by
the
Company on behalf of PMIC, then PMIC agrees to indemnify and
hold
harmless
the
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EXHIBIT 10.1
Company against any
such loss, including interest and penalties occasioned
by such
determination.
The
Company agrees to defend, indemnify, and hold harmless PMIC
against
any and
all loss, liability, cost or expense (including without
limitation
reasonable
attorneys' fees) arising from or related in any way whatsoever
to the
services provided hereunder, except to the extent solely caused
by
PMIC's
gross negligence or willful misconduct.
11. GENERAL
A.
Applicable
Law. This Agreement shall be governed by and interpreted
under the laws of the State of Washington.
B.
Severability. Any invalidity, in whole or in part, of any
provision
of this Agreement shall not affect the validity of any other of
its
provisions.
C.
Notices.
Any notice or other communication hereunder shall be in
writing.
D.
Waiver. No
term or provision hereof shall be deemed waived or breach
excused unless such waiver is in writing and signed by the
party
claimed to have waived or consented.
E.
Assignment. Neither party may assign, sell, transfer, or
subcontract
any of its rights or obligations under this Agreement without
the
other party's prior written consent.
F.
Modification. This Agreement may not be modified except by
written
agreement of both parties.
12. ENTIRE AGREEMENT
This
Agreement, including Addendum A and any other attachments hereto
and
as may be
modified from time to time as provided herein, constitutes the
entire
agreement between PMIC and the Company regarding the services
and
costs and
other subject matter referred to herein, and as of the
effective
date
hereof terminates, replaces, and supersedes all prior agreements
and
other
communications between the parties with respect to this subject
matter,
regardless of whether in written, oral, or any other form.
PEMCO MUTUAL INSURANCE COMPANY
EVERGREENBANK
By: /s/ Steven A. Ricco
By: /s/ Gerald O. Hatler
-------------------
--------------------
Name: Steven A. Ricco
Name: Gerald O. Hatler
Title: Vice President & CFO
Title: President & CEO
Date: 1/19/2005
Date: 12.30.2004
PMIC - EvergreenBank Cost Sharing Agreement - Page 5
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ADDENDUM A - SERVICES AND COST ALLOCATIONS
TO THE COST SHARING AGREEMENT
BETWEEN PEMCO MUTUAL INSURANCE COMPANY
AND EVERGREENBANK
DATED DECEMBER 30, 2004
PERIOD COVERED: JANUARY 1 THROUGH DECEMBER 31, 2005
Confidential - Internal Use Only
1
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HUMAN RESOURCES
DESCRIPTION OF SERVICES:
SPECIALTY FUNCTIONS/ADMINISTRATION
-
Contracts with, and manages, 3rd party vend
