Exhibit 10.6
INTERCOMPANY SERVICE AGREEMENT
This Agreement effective January 1, 1999, by and between California Indemnity
Insurance Company (hereinafter referred to as "CIIC"), a California Insurer, and
Sierra Health Services, Inc., a Nevada corporation (hereinafter referred to as
"SHS").
RECITALS
WHEREAS, CIIC desires to utilize certain management services which can be
provided by SHS; and
WHEREAS, such an arrangement will achieve certain operating economies and
improve services to the benefit of CIIC.
NOW THEREFORE, it is AGREED as follows:
1. PERFORMANCE OF SERVICES AND FACILITIES
SHS agrees to provide and CIIC agrees to accept, certain executive,
administrative, and other services that are customary and usual of an insurance
company to enable CIIC to operate its business. Such services shall include, but
are not limited to, the following. (Deletions or additions to the specific
functions and services may be made by mutual agreement of the parties in
writing):
(a) Data Processing Services, including provision for necessary
programming for present and new systems application. This will include use of
data processing programs and hardware, all supplies, input, processing and
output requirements, maintenance of access equipment and software, network
support as may be required by CIIC. In addition, this includes
reports operations
and financial reports.
(b) Tax Accounting services, including the preparation of and timely
filing of tax returns with various applicable taxing authorities, all under the
ultimate supervision of the Board of Directors and responsible officers of CIIC.
(c) General Administrative and Facilities Services, including but not
limited to mailroom, purchasing, phone receptionist, warehouse, storage and
office lease management.
(d) Actuarial, all under the ultimate supervision of the Board of
Directors and responsible officers of CIIC.
(e) Human resource and payroll services, including processing of
payroll and keeping of appropriate records, advertising and recruiting costs for
new or open positions, administration of health insurance, retirement and other
benefits.
2. RESPONSIBILITIES
SHS shall be responsible for the fitness of personnel for a particular position
and shall use its best efforts to ensure that any person employed by it to
provide services to CIIC shall have necessary and appropriate credentials,
expertise, and personal qualities relative thereto. All services provided by SHS
under this Agreement shall be subject to the direction and control and ultimate
veto of the authorized officers of CIIC. All accounts, documents, files,
vouchers, data, letters and all other papers and records created and maintained
by SHS pursuant to this Service Agreement are the property of CIIC and shall be
open at all times to inspection by CIIC or its designees upon reasonable notice
and , upon termination of this Service agreement, shall be returned to CIIC if
it so requests. However, SHS shall be permitted to make copies of such records
at its expense.
3. COMPENSATION
SHS shall, at its option, send invoices as often as monthly, but no less than
annually, for all services provided hereunder and CIIC agrees to pay SHS within
10 calendar days after receipt unless it objects to such charges as provided
below. The fees to be charged for all services hereunder shall be those actually
incurred by SHS, or at the option of CIIC at its reasonable estimate of the cost
directly to it if it staffed or performed such function directly (including all
applicable benefit, overhead and related business costs), whichever is less, all
pursuant to allocation reasonably applied to such services. The manner and
method allocation shall be settled between SHS and CIIC on or before the end of
the first quarter of any calendar year in which services are rendered under this
Agreement and shall be specified in writing. Unless otherwise agreed
allocation of staff services will be based upon actual time SHS personnel
allocated to performing the services required but may be estimated for any
particular services whose annual allocation would be less than $50,000. From
time to time as is reasonable, SHS and CIIC will survey the actual costs of SHS
in supplying the services hereunder and the method of allocation. In surveying
the method of allocation the parties shall be guided by guidelines, if any
published by the National Association of Insurance Commissioners .
CIIC also shall pay directly to SHS the amount of reasonable out of pocket
expenses including reimbursement for travel and entertainment expense, etc.,
relating to CIIC.
SHS's determination of charges hereunder shall be presented to CIIC and if CIIC
objects to any such determination, it shall so advise within thirty (30) days of
receipt of notice of said determination. Unless the parties can reconcile any
such objection, they shall agree to the selection of a firm of independent
certified public accountants which shall determine the charges properly
allocable to CIIC, and shall, within a reasonable time, submit such
determination, together with the basis therefore, in writing to both parties
whereon such determination shall be binding. The expenses of such a
determination by a firm of independent certified public accountants shall be
borne equally by both parties.
Each party shall be responsible for maintaining full and accurate accounting
records of all services rendered and facilities used pursuant to this Agreement
and such additional information as may reasonably be requested for purposes of
the parties' bookkeeping and accounting operations.
4. TERM
This Agreement or any part thereof shall remain in effect until terminated in
whole or in part by either party upon giving one hundred eighty days (180)
written notice to the other party.
5. REPRESENTATION
Each of the parties represents to the other that it has proper authority to
enter into, and be bound by and carry out the terms of this Agreement, that it
is legally organized and in good standing under the laws of the various
jurisdiction in which it does business, that it is not party to any agreement,
oral or written, which is in violation of or in conflict with the terms hereof,
and that it has no knowledge of any law or regulation which will make this
agreement void or unenforceable.
6. SEVERABILITY
In the event that any part of this Agreement is held to be invalid or
unenforceable, then the remainder of this Agreement shall
remain in full force and effect.
7. ASSIGNMENT
Any rights pursuant hereto shall not be assignable by any party hereto, except
by operation of law. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto, or their
respective legal successors, any rights, remedies, obligations or liabilities,
or to relieve any person other than the parties hereto or their respective legal
successors, from any obligations or liabilities that would otherwise be
applicable.
8. GOVERNING LAW
This Agreement is made pursuant to and shall be governed by, interpreted under,
and the rights of the parties determined in accordance with, the laws of the
state of California.
9. ARBITRATION
Any disputes hereunder shall be settled by binding arbitration in accordance
with the general arbitration rules of the American Arbitration Association. Such
arbitration shall take place in Las Vegas, Nevada. The decision of the
arbitrators shall be final and no party shall have any right of appeal with
respect thereto.
10. NOTICES
All notices, statements or requests to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered by hand to an officer
of the other party, or when deposited with the U.S. Postal Service, as certified
or registered mail, postage prepaid as follows:
California Indemnity Insurance Company
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Sierra Health Services, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
the or to such person or place as each party may from time to time designate by
written notice sent as aforesaid.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have
executed this Agreement on the date first above written.
SIERRA HEALTH SERVICES, INC.
BY: s/Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
Vice President, Chief Financial Officer and Treasurer
CALIFORNIA INDEMNITY INSURANCE COMPANY
BY: s/Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chief Financial Officer and Treasurer
