OF,
OR RELATING TO, THE SURVIVING CORPORATION; PROVIDED, HOWEVER, THAT TO THE EXTENT
THAT THERE IS A TAX AUDIT OR TAX CONTEST RELATING TO TAXES THAT WILL RESULT IN A
CLAIM SUBJECT TO INDEMNIFICATION PURSUANT TO ARTICLE X, PARENT SHALL (I) GIVE
NOTICE TO THE SHAREHOLDER REPRESENTATIVES OF SUCH TAX AUDIT OR TAX CONTEST AND
OF THE MATTERS THAT COULD GIVE RISE TO INDEMNIFICATION, (II) ALLOW THE
SHAREHOLDER REPRESENTATIVES TO COMMENT ON SUCH MATTERS AND PROVIDE TO THE
SHAREHOLDER REPRESENTATIVES INFORMATION REASONABLY REQUESTED BY THE SHAREHOLDER
REPRESENTATIVES FOR PURPOSES OF EVALUATING SUCH MATTERS, (III) TO THE EXTENT
COMMENTS FROM THE SHAREHOLDER REPRESENTATIVES ARE RECEIVED, REASONABLY AND IN
GOOD FAITH CONSIDER SUCH COMMENTS, AND (IV) ALLOW THE SHAREHOLDER
REPRESENTATIVES AND THEIR COUNSEL, AT THE SOLE EXPENSE OF THE SHAREHOLDER
REPRESENTATIVES, TO PARTICIPATE IN ANY PROCEEDINGS RELATING TO SUCH MATTERS,
PROVIDED THAT PARENT AND THE SHAREHOLDER REPRESENTATIVES SHALL JOINTLY CONTROL
THE CONDUCT OF SUCH PROCEEDINGS ON TERMS MUTUALLY AGREEABLE TO PARENT AND THE
SHAREHOLDER REPRESENTATIVES.
PARENT SHALL NOT ENTER INTO ANY SETTLEMENT OF ANY
CONTEST OR OTHERWISE COMPROMISE ANY ISSUE THAT MAY HAVE AN ADVERSE EFFECT ON THE
TAX LIABILITY OF THE COMPANY SHAREHOLDERS OR THE COMPANY FOR ANY PRE-CLOSING TAX
PERIOD WITHOUT THE PRIOR WRITTEN CONSENT OF THE SHAREHOLDER REPRESENTATIVES,
WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.
SECTION 8.10.
WORKER'S COMPENSATION INSURANCE
(A)
ON THE CLOSING DATE THE COMPANY WILL HAVE
IN PLACE INSURANCE WITH A WORKERS' COMPENSATION CARRIER TO COVER WORKERS'
COMPENSATION CLAIMS THAT EXCEED THE RETAINED SELF-INSURED RISK OF $750,000 PER
OCCURRENCE.
THE PARTIES ACKNOWLEDGE THAT THE WORKERS' COMPENSATION CARRIER
MAKES PREMIUM ADJUSTMENTS AT THE END OF THE POLICY YEAR.
THE ADJUSTMENT RESULTS
IN EITHER ADDITIONAL PREMIUM PAYMENTS OR A PARTIAL REFUND.
PARENT AND THE
SURVIVING CORPORATION EXPRESSLY AGREE THAT THEY WILL PAY ANY PREMIUM INCREASE
AND COMPANY AGREES THAT PARENT WILL RETAIN ANY REFUNDS ATTRIBUTABLE TO BUSINESS
CONDUCTED IN THE STATE OF WASHINGTON FOR THE POLICY YEARS BEGINNING ON JULY 1,
2004, AND DECEMBER 1, 2005 FOR ALL OTHER STATES.
(B)
ON MARCH 1, 2007, THE COMPANY ACTUARIAL
REVIEWER WILL PREPARE AND DELIVER TO PARENT AN ACTUARIAL REVIEW OF THE SURVIVING
CORPORATION'S WORKERS' COMPENSATION CLAIMS PAID AND RESERVES HELD FOR WORKERS'
COMPENSATION CLAIMS (THE "ULTIMATES") FOR THE POLICY YEARS BEGINNING NOVEMBER 1,
2000, NOVEMBER 1, 2001, NOVEMBER 1, 2002 AND DECEMBER 1, 2003, AND FOR THE
PORTION OF THE POLICY YEAR BEGINNING DECEMBER 1, 2004 THROUGH THE CLOSING
47
Date.
For purposes of this Section 8.10, for the policy years beginning
November 1, 2000, November 1, 2001 and November 1, 2002, the Ultimates will be
calculated for the amounts below the retained $250,000 deductible per occurrence
and for the policy year beginning December 1, 2003, and for the portion of the
policy year beginning December 1, 2004 through the Closing Date, the Ultimates
will be calculated for the amounts below the retained $750,000 deductible per
occurrence.
The March 1, 2007, actuarial review will be calculated by using
loss run information known through December 31, 2006.