Document:

exv10w16

 

Exhibit 10.16

Description of Reinsurance Agreements for 2007 between

ACIC, BCIC and Swiss Reinsurance Corporation, General Reinsurance

Corporation and Max Re Ltd. effective January 1, 2007

The Company, on behalf of its subsidiaries American Compensation Insurance Company (ACIC) and
Bloomington Compensation Insurance Company (BCIC), entered into reinsurance contracts for the
fiscal year beginning January 1, 2007. The following summarizes the significant terms of these
reinsurance agreements.

LIABILITY OF THE REINSURER

The Reinsurers shall pay to ACIC and BCIC, with respect to Workers’ Compensation and Employers’
Liability Business, the amount of Net Loss for each Occurrence, as defined in the contracts, in
excess of the Company’s retention, but not exceeding the Limits of Liability of the Reinsurer as
follows:

	 	 	 	 	 
	Loss Layer	 	Reinsurer	 	Comment
	$800,000 excess of $200,000

	 	65 % Swiss Reinsurance Corporation
	 	All business written by the Company.
	 

	 	35% Max Re Ltd.
	 	Recoveries from the
MN WCRA will inure
to the benefit of
this treaty
	 
	 	 	 	 
	$9,000,000 excess $1,000,000

	 	50% Swiss Reinsurance Corporation
	 	Non Minnesota losses.
	 

	 	50% General Reinsurance Corporation	 	 
	 
	 	 	 	 
	$10,000,000 excess

$10,000,000

	 	100% General Reinsurance Corporation
	 	Non Minnesota losses.
Net loss for any one
employee shall not
exceed $10,000,000
	 
	 	 	 	 
	Excess of $20,000,000

	 	 	 	Non Minnesota losses
100% retained by
ACIC and BCIC

COMMENCEMENT AND TERMINATION

The agreements shall apply to new and renewal policies of ACIC and BCIC becoming effective at and
after 12:01 A.M., January 1, 2007, and to policies in force at 12:01 A.M., January 1, 2007, with
respect to losses resulting from Occurrences taking place at or after the aforesaid time and date.

The contracts are for one year and automatically expire at 12:01 A.M. on January 1, 2008. The
Reinsurers may also terminate the contracts in the event of significant adverse events at ACIC or
BCIC or in the event of a change in control of ACIC, BCIC or RTW, Inc.

REINSURANCE PREMIUM

ACIC and BCIC agreed to pay the Reinsurers based on subject premiums earned for each Loss Layer as
shown above. These rates are similar to the rates that we paid in 2006.exv10w17

 

Exhibit 10.17

AMENDMENT NO. 11 TO LEASE AGREEMENT

     THIS AMENDMENT is made as of December 5, 2006, between TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA (“Landlord”) and RTW, INC. and AMERICAN COMPENSATION INSURANCE COMPANY
(collectively, “Tenant”)-

     A. Landlord and Tenant or their predecessors in interest entered into a written lease
agreement
dated August 7, 1990 (“Initial Lease”), which has not previously been amended or modified,
except by:

     Amendment No. 1 to Lease Agreement dated October 15, 1990 (“Amendment No. 1”),

     Amendment No. 2 to Lease Agreement dated October 28, 1991 (“Amendment No. 2”),

     Amendment No. 3 to Lease Agreement dated December 29, 1992 (“Amendment No. 3”),

     Amendment No. 4 to Lease Agreement dated January 31, 1994 (“Amendment No. 4”),

     Amendment No. 5 to Lease Agreement dated July 27, 1994 (“Amendment No. 5”),

     Amendment No. 6 to Lease Agreement dated December 9, 1994 (“Amendment No. 6”),

     Amendment No. 7 to Lease Agreement dated January 15, 1997 (“Amendment No. 7”),

     Amendment No. 8 to Lease Agreement dated July 20, 1998 (“Amendment No. 8”),

     Amendment No. 9 to Lease Agreement dated January 12, 1999 (“Amendment No. 9”), and

     Amendment No. 10 to Lease Agreement dated June 13, 2002 (“Amendment No. 10”).

The Initial Lease and Amendments Nos. 1 through 10 are sometimes collectively referred to herein as
the “Current Lease.”

     B. The Current Lease relates to the Leased Premises consisting of approximately 26,301
rentable
square feet on the fourteenth and fifteenth floors of the building commonly known as 8500
Normandale
Lake Boulevard, Bloomington, Minnesota (the “Building”), and comprised of the following
parcels:

     Approximately 20,745 rentable square feet on the fourteenth floor (“Suite 1400”),and

     Approximately 5,556 rentable square feet on the fifteenth floor (“Suite 1550”).

     C. Landlord
and Tenant desire to delete Suite 1550 from the Leased Premises, to expand the
Leased Premises to include approximately 11,185 rentable square feet on the eleventh floor of
the Building
as shown on the attached Exhibit 1 (“Suite 1130”), to extend the term of the Lease, and to
otherwise
amend the Lease as provided in this Amendment.

     FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are expressly
acknowledged, the parties agree as follows:

     1. Effect. The Current Lease is hereby amended to the extent necessary to give effect
to this
Amendment, and the terms of this Amendment shall supersede any contrary terms in the Current
Lease.
All references in the Current Lease to “this Lease,” and all references in this Amendment to
“the Lease,”
shall be deemed to refer to the Current Lease as amended by this Amendment. In all other
respects, the
terms and conditions of the Current Lease shall remain unmodified and in effect. Unless
otherwise defined
herein, capitalized terms used in this Amendment shall have the same meanings as provided in
the Current Lease.

     2. Term. The term of the Lease is hereby extended for one (1) period of sixty (60)
months
commencing on October 1, 2007, and ending on September 30, 2012 (“Third Extension Term”).
Except

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as expressly provided otherwise in the Lease or this Amendment, the Lease shall continue
during the Third Extension Term on all of the same terms and conditions, and any reference in the
Lease to the term of the Lease shall be deemed to include and refer to the Third Extension Term.
This Amendment shall not be deemed to grant to Tenant any right or option to further extend or
renew the Lease, and any options to extend or renew contained in the Lease are hereby deleted.

     3. Leased Premises.

     A. For purposes of this Amendment, the “Relocation Date” shall mean the earlier of: (1) the
date
of substantial completion of the Tenant Finish Work in Suite 1130 pursuant to the attached
Exhibit 2, or
(2) the date Tenant occupies all or any part of Suite 1130 for the conduct of business. The
Relocation Date
is currently estimated to occur on approximately March 1, 2007. If the Relocation Date is
delayed,
Tenant’s obligation to pay rent for Suite 1130 shall be postponed until the Relocation Date
occurs (except
in the case of Tenant Delay as provided in the attached Exhibit 2), Landlord shall not be
liable for such
delay, and the term shall not be extended or affected thereby.

     
B. As of the Relocation Date, Suite 1550 shall be entirely deleted and released from the
Lease,
and Tenant shall completely vacate Suite 1550 and surrender possession thereof to Landlord in
the
condition required under the Lease, reasonable wear and tear excepted. Tenant shall at its
expense remove
all of Tenant’s trade fixtures, personal property, equipment, and telecommunications and
computer wiring
from Suite 1550, and repair any damage caused by such removal,
moving, or installation.

     C. As of the Relocation Date, the Leased Premises shall be amended and expanded so that the
Leased Premises thereafter shall consist of a total of approximately 31,930 rentable square
feet, and shall
be comprised of Suite 1400 and Suite 1130. Except as expressly provided otherwise in this
Amendment or
in the Lease, Suite 1130 shall be added to and become part of the Leased Premises for the
remaining term
of the Lease (including the Third Extension Term and any extension thereof) on all of the
terms and
conditions of the Lease, and any reference in the Lease to the Leased Premises shall
thereafter be deemed
to refer to Suite 1400 and Suite 1130.

     D. If Tenant holds over in Suite 1550 after the Relocation Date, in addition to Landlord’s
other
rights and remedies under the law and the Lease: (1) Tenant shall pay holdover rent for Suite
1550 at one
hundred fifty percent (150%) of the rate for Base Net Rent and Operating Costs payable by
Tenant for
such space during the month preceding the Relocation Date, computed on a daily basis for each
day Tenant
remains in possession of Suite 1550; and (2) Landlord shall be entitled to lawfully retake
possession of
Suite 1550 and to recover from Tenant all costs, reasonable attorneys’ fees and consequential
damages
sustained by Landlord as a result of such holding over by Tenant.

     5. Rent.

     A. Tenant shall pay Base Net Rent for Suite 1400 through September 30, 2007 as currently
provided in the Lease. During the Third Extension Term, Tenant shall pay Base Net Rent for Suite
1400 at an annual rate per rentable square foot and payable in monthly installments as follows:

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	 	 	Annual Rate Per	 	Monthly
	Period	 	Square Foot	 	Installment
	10/1/07-9/30/09
	 	$	17.85	 	 	$	30,858.19	 
	10/1/09-9/30/10
	 	$	18.50	 	 	$	31,981.88	 
	10/1/10-9/30/11
	 	$	19.10	 	 	$	33,019.13	 
	10/1/11-9/30/12
	 	$	19,75	 	 	$	34,142.81	 

     B. Tenant shall pay Base Net Rent for Suite 1550 through the day preceding the Relocation
Date
as currently provided in the Lease.

     C. Commencing as of the Relocation Date and continuing through the end of the Third Extension
Term, Tenant shall pay Base Net Rent for Suite 1130 at an annual rate per rentable square foot
and payable
in monthly installments as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Annual Rate	 	Monthly
	Period	 	Per Square Foot	 	Installment
	Relocation Date
through 9/30/07

	 	$	17.20	 	 	$	16,031.83	 
	10/1/07-9/30/09

	 	$	17.85	 	 	$	16,637.69	 
	10/1/09-9/30/10

	 	$	18.50	 	 	$	17,243.54	 
	10/1/10-9/30/11

	 	$	19.10	 	 	$	17,802.79	 
	10/1/11-9/30/12

	 	$	19.75	 	 	$	18,408.65	 

     D. Tenant shall pay its proportionate share of Operating Costs for Suite 1400 and Suite
1550
through the day preceding the Relocation Date as currently provided in the Lease. Commencing
as of the
Relocation Date, Tenant’s proportionate share of Operating Costs for Suite 1400 and Suite 1130
shall be 6.593%, calculated by dividing the rentable square feet in Suite 1400 and Suite 1130 of 31,930
by the
rentable square feet in the Building of 484,290; and Tenant shall thereafter pay its
proportionate share of
Operating Costs for Suite 1400 and Suite 1130 as provided in the Lease.

     E. Rent for Suite 1400 and Suite 1130 shall be paid at the same time and in the same manner as
currently provided in the Lease. If the Relocation Date is not the first day of a calendar
month, the Base
Net Rent and Tenant’s proportionate share of Operating Costs for the month in which the
Relocation Date
occurs shall be prorated on a daily basis between Suite 1550 and Suite 1130, and any
deficiency or refund
shall be paid within thirty (30) days after Landlord’s
statement to Tenant.

     6. Leasehold Improvements. Landlord agrees to construct leasehold improvements in
Suite 1400
and Suite 1130 as provided in the attached Exhibit 2. In all other respects, Tenant agrees to
accept Suite
1400 and Suite 1130 on an “as is” basis, and Landlord has no obligation to do or pay for any
leasehold
improvements or plans.

     7. Miscellaneous.

     A. Within ten (10) days after written request by Landlord, Tenant shall execute and deliver an
instrument in form reasonably satisfactory to Landlord confirming the Relocation Date or any
other matter
reasonably requested by Landlord relating to the relocation of the Leased Premises.

     B. Paragraph 6B of Amendment No. 10 and all prior provisions relating to climate-controlled
parking spaces are hereby deleted from the Lease.

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     C. Paragraph 6C of Amendment No. 10 and all prior provisions relating to storage spaces
are hereby entirely deleted from the Lease.

     8. Tenant Representations. Tenant hereby represents to Landlord that there has
been no assignment of Tenant’s interest under the Lease and no sublease of all or any portion of
the Leased Premises by Tenant requiring Landlord’s consent that has not been obtained, there
are no existing defenses, claims or offsets which Tenant has against the enforcement of the
Lease or Landlord, and Landlord and Tenant are not currently in
default under the Lease.

     9- Brokers. Landlord and Tenant each represents that it has not engaged or dealt with
any real estate broker, agent or finder with respect to this Amendment, except for United
Properties LLC (representing Landlord and whose commission, if any, shall be paid by Landlord
pursuant to a separate written agreement). Landlord and Tenant shall indemnify and hold each other
harmless from all claims, liability or expense (including reasonable attorneys’ fees) in connection
with any claim for broker’s, finder’s or other fees or commissions by any other person or entity as
a result of such party’s actions or alleged actions.

     10. Entire Agreement. The Lease, including, without limitation, this Amendment and all
exhibits which are attached hereto and hereby incorporated by reference, constitutes the entire
agreement between Landlord and Tenant with respect to the subject matter hereof, and may not be
amended or modified except in a writing signed by Landlord and Tenant. Tenant acknowledges that it
has not been induced to enter into this Amendment by any agreements or representations which are
not set forth in this Amendment. This Amendment shall not be effective until execution and delivery
by both Landlord and Tenant.

     By signing this Amendment, the parties agree to the above terms.

	 	 	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	TEACHERS INSURANCE AND ANNUITY 

ASSOCIATION OF AMERICA	 	RTW, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Arend W. Taal
	 	 	 	By
	 	/s/ Jeffrey B.Murphy	 	 
	Name:

	 	 

Arend W. Taal
	 	 	 	Name:
	 	 

Jeffrey B.Murphy
	 	 
	Title:

	 	DIRECTOR
	 	 	 	Title:
	 	CEO	 	 
	Date
Signed: 12/11/06

	 	 	 	Date Signed:

     December 7, 2006	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	AMERICAN COMPENSATION INSURANCE COMPANY
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By
	 	/s/ Alfred L. LaTendresse	 	 
	 

	 	 	 	 	 	Name:
	 	 

Alfred L. LaTendresse
	 	 
	 

	 	 	 	 	 	Title:
	 	EVP and CFO	 	 
	 

	 	 	 	 	 	Date Signed:
     December 7, 2006	 	 

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