Common use of Commutation Agreement Clause in Contracts

Commutation Agreement. (i) At the Closing, Purchaser and Seller shall cause FIC and each of the Affiliated Reinsurance Entities to execute and deliver a commutation agreement in substantially the form attached hereto as Exhibit A (the “Commutation Agreement”), which agreement shall provide for the commutation of all liabilities assumed by the Affiliated Reinsurance Entities from FIC in respect of the ARE Reinsured Pre-Closing Contracts (the “Closing Date Legacy Liabilities”). (ii) In consideration for the commutation of the Closing Date Legacy Liabilities pursuant to the Commutation Agreement at the Closing, the Affiliated Reinsurance Entities shall pay to FIC an aggregate commutation payment in cash equal to the greater of (A) the Estimated Legacy Reserves and (B) the sum of (1) Estimated Affiliated Reinsurance Entity Cash, plus (2) the amount, if any, by which the Estimated FIC Equity is less than $1,500,000 (such aggregate amount payable to FIC pursuant to this Section 2.1(b)(ii), the “Estimated Commutation Payment,” and as adjusted pursuant to Section 2.3, the “Commutation Payment”).