Common use of Renewal Commission Clause in Contracts

Renewal Commission. (a) The Retrocessionaire shall pay to the Retrocedent a renewal commission ("Renewal Commission") of twelve and a half percent (12.5%) on all net reinsurance premiums (excluding any reinstatement premiums relating to any losses incurred on or after the Effective Date) collected in cash by the Retrocessionaire or any Affiliate thereof relating to any Reinsured Contracts which are renewed, at its sole discretion, by the Retrocessionaire or any Affiliate thereof ("Renewed Contracts") over the twelve (12) month period following the date hereof. At the Closing, the Retrocessionaire will remit to the Retrocedent an advance payment of eight million dollars ($8,000,000) ("Advance Payment") to be applied against payment of such Renewal Commissions. The Advance Payment shall be a minimum Renewal Commission and shall not be subject to repayment by the Retrocedent. The parties agree that in the event the aggregate amount of Renewal Commissions to be paid by the Retrocessionaire to the Retrocedent exceeds the amount of the Advance Payment, the Retrocessionaire shall pay such additional Renewal Commissions to the Retrocedent as reinsurance premiums are received in cash from the Renewed Contracts. The parties further agree that the decision to write any Renewed Contracts is at the sole discretion of the Retrocessionaire, and that this Section 4.2 does not create an obligation in any way on the part of the Retrocessionaire to renew any Reinsured Contract. (b) For the avoidance of doubt, any reinsurance premiums relating to (i) the cancellation and rewriting of Reinsured Contracts on the Retrocessionaire's paper or (ii) Novation of Reinsured Contracts effected pursuant to Section 2.4 hereof shall be subject to the Ceding Commissions calculation under Section 4.1 hereof, but not the Renewal Commission calculation under this Section 4.2 hereof; provided, however, subject to Section 4.4, any renewal of a Reinsured Contract which has been novated pursuant to Section 2.4 hereof will be subject to Renewal Commissions. New Section 4.2(c). (c) The premium used for determining the Renewal Commissions paid to the Retrocedent under this Section 4.2 shall be net of all premiums paid by the Retrocessionaire to third party reinsurers under reinsurance agreements obtained by the Retrocessionaire to reinsure the Renewed Contracts. The premium for such reinsurance shall be calculated by reasonably allocating the premium for all reinsurance obtained by the Purchaser for the coverage period of the Renewal Contracts between the premium received by the Purchaser for the portion of the Renewal Contracts on which the Seller Parties are to receive Renewal Commissions and the premium received by the Purchaser on any and all other business underwritten by the Purchaser protected by such third party reinsurance. In the event the Retrocessionaire materially changes the reinsurance coverage purchased by the Retrocessionaire in connection with the Reinsured Contracts, the Retrocessionaire and the Retrocedent agree to determine jointly in good faith an appropriate amount of Renewal Commissions payable to the Retrocedent as if the Retrocessionaire has purchased reinsurance at a level comparable to the current program of reinsurance provided under the Third Party Retrocession Contracts to LaSalle Re. (d) In the event the Retrocessionaire renews a Reinsured Contract at higher reinsurance premiums than the reinsurance premiums previously paid under such Reinsured Contract, the Retrocedent is entitled to Renewal Commissions based upon net reinsurance premiums not greater than one hundred and thirty-five percent (135%) of the expiring net reinsurance premium relating to such Reinsured Contract. Furthermore, in the event the Retrocessionaire renews a Reinsured Contract and in the process increases the amount of coverage under such Reinsured Contract, the Retrocedent shall not be entitled to any Renewal Commission based upon such additional coverage, but shall be entitled to Renewal Commissions based upon its pro rata share of the coverage under such Reinsured Contract prior to its renewal.