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ASSUMPTION REINSURANCE AGREEMENT
by and between
UNUM LIFE INSURANCE COMPANY OF AMERICA
and
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
Dated as of October 1, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.................................. 1
ARTICLE II BUSINESS ASSUMED............................. 3
ARTICLE III NOTICES; ASSUMPTION CERTIFICATES; NOVATIONS.. 4
ARTICLE IV TERRITORY.................................... 6
ARTICLE V CONTRACT ADMINISTRATION...................... 6
ARTICLE VI PREMIUMS; RECOVERIES......................... 6
ARTICLE VII TRANSFER OF ASSETS........................... 6
ARTICLE VIII OFFSETS...................................... 7
ARTICLE IX ERRORS AND OMISSIONS......................... 7
ARTICLE X DUTY OF COOPERATION.......................... 7
ARTICLE XI ARBITRATION.................................. 8
ARTICLE XII MISCELLANEOUS PROVISIONS..................... 8
Section 12.01. Notices................................... 8
Section 12.02. Amendment................................. 9
Section 12.03. Counterparts.............................. 10
Section 12.04. No Third Party Beneficiaries.............. 10
Section 12.05. Assignment................................ 10
Section 12.06. Governing Law............................. 10
Section 12.07. Entire Agreement.......................... 10
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EXHIBITS
EXHIBIT A Option Letters
EXHIBIT B Certificates of Assumption
SCHEDULES
SCHEDULE 1.01 Insurance Contracts
SCHEDULE 1.02 LLANY Separate Account
SCHEDULE 1.03 Seller Separate Account
ASSUMPTION REINSURANCE AGREEMENT
--------------------------------
THIS ASSUMPTION REINSURANCE AGREEMENT (this "Agreement"), dated as of
October 1, 1996, is made by and between UNUM Life Insurance Company of America,
a Maine domiciled stock life insurance company ("Seller"), and Lincoln Life &
Annuity Company of New York, a New York domiciled stock life insurance company
("LLANY").
WHEREAS, Seller has agreed to cede and transfer to LLANY the Insurance
Contracts (as defined below) and LLANY has agreed to assume the rights,
obligations and liabilities of Seller under the Insurance Contracts; and
WHEREAS, Seller and LLANY are, concurrently with the execution of this
Agreement, entering into an Indemnity Reinsurance Agreement (the "Indemnity
Reinsurance Agreement") whereby Seller will cede and LLANY will reinsure, on an
indemnity reinsurance basis, the general account obligations of Seller under the
Insurance Contracts pending the assumption of the Insurance Contracts by LLANY
under this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and upon the terms and conditions set forth herein, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
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The following terms shall have the respective meanings set forth below
throughout the Agreement:
"Acquisition Agreement" means the Second Amended and Restated Asset
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Transfer and Acquisition Agreement entered into by and between Purchaser (as
defined below) and Seller dated as of January 24, 1996, to which LLANY has been
added as a party.
"Affiliate" means, with respect to any Person, at the time in
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question, any other Person controlling, controlled by or under common control
with such Person.
"Agreement" means this Assumption Reinsurance Agreement.
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"Certificateholder Notice" shall have the meaning set forth in Article
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III.
"Certificateholders" means the certificateholders under the group
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annuity contracts included within the Insurance Contracts.
"Certificates of Assumption" shall have the meaning set forth in
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Article III.
"Contractholder Notice" shall have the meaning set forth in Article
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III.
"Contractholders" means the holders of the group annuity contracts
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included within the Insurance Contracts.
"Custodian Account" means the Custodian Account established pursuant
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to the Custodian Agreement entered into by and among Seller, LLANY and the
custodian named therein dated the date hereof.
"Effective Date" means October 1, 1996.
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"Extra Contractual Obligations" means all liabilities for
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consequential, exemplary, punitive or similar damages which relate to or arise
in connection with any alleged or actual act, error or omission by Seller or any
of its Affiliates prior to the date hereof, whether intentional or otherwise, or
from any reckless conduct or bad faith by Seller or any of its Affiliates, in
connection with the handling of any claim under any of the Insurance Contracts
or in connection with the issuance, delivery, cancellation or administration of
any of the Insurance Contracts (provided that no liability with respect to which
Purchaser or LLANY shall be entitled to indemnification under Section
10.01(a)(ii) of the Acquisition Agreement shall be deemed to be an Extra
Contractual Obligation).
"General Account Liabilities" means those Insurance Liabilities which
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are general account obligations of Seller, excluding any general account
liabilities which relate to (i) amounts transferred from the Seller Separate
Account to the general account of Seller pending distribution to holders of the
Insurance Contracts and (ii) amounts held in the general account of Seller
pending transfer to the Seller Separate Account.
"Inactive Certificateholder" means a Certificateholder under an
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Insurance Contract with respect to which regular periodic deposits are not being
made by the Contractholder.
"Indemnity Reinsurance Agreement" shall have the meaning set forth in
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the second recital of this Agreement.
"Insurance Contracts" means all group annuity contracts issued by
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Seller that are listed on Schedule 1.01 hereto and in effect on the Effective
Date and all certificates and participation agreements in effect as of the
Effective Date issued in accordance with the terms of such group annuity
contracts (including all supplements, endorsements, riders and ancillary
agreements in connection therewith).
"Insurance Liabilities" means all liabilities and obligations arising
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under the Insurance Contracts (including, without limitation, the Seller
Separate Account Liabilities, but excluding any Extra Contractual Obligations),
including, without limitation: (i) all liability for premium taxes arising on
account of premiums paid or annuities purchased on or after the Effective Date,
(ii) all amounts payable on or after the Effective Date for returns or
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refunds of premiums under the Insurance Contracts, (iii) all liability for
commission payments and other fees or compensation payable with respect to the
Insurance Contracts to or for the benefit of brokers and service providers, to
the extent that such amounts are or become payable on or after the Effective
Date, (iv) all guaranty fund assessments and similar charges imposed with
respect to the Insurance Contracts based on premiums paid on or after the
Effective Date.
"LLANY" shall have the meaning set forth in the introductory paragraph
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of this Agreement.
"LLANY Separate Account" means the separate account of LLANY described
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on Schedule 1.02 hereto.
"Notice" means a Contractholder Notice or a Certificateholder Notice.
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"Novated Contracts" shall have the meaning set forth in Article III.
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"Person" means any individual, corporation, partnership, firm, joint
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venture, association, joint-stock company, trust, unincorporated organization,
governmental, judicial or regulatory body, business unit, division or other
entity.
"Purchaser" means The Lincoln National Life Insurance Company, an
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Affiliate of LLANY.
"Seller" shall have the meaning set forth in the introductory
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paragraph of this Agreement.
"Seller Separate Account" means the separate account of Seller
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described on Schedule 1.03 hereto.
"Seller Separate Account Liabilities" means those insurance
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liabilities that are reflected in the Seller Separate Account and that relate to
Insurance Contracts.
ARTICLE II
BUSINESS ASSUMED
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Upon the terms and subject to the conditions and other provisions of
this Agreement and any required governmental and regulatory consents and
approvals, Seller hereby agrees to cede to LLANY and LLANY hereby agrees to
accept and assume the Insurance Contracts. LLANY agrees to indemnify, defend
and hold harmless Seller (and its directors, officers, employees, Affiliates,
successors and permitted assigns), in accordance with the procedures set forth
in Section 10.02 and Section 10.03 of the Acquisition
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Agreement, from and against all Insurance Liabilities assumed by LLANY pursuant
to this Agreement.
ARTICLE III
NOTICES; ASSUMPTION CERTIFICATES; NOVATIONS
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LLANY shall prepare for mailing to each Contractholder an option
letter, including a rejection form, substantially in the form attached hereto as
Exhibit A-1 (such option letters are hereinafter referred to as the
"Contractholder Notices"). The Contractholder Notices shall be mailed by LLANY
to each such Contractholder, at the sole expense of LLANY, on the date when all
required regulatory approvals have been obtained for the assumption of each such
Insurance Contract by LLANY or as soon as practicable thereafter. Each
Contractholder Notice shall be dated the date upon which it is mailed.
Seller and LLANY agree that a Contractholder will remain a
Contractholder of Seller if a rejection of the assumption is delivered by such
Contractholder to Seller or LLANY prior to the later of (i) the expiration of
the 30-day period which will commence on the date that the Contractholder Notice
is sent to such Contractholder or (ii) with respect to active Insurance
Contracts under which regular periodic deposits are being made, the date of the
next deposit under the relevant Insurance Contract. In the event of such
rejection, Certificateholder Notices will not be sent to Certificateholders
under the Insurance Contracts held by such Contractholder (as otherwise provided
for below) and such Certificateholders will remain as Certificateholders of
Seller.
Following the expiration of the rejection period referred to above
(or, if earlier, following the receipt of any affirmative consent from a
Contractholder), LLANY shall prepare for mailing to each Certificateholder under
the applicable Insurance Contracts who is a resident of New York at the time of
mailing an option letter, including a rejection form, substantially in the form
attached hereto as Exhibit A-2. LLANY shall also prepare for mailing to each
Certificateholder under the applicable Insurance Contracts who is not a resident
of New York at the time of the mailing an option letter, including an
affirmative consent form, substantially in the form attached hereto as Exhibit
A-3. The option letters, rejection forms and affirmative consent forms to be
mailed to Certificateholders in accordance with the foregoing are referred to
herein as the "Certificateholder Notices." The Certificateholder Notices shall
be mailed promptly by LLANY to each such Certificateholder, at the sole expense
of LLANY. Each Certificateholder Notice will be dated the date upon which it is
mailed.
Seller and LLANY agree that a Certificateholder will remain a
Certificateholder of Seller if a rejection of the assumption is delivered by
such Certificateholder to Seller or LLANY prior to the later of (i) the
expiration of the 30-day period which will commence on the date that the
Certificateholder Notice is sent to such Certificateholder or (ii) with respect
to active Insurance Contracts under which regular
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periodic deposits are being made, the date of the next deposit under the
relevant Insurance Contract. If a rejection of the assumption is not delivered
by a Certificateholder as described in the preceding sentence, such
Certificateholder will become a Certificateholder of LLANY as described below;
provided, however, that if an Inactive Certificateholder, prior to his taking
action that indicates his acceptance of LLANY as the assuming insurer (e.g., by
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making a request to LLANY for a contract loan, withdrawal, transfer or change in
beneficiary, making a payment to LLANY with respect to a contract loan, or any
similar action), objects to the transfer of his certificate to LLANY and
requests in writing that his certificate revert to Seller, the certificate of
such Inactive Certificateholder will promptly revert to Seller.
LLANY shall also prepare and mail certificates of assumption in the
form attached hereto as Exhibit B-1 or B-2, as applicable (the "Certificates of
Assumption").
Insurance Contracts assumed by LLANY hereunder as provided for above
shall be deemed to have been assumed by novation and shall be defined herein as
"Novated Contracts." Except as set forth below in this Article III, the
effective date of novation of an Insurance Contract shall be the effective date
of novation specified in the Certificateholder Notices sent in respect of such
Insurance Contract, which date shall be (i) if the Certificateholder Notices are
mailed on or prior to the 25th day of any month, the first day of the second
month following the month in which such Certificateholder Notices are mailed,
and (ii) if the Certificateholder Notices are mailed after the 25th day of any
month, the first day of the third month following the month in which such
Certificateholder Notices are mailed. Notwithstanding the foregoing, the
effective date of novation of an Insurance Contract that has Seller Separate
Account Liabilities related thereto shall be no earlier than the date upon which
the assets supporting such Seller Separate Account Liabilities are transferred
to the LLANY Separate Account.
LLANY shall be the successor to Seller under the Novated Contracts as
if the Novated Contracts were direct obligations originally issued by LLANY.
LLANY shall be substituted in the place and stead of Seller, and each
Contractholder and Certificateholder under a Novated Contract shall be entitled
to disregard Seller as a party thereto and treat LLANY as if it had been
originally obligated thereunder. Each such Contractholder and Certificateholder
shall have the right to file claims arising under the Novated Contracts on or
after the effective date of such novation directly with LLANY and shall have a
direct right of action for Insurance Liabilities reinsured thereunder against
LLANY, and LLANY hereby consents to be subject to direct action taken by any
Contractholder or Certificateholder under a Novated Contract. LLANY accepts and
assumes the Novated Contracts subject to any and all defenses, setoffs and
counterclaims to which Seller would be entitled in relation to the Insurance
Liabilities, it being expressly understood and agreed by the parties hereto that
no such defenses, setoffs or counterclaims are waived by the execution of this
Agreement or the consummation of the transactions contemplated hereby and that
LLANY shall be fully subrogated to all such defenses, setoffs and counterclaims.
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ARTICLE IV
TERRITORY
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This Agreement shall apply to Insurance Contracts covering lives and
risks wherever resident or situated.
ARTICLE V
CONTRACT ADMINISTRATION
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Following the respective effective dates of novation of the Novated
Contracts, LLANY shall have sole direct responsibility for the administration
and servicing of the Novated Contracts. Seller agrees that, after the
respective effective dates of novation of the Novated Contracts, it will forward
to LLANY immediately upon receipt all notices and other written communications
received by it relating to Novated Contracts (including, without limitation, all
inquiries or complaints from state insurance regulators, agents, brokers and
insureds and all notices of claims, suits and actions for which it receives
service of process).
ARTICLE VI
PREMIUMS; RECOVERIES
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Seller shall remit to LLANY or LLANY shall retain, as applicable, 100%
of all premiums, contract loan repayments and other amounts received by Seller
or LLANY with respect to the Novated Contracts on or after the respective dates
of novation including, but not limited to, all administrative expense and
deposit charges deducted from the remittance of premiums or other amounts billed
separately, asset charges collected, market value adjustments collected and
back-end loadings collected under the Novated Contracts.
Effective on the respective effective dates of novation, LLANY shall
have sole direct responsibility for billing and collecting premiums in respect
of, and principal and interest payments on contract loans under, the Novated
Contracts.
ARTICLE VII
TRANSFER OF ASSETS
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On the respective dates of novation, Seller shall transfer and assign
to LLANY all contract loans under the Novated Contracts. In addition, Seller
shall, on the effective date of novation specified in the Notice sent in respect
of an Insurance Contract which has Seller Separate Account Liabilities related
thereto, transfer to the appropriate LLANY
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Separate Account the assets of the Seller Separate Account which support the
Seller Separate Account Liabilities arising under each Insurance Contract so
novated.
In the event that contract loans are transferred by Seller to LLANY or
assets are transferred from the Custodian Account to LLANY with respect to (i) a
Novated Contract that is subsequently finally determined in a judicial
proceeding or by regulatory action not to have been novated or (ii) a
certificate of an Inactive Certificateholder that reverts to Seller pursuant to
Article III, LLANY shall transfer any contract loans under such Insurance
Contract to Seller and shall transfer to the Custodian Account assets with a
market value on the date of transfer in an amount at least equal to the General
Account Liabilities (less any contract loans) arising under such Insurance
Contract on the date of transfer. In the event that assets are transferred to
the LLANY Separate Account with respect to (i) a Novated Contract that is
subsequently determined not to have been novated or (ii) a certificate of an
Inactive Certificateholder that reverts to Seller, LLANY shall transfer to the
Seller Separate Account the assets in the LLANY Separate Account relating to the
LLANY separate account liabilities arising under such Insurance Contract on the
date of transfer.
ARTICLE VII
OFFSETS
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Any debts or credits between Seller and LLANY arising under this
Agreement are deemed mutual debts or credits, as the case may be, and shall be
netted or set off, as the case may be, and only the balance shall be allowed or
paid hereunder.
ARTICLE IX
ERRORS AND OMISSIONS
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Inadvertent delays, errors or omissions made by either Seller or LLANY
in connection with this Agreement or any transaction hereunder shall not relieve
the other party from any liability which would have attached to such party had
such delay, error or omission not occurred, provided that the party causing such
delay error or omission rectifies the same as soon as possible after its
discovery thereof.
ARTICLE X
DUTY OF COOPERATION
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Each party hereto shall cooperate fully with the other in all
reasonable respects in order to accomplish the objectives of this Agreement.
This duty to cooperate shall include
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obtaining the governmental and regulatory consents and approvals and taking the
other steps necessary for the assumption of the Insurance Contracts, as
described in Article III.
ARTICLE XI
ARBITRATION
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It is the intention of the parties hereto that customs and usages of
the business of indemnity reinsurance and assumption reinsurance shall be given
full effect in the interpretation of this Agreement other than to the extent
that the unique aspects of the transaction render such customs and usages
inapplicable. The parties hereto shall act in all things with the highest good
faith. Any dispute or difference with respect to the operation or
interpretation of this Agreement on which an amicable understanding cannot be
reached shall be submitted to arbitration, which shall be mandatory and binding.
The arbitrators shall be free to reach their decision from the standpoint of
equity and customary practices of the insurance and reinsurance industry rather
than from that of strict legal principles.
The arbitration shall be held in Portland, Maine, and shall consist of
three arbitrators who must be active or retired executive officers of life
insurance companies other than the parties to this Agreement, their Affiliates
or subsidiaries. Seller shall appoint one arbitrator and LLANY the second.
Such arbitrators shall then select the third arbitrator before arbitration
commences. Should one of the parties decline to appoint an arbitrator or should
the two arbitrators be unable to agree upon the choice of a third, such
appointment shall be left to the President of the American Academy of Actuaries.
Decisions of the arbitrators shall be by majority vote. The cost of
arbitration, including the fees of the arbitrators, shall be borne as the
arbitrators shall decide.
Judgment upon any award granted by the arbitrators may be entered in a
Federal court of competent jurisdiction in Portland, Maine.
ARTICLE XII
MISCELLANEOUS PROVISIONS
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Section 12.01. Notices. Any notice required or permitted hereunder
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shall be in writing and shall be delivered personally (by courier or otherwise),
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, three days after the date of deposit in the United
States mails, as follows:
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(1) If to LLANY to:
Lincoln Life & Annuity Company of New York
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
With concurrent copies to:
The Lincoln National Life Insurance Company
0000 Xxxxx Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Telecopier No.: (000) 000-0000
Xxxxxxxxxx, Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
(2) If to Seller to:
UNUM Life Insurance Company of America
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
With a concurrent copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Xx.
Telecopier No.: (000) 000-0000
Any party may, by notice given in accordance with this Agreement to
the other party, designate another address or person for receipt of notices
hereunder.
Section 12.02. Amendment. This Agreement may not be modified,
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changed, discharged or terminated, except by an instrument in writing signed by
an authorized officer of each of the parties hereto.
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Section 12.03. Counterparts. This Agreement may be executed by the
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parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 12.04. No Third Party Beneficiaries. Except as otherwise
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specifically provided for herein, nothing in this Agreement is intended or shall
be construed to give any Person, other than the parties hereto, their successors
and permitted assigns, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
Section 12.05. Assignment. This Agreement shall be binding upon and
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inure to the benefit of the parties hereto and their respective successors,
permitted assigns and legal representatives. Neither this Agreement, nor any
right hereunder, may be assigned by either party (in whole or in part) without
the prior written consent of the other party hereto.
Section 12.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
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AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MAINE, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 12.07. Entire Agreement. This Agreement, together with the
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Acquisition Agreement and the other Ancillary Agreements (as defined in the
Acquisition Agreement), constitutes the entire agreement between the parties
relating to the assumption of the Insurance Contracts by LLANY, and there are no
other agreements between the parties hereto, either existing or contemplated,
written or oral, relating to such assumption.
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IN WITNESS WHEREOF, Seller and LLANY have executed this Agreement as
of the Effective Date.
UNUM LIFE INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President and
General Counsel
LINCOLN LIFE & ANNUITY COMPANY
OF NEW YORK
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President
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