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LINCOLN NATIONAL CORPORATION
EXHIBIT 10(b) 1982 STOCK OPTION INCENTIVE PLAN
SECTION 1
GENERAL
1.1. Effective Date and Purpose. Lincoln National Corporation, an
Indiana corporation, ("LNC") has established the LINCOLN NATIONAL CORPORATION
1982 STOCK OPTION INCENTIVE PLAN (the "Plan") effective as of May 13, 1982
(the "Effective Date"), subject to approval of the Plan at the 1982 Annual
Meeting of LNC shareholders by the holders of a majority of the shares of LNC
stock entitled to vote at that meeting. The purpose of the Plan is to promote
the long-term financial performance of LNC by (a) attracting and retaining
executive and other key employees of LNC and its Subsidiaries (as defined in
subsection 2.1) who possess outstanding abilities with incentive compensation
opportunities which are competitive with those of other major corporations;
(b) motivating such employees to further the long-range goals of LNC; and (c)
furthering the identity of interests of participating employees and LNC
shareholders through opportunities for increased employee ownership of LNC
common stock.
1.2. Plan Administration. The Plan shall be administered by the
Committee (as described below). In addition to those rights, duties, and
powers vested in the Committee by other provisions of the Plan, the Committee
shall have sole authority to:
(a) interpret the provisions of the Plan;
(b) adopt, amend and rescind rules and regulations for the
administration of the Plan; and
(c) make all other determinations deemed by it to be necessary or
advisable for the administration of the Plan;
provided that the Committee shall exercise its authority in accordance with
the provisions of the Plan. The Committee may not exercise its authority at
any time that it has fewer than three members. The Committee shall exercise
its authority only by a majority vote of its members at a meeting or by a
writing without meeting. At any date, the members of the Committee shall be
those members of the Compensation Committee of the Board of Directors of LNC
who are not eligible and who have not been eligible within one year preceeding
that date to participate in the Plan or any other plan of LNC or a Subsidiary
under which stock, stock options or stock appreciation rights of LNC or a
Subsidiary may be granted. In the event that fewer than three members of the
Compensation Committee of the Board are eligible to serve on the Committee,
the Board of Directors of LNC may appoint one of its other members who is
otherwise eligible to serve, to serve on the Committee until such time as
three members of the Compensation Committee are eligible to serve.
1.3. Shares Available. The sum of the number of shares of LNC common stock
for which Incentive Stock Options and Non-qualified Stock Options (both as
defined in subsection 3.1) may be granted; of shares of LNC common stock which
may be awarded under a Restricted Stock Award (as defined in subsection 5.1);
and of shares awarded pursuant to Section 6 in connection with awards under
LNC Management Incentive Plan II may not exceed 2,000,000. If all or a
portion of an Incentive Stock Option or Non-qualified Stock Option expires or
is terminated without having been exercised in full and without having been
surrendered to exercise any related Stock Appreciation Rights (as defined in
subsection 4.1) or if any Restricted Stock Award is forfeited, then the number
of shares which were forfeited or not purchased shall not thereafter be
considered in determining whether the 2,000,000 limitation described in the
next preceding sentence has been exceeded. For purposes of determining if the
limitation described above has been exceeded, the number of shares of LNC
common stock for which Incentive Stock Options and Non-qualified Stock Options
have been granted prior to January 6, 1984, shall be multiplied by two. The
shares of LNC common stock delivered pursuant to the Plan shall be authorized
but unissued shares or reacquired shares held by LNC as treasury shares
(including shares purchased in the open market). In the event of a merger,
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consolidation, reorganization, recapitalization, stock dividend, stock split
or other similar change in the corporate structure or capitalization of LNC
which affects the LNC common stock, appropriate adjustment, as determined by
the Board of Directors of LNC (or its successor), shall be made with respect
to the number and kinds of shares (or other securities) which may thereafter
be awarded or be subject to option under the Plan. Agreements evidencing
grants and awards under the Plan shall be subject to and shall provide for
appropriate adjustments, determined by the Board of Directors of LNC (or its
successor) in the event of such changes in the corporate structure or
capitalization of LNC occurring after the date of grant or award.
1.4. Term, Amendment, and Termination of Plan. Grants and awards may not
be made under the Plan after the earlier of May 12, 1987, or the termination
date of the Plan. The Board of Directors of LNC may amend or terminate the
Plan at any time except that, without the approval of the holders of a
majority of LNC stock entitled to vote at a duly held meeting of such
shareholders, the Board may not:
(a) increase the number of shares of LNC common stock which may be issued
under the Plan, except as provided in subsection 1.3;
(b) reduce the minimum option price under any stock option,
except as provided in subsection 1.3;
(c) increase the maximum period during which Incentive Stock
Options, Non-qualified Stock Options and Stock
Appreciation Rights may be exercised;
(d) extend the term of the Plan; and
(e) amend the standards for participation described in
Section 2.
Amendment or termination of the Plan shall not affect the validity or terms
of any grant or award previously made to a Participant in any way which is
adverse to the Participant without the consent of the Participant.
SECTION 2
PLAN PARTICIPATION
2.1. Participation Designations. The Committee may, at any time, designate
any key executive, managerial, supervisory or professional employee of LNC or
of a Subsidiary (as defined below) to be a Participant. For purposes of the
Plan, the term "Subsidiary" means any corporation at any date that LNC owns
directly, or indirectly through an unbroken chain of subsidiary corporations,
stock possessing a majority of the total combined voting power of all classes
of stock of that corporation.
2.2. Participation Not Contract of Employment. The Plan does not
constitute a contract of employment. Participation in the Plan does not give
any employee the right to be retained in the employ of LNC or a Subsidiary and
does not limit in any way the right of LNC or a Subsidiary to change the
duties or responsibilities of any employes.
2.3. Withholding Taxes on Plan Benefits. LNC and the Subsidiaries shall
have the right to deduct from any cash payment made pursuant to the Plan the
amount of any tax required by law to be withheld from that payment. LNC and
the Subsidiaries shall have the right to require payment to them from any
person entitled to receive LNC common stock pursuant to the Plan of the
amount of any tax required by law to be withheld with respect to that stock
prior to its delivery.
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SECTION 3
STOCK OPTIONS
3.1. Grantees. The Committee may, at any time, designate a Participant to
receive an Incentive Stock Option or Non-qualified Stock Option (each as
defined below) whether or not the Participant has previously received a grant
under the Plan. For purposes of the Plan, the term "Incentive Stock Option"
means an option to purchase LNC common stock which meets the requirements of
section 422A(b) of the Internal Revenue Code of 1954, as amended, (the "Code")
and the term "Non-qualified Stock Option" means an option to purchase LNC
common stock which is not an Incentive Stock Option. Each Incentive Stock
Option ("ISO") and Non-Qualified Stock Option ("NQSO") granted under the Plan
shall be evidenced by an agreement between the Participant and LNC. The
Provisions of each agreement shall be determined by the Committee in
accordance with the provisions of the Plan. A Participant shall not have any
rights of a shareholder of LNC common stock with respect to shares subject to
an ISO or NQSO until such shares are purchased on exercise of the option.
3.2. Number of Shares Optioned and Option Price. The Committee shall,
subject to the limitations of subsection 1.3 and this Section 3, determine the
number of shares of LNC common stock which may be purchased and the option
price of each share on exercise of each ISO and NQSO granted under the Plan.
The number of shares of LNC common stock for which ISOs may be granted to a
Participant under this Plan and any other plan of LNC or a Subsidiary during
any calendar year beginning before January 1, 1987 shall not exceed the number
whose aggregate Fair Market Value (as defined below), at the time each ISO is
granted, does not exceed the dollar limitation (including unused carry- overs)
described in section 422A(b)(8) of the Internal Revenue Code of 1954, as
amended. With respect to ISOs granted after December 31, 1986, the aggregate
Fair Market Value (determined as of the time the option is granted) of LNC
common stock with respect to which ISOs are exercisable for the first time by
a Participant during any calendar year under the Plan or any other Plan of LNC
or a Subsidiary shall not exceed $100,000. The option price of each share
under an ISO or NQSO shall not be less than 100% of the Fair Market Value of a
share of LNC common stock on the date the option is granted. For purposes of
the Plan, the term "Fair Market Value" means the average of the highest and
lowest prices of a share of stock, as quoted on the composite transactions
table covering transactions on the New York Stock Exchange on the first date
that the stock was traded on that Exchange which next precedes the date as of
which the determination is being made.
3.3. Exercise of Options and Payment. Each ISO and NQSO shall become
exercisable in full at such time, or in such portions at such times, as the
Committee determines subject to the following provisions of this subsection
3.3. No ISO or NQSO granted to a Participant shall be exercisable prior to
the first anniversary of the date that the option was granted except, in the
discretion of the Committee and subject to the limitations of subsection 3.2,
if the Participant`s employment with LNC and all Subsidiaries terminates by
reason of death, disability (as defined by the Committee), or retirement (as
described in subsection 3.4(d)). During any period that an ISO or NQSO is
exercisable, it may be exercised by delivering a written notice which
specifies the number of shares purchased and full payment of the purchase
price to the Secretary of LNC. Payment may be made in cash, in shares of LNC
common stock with an aggregate Fair Market Value on the date of exercise equal
to the purchase price, or in any combination of cash and such shares.
3.4. Termination of Options. Each ISO and NQSO shall terminate and not be
exercisable after the date determined by the Committee which date shall not be
later than the earliest of (a) the tenth anniversary of the date that the
option was granted; (b) the last day of the three month period beginning on
the date the Participant`s employment with LNC and all Subsidiaries terminates
for reasons other than described in (c) or (d) following; (c) the first
anniversary of the date the Participant`s employment with LNC and all
Subsidiaries terminates on account of death or disability (as defined by the
Committee); or (d) the fifth anniversary of the Participant`s normal
retirement or, with the approval of the Participant`s employer, early
retirement under the terms of a retirement plan of LNC or a Subsidiary.
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3.5. Transferability. Each ISO and NQSO granted to a Participant may not
be transferred by the Participant except by will or the laws of descent and
distribution, and may be exercisable during the Participant`s lifetime only by
the Participant.
SECTION 4
STOCK APPRECIATION RIGHTS
4.1. Grantees. The Committee may, at the time a stock option is granted
under Section 3 to a Participant or at any time thereafter, designate that
Participant to be granted, in conjunction with that stock option, a Stock
Appreciation Right (as defined below). The Committee may grant a Stock
Appreciation Right to a Participant only after it has determined that such
grant is necessary or desirable to create a reasonable opportunity for the
Participant to acquire an increased ownership interest in LNC. In making such
determination, the Committee shall consider the number of shares of LNC common
stock then owned by the Participant, the Participant`s outstanding stock
options for LNC common stock and related Stock Appreciation Rights, and such
other factors that the Committee considers relevant. No Stock Appreciation
Right may be granted in conjunction with a previously granted ISO without the
written consent of the affected Participant. For purposes of the Plan, the
term "Stock Appreciation Right" means a right to surrender all or a portion of
a stock option and receive, in exchange, payment of an amount no greater than
the excess of the Fair Market Value (as defined in subsection 3.2) of one or
more shares of LNC common stock determined on the date the related stock
option was granted. Each Stock Appreciation Right ("SAR") granted under the
Plan shall be evidenced by an agreement between the Participant and LNC. The
provisions of each agreement shall be determined by the Committee in
accordance with the provisions of the Plan.
4.2. Terms of SARs. The Committee shall determine the number of shares of
LNC common stock and the percentage (not more than 100 percent) or maximum
amount of the increase in the Fair Market Value of those shares over the
relevant period upon which payment of each SAR at exercise shall be based.
Each SAR may be exercisable at any date with respect to no more than the
number of shares for which the related stock option is exercisable on that
date. Each SAR issued in conjunction with an ISO may be exercisable only when
there has been an increase in Fair Market Value of the shares over the
relevant period. If a Participant to whom an SAR has been granted is subject
to Section 16 of the Securities Exchange Act of 1934, as amended, the
Committee may, at any time, impose such conditions and limitations to such SAR
as the Committee deems necessary or desirable for the Participant to comply
with or obtain an exemption from such Section 16 and applicable rules and
regulations. The terms of an SAR may include such other conditions and
limitations on exercise as the Committee deems desirable.
4.3. Exercise of SARs and Payment. During any period that a SAR is
exercisable, it may be exercised by delivering a written notice which
specifies the extent to which the SAR is being exercised to the Secretary of
LNC. Payment to the Participant shall be made as soon as practicable after
exercise of the SAR and may be made in cash, in shares of LNC common stock
with an aggregate Fair Market Value on the date of exercise equal to the
amount to be paid, or in any combination of cash and such shares as determined
by the Committee. Upon exercise of an SAR, the right to exercise the related
stock option shall automatically be terminated to the same extent that the SAR
was exercised.
4.4. Termination of SARs. Each SAR shall terminate and not be exercisable
after the same date that the related stock option terminates.
4.5. Transferability. Each SAR granted to a Participant may not be
transferred by the Participant except together with the related stock option
and except by will or the laws of descent and distribution, any may be
exercisable during the Participant`s lifetime only by the Participant.
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SECTION 5
RESTRICTED STOCK AWARDS
5.1. Grantees. The Committee may, at any time, designate a Participant to
receive a Restricted Stock Award (as defined below) whether or not the
Participant has previously received a grant under the Plan. For purposes of
the Plan, the term "Restricted Stock Award" means the right to receive, at
specified times and subject to specified conditions, shares of LNC common
stock which may bear such restrictive endorsements as the Committee
determines. Each Restricted Stock Award ("RSA") shall be evidenced by an
agreement between the Participant and LNC. The provisions of each agreement
shall be determined by the Committee in accordance with the provisions of the
Plan.
5.2. Grants of Restricted Stock Awards. The Committee shall, subject to
subsection 1.3 and this Section 5, determine the number of shares of LNC
common stock which may be awarded, the time or times the shares may be
awarded, and the conditions which must be met for award and delivery of the
shares to the Participant under each RSA granted under the Plan. An RSA may
provide, in the discretion of the Committee, for the crediting to the
Participant, on each dividend payment date, of an amount equal to the product
of the dividend paid on a share of LNC common stock multiplied by the number
of shares which may be awarded under that RSA, and for the payment in cash to
the Participant of the amounts so credited at such time as the Committee may
determine. An RSA may provide, in the discretion of the Committee, for the
issuance of the shares which may be awarded under the RSA in the name of the
Participant subject to the following restrictions:
(a) the shares may not be issued earlier than six months after the grant
of the RSA;
(b) the shares may not be sold, transferred, pledged or otherwise assigned
or encumbered;
(c) each stock certificate shall be registered in the name of the
Participant and deposited with the Secretary of LNC;
(d) dividends paid on the shares shall be paid to the Participant at such
times as the Committee shall determine; and
(e) the shares and dividends paid shall be subject to a forfeiture in
accordance with subsection 5.4.
Subject to the foregoing restrictions, the Participant shall have all of the
rights of a holder of LNC common stock with respect to the shares issued to
him or her under this subsection 5.2.
5.3. Distribution of Shares. Subject to the provisions of subsection 5.4,
each RSA shall provide for the distribution of the awarded shares of LNC
Common stock free of all restrictions to the Participant or, in the event of
the Participant`s death, the person or persons to whom the RSA was transferred
by will or the laws of descent and distribution. Distribution shall be
provided for at such time or times during the period beginning on the first
anniversary and ending on the tenth anniversary of the date of grant of the
RSA as the Committee shall determine; except that, in the discretion of the
Committee, distribution may be provided for prior to such first anniversary if
the Participant`s employment with LNC and all Subsidiaries terminates on
account of death, disability (as determined by the Committee), or retirement
(as described in subsection 3.4(d)).
5.4. Forfeiture. Each RSA shall provide that a Participant shall forfeit
all rights under the RSA, all shares of LNC common stock issued pursuant to
the RSA which had not been distributed to the Participant free of all
restrictions, and all undistributed amounts credited to the Participant with
respect to dividends paid on LNC common stock pursuant to the RSA if:
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(a) the Participant`s employment with LNC and all Subsidiaries terminates
for any reason other than death, disability (as defined by the
Committee), retirement (as described in subsection 3.4(d)), or other
reasons determined by the Committee which should not cause forfeiture;
or
(b) the conditions, if any, specified in the RSA are not fully satisfied
within the prescribed time.
5.5. Transferability. Each RSA granted to a Participant may not be
transferred by the Participant except by will or the laws of descent and
distribution.
SECTION 6
STOCK INCENTIVE AWARDS
A Participant who is eligible for a cash award under the terms of LNC
Management Incentive Plan II (the "Incentive Plan") may file a request with
the Committee (at such time and in such manner as it determines) for
distribution of shares of LNC common stock in lieu of all or a portion of such
cash award (reduced by taxes withheld). The Committee may, in its discretion,
approve or deny the Participant`s request and shall notify the participant of
its decision. If the Committee approves the Participant`s request, it shall
direct delivery to the Participant of the number of whole shares of LNC common
stock determined by dividing the amount of the surrendered cash award by the
Fair Market Value, on the date that the request is approved, of a share of LNC
common stock. The amount, if any, of the cash award which is not paid in LNC
common stock shall be paid in cash under the Incentive Plan.
SECTION 7
POSTPONEMENT OF EXERCISE
The Committee may postpone any exercise of an ISO, NQSO, or SAR or
distribution pursuant to an RSA for such time as the Committee in its
discretion may deem necessary in order to permit LNC (a) toeffect or maintain
registration of the Plan or LNC common stock issuable pursuant to the Plan
under the Securities Act of 1933, as amended, or the securities laws of any
applicable jurisdiction; (b) to take any action necessary to comply with
restrictions or regulations incident to the maintenance of a public market for
LNC common stock; or (c) to determine that no action referred to in (a) or (b)
above needs to be taken. LNC shall not be obligated to issue shares upon
exercise of any ISO, NQSO or SAR or to issue shares pursuant to an RSA in
violation of any law. Any such postponement shall not extend the term of an
ISO, NQSO or SAR. Neither LNC nor its directors or officers shall have any
obligation or liability to any Participant (or successor in interest) because
of the loss or rights under any grant or award under the Plan due to
postponements pursuant to this Section 7.
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SUPPLEMENT A
THE LNC STOCK OPTION INCENTIVE SCHEME
FOR U.K. EMPLOYEES
This Supplement A is adopted as part of the Lincoln National Corporation 1986
Stock Option Incentive Plan (`the Plan`) and is referred to as `the U.K.
Scheme`.
The Rules of the Plan will apply to United Kingdom employees subject to the
following additions and modifications.
1. The U.K. Scheme will be effective from the date approved by the Board
of Inland Revenue.
2. (1) Subject to sub paragraphs (2) and (3) of this paragraph
participation in the U.K. Scheme will be determined in the same
manner as for the Plan.
(2) No person shall obtain rights under the U.K. Scheme unless he is
at that time an eligible employee of a participating Company.
For this purpose
(i) an eligible employee of a company is any director or
employee who is required to devote to his duties not less
than 25 hours (or in the case of any employee who is not a
director, 20 hours) per week (excluding meal breaks),
including any time spent in carrying out duties for any
other participating company, and this is not precluded by
paragraph 4(1)(b) of Schedule 10 of the Finance Act of 1984
from participating in the U.K. Scheme,
and (ii) a participating company is any body corporate including
Cannon Assurance Limited which is under the control (within
the meaning of Section 534 of the Income and Corporation
Taxes Act 1970) of Lincoln National Corporation.
(3) No person shall be entitled to obtain or exercise rights under
the U.K. Scheme at any time when he has or within the preceding
12 months had a material interest in a close company within the
meaning of Chapter IV of Part XI of the Income and Corporation
Taxes Act 1970, which is
(i) a company the shares of which may be acquired pursuant to
the exercise of rights obtained under the U.K. Scheme; or
(ii) a company which has control of such a company or is a
member of a consortium which controls such a company.
3. No option shall be granted under the U.K. Scheme to an eligible
employee if immediately following such grant he would hold outstanding
options which have neither lapsed nor been exercised with an aggregate
subscription price exceeding the greater of 100,000 (pounds) or four
times the amount of the Eligible Employee`s relevant emoluments for
the period of 12 months beginning with the first day during the
current year of assessment in respect of which there are relevant
emoluments. For this purpose
(i) outstanding options include all options granted under the
U.K. Scheme and other scheme approved under schedule 10 of
the Finance Act 1984 and established by Lincoln National
Corporation or any participating company (as defined in
Rule 1 and Rule 2 above) and
(ii) relevant emoluments has the same meaning as in paragraph
5(5) of Schedule 10 of the Finance Act of 1984.
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4. For the purpose of the U.K. Scheme the option price of each share
shall instead of the price quoted under paragraph 3.2. of the Plan be
the middle market quotation derived from the Stock Exchange Daily
Official List for the date the option is granted, provided that if the
Fair Market Value (as defined in the said paragraph 3.2.) for that
date is higher when converted to sterling at the rate of exchange
quoted for that day by National Westminster Bank, then the option
price will be the Fair Market Value (as so converted).
5. (1) On exercise of an option by a Participant payment shall be made
in cash and the right under the Plan (paragraph 3.3.) to make
payment or partially to make payment in shares of LNC common
stock shall not apply to the U.K. Scheme.
(2) Shares acquired on the exercise of an option under the U.K.
Scheme will be issued and allocated not later than 30 days after
the exercise of the option.
6. For the purposes of the U.K. Scheme all references to `LNC Common
Stock` shall be deemed to be references to LNC common stock which
satisfy the conditions specified in Paragraphs 7 to 11 inclusive of
Schedule 10 to the Finance Act 1984.
7. Section 4 (Stock Appreciation Rights), Section 5 (Restricted Stock
Awards) and Section 6 (Stock Incentive Awards) of the Plan shall not
apply to the U.K. Scheme.
8. All amendments to the U.K. Scheme shall be subject to the prior
approval of the Board of Inland Revenue and any amendments to the Plan
shall be ineffective for the purposes of the U.K. Scheme until
approved by the Board of Inland Revenue.