Exhibit 10(a)
LINCOLN NATIONAL CORPORATION
1986 STOCK OPTION INCENTIVE PLAN (As Amended and
Restated Effective as of May 12, 1994)
SECTION 1
GENERAL
1.1. Purpose. The purpose of the LINCOLN NATIONAL CORPORATION 1986 STOCK
OPTION INCENTIVE PLAN (the "Plan") is to promote the long-term financial
performance of Lincoln National Corporation ("LNC") by (a) attracting and
retaining key employees, agents and brokers by providing incentive compensation
opportunities which are competitive with those of other major corporations; (b)
motivating such persons to further the long-range goals of LNC; and (c)
furthering the identity of interests of participating employees, agents and
brokers and LNC shareholders through opportunities for increased ownership of
LNC Common Stock, thereby strengthening their concern for the welfare of LNC by
enhancing its profitable growth.
1.2. Definitions. The following definitions shall be applicable throughout
the Plan:
(a) "Award" means, individually or collectively, any Option, Restricted Stock
Award, Performance Award, Stock Appreciation Right, Incentive Award or
Dividend Equivalent Right.
(b) "Board" means the Board of Directors of Lincoln National Corporation.
(c) "Change of Control" has the same meaning as in the LNC Executives'
Severance Benefit Plan on the date immediately preceding the Change of
Control.
(d) "Code" means the Internal Revenue Code of 1986. Reference in the Plan to
any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such
section.
(e) "Committee" means not less than three members of the Board who are
selected by the Board as provided in subsection 1.4.
(f) "Common Stock" means the common stock of Lincoln National Corporation.
(g) "Company" means, collectively, Lincoln National Corporation and its
subsidiaries.
(h) "Dividend Equivalent Right" or "DER" means the right of the holder thereof
to receive, pursuant to the terms of the DER, credits based on cash
dividends that would be paid in shares specified by the DER if such shares
were held by the Holder, as more particularly described in Section 8.
(i) "Fair Market Value" means, as of any specified date, the average of the
highest and lowest quoted selling prices of the Common Stock as reported on
the Composite Tape for issues listed on the New York Stock Exchange on the
first business day that the Common Stock was traded on that Exchange which
next precedes the date as of the Award, or, if no sales were reported on
the Composite Tape on such specified date, the average of the
highest and lowest quoted
selling prices of the Common Stock on the nearest dates before and after
such specified date on which sales of the Common Stock were so reported.
(j) "Holder" means an employee, agent or broker of the Company who has been
granted an Option, a Restricted Stock Award, a Performance Award, Dividend
Equivalent Right, Stock Appreciation Right or an Incentive Award.
(k) "Incentive Award" means an Award granted under Section 6 of the Plan.
(l) "Incentive Stock Option" means an Option within the meaning of section
422(b) of the Code.
(m) "Option" means an Award under Section 3 of the Plan and includes both
Nonqualified Stock Options and Incentive Stock Options to purchase Common
Stock.
(n) "Performance Award" means an Award granted under Section 7 of the Plan.
(o) "Personal Representative" means the person who upon the death, disability
or incompetency of a Holder shall have acquired, by will or by the laws of
descent and distribution or by other legal proceedings, the right to
exercise an Option or the right to any Restricted Stock Award, Performance
Award, Dividend Equivalent Right or Incentive Award therefore granted or
made to such Holder.
(p) "Plan" means the Lincoln National Corporation 1986 Stock Option Incentive
Plan (As Amended and Restated Effective as of May 12, 1994).
(q) "Restricted Stock Award" means an Award granted under Section 5 of the Plan.
(r) "Stock Appreciation Right" or "SAR" means an Award granted under Section
4 of the Plan.
(s) "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.
1.3. Effective Date and Duration of Plan. The amended and restated Plan shall
become effective following adoption by the Board and approval of shareholders of
Lincoln National Corporation at its 1994 Annual Meeting of Shareholders. No
further Awards may be granted under the Plan after ten years from the date the
amended and restated Plan becomes effective. The Plan shall remain in effect
until all Options granted under the Plan have been exercised or expired by
reason of lapse of time, all restrictions on Restricted Stock Awards have been
eliminated, and all DER's and SAR's satisfied.
1.4. Plan Administration. The Plan shall be administered by the Committee. In
addition to those rights, duties, and powers vested in the Committee by other
provisions of the Plan, the Committee shall have sole authority, in its
discretion, to:
(a) determine which employees, agents and brokers of the Company, shall receive
an Award;
(b) construe the Plan and respective agreements executed thereunder;
(c) adopt, amend and rescind rules and regulations for the administration of the
Plan;
(d) ensure that awards continue to qualify under Rule 16b-3 of the Securities
Exchange Act of 1934, as the same may be hereafter amended; and
(e) 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 correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any agreement relating
to an Award in the manner and to the extent it shall deem expedient to carry it
into effect. The determinations of the Committee on the matters referred to in
this subsection 1.4 shall be conclusive.
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 who are not eligible and who have not been eligible
within one year preceding 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 may appoint one of its other members who is otherwise
eligible to serve on the Committee until such time as three members of the
Compensation Committee are eligible to serve.
1.5. Shares Available. The aggregate number of shares of LNC Common Stock that
may be issued under the Plan shall not exceed the sum of (a) 5,000,000 shares
originally authorized by shareholders in 1986 (formerly 2,500,000 prior to the
two for one stock split effected through a stock dividend declared by the Board
on May 13, 1993), less the aggregate number of shares issued under the Plan
prior to the effective date of its amendment and restatement and (b) an
additional 5,000,000 shares. In addition to the foregoing limit on the aggregate
number of shares that may be issued under all Awards, the aggregate number of
Restricted Stock Awards that may be granted during any calendar year (or portion
thereof) after the effective date of the amendment and restatement of this Plan,
shall not exceed three-tenths of one percent (0.3%) of the number of shares of
Common Stock outstanding as of December 31 of the prior year. If the number of
shares of Common Stock awarded as Restricted Stock Awards in any year is less
than the number of shares that could have been so granted pursuant to this
subsection, the balance of such unused shares may be added to the maximum number
of shares of Restricted Stock that may be effectively awarded in following
years. To the extent that an Award lapses or the rights of its Holder terminate
or the Award is paid in cash, any shares of Common Stock subject to such Award
shall again be available for the grant of an Award and not be included in
calculating shares available under this subsection.
1.6. Individual Dollar Limitations. The aggregate Fair Market Value of shares of
Common Stock with respect to which Awards (excluding the underlying shares for
Dividend Equivalent Rights) may be made to any individual in any one calendar
year cannot exceed $5,000,000.
1.7. Stock Offered. The shares of Common Stock to be offered, pursuant to the
grant of an Award shall be authorized but unissued shares.
1.8 Change in Corporate Structure. In the event of a merger, consolidation,
reorganization, combination, exchange, recapitalization, stock dividend, stock
split or other similar change in the corporate structure or capitalization of
LNC which affects the Common Stock, outstanding Awards shall be subject to
adjustment by the Committee at its discretion as to the number and price of
shares of Common Stock or other consideration subject to such Awards. In the
event of such changes in the corporate structure or capitalization of LNC, the
aggregate number of shares available under the Plan may be appropriately
adjusted by the Committee, whose determination shall be conclusive.
1.9. Amendment and Termination of Plan. The Board 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 Common Stock which may be issued under the
Plan, except as provided in subsection 1.8;
(b) reduce the minimum option price under any Option, except as provided in
subsection 1.8;
(c) increase the maximum period during which Options and related Stock
Appreciation Rights or related Dividend Equivalent Rights may be exercised;
(d) extend the maximum period during which Awards may be granted under the
Plan;
(e) amend the standards for eligibility described in Section 2; and
(f) materially increase the benefits accruing to employees under the Plan.
Amendment or termination of the Plan shall not affect the validity or terms of
any Award previously made to a Holder in any way which is adverse to the Holder
without the consent of the Holder.
1.10. Amendment to Awards. Any Award which was granted under the 1982 Stock
Option Incentive Plan, or which was granted under this Plan prior to the
effective date of the amendment and restatement, may, subject to any
requirements of applicable law or regulation, be amended by action of the
Committee so as to incorporate in that award any terms that might have been
incorporated in an award under this Plan as amended and restated.
SECTION 2
ELIGIBILITY; EFFECT OF THE PLAN
2.1. Participation Designations. The Committee may, at any time, make Awards to
any key executive, managerial, supervisory or professional employee of the
Company or any person holding either an agent's or broker's contract with a
Subsidiary. Awards may not be granted to (i) any director who is not an
employee of the Company or (ii) any person who immediately after such grant is
the owner, directly or indirectly of more than 10% of the total combined voting
power of all classes of stock of LNC.
The right to select eligible employees, agents, and brokers who are subject to
Rule 16(a) of the Securities Exchange Act of 1934 ("Reporting Persons") and all
decisions regarding Awards to such Reporting Persons are reserved exclusively to
the Committee. The right to select individuals who are not Reporting Persons for
participation in the Plan is reserved to the Committee, but such reserved right
may be delegated in whole or in part by the Committee to the chief executive
officer or chief operating officer of LNC.
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 nor does it limit in
any way the right of LNC or a Subsidiary to change the duties or
responsibilities of any employee, agent or broker.
2.3. Multiple Awards. An Award may be made on more than one occasion to the same
person, and such Award may include an Incentive Stock Option, Nonqualified Stock
Option, Restricted Stock Award, Stock Appreciation Right, Dividend Equivalent
Right, Performance Award, Incentive Award, or any combination thereof.
2.4. Withholding Taxes on Plan Benefits. The Company 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. The Company shall have the
right to require payment from any person entitled to receive 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. A Holder may elect with
respect to any Option, any Stock Appreciation or Dividend Equivalent Right which
is paid in whole or in part in Common Stock and any Restricted Stock, Incentive
or Performance Award to surrender shares of Common Stock the Fair Market Value
of which on the date of surrender satisfies all or part of the withholding
requirements. Such election must be made by filing a Stock Surrender Withholding
Election with the Secretary of LNC which meets the following requirements and
conditions:
(a) Any Stock Surrender Withholding Election shall be in writing and be
irrevocable;
(b) The Committee shall have the right with respect to any or all outstanding
awards to terminate or suspend for any period the right of a Holder to make
a Stock Surrender Withholding Election at any time prior to the making of
such election;
(c) Any Stock Surrender Withholding Election must be made prior to the date
that the amount of tax to be withheld is determined (the "Tax Date"); and
(d) If a Holder is a Reporting Person, the Stock Surrender Withholding Election
must be made:
(i) more than six months after the date of grant of the Award with respect
to which such election is made (except whenever such election is made by
a disabled Holder or the estate or personal representative of a deceased
Holder); and
(ii) either at least six months prior to the Tax Date or during the ten day
"window period" beginning on the third day following the release for
publication of LNC's summary statement of earnings for a quarter or
fiscal year.
2.5. Awards to Employees Who Are Foreign Nationals. Without amending the Plan,
the Committee may, subject to the limitations in subsections 1.5 and 1.9, grant,
amend, administer, annul or terminate awards to employees who are foreign
nationals on such terms and conditions different from those specified in the
Plan as may in the judgment of the Committee be necessary or desirable to foster
and promote achievement of the purposes of the Plan.
SECTION 3
STOCK OPTIONS
3.1. Grantees. The Committee may, at any time, award an Incentive Stock Option
or Nonqualified Stock Option to an eligible employee, agent, or broker whether
or not such individual has previously received a grant under the Plan.
3.2. Stock Option Agreement. Each Option granted under the Plan shall be
evidenced by an agreement between the Holder and LNC. The Provisions of each
agreement shall be determined by the Committee in accordance with the provisions
of the Plan. LNC shall notify a Holder of any grant of an Option, and a written
option agreement or agreements shall be duly executed and delivered by LNC to
the Holder.
3.3. Shareholder Rights and Privileges. A Holder shall be entitled to all rights
and privileges of a shareholder only with respect to such shares of Common Stock
as have been purchased on exercise of the Option and for which certificates of
stock have been registered in the Holder's name.
3.4. Individual Limitations. In the case of Incentive Stock Options, the
aggregate Fair Market Value (determined as of the time the Option is granted
according to Section 422(d)(1) of the Code) of shares of Common Stock with
respect to which are exercisable for the first time in any one calendar year by
any one individual cannot exceed $100,000 (or such other individual limits as
may be in effect under the Code on the date of grant). In the case of Options,
the maximum number of Options awarded to one individual cannot exceed 100,000
Options.
3.5. Exercise of Options and Payment. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall not be less than 100% of the
Fair Market Value of a share of Common Stock when the Option is granted. During
any period that an Option is exercisable, it may be exercised by delivering an
irrevocable notice of exercise 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 Common Stock with an aggregate Fair Market Value
equal to the purchase price, or in any combination of cash and such shares,
provided, however, payment of the exercise price may only be made in shares of
Common Stock which have been owned by the Holder for at least six months.
3.6. Limitations on Exercise of Option.An Option shall be exercisable in whole
or in such installments and at such times, commencing not earlier than six
months from the date of grant, as determined by the Committee. Generally,
Options granted to a Holder shall not be exercisable prior to the first
anniversary of the grant date except, in the discretion of the Committee and
subject to the limitations of subsection 3.4, if the Holder`s employment with
LNC and all Subsidiaries terminates by reason of death, Disability, or
retirement (as described in subsection 3.7(d)).
3.7. Option Period. Each Option shall terminate and not be exercisable as
specified by the Committee which date shall not be later than the earliest of
(a) the tenth anniversary of the grant date; (b) the last day of the three month
period beginning on the date the Holder's service with LNC and all Subsidiaries
terminates for reasons other than described in (c), (d) or (e) following; (c)
the first anniversary of the date of Holder's termination of service with LNC
and all Subsidiaries on account of death or Disability; (d) the fifth
anniversary of the Holder's retirement at or after age 65 or, with the approval
of the Holder's employer, early retirement at either age 55 with 5 years of
service or under the terms of a retirement plan of LNC or a Subsidiary, or (e)
the sixth anniversary of the Holder's termination of service after a Change of
Control of LNC.
3.8. Transferability. An Option shall not be transferable except by will or
the laws of descent and distribution, and may be exercisable during the
Holder's lifetime only by the Holder; provided, however, to the extent
permitted under Rule 16b-3 under the Securities Exchange Act of 1934, the
Committee may develop rules to permit the transfer of Nonqualified Options to an
immediate family member of the Holder or to a family trust.
3.9. Surrender of Options. The Committee (concurrently with the grant of an
Option or subsequent to such grant) may in its sole discretion, grant to any
Option Holder the right upon written request; to surrender any exercisable
Option or portion thereof in exchange for cash, whole shares of Common Stock or
a combination thereof, as determined by the Committee, with a value equal to the
Fair Market Value, as of the date of such request, of one share of Common Stock
over the Option price for such share multiplied by the number of Shares covered
by the Option or portion thereof to be surrendered. In the case of any such
surrender right which is granted with an Incentive stock Option, such right
shall be exercisable only when the Fair Market Value of the Common Stock exceeds
the price specified therefor in the Option or portion thereof to be surrendered.
In the event of the exercise of any surrender right granted hereunder; the
number of shares reserved under the Plan shall be reduced only to the extent
that shares of Common Stock are actually issued in connection with the exercise
of such surrender right. Additional terms and conditions governing any such
surrender rights may from time to time be prescribed by the Committee in its
sole discretion.
SECTION 4
STOCK APPRECIATION RIGHTS
4.1. Holders. The Committee may, at the time an Award is made, designate that
a Holder be granted, in conjunction with that Award, a Stock Appreciation Right
("SAR"). No SAR may be granted in conjunction with a previously granted
Incentive Stock Option without the written consent of the affected Holder. No
more than 100,000 SARs may be awarded to one participant in one calendar year.
For purposes of the Plan, the term "Stock Appreciation Right" means a right to
surrender all or a portion of an Option and receive, in exchange, payment of a
cash amount no greater than the excess of the Fair Market Value of one or more
shares of LNC common stock over the Fair Market Value of such option share on
the date the related Option was granted. Each Stock Appreciation Right granted
under the Plan shall be evidenced by an agreement between the Holder 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 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 Option is exercisable on that date. Each SAR issued in
conjunction with an Incentive Stock Option may be exercisable only when there
has been an increase in Fair Market Value of the shares over the relevant
period. If a Holder 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 Holder 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 an irrevocable written notice to
the Secretary of LNC which specifies the extent to which the SAR is being
exercised. Payment to the Holder shall be made as soon as practicable after
exercise of the SAR and may be made in cash, in shares of 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 Option
shall automatically be terminated to the same extent that the SAR was exercised.
Upon exercise of a SAR attached to a Restricted Stock Award, the restrictions on
the Restricted Stock Award shall lapse.
4.4. Termination of SARs. Each SAR shall terminate and not be exercisable after
the same date that the related Award terminates.
4.5. Transferability. Each SAR granted to a Holder shall not be transferable
except by will or the laws of descent and distribution; provided, however, to
the extent permitted under Rule 16b-3 under the Securities Exchange Act of 1934,
the Committee may develop rules to permit the transfer of the SAR together with
the related Option and only to the extent that the related Option may be
transferred.
SECTION 5
RESTRICTED STOCK AWARDS
5.1. Holders. The Committee may, at any time, designate a Holder to receive a
Restricted Stock Award whether or not the Holder 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 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 Holder 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 1.5 and this Section 5, determine the number of shares of 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 Holder
under each RSA granted under the Plan. An RSA may provide, in the discretion of
the Committee,for the crediting to the Holder,on each dividend payment date, of
an amount equal to the product of the dividend paid on a share of Common Stock
multiplied by the number of shares which may be awarded under that RSA, and for
the payment in cash to the Holder 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 Holder 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 Holder and
deposited with the Secretary of LNC;
(d) if dividends are paid on the shares, they shall be paid to the Holder at
such times as the Committee shall determine; and
(e) the shares and any dividends accumulated shall be subject to forfeiture
in accordance with subsection 5.4.
Subject to the foregoing restrictions, the Holder shall have all of the rights
of a holder of 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 Common Stock
free of all restrictions to the Holder or, in the event of the Holder`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 of the date of grant
of the RSA and ending on a date 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 Holder's service with LNC and all Subsidiaries
terminates on account of death, Disability, or retirement (as described in
subsection 3.7(d)).
5.4. Forfeiture. Each RSA shall provide that a Holder shall forfeit all rights
under the RSA, all shares of Common Stock issued pursuant to the RSA which had
not been distributed to the Holder free of all restrictions, and all
undistributed amounts credited to the Holder with respect to dividends paid on
Common Stock pursuant to the RSA if:
(a) the Holder`s service with LNC and all Subsidiaries terminates for any
reason other than death, Disability, retirement (as described in
subsection 3.7(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 Holder may not be transferred
by the Holder except by will or the laws of descent and distribution.
SECTION 6
INCENTIVE AWARDS
6.1 General. An Incentive Award may be granted hereunder in the form of shares.
Incentive shares may be granted to an eligible employee for no cash
consideration, for such minimum as may be required by applicable law, or for
such other consideration as may be specified by the grant. The terms and
conditions of incentive shares shall be specified by the grant.
6.2 Terms of Incentive Awards. Incentive shares may be paid to the grantee in a
single installment or in installments and may be paid at the time of grant or
deferred to a later date or dates. Each grant shall specify the time and method
of payment as determined by the Committee, provided that no such determination
shall authorize delivery of shares to be made later than the tenth anniversary
of the Holder's date of termination. The Committee, by amendment of the grant
prior to delivery, can modify the method of payment for any incentive shares,
provided that the delivery of any incentive shares shall be completed not later
than the tenth anniversary of the Holder's date of termination.
6.3 Distribution of Incentive Awards. If any incentive shares are payable after
the Holder dies, such shares shall be payable (a) to the Holder's designated
beneficiary or, if there is no designated beneficiary,
to the Holder's personal representative, and (b) either in the form specified by
the Award or otherwise, as may be determined in the individual case by the
Committee under this Plan.
6.4 Forfeiture. Any grant of incentive shares is provisional, as any share,
until delivery of the certificate representing such share. If, while the grant
is provisional,
(a) the grantee terminates, but does not terminate normally, or
(b) the grantee is determined to have engaged in detrimental activity,
the grant shall be annulled as of the date of termination or, the date of
such determination, as the case may be.
6.5. Management Incentive Plan II. The Committee may, in its discretion,
designate that a Holder who is eligible for a cash award under the terms of the
LNC Management Incentive Plan II (the "MIP II Plan") receive such award as a
grant of restricted stock in lieu of all or a portion of the MIP II Plan cash
award, such RSA shall be made subject to subsection 1.5 and Section 5. The
amount, if any, of the MIP II award which is not paid as an RSA shall be paid in
cash. This cash payment shall be determined by subtracting from the MIP II Plan
award the total Fair Market Value, on the date of the RSA, of the shares of
Common Stock represented by the RSA without discount for any restrictions.
6.6. Executive Value Sharing Plan. The Committee may, in its discretion,
designate that a Holder who is eligible for a cash award under the terms of the
LNC Executive Value Sharing Plan (the "EVS Plan") receive such award as a grant
of restricted stock in lieu of all or a portion of the EVS Plan cash award. If
the Committee decides to make an RSA in lieu of all or a portion of the EVS Plan
cash award, such RSA shall be made subject to subsection 1.5 and Section 5. The
amount, if any, of the EVS Plan award which is not paid as an RSA shall be paid
in cash.
6.7. Career Stock. The Committee may, in its discretion, designate Restricted
Stock Awards, subject to subsection 1.5 and section 5, to employees of LNC and
its subsidiaries who make an irrevocable election to waive participation in and
any benefits under designated retirement programs maintained by the Company. The
Committee may also, in its sole discretion, award shares of Restricted Stock to
individuals who become officers after the effective date of the Plan in lieu of
participation in certain retirement programs maintained by the Company.
SECTION 7
PERFORMANCE AWARDS
7.1 General. Performance awards may be granted hereunder to an eligible
employee, for no cash consideration, for such minimum as may be required by
applicable law, or for such other consideration as may be specified by the
grant. The terms and conditions of performance awards, which may include
provisions establishing performance periods, performance criteria to be achieved
during a performance period, and vesting dates shall be specified by the award.
7.2 Terms of Performance Awards. Performance awards shall be credited as of the
date of the award to a bookkeeping reserve account maintained by LNC ("Account")
in units which are equivalent in value to Shares of Common Stock ("Stock
Units"). Performance awards may be paid in cash, shares, or other consideration,
or any combination thereof. The extent to which any applicable performance
criteria have been achieved shall be conclusively determined by the Committee.
Performance awards may be payable in a single payment or in installments and may
be payable at a specified date or dates or upon attaining performance criteria.
7.3 Forfeiture. Except as otherwise specified by the award, if the Holder
terminates, but does not terminate on account of death, Disability, or
retirement, as defined in subsection 1.7(d), any performance award or
installment thereof not vested prior to the Holder's termination shall be
annulled as of the date of termination.
7.4 Executive Value Sharing Plan. The Committee may, in its discretion,
designate that a person who is eligible to receive a cash award under the EVS
Plan receive such award in Stock Units as a Performance Award. The Committee may
also in its sole discretion convert outstanding RSAs to Stock Units as
Performance Awards.
7.5 Transferability. Each Performance Award shall not be transferable except by
will or the laws of descent and distribution.
SECTION 8
DIVIDEND EQUIVALENT RIGHTS; INTEREST EQUIVALENTS
8.1 Dividend Equivalent Right. A Dividend Equivalent Right or DER may be
granted hereunder to an eligible employee, as a component of another award or as
a separate award. The terms and conditions of DERs shall be specified by the
grant. Dividend equivalents credited to the holder of a DER may be paid
currently or may be deemed to be reinvested in additional shares (which may
thereafter accrue additional dividend equivalents). Any such reinvestment
shall be at Fair Market Value at the time thereof. DERs may be settled in cash
or shares or combination thereof, in a single installment or installments. A DER
granted as a component of another award may provide that such DER shall be
settled upon exercise, settlement, or payment of, or lapse of restrictions on,
such other award, and that such DER shall expire or be forfeited or annulled
under the same conditions as such other awards. A DER granted as a component of
another award may also contain terms and conditions different from such other
award.
8.2 Interest Crediting. Any award under this Plan that is settled in whole or
in part in cash on a deferred basis may provide, as determined in the sole
discretion of the Committee, for interest equivalents to be credited with
respect to such cash payment. Interest equivalents may be compounded and shall
be paid upon such terms and conditions as may be specified by the grant.
SECTION 9
POSTPONEMENT OF EXERCISE
The Committee may postpone any exercise of an Option 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) to effect or maintain registration of the
Plan or 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 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 Option 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 Award. Neither LNC nor its directors or officers shall
have any obligation or liability to any Holder (or successor in interest)
because of the loss or rights under any Award under the Plan due to
postponements pursuant to this Section 10.